Citizen Trust Bank History

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In 1919 a group of five foresighted men envisioned a bank which would primarily serve the black citizens of Atlanta. This vision emerged after Heman Perry attempted to be fitted for a pair of socks at a white owned store and was refused. Determined to provide access to capital so that Black business men could own and operate independently of white owned companies, these "Fervent Five" (the organizing committee for the bank), led by Perry (chairman), James A. Robinson (secretary), Thomas J. Ferguson, William H. King and Henry C. Dugas, pooled their time, money and resources to develop a bank which would offer its customers improved financial security. The intense national drive to sell stock for the creation of Citizens Trust Company spanned both rural and urban America.

On August 16, 1921 the doors of Citizens Trust Company opened on "Sweet" Auburn Avenue. The first home of the bank was in the Standard Life Insurance building. At the time the bank received its charter the Atlanta Journal wrote: "Promoters of the Citizens Trust Co., have been granted a charter for the immediate organization of the institution a bank with $500,000 capital stock all of which is said to have been already subscribed by Negro citizens." Perry served as the first Chairman of the Board and H. C. Dugas was the bank’s first president. The slogan of the bank was “Bank Where You Feel at Home”.

The bank officially reorganized itself on September 8, 1927 with new Articles of Incorporation and By-Laws. Young L.D. Milton and Clayton R. Yates assumed leadership roles in the institution. Yates was elected acting Chairman of the Board and Milton was elected Cashier-Treasurer. Earlier on July 28, 1927 both, along with J.B. Blayton (one of the first Black Certified Public Accountant in the United States) had been elected to the board of directors at the annual shareholders meeting.

In August of 1928, the executives at Citizens Trust again began exploring the possibility of joining the Federal Reserve System. The idea had first been explored by Heman Perry four years earlier. The board increased its capital stock by 200 shares at $250 par value per share and began working on other requirements of the “Fed” to become a member.

On March 5 1933, the day after being sworn into office, Franklin Roosevelt stepped into the breach and declared a "bank holiday," which, for four days forced the closure of the nation's banks and halted all financial transactions. The "holiday" not only helped stem the frantic run on banks that was occurring, but gave Roosevelt time to push the Emergency Banking Act through the legislative chain. Passed by Congress on March 9, 1933, the act handed the president a far-reaching grip over bank dealings and "foreign transactions." The legislation also paved the path for solvent banks to resume business as early as March 10, 1933. Citizens Trust was one of the first banks to reopen. The Bank had received resounding expressions of confidence during the closure period from its customers. Shortly thereafter, Citizens Trust became the first African American owned bank in the United States to become a member of the Federal Deposit Insurance Corporation (FDIC).

In 1947, Citizens Trust Bank was asked to become the first African American owned Bank in the United States of America to become a member of the Federal Reserve Bank. The Bank was asked to join without resubmitting its application from the early thirties. The board and management were surprised by the invitation, primarily because it came without provocation. Yates and Milton remembered their early years at the bank when Perry, Boddie and Dugas tried to inspire African Americans throughout the country to increase the deposits of Citizens Trust Company to $1,000,000 in order to make the bank appealing to the Federal Reserve Bank. Twenty six years after the idea was first mentioned in the first shareholders meeting, Citizens Trust Company became the first Black owned bank to become a member of the Federal Reserve system in October of 1948.

In October of 1954, Citizens Trust Company’s management finalized a film entitled, Partners in Progress. This film was made in order that the history and relevance of Citizens Trust Bank be chronicled for all time. The Bank began investing in the development of sub-divisions throughout southwest Atlanta. Just as Heman Perry developed the Black community over thirty years earlier, Milton and his management team also had its place in providing housing in new communities that would become one of the most affluent areas for African Americans in the country. After the development of the Hunter Road project using a special program by the Federal Housing Administration, the bank developed the Mozley Park sub-division, for which white banks would not provide mortgages. In addition, Citizens Trust provided financing of the Morris Brown Sub-Division and the Bankhead and Hightower communities. In the early 50’s the Bank was instrumental in providing financing for Blacks that were purchasing homes in white communities.

On August 2, 1954, Citizens Trust Bank opened its first branch office, the Westside Branch. The state of the art facility was opened in the community first developed by Heman Perry in the early 1900’s. The branch was located on Hunter Road near Ashby Street. At the time of the branch’s opening, the bank drew 4,000 visitors. The community lauded over the marble floors and spiral staircases. By all accounts the opening of the Westside Branch Office was a major success. The board of directors began having their board meetings at the new location.

In the middle 1960’s, Milton and his management team recognized that the Big Bethel Church’s lease agreement, which had originated in the late 20’s, would soon expire on the bank’s 212 Auburn Avenue headquarters. The building, which was in excess of fifty years old, renovated once, and in need of further renovations, would once again come under the discretion of the church. Citizens Trust began its own plans of building a new state of the art facility at 75 Piedmont Avenue.

After the completion of the building, Mr. Milton decided to retire from the bank as its president and CEO since January of 1938. He had been an original employee of the bank during the Perry years, and guided the bank through the Great Depression, World War II and racial segregation. The bank had gone from approximately $300,000 in total assets at the beginning of his tenure to over $26,000,000 at the time he retired. He was named president emeritus of the institution. Mr. Milton’s tenure with the bank ended on March 24, 1971 almost 50 years since the bank’s founding. Executive Vice President Charles Reynolds became acting president of the bank on March 18, 1971 and was officially elected on May 26, 1971.

Moving into the new area of bank management was not without its challenges. Reynolds was faced with rapidly changing banking environment that had not been planned for during the later stages of the Milton administration. Technological advances had been made in data processing via main frame computers. Reynolds had an uphill battle that also included the weight of trying to manage a 12-story office building and keep it sufficiently occupied.

Reynolds presented the board with its first branch expansion opportunity since the Westside Branch was established in 1954. Reynolds made this presentation in December 1971 and moved the project to final approval by the regulators several months later in 1972. The Gordon Road Branch, which was later renamed the Adamsville Branch, was opened September 5, 1972.

Although the bank continued to progress, the Citizens Building Corporation continued to drag the earnings of the company down. The building was completely leased up with tenants paying on time and the income being generated was not enough to cover operating expenses. In 1973, the Company began in earnest to renegotiate rental rates for its major tenants. By 1974, the attrition of capital caused by the building forced the bank to raise additional capital. On July 24, 1974, Citizens Bancshares Corporation approved an increase in its common stock from 100,000 shares to 275,000.

Chairman of the Board Harry Richardson asked permission to retire from the board on June 26, 1974 due to his age and failing health. With reluctance the board accepted his request to retire and named him Chairman Emeritus along with Yates. Vice Chairman Herman J. Russell was approved as the new Chairman of Citizens Bancshares and Citizens Trust Bank. In October of 1974, Reynolds submitted his letter or resignation.

Russell and the board had solicited I. Owen Funderburg to become Milton’s successor in 1971. They were unsuccessful at that time, but came back again to hire Funderburg who was president and CEO of Gateway National Bank in St. Louis. Surprisingly Funderburg agreed to accept the position as president and chief executive officer of Citizens Trust Bank and took charge of the organization on January 9, 1975.

With Funderburg in place a series of preferred stock and capital notes were issued to Atlanta area banks, the Ford Foundation, Minbank and other financial institutions totaling $3,000,000. At the beginning of 1976, the Funderburg administration began taking strong corrective actions and implementing new systems. Russell and Funderburg were also aggressively pursuing deposits and new business for the bank. The bank grew during these tough times by $6 million from 1975 through the end of 1976.

In July of 1977, Citizens Trust Bank was honored to have one of its key executives to become the Associate Administrator of the United States Small Business Administration, Washington, D.C. in the Jimmy Carter administration. William A. “Bill” Clement was presented with a resolution from the board thanking him for his service as the number two executive in the company and Vice President and Senior Loan Officer.

By the third quarter of 1978 the bank was again on a roll. Earning steady profits while still carrying the burden of the building. The bank did divest of a large parking lot that was being leased to Beaudry Ford (the Bourne Brothers). The bank sold this tract of land for $6.50 a square foot. The bank also increased its role in the National Bankers Association (“NBA”), the trade group for the nations women and minority owned commercial banks. The bank first joined the organization in 1927 when Richard R. Wright, the first Chairman of the association, sent a letter to Citizens Trust’s board. At that time the organization was known as the National Negro Bankers Association. The name was subsequently changed in 1948 to include all minority-banking groups. L.D. Milton had served as chairman of the group in the 1950’s and Funderburg was first elected chairman to a two-year term in 1971 (while president of Gateway National Bank in St. Louis) and again in 1981.

In late 1981, the bank had a study performed by Landauer Associates, Inc. to review several feasibility propositions regarding the bank’s headquarters. By late 1982, Funderburg and director Dr. Johnnie L. Clark (professor, real estate developer and certified public accountant) where empowered to sell the bank’s headquarters and lease space back in the facility. In December of 1982 the bank building was sold.

By 1984 the bank had increased its size to $65 million and again more capital was needed. On sound earnings footing and having retired all of the capital notes that the bank borrowed as emergency capital during the middle and late 1970’s, Citizens Trust (through its holding company Citizens Bancshares Corporation) found itself in a much better strategic position to raise capital. Also, the company was earning a healthy profit and paying strong dividends. The bank issued an additional $1.5 million in new stock.

In 1985, Citizens Trust Bank was named “Bank of the Year” by Black Enterprise Magazine. This article touted the effective management style of Funderburg and the advances made by the bank during his administration.

The bank continued to increase its reach in 1987. Citizens Trust successfully added three new branches in Kroger Supermarkets in rapid succession. Through these facilities, more and more customers learned first hand the value of neighborhood banking. The branches were located at Old National Highway, Wesley Chapel Road and Citi-Center on Cleveland Avenue. In addition, the bank topped the $100 million mark prior to the year-end. This achievement was significant when compared to the early struggles of the bank and the failure in 1974. Now with strong capital in hand, the bank continued its push into quality commercial projects that improved communities, and brought new entrepreneurs to a level that helped revitalize communities. During this growth period, the bank’s net revenues dropped significantly with the rapid expansion. By 1990, the bank was solidly over $100,000 and often-challenged Freedom National Bank in New York and Seaway National Bank in Chicago as the largest black owned commercial bank in the country.

In 1991, I. Owen Funderburg announced his retiring. Bringing to a close in 1992 a legendary seventeen-year run as president of Citizens Trust. He began his banking career in 1948 as a teller at the Mechanics and Farmers Bank in Durham North Carolina. Changing directions the bank’s board brought in William L. Gibbs to be president and CEO of the bank. Entering 1993 under Gibbs, the bank continued its expansion program by opening new in-store branch offices in Cub Foods on Lawrenceville Highway. Gibbs also introduced new account managers and a new credit culture in the bank. In addition, new management renegotiated its Main Office lease (reducing costs), renegotiated the Company’s debt (which eliminated a restrictive loan agreement), recruited a new commercial lending staff, remodeled the Adamsville Branch and reduced classified loans by $1.8 million. During 1994, the bank acquired a branch office from the RTC located at 712 West Peachtree Road introducing CTB to the midtown community. Gibbs also swapped the bank’s Kroger locations for free standing locations at East Point and Wesley Chapel Road. The bank’s new motto was “Strength Through Progress”.

In 1993, James E. Young was selected by First Southern Bank to replace Herbert Orise as its president. By 1994, First Southern was growing fast and earning a solid reputation in the community. The two banks briefly considered merging in 1992, but could not settle on the structure of the transaction. By 1996, First Southern was approximately $50 million in size with three branch operations, an operations center and newly acquired full service mortgage company.

In July of 1997, Gibbs resigned from the bank. CTB decided to explore a business combination with First Southern Bank. This agreement would merge the banks whereby Young would assume the presidency of the combined bank. After intense negotiations the media with much fan fare greeted the historic merger of Citizens Trust Bank and First Southern Bank. All of the recognizable press in Atlanta and in the national banking community (as well as Black Enterprise Magazine) carried feature stories on the transaction. Young took the helm of Citizens Trust Bank on February 2, 1998.

At the time of the merger, Citizens Trust Bank became one of the nations largest predominately African American owned commercial banks. The bank ended February with approximately $191 million in total assets. The merger was consummated on January 30, 1998.

Pre-merger Citizens Trust Bank was listed as No. 7 on the Black Enterprise Financial 25 list with 145 million is assets and eight locations. First Southern made its inaugural appearance on the 1997 Black Enterprise Financial 25 list at No.24 with assets of $58 million and three locations. (Black Enterprise annually ranks the nation's top black controlled financial institutions.) The combined bank was now number 6 on 1998's listing.

In June of 1998, Citizens Trust Bank, considered the leading church lender relative to its capital base in metro Atlanta, pulled together three other minority-owned banks and loaned the historic Ebenezer Baptist Church $5.5 million to finance the construction of a new sanctuary for it 2,000 members. The deal's negotiations lasted for merely 30 days. A similar deal would normally have taken at least six months or more to complete.

The pastor and congregation of the 76-year old Ebenezer Baptist Church where excited about the new sanctuary, which has 1,000 more seats than the present church that seats only 750. Due to overgrowth (300 visitors every Sunday morning and 700,000 annually), the church has had to have two services to accommodate its 2,000 member congregation. This is the same church where Dr. Martin Luther King, Jr. began his role as a national leader. His father Martin Luther King, Sr., had been a pastor at Ebenezer for 44 years (from 1931 – 1975) and was a former board member of Citizens Trust Bank.

In the spring of 1999, Young announced that the common stock of the Company was available in the public market. Citizens Bancshares Corporation entered into an agreement with J. C. Bradford and Co. that provides for Bradford to act as Principal Market Maker. J. C. Bradford was the market maker for more than sixty community banks in the Georgia area. This agreement between Citizens Bancshares and J. C. Bradford & Co. increased the liquidity of the stock. The company's stock began trading under the ticker symbol CZBS.

In addition, Citizens Trust Bank became the first and only African-American-owned bank in nation to become part of the SBA's Preferred Lender Program. The much sought after designation permits Citizens Trust to issue a SBA guaranty for any loan it approves under Preferred Lender Program (``PLP'') guidelines. The granting of this authority by the SBA to Citizens Trust will give the bank the ability to approve its own SBA guaranteed loans prior to SBA approval.

Pursuant to a certain Purchase and Assumption Agreement entered into on Friday, March 10, 2000, with the Federal Deposit Insurance Corporation (FDIC) as Receiver for Mutual Federal Savings Bank, Atlanta, Georgia, CTB has assumed all the deposits and purchased most of the assets of Mutual Federal Savings Bank. The acquisition served to enhance CTB's assets by some $30 million dollars thereby increasing its total assets to approximately a quarter of a billion dollars, and ensured the continuation of banking services to the former Mutual Federal 6,000 banking customers. Mutual Federal Savings Bank was closed by Order of the Office of Thrift Supervision on Friday, March 10, 2000, at which time the FDIC was appointed. Former depositors and customers of Mutual Federal Savings Bank continued using both former banking facilities of Mutual Federal at 205 Auburn Avenue (downtown Atlanta) and 2577 Martin Luther King, Jr. Drive until their accounts were properly transferred into CTB's account system.

After nearly two years of deliberation, Citizens Trust Bank and Citizens Federal Savings Bank in Birmingham, Alabama agreed on a business combination. Citizens Federal was a savings and loan founded by the legendary black Alabama businessman A.G. Gaston in 1957. The bank had labored for years trying to find answers to growing competition from other institutions. The bank had few products and continued to operate under the status quo. Led by Chairman and CEO, Bunny Stokes, the bank knew that it needed to compete and carefully negotiated the change in ownership with CTB. The final agreement allowed Citizen Trust to acquire Citizens Federal’s holding company, CFS Bancshares, Inc. for $9.2 million in cash. It represented the first acquisition by CTB of a bank in another state. At the close of business on February 28, 2003, the acquisition took effect and Citizens Federal became Citizens Trust Bank.

In September 2003, Citizens Bancshares Corporation, parent company of Citizens Trust Bank, announced the Bank was granted Preferred Lending Partner (PLP) Status in Alabama by the Small Business Administration (SBA). The PLP status is the premier accreditation granted by the SBA which will allow Citizens Trust Bank to document and originate SBA guaranteed loans throughout the entire state of Alabama. A public presentation was held at the Alabama Division Corporate Office located at 1700 3rd Avenue North in Birmingham on October 1st at 10:00AM to celebrate another first for Citizens Trust Bank Birmingham Division.

In May 2004, after thirty-six years in banking, CTB Birmingham Division President, Bunny Stokes Jr. announced his retirement from Citizens Trust Bank. Mr. Stokes began his long and distinguished career at Citizens Federal in 1968, gaining a thorough understanding of all areas of bank operations. Mr. Stokes’ achievements and contributions have been recognized with numerous awards, including Business Leader of the Year, awarded by the Omega Psi Phi Fraternity, and the Alumni Merit Award from Booker T. Washington Business College. Robert Nesbitt joined Citizens Trust Bank shortly after Mr. Stokes retirement and assumed the position of Birmingham Division President in the Fall of 2004.