When Cleveland's former mayor, Dennis Kucinich, was attacking that city's business interests for what he saw as a failure to support their hometown in its financial straits, one of his favorite targets was CleveTrust Corporation, parent of the Cleveland Trust Company.
For more than a year the bank, along with others in the city, had refused to continue carrying the city's unpaid debts, a decision that led to Cleveland's default nearly a year before Mr. Kucinich lost his bid for re-election.
Today the bank has a new name -- AmeriTrust Corporation; the State of Ohio has started permitting banks to open branches in neighboring counties; and with Mr. Kucinich gone, "The atmosphere is totally different, not just for bankers, but for the whole business community," says Jerry V. Jarrett, AmeriTrust's president.
But one problem remains that will require more than a new mayor or name to remedy: The bank is still in Cleveland, near the center of an industrial region that has been ravaged by the recession.And Mr. Jarrett concedes that the comeback, or what there is of one, "will be slow. The 1981 cars will be critical. A lot depends on how well they're received." Plants in the Midwest are heavy suppliers to the auto industry. Even if the cars are well received, the region, as it has traditionally done, will probably lag about six months behind the recovery in the rest of the nation.
Those downsized cars have already opened one bright spot for the region's economy, Mr. Jarrett notes. The tool and die makers have been kept busy providing new machinery for the retooled auto plants.
Of course, he has noticed another bright spot in his area, too: his own bank. Despite the economic doldrums, AmeriTrust is thriving. It and the National City Corporation, Ohio's second-largest bank, continually present the anomaly of two institutions enjoying financial success in an area of financial distress. Mr. Jarrett and AmeriTrust's chairman, Mr. Brock Weir, were in Boston recently to discuss this happy situation with financial analysts here.
Last year AmeriTrust reported a $1.18 rate of return on every $100 of assets, about twice the rate of most similar-size banks. National City's rate of return of $1.28 was twice that of BankAmerica Corporation, parent of the nation's largest bank. At AmeriTrust, income and dividends have risen 17 years in a row. Last year its net income reached $57.4 million; its dividends stood at $2.35 per share.
One reason for this stellar performance, Mr. Jarrett maintains, is the kind of customers in the area -- both corporate and consumer.
"We have a higher proportion of non-blue chip companies," which borrow more frequently and have fewer alternate sources of borrowing, he says. While large, highly rated companies can go to bond markets, insurance companies, banks, and other sources for financing, many companies in the Cleveland area have one choice: the bank.
AmeriTrust's individual customers also help its financial picture. Many of them are conservative depositors who prefer to keep their money in low-interest savings accounts.
Just how conservative was pointed up recently when AmeriTrust introduced a "statement savings account," which gave the customer a monthly statement of his savings account, similar to a checking account statement, instead of a passbook. Only 15 percent of the bank's customers showed any interest in it, Mr. Jarrett says. "People just didn't want to give up that passbook."
Another change in the bank's operations is going ahead with less resistance: expansion. As of Feb. 1, 1979, banks in Ohio can open full-service branches in countries next to their home offices. But the Legislature was lberal when it wrote the law, Mr. Jarrett notes, because it permtted a bank holding company to open a new bank in another part of the sate and follow with branches in counties next to the new bank's home county.
Since the law was passed, AmeriTrust has opened banks in several Ohio cities, including Akron, Columbus, and Cincinnati. Thus, Ohio will eventually have statewide branching, something already permitted in New York, New Jersey, Virginia, and, to a limited extent, in Florida.
But for AmeriTrust, Cleveland is home, and Mr. Jarrett remembers the troubles his bank had with officials of the city under its previous mayor. "We could not get good information from the city" on its cash flow, financial needs, the future plans, he says.
Today, he notes, the situation is "totally different, very positive." While "there have been few tangible changes" in the city's financial status since Mayor George V. Voinovich came to office last November, its financial problems have been identified and are therefore "getting to a point where they can be dealt with," says Mr. Jarrett. But, he adds, "the city is still technically in default."
The progress so far has been accomplished partly through the efforts of a task force of business and financial leaders the mayor formed shortly after he took office. Its first task was to raise enough money from the business community and private contributions to pay for staff and consultants to help analyze the problems and come up with some solutions. The goal was to raise $ 500,000 for this effort, but "in two weeks we had over $750,000," Mr. Jarrett says.
The task force has been studying all city services and operations, including the police and fire departments, the motor pool, garbage collection, civil services, computer operations, and "everything a city has to do for its citizens ," Mr. Jarrett says. The aim, he adds, "is to manage the city the way any large organization would be managed."