While the Crash of 1929 is more widely known, it was the Bank Panic of 1907 that shook people’s confidence in Wall Street and the banking system, so much so that the U.S. Government created The Federal Reserve System. The problems evident in the Bank Panic of 1907 stimulated the U.S. government to change its role in the governance of the operation of the national financial system. By 1914, the Federal Reserve began operations, and Luzerne Bank joined the very same year. The result of the Bank Panic of 1907 and The Crash of 1929 was the establishment of the Federal Deposit Insurance Corporation (FDIC). Before the FDIC, the willingness of people to hold bank deposits depended upon their confidence in the strength of the banks and personal reputations of bankers and principal shareholders.
Why would Luzerne Bank open its doors in the midst of a bank panic? It was because the local economy in the Wyoming Valley was booming at the time. The coal and lumber trades were booming. Silk and lace mills were opening all over the Wyoming Valley. People were streaming in from all over the world. At that point in time, the local economic outlook projected growth into the next two decades.
Those projections proved correct. The economy of the Wyoming Valley did grow. As it grew, the banks grew with it. By the late 1920’s just about every city and borough in the Valley would have its own bank. Luzerne Borough was no different.
What is unique about Luzerne Bank, however, is that it was one of the first banks organized outside of downtown Wilkes-Barre. Luzerne Borough, with its coal and lumber industries, had a growing business district, large labor pool, and location at a natural gateway to the Back Mountain, with its prosperous farms and lumber trades. This represented the perfect opportunity for the establishment of a strong community bank.
During the summer of 1907, the first organizational meetings were held at Henry C. Johnson’s Hardware Company. The bank opened in the fall of that year with 71 original stockholders and a capitalization of $50,000 divided into 500 shares priced at $100 per share.
The bank rented its offices at a building owned by John T. Snyder at 118 Main Street Luzerne, PA. By 1922, the bank would construct its own building on this same spot. To this day, the Bank has maintained its headquarters at this address.
Calvin Perrin, Luzerne Bank’s first Chairman, recorded in November of 1908 that 817 accounts were opened with deposits totaling $178,642 (this is nearly $4 million by today’s standards). Within 5 years, Luzerne Bank would service 4,000 bank accounts in a borough with a population of approximately 6,000 people.
Luzerne Bank was founded and organized by the community leaders of Luzerne, Kingston, and Wilkes-Barre. These were people who lent their names and impeccable reputations in order to establish this bank.
On the bank’s 50th anniversary in 1957, Cashier George M. Harris (The title of Cashier corresponds to the more modern title of President or Chief Executive Officer) reflected in a published letter to the newspapers stating, “I was fortunate to work with a splendid group of men who constituted the board of directors. They had commanded respect and esteem.”
In a small community, personal reputation is important. This is particularly so for a community bank. Local men of Luzerne, such as Henry C. Johnson and William J. Parry, had fine main street business reputations. Joining them as founding directors and early stockholders were Civil War Veteran Calvin Perrin, owner of Payne & Perrin, also onetime Burgess of Luzerne; Sherman P. Frantz, a well-known butcher and purveyor of a “first-class market”; Forty Fort attorney Frederick W. Denniston; and Ira T. Honeywell, furniture dealer and undertaker.
100 years ago, there were certain family names in the Wyoming Valley that brought instant credibility to any business endeavor. By the beginning of the 20th Century, descendants of the original pioneer settlers were well established in the business and finance industries. This brought with it, instant respect and reputation. Their names, Butler, Hollenback, Shoemaker, Reynolds, Nesbitt, Dorrance, Swetland, Pettebone and Conyngham, were known to just about every resident of the Wyoming Valley.
One who served on the founding board of Luzerne Bank was John Butler Reynolds. Mr. Reynolds was a pioneer in transportation at the turn of the century. A lawyer by training, he was instrumental in building the first electric railway in the Wyoming Valley and the second bridge to cross the Susquehanna River, the North Street Bridge. Reynolds was a grandson (on his father’s side) of Benjamin Reynolds, one of the founders of the Wyoming Bank. John was a great-great grandson of Zebulon Butler, commander of the American forces during the Battle of Wyoming in 1778.
Other men of distinction who were early shareholders in the bank include Attorney Granville J. Clark. Mr. Clark was the organizer of the Tunkhannock & Wyoming Valley Telephone Co. Another was Frederick N. Ruggles, the owner of Ruggles Lumber Company.
As it has for over 100 years, Luzerne Bank continues its association with descendants of the original shareholders and directors. Today, Henry C. Johnson, the grandson of a founding director, is still a shareholder. His father, Stanley Johnson served for 18 years as Luzerne Bank’s Chairman. The bank is also proud of its long association with the Moore family. Guy W. Moore, the business manager of the Wilkes-Barre Record served the bank for some 50 years. Today his grandson continues the tradition as a shareholder.
The family of the current board Chairman, Attorney Joseph Kluger has also had a long association with Luzerne Bank as well as with the overall banking industry in the Wyoming Valley. Attorney Kluger’s father, Allan Kluger served as Luzerne Bank’s Chairman in the recent past. Attorney Kluger’s grandfather, Samuel Kluger, served as the Cashier of the First National Bank of Wyoming. It is interesting to note that the headquarters of the First National Bank of Wyoming is now the Wyoming Branch Office of Luzerne Bank.
Through the 1930’s, the bank’s management and directors held a steady course. Even at the height of the Great Depression, following President Roosevelt’s orders that all banks close, federal bank examiners were able to verify Luzerne Bank’s safety and soundness. This was attested in the 1933 Meeting Minutes book. “While your officers and directors knew that our bank was in a sound condition we were all mighty pleased when we received the wire giving us permission to reopen.”
Following World War II the bank continued on a path of growth while concentrating on its geographic niche. In a 1944 letter to shareholders, Luzerne Bank President William D. Taylor wrote, “There is a ray of sunshine! There is resumption in production of civilian goods, including refrigerators, washing machines, autos, stoves, etc. It is from the financing of these items that we look for an increase in earnings and profits.”
The profits did increase and were used by the bank to add conveniences and services for its customers. Drive-in service and a walk-up window were added, new employees hired, and internal operations improved. By the 1970’s Luzerne Bank was in a position to begin expanding into branches.
Through the 1990’s the bank charted an aggressive physical expansion and reported increasing profits. Through all these changes, Luzerne Bank continued to focus on the banking needs of the people and businesses of the Wyoming Valley and retaining a local board of directors.
As much as has changed for Luzerne Bank over the years in going from two employees and hand-written ledger entries to 90 plus employees and innovative use of technology, there remains a common thread that runs from 1907 into 2011 and beyond. It is that Luzerne Bank has never wavered from its core principles of maintaining a safe and sturdy reputation while catering to the banking needs of our customers.
Luzerne Bank’s success over the course of its 100 plus years is the result of the loyalty of our customers and shareholders. It is also the result of the commitment of its staff, management team and Board of Directors to meeting the financial needs of the people of the Wyoming Valley.
We remain grateful to our customers and to everyone who helped make this bank a success. We look forward to continuing this success as a Safe, Sound, and Secure Bank far into the future.