The LORAIN ST. BANK was formed at Lorain and Fulton in 1890 as the Lorain St. Savings and Trust with $100,000 capital. Over the years, the capital of the Lorain Bank was increased to $500,000 and its assets grew to $10 million; in 1929 the bank had over 20,000 depositors. As the economic pressures of the Depression mounted, the Lorain St. Bank and Trust worked with other local banks to limit foreclosures. The bank's reserves were depleted in 1932; when Franklin D. Roosevelt announced the bank holiday in 1933, the Lorain St. Bank was closed while plans to reorganize it as a licensed bank were formulated.
Two factions emerged with plans to pay off depositors, liquidate debt, and return to stable banking operations. Major stockholder Carl Scheaffer wanted to set up the institution as a model bank, chartered by the state with Federal Reserve membership and backed by local friends of the institution, not Reconstruction Finance Corp. funds. Since this plan would result in delayed and reduced payment to current depositors, 300 depositors protested against the reorganization. Scheaffer and his group broke off the Lorain Bank and opened the People's National Bank of Lorain of Lakewood at 14828 Detroit Ave.
The Lorain St. Savings and Trust remained closed while a conservator, Robert M. Huston, tidied up its affairs. When the bank reopened in Jan. 1935 as the Lorain St. Bank, most of its mortgages had been refinanced under the Home Owners' Loan Corp. and the Fulton Mortgage Co. had been set up to liquidate the assets of the old bank over 7 years. As soon as the bank reopened, its representatives and those of the People's National Bank talked of merging; the People's office became another branch of the Lorain St. Bank, which bought its assets. The reunified bank remained a well-respected neighborhood operation until 1946, when an agent for Cleveland Trust bought 80% of the stock. A group of local businesses offered a higher per share price to keep the bank independent and tried to prevent a vote; however, persistent rumors that the bank would be moved from the west side to the downtown Cleveland business district if not sold motivated the stockholders to approve the merger. All 3 branches of the Lorain St. Bank became branches of Cleveland Trust.