The Crystal Room of the Willard Intercontinental Hotel was filled with talking, laughing bankers when the Washington Area Bankers Association met for its holiday luncheon in mid-December.

Then, the talking and laughing stopped.

The news had spread quickly through the group that C. James Nelson, president of the District's City National Bank and former president of the association, had committed suicide that morning. Robert Pincus, president of the association and of Sovran Bank/D.C. National, took the podium to ask the group of about 100 for a moment of silence.

"Everyone was shocked," said Webb Hayes IV, chairman of Palmer National Bank in the District. "There was stunned silence."

In the midst of the gravest local banking crisis in more than 50 years, Nelson's suicide at the age of 57 showed the mounting pressure on top executives, according to interviews with other bankers, psychologists and his widow, Etta S. Nelson.

"He felt he was into something he couldn't control: this economic downturn," said John V. Pollock, chief operating officer of John Hanson Savings Bank and a friend of Nelson's. "He was a good technical banker and was used to being able to fix things. But the normal and cus- tomary methods of fixing things no longer work."

The stress became especially difficult for Nelson to deal with because other personal problems arose. In September, doctors discovered that his wife, to whom he had been married for 35 years, had a cancerous lung tumor. The lung was removed, the prognosis looked good and doctors assured her that no chemotherapy was needed.

While Nelson put on a cheerful face when his wife came home from the hospital, Etta Nelson believes her illness contributed greatly to his depression and ultimate suicide.

"Had it been the slow economy without my illness, it might have been different," she said. "But things just sort of piled up."

In 1987, Nelson left his job as president of the National Bank of Washington to help launch City National Bank, which he hoped would become a profitable small bank. It was to be a one-branch District of Columbia bank that catered to small and medium-size business and professional organizations, embassies and individuals of moderate wealth in need of personal service.

Nelson brought decades of banking experience to the new enterprise. Banking had been his career, beginning at North Carolina National Bank (NCNB), where he spent 15 years. In 1977, he moved to Columbus, Ohio, where he was executive vice president of Huntington National Bank.

In 1981, he became president of National Bank of Washington, joining his former NCNB colleague Luther H. Hodges Jr., who was chairman of the bank.

When City National Bank opened at expensive, refurbished Dupont Circle offices in 1988, some banking officials and analysts predicted the new bank would have a tough competitive fight on its hands because there were already so many small banks in the District.

But Nelson disagreed. "It's one of the best banking markets in the country," he told The Washington Post at the time. "It's almost a slam dunk."

The bank opened its doors after Nelson, developer Jeffrey Cohen and Chesapeake & Potomac Telephone Cos. President Delano E. Lewis raised $8 million from about 40 private investors. Nelson had invested his own money in the bank and encouraged others to invest with the hope of reaping a profit in three to five years if the bank succeeded and merged with a bigger bank. He also found time for association activities, serving as president of the Washington Area Bankers Association in 1988-89.

Nelson hoped financial success at the bank would eventually allow him to cut back on his hectic work schedule.

"I think our retirement was sort of riding on the bank," said Etta Nelson. "But we viewed it as long-term. We would retire if it did well, or he'd continue to work."

What Nelson and other organizers didn't foresee was the worsening economy and the struggle ahead for many local banks, especially those that made significant real estate loans.

According to Office of the Comptroller of the Currency records, the privately held bank lost about $1 million a year in 1988 and 1989. It lost more than $1 million in the first nine months of 1990, a pivotal year because the third year of a new bank's operation usually is considered the turnaround year.

City National suffered from several problems. Analysts said its overhead was the highest in the District for a bank its size, with costs in 1989 of nearly $800,000 for salaries and more than $700,000 for elegant offices and equipment. Adams National Bank President Barbara Blum said Nelson grew concerned about the costs and had approached her shortly before his death to talk about the management of salaries and overhead at her bank.

One source said there were about five loans to prominent real estate borrowers, each in the range of about $500,000, that Nelson had been renegotiating before his death. While City National had assets of $42.9 million, its nonperforming loans -- loans that are not earning interest -- were rising and, as a result, its ability to make new loans was shrinking.

Etta Nelson said her husband was greatly affected by problems at the bank partly because he still had the competitive spirit of the football player at Duke University whom she married. An offensive lineman on the same team as quarterback Sonny Jurgensen that won the Orange Bowl in 1955, Nelson was "not satisfied with the status quo," she said. He had set specific goals for the bank's first few years and the bank had failed to meet them.

At a reception in July for the bank's two-year anniversary, Nelson had been "very hopeful," his wife recalled. "He thought they were going to be able to make some progress, unlike the bigger banks. But they just weren't growing."

Then, as the economy and real estate markets weakened further, things seemed to get worse for Nelson.

"Right before Thanksgiving ... we noticed a sadness in him," said Etta Nelson. "He just didn't want to do the normal things like play golf. He went to the bank and worked on Saturday and Sunday. We realized things weren't good. He always worked a lot when things came up, but he would usually take one day off to play golf."

Nelson's wife and two daughters became alarmed and urged him to see the family doctor, she said.

Bankers said Nelson became noticeably less decisive by late November. One associate described a telephone conversation in which he talked with Nelson about a business problem. When asked what he was going to do, Nelson said: "I don't know what I'm going to do. I don't know. I don't know. I don't know," his voice trailing off.

Another described a lunch at which Nelson seemed distraught. "He'd just stare out into space," said Adams National President Blum. "He was obviously thinking about more than one thing at once."

Psychologists said the sense of a loss of control among executives has become more common because of the economic downturn. They have given it a name: recession depression.

"We're seeing a lot more of this," said William A. Roiter, a psychologist with Hurst Associates of Boston, which provides companies with employee assistance and psychological counseling programs.

"Managers and senior level managers who have been successful for most of their careers ... are most affected," said Roiter, who did not know Nelson. "They feel the loss of control."

Nelson committed suicide by going into the basement of his Chevy Chase home on the morning of Dec. 13 and shooting himself with a 16-gauge shotgun. He left no suicide note. After Etta Nelson discovered her husband's body, she told Montgomery County police officials that he had been worried about City National's financial problems.

"The bank was very personal to him," she later said.

A few hours after Etta Nelson discovered her husband's body, the board of directors of City National Bank met in the bank's Dupont Circle offices after being hastily called together by Delano Lewis, chairman of the bank. Amid concerns that day about depositor reaction, the board issued the following statement:

"... Although City National Bank, like many other banks in this region, has experienced some increase in its nonperforming loans, after a thorough and recent review of its loan portfolio and continued monitoring by its outside auditors, Price Waterhouse, the board expressed every confidence that this tragic occurrence was unrelated to the operations of the bank and that the bank would continue to operate normally."

"We were concerned for the family, but wanted to reassure the customers," Lewis later said. "It was obvious people would have those questions."

The board appointed Thomas F. Kyhos, a 43-year-old lawyer and investment banker, to take Nelson's place as president and chief executive of City National. Kyhos does not dismiss the financial problems the struggling bank faces, but said they are being addressed and that he expects the bank to survive as an independent entity.

Kyhos and other affiliated investors bought developer Jeffrey Cohen's stake in the bank last spring. Unlike Cohen, other investors in City National Bank have been unable to sell their stock.

Several investors tried to bail out recently by offering their shares, according to Lewis Sosnowik, vice president of Rockville-based Koonce Securities. Although they were willing to take losses, there were no buyers for their shares, he said.

After Nelson's death, the bank called in both federal banking regulators and its own auditors.

While the final audits are not complete, Kyhos said he has been assured by the auditors that there were no hidden problems at the bank.

Now, Kyhos said he has set about to protect the capital of the bank by improving loan quality and reducing overhead. Kyhos has moved offices, including his own, to the basement of the bank's Dupont Circle building and plans to cut 30 percent of his office expenses by subletting the second floor of the bank's offices. And the salaries of the bank's 13 employees have been frozen, he said.

"On the issue of capital, we're in fine shape," said Kyhos, adding that board members and outside investors have said they are willing to put up more capital if necessary. He declined to name those who said they would invest in the bank.

Kyhos said C. James Nelson "was a great guy and a great banker, but no one will ever know what was in his mind."

Shortly before his death, Nelson told a close friend in the banking community that in more than 30 years in the banking industry, he had never seen business so bad.

What's more, the friend said, "he didn't see it ending. He just saw no hope of it ending."

Staff writer Veronica T. Jennings contributed to this report.