First Chicago Bank
|First Chicago Bank|
|Bank Holding Company|
|Traded as||NYSE: FNB|
|Fate||Merged with Banc One Corporation|
|Predecessor||First National Bank of Chicago|
|Barry Sullivan (CEO)|
First Chicago Bank was a Chicago-based retail and commercial bank tracing its roots back to 1863. Over the years, the bank operated under several names including The First National Bank of Chicago and First Chicago NBD (following its 1995 merger with the former National Bank of Detroit). In 1998, First Chicago NBD merged with Banc One Corporation to form Bank One Corporation, today a part of Chase.
Founding and early history
On July 1, 1863, banker Edmund Aiken and his partners invested $100,000 to found a new federally chartered bank that could take advantage of the National Banking Act of 1863, which allowed national banks to exist along with state-chartered institutions for the first time. First Chicago received National Bank charter No. 8. The new bank known as The First National Bank of Chicago, or The First, grew steadily in the 1860s, financing the American Civil War.
The First merged with Union National Bank in 1900 and with the Metropolitan National Bank in 1902. At the beginning of the twentieth century, noted investors in the bank include J. Pierpont Morgan, James Stillman, Jacob H. Schiff, E. H. Harriman, and Marshall Field. In 1913, The First became a charter member of the Federal Reserve system. The First survived the depression, even acquiring Foreman State Banks in 1931 and was able to open its doors without regulatory delays following the National Bank Holiday of 1933.
In 1903, the First opened the First Trust and Savings Bank which provided savings accounts to individual customers. First Trust and Savings Bank merged with Union Trust Company in 1928 to become the First Union Trust and Savings Bank. During the Great Depression, the First would absorb First Union Trust and Savings Bank’s customers and operations. The bank was active in the sale of War Bondsduring World War II. During the 1950s and 1960s the First expanded both in the Midwestern US as well as abroad, opening offices in London (1959), Tokyo (1962) and later Beijing (1980).
In 1969 the bank was reorganized as the primary subsidiary of the new First Chicago Corporation, a newly formed bank holding company. First Chicago was used as a brand name starting in 1969 and the bank moved into a new skyscraper in the Loop in Chicago. The bank grew consistently through the early 1970s, however, the bank’s growth undermined its underwriting standards. By the end of 1975 and the beginning of 1976, non-performing loans at First Chicago had reached twice the national average for commercial banks at roughly 11% of all loans. Efforts to fix the bank failed and the bank struggled through the end of the 1970s, suffering from highly speculative bets on interest rates.
Expansion beyond a single retail banking location was hindered for years by the Illinois state legislature with Illinois being one of the last states to allow branch banking. Illinois also did not allow holding companies to own more than one bank. First Chicago was not allowed to open its first branch bank until 1977, when banks were allowed to open two limited banking facilities within 1,500 feet of the main office.
Unlike its rivals, First Chicago waited two years before making its first bank purchase after the Illinois legislature began to allow holding companies to own more than one bank in 1981. In 1984, First Chicago purchased American National Corporation, the holding company for American National Bank and Trust Company of Chicago, another bank located in the Loop, from Walter E. Heller International Corporation for $275 million.
During the 1980s, CEO Barry F. Sullivan, formerly with Chase Manhattan Bank, was able to turn around the bank in the early 1980s. Additionally First Chicago’s private equity operations proved highly successful and served the incubator for a number of successful independent private equity groups. Stanley Golder, who built the group in the 1970s left the bank in 1980 to found GTCR. In the 1990s, the team, led by John Canning, Jr. would spin out of First Chicago to form private equity firm Madison Dearborn. Midwestern private equity firm, Primus Capital was also founded by First Chicago private equity alumni.
Expanding out of downtown and into the suburbs
First Chicago began to expand for the first time into the northwest suburbs of Chicago with the acquisition of the Arlington Heights-based First United Financial Services, a bank holding company with five banks, in 1987. The following year, First Chicago entered DuPage County by acquiring Gary-Wheaton Corp., another bank holding company.
In 1989, First Chicago acquired the north Chicago-based Ravenswood Financial Corp. for $55.1 million. Ravenswood Financial’s only bank was renamed First Chicago Bank of Ravenswood. First Chicago also acquired the Winnetka-based Winnetka Bank for $21.6 million in stock.
In 1993, First Chicago acquired Lake Shore Bancorp, another Chicago-based bank holding company, $323 million.
Most of the acquired banks were named First Chicago Bank of followed by the name of the geographical location. Illinois law did not permit the merger of most of the acquired banks into the First National Bank of Chicago until as late as 1993.
First Chicago once again began to suffer from the quality of its loan portfolio in the early 1990s and sought out a merger with the National Bank of Detroit, which at the time was the 18th largest bank in the US (First Chicago was the 10th largest bank). The $5 billion merger created the 7th largest bank in the US with $72 billion of assets, and was also a leader in the issuance of credit cards. In April 1998 First Chicago NBD announced a $30 billion merger with Banc One Corporation, a bank holding company headquartered in Columbus, Ohio, that was also a leading issuer of credit cards through its First USA division. Following the merger the company was renamed Bank One Corporation with headquarters in Chicago, Illinois. In 2004, Bank One Corporation merged into JPMorgan Chase & Co. and its subsidiary bank, then named Bank One, National Association, merged into JPMorgan Chase Bank, National Association.
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- Lyman J. Gage – Secretary of the Treasury under William McKinley and Theodore Roosevelt was a former bank president, who ascended the organization after beginning as a cashier
- In 1882, The First became the first bank to open a women’s banking department, to attract female customers.
- In 1899, The First established a corporate pension plan, the first bank to do so in the U.S.
- Bank One Corporation
- JPMorgan Chase
- Chase (bank)
- Madison Dearborn
- National Bank of Detroit (NBD)
- Waid Vanderpoel
- “The History of JPMorgan Chase & Co.: 200 Years of Leadership in Banking” (PDF). JPMorgan Chase & Co. 2008. p. 4.
- Knoch, Joanne (June 30, 1963). “1st National 100 Years Old”. Chicago Tribune. p. E1. (Subscription required (help)).Alternate Link via ProQuest.
- Wilson, Mark R. (2005). “First National Bank of Chicago”. In Grossman, James R.; Keating, Ann Durkin; Reiff, Janice L. Encyclopedia of Chicago.
- “Bank One Corporation History”. FundingUniverse.
- “Two Banks to Be Merged: Plan to Consolidate First And Union National”. Chicago Daily Tribune. May 31, 1900. p. 5. (Subscription required (help)). Alternate Link via ProQuest.
- “Unite to Form $100,000,000 Bank”. Chicago Daily Tribune. April 22, 1902. p. 1. (Subscription required (help)). Alternate Linkvia ProQuest.
- Clark, William (February 5, 1969). “First National Maps Holding Firm”. Chicago Tribune. p. E1. Alternate Link via ProQuest.
- Grubber, William (January 21, 1977). “1st National to open 2 branches”. Chicago Tribune. p. C7 Alternate Link via ProQuest.
- Gruber, William & Barnhart, Bill (June 21, 1981). “Bank rush could be in offing”. Chicago Tribune. p. W5. Alternate Linkvia ProQuest.
- Cole, Robert J. (August 10, 1983). “Heller to Sell American National to First Chicago”. New York Times.
The Walter E. Heller International Corporation said yesterday that it had signed a letter of intent to sell its American National Corporation, owner of the American National Bank and Trust Company, to the First Chicago Corporation, owner of the First National Bank of Chicago, for $275 million.
- Gruber, William (September 18, 1983). “Illinois has own financial version of ‘Jaws'”. Chicago Tribune. pp. F1–F2.Alternate Link via ProQuest.
- Gruber, William (March 18, 1984). “First National’s turnaround enters new phase”. Chicago Tribune. pp. N1–N2. Alternate Link via ProQuest.
- “Fund Venture Begun in Chicago”. New York Times. January 7, 1992.
- Cohen, Laurie (January 28, 1987). “First Eyes Bank Chain In Suburbs”. Chicago Tribune.
- “Gary-wheaton Acquisition”. Chicago Tribune. February 11, 1988.
- “First Chicago In Acquisition”. New York Times. November 25, 1987.
- Winter, Christine (April 26, 1989). “1st Chicago Buying Ravenswood Bank”. Chicago Tribune.
- “First Chicago Corp. has agreed to acquire The Winnetka..”Chicago Tribune. May 25, 1989.
- Stangenes, Sharon (November 22, 1993). “First Chicago Is Buying Lake Shore”. Chicago Tribune.
- Schmeltzer, John (January 16, 2004). “Illinois laws curbed banks’ size, scope”. Chicago Tribune.
- Bailey, Jeff & Hays, Laurie (January 2, 1987). “First Chicago To Buy a Bank For $247 Million — Acquiring Beneficial Unit Would Allow Expansion Of Credit Card Business”. Wall Street Journal (Eastern ed.). p. 1. (Subscription required (help)).
First Chicago Corp. moved to expand its profitable credit card operations with an agreement to buy a Delaware bank, which has $1 billion in credit card loans, from Beneficial Corp. for $247 million. The purchase of Beneficial National Bank USA of Wilmington would expand First Chicago’s big and profitable Visa and MasterCard business by nearly a third — to about $4.4 billion in loans on about four million cards. At the same time, the move would give the Chicago-based parent company of First National Bank of Chicago a banking charter in a state that has been hospitable to credit card issuers… the Delaware bank would give First Chicago a safe haven in any event, as Delaware doesn’t regulate interest rates or annual fees on credit cards. First Chicago is the fifth-largest U.S. charge-card issuer.Alternate Link via ProQuest.
- Phillips, Stephen (January 1, 1987). “First Chicago to Buy Delaware Bank”. New York Times.
- Gruber, William (January 1, 1987). “First Buying Delaware Bank: Major Credit Card Business Is Part Of The Deal”. Chicago Tribune.
- “First Chicago Finishes Deal”. Chicago Tribune. July 7, 1987.