First Chicago Bank

First Chicago Bank was a historic American retail and commercial banking institution headquartered in Chicago, Illinois. Its origins date to July 1, 1863, when banker Edmund Aiken and his associates invested $100,000 to establish a federally chartered bank under the newly enacted National Banking Act. The institution received National Bank charter No. 8 and began operating as The First National Bank of Chicago. It financed commercial activity in the rapidly developing Midwest and provided financing connected with the Union war effort during the American Civil War. The bank expanded through mergers and the creation of affiliated institutions. It combined with Union National Bank in 1900 and Metropolitan National Bank in 1902. In 1903, it established First Trust and Savings Bank to serve individual savers; that institution later combined with Union Trust Company and eventually had its customers and operations absorbed by the main bank during the Great Depression. The First also introduced several notable institutional innovations. It opened what is described as the first banking department for women in the United States in 1882 and established a corporate pension plan in 1899. In 1913, it became a charter member of the Federal Reserve System. The institution survived the economic crises of the early twentieth century, including the Great Depression. It acquired Foreman State Banks in 1931 and was able to reopen without regulatory delays after the 1933 national bank holiday. During the Second World War, it supported the sale of war bonds. In the postwar period, the bank broadened its Midwestern presence and developed an international network, opening offices in London in 1959, Tokyo in 1962, and Beijing in 1980. In 1969, the bank became the principal subsidiary of a new bank holding company, First Chicago Corporation. “First Chicago” increasingly became the public-facing brand, and the institution moved into a prominent Loop skyscraper originally called First National Plaza, now known as Chase Tower. The bank’s expansion in the 1970s was accompanied by deterioration in underwriting quality. By late 1975 and early 1976, non-performing loans were reported at roughly 11 percent of loans, about twice the national average for commercial banks. Speculative interest-rate positions and continuing credit problems created a prolonged restructuring challenge. Illinois banking restrictions limited the institution’s ability to expand through branches and multiple-bank holding companies. It opened its first branch banking facilities in 1977 and began a more active acquisition program after state law changed in 1981. Major transactions included the 1984 purchase of American National Corporation, the 1987 acquisition of First United Financial Services and Beneficial National Bank USA, the 1988 purchase of Gary-Wheaton Corp., and further acquisitions in the Chicago area through the early 1990s. Beneficial National Bank USA was renamed FCC National Bank and strengthened the group’s credit-card business. Chief executive Barry F. Sullivan helped improve the bank’s condition during the early 1980s. First Chicago also developed a significant private-equity operation, whose alumni later helped establish independent firms including GTCR and Madison Dearborn. Nevertheless, renewed loan-portfolio problems in the early 1990s led the bank to seek a strategic merger. In 1995, First Chicago merged with NBD Bank in a transaction valued at approximately $5 billion, forming First Chicago NBD Corporation. The combined company was headquartered in Chicago, had approximately $72 billion in assets, and became a major credit-card issuer. In April 1998, First Chicago NBD announced a merger with Banc One Corporation of Columbus, Ohio. The transaction created Bank One Corporation, headquartered in Chicago, and the First Chicago and NBD names were retired in 1999. Bank One later merged with JPMorgan Chase & Co. in 2004, bringing the institution’s successor bank in…

First Chicago Bank originated during the creation of the United States national banking system. On July 1, 1863, Edmund Aiken and his partners founded a federally chartered bank with $100,000 in capital. It received charter No. 8 under the National Banking Act and operated as The First National Bank of Chicago. The institution financed business activity in Chicago and the Midwest and participated in financing associated with the Union during the Civil War. The bank grew through a combination of organic expansion, mergers, and affiliated institutions. It merged with Union National Bank in 1900 and Metropolitan National Bank in 1902. Its early twentieth-century investors included prominent figures such as J. Pierpont Morgan, James Stillman, Jacob H. Schiff, E. H. Harriman, and Marshall Field. The First became a Federal Reserve charter member in 1913. It remained open through the Depression-era banking crisis, acquired Foreman State Banks in 1931, and reopened without regulatory delay after the 1933 national bank holiday. Its consumer and trust businesses developed alongside commercial banking. First Trust and Savings Bank was created in 1903 and later combined with Union Trust Company. During the Depression, its operations and customers were absorbed into the main institution. The bank also introduced a women’s banking department in 1882 and a corporate pension plan in 1899. It supported the sale of war bonds during the Second World War. After 1945, First Chicago expanded across the Midwest and internationally. It opened offices in London in 1959, Tokyo in 1962, and Beijing in 1980. In 1969, a holding-company structure was created under First Chicago Corporation, and the First Chicago name became increasingly prominent. The bank moved into First National Plaza in Chicago’s Loop, a building later known as Chase Tower. Growth in the 1970s exposed weaknesses in credit underwriting. Non-performing loans reached about 11 percent of loans by late 1975 and early 1976, approximately twice the national average for commercial banks. The institution also faced losses and instability associated with speculative interest-rate positions. Illinois restrictions on branch banking and multi-bank holding companies constrained its ability to respond through geographic expansion. Limited branch facilities became possible in 1977, while broader acquisition opportunities emerged after legislative changes in 1981. First Chicago then pursued acquisitions in and around Chicago. It purchased American National Corporation in 1984, First United Financial Services in 1987, Gary-Wheaton Corp. in 1988, Ravenswood Financial Corp. and Winnetka Bank in 1989, and Lake Shore Bancorp in 1993. It also acquired Beneficial National Bank USA in 1987 and renamed it FCC National Bank, reinforcing its credit-card operations. Many acquired institutions initially retained geographically specific First Chicago names because Illinois law delayed the consolidation of separately chartered banks. Barry F. Sullivan, a former Chase Manhattan banker, led a turnaround during the early 1980s. First Chicago’s private-equity activities were also influential: Stanley Golder later founded GTCR, while John Canning Jr. and colleagues eventually formed Madison Dearborn. These developments gave the bank an important, if indirect, role in the growth of private-equity firms associated with the Midwest. Loan-quality problems returned in the early 1990s, prompting a strategic merger with Detroit-based NBD Bank. Completed in 1995, the approximately $5 billion transaction formed First Chicago NBD Corporation. The combined company was headquartered in Chicago, reported approximately $72 billion in assets, and became a significant issuer of credit cards. In 1998, First Chicago NBD announced a roughly $30 billion merger with Banc One Corporation. The resulting Bank One Corporation retired the First Chicago and NBD names in 1999. Bank One subsequently merged with JPMorgan Chase & Co. in 2004, completing the principal corporate succession of the First Chicago banking franchise.

1. 2004Bank One joins JPMorgan Chase

   Bank One Corporation merged into JPMorgan Chase & Co., bringing First Chicago’s principal successor into JPMorgan Chase.

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2. 1998Merger agreement with Banc One

   First Chicago NBD announced a major merger with Banc One Corporation, producing Bank One Corporation.

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3. 1995Merger with NBD Bank

   The approximately $5 billion merger created First Chicago NBD Corporation.

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4. 1984American National Corporation acquired

   First Chicago bought the holding company for American National Bank and Trust Company of Chicago for $275 million.

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5. 1977First limited branch facilities opened

   Changes in Illinois banking rules permitted First Chicago to open its first limited branch banking facilities.

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6. 1969First Chicago Corporation formed

   The bank became the primary subsidiary of a new bank holding company and adopted First Chicago as its principal public brand.

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7. 1913Federal Reserve charter member

   The First joined the Federal Reserve System as a charter member.

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8. 1903First Trust and Savings Bank established

   The bank created an affiliated savings institution for individual customers.

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9. 1900Merger with Union National Bank

   The First expanded through a merger with Union National Bank.

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10. 1899Corporate pension plan

    The bank established a corporate pension plan, described as the first of its kind among United States banks.

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11. 1882Women’s banking department

    The First opened a banking department intended to attract and serve female customers.

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12. 1863Founding under the National Banking Act

    Edmund Aiken and partners established the federally chartered First National Bank of Chicago, which received National Bank charter No. 8.

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A major Chicago-centered bank serving commercial enterprises, consumers, institutional clients, and later credit-card customers, with a strong Midwestern identity and an expanding international network.

• Commercial bankingCommercial banking1863

  Commercial and corporate lending formed the institution’s historical core. First Chicago financed businesses in Chicago and the Midwest, supported institutional customers, and developed a substantial network of domestic and international offices. Credit-quality problems in the 1970s and early 1990s became important strategic pressures on the bank.

• Retail and savings bankingRetail banking1903

  The bank served individual customers through deposit and savings services. First Trust and Savings Bank, established in 1903, was an important affiliated retail institution before its customers and operations were absorbed during the Depression. Later Illinois acquisitions expanded First Chicago’s retail footprint beyond downtown Chicago.

• Trust servicesTrust and investment services1903

  Trust and savings activities were provided through First Trust and Savings Bank and its successor combination with Union Trust Company. These services complemented the bank’s commercial relationships and broadened its role beyond lending and deposits.

• FCC National Bank credit cardsCredit cards1987

  First Chicago acquired Delaware-based Beneficial National Bank USA in 1987 and renamed it FCC National Bank. The transaction was intended to strengthen the group’s credit-card business, which later became one of the combined First Chicago NBD organization’s notable areas of activity.

• Private-equity activitiesAlternative investments

  First Chicago operated a successful private-equity group that functioned as an incubator for investment professionals and later independent firms. Alumni associated with the operation included Stanley Golder, who founded GTCR, and John Canning Jr., who helped establish Madison Dearborn.

• War bond sales

  United States

  During the Second World War, the bank participated in the sale of war bonds as part of the national wartime financing effort.

  Outcome. The bank supported the United States war-bond program; the cited material does not quantify its sales or financial impact.

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• 1998Merge with Banc One CorporationM&A

  First Chicago NBD pursued another scale-building combination with Banc One, a large Ohio-based banking company and credit-card operator.

  What changed. The companies announced a merger valued at approximately $30 billion and created Bank One Corporation, headquartered in Chicago.

  Aftermath. The First Chicago and NBD names were retired in 1999. Bank One later became part of JPMorgan Chase in 2004.

  Announced merger value. (1998)

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• 1995Merge with NBD BankM&A

  First Chicago was again experiencing problems with the quality of its loan portfolio and sought a larger strategic combination.

  What changed. It completed an approximately $5 billion merger with NBD Bank, creating First Chicago NBD Corporation.

  Aftermath. The combined institution ranked among the largest United States banks, was headquartered in Chicago, and became a major credit-card issuer.

  Transaction value. (1995)

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• 1987Acquire Beneficial National Bank USAM&A

  First Chicago wanted to expand and strengthen its credit-card operations.

  What changed. The bank acquired the Delaware institution and renamed it FCC National Bank.

  Aftermath. Credit cards became an important business line and later contributed to the scale of First Chicago NBD’s consumer-finance operations.

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• 1969Reorganize under a bank holding companyStrategy

  The institution sought a modern corporate structure and a platform for expansion beyond its traditional single-bank format.

  What changed. First Chicago Corporation was created, with the bank as its principal subsidiary; First Chicago became the prominent operating brand.

  Aftermath. The holding-company structure supported later acquisitions and geographic expansion, although the bank subsequently faced serious loan-quality problems.

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• 1998First Chicago NBD announces merger with Banc One

  The announced combination with Banc One Corporation created Bank One Corporation and ended the independent First Chicago identity.

  M&ALeadership change
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• 1995First Chicago and NBD Bank complete their merger

  The approximately $5 billion combination created First Chicago NBD Corporation, a large Chicago-based banking organization.

  M&A
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• 1987First Chicago acquires Beneficial National Bank USA

  The Delaware bank was acquired and renamed FCC National Bank to strengthen First Chicago’s credit-card business.

  M&AProduct generation
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• 1984First Chicago acquires American National Corporation

  The bank purchased the holding company for American National Bank and Trust Company of Chicago.

  M&A
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• 1969First Chicago Corporation is established

  The bank was reorganized as the principal subsidiary of a new bank holding company, and First Chicago became its principal brand.

  Other
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• 1913The First becomes a Federal Reserve charter member

  The bank joined the Federal Reserve System as one of its charter members.

  Regulation
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• 1863First Chicago receives National Bank charter No. 8

  Edmund Aiken and his partners founded the federally chartered institution that became The First National Bank of Chicago.

  Other
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1. First Chicago Bank