First Chicago Bank

First Chicago Bank
Company type	Public
Industry	Banking, Financial services
Predecessor	The First National Bank of Chicago
Founded	July 1, 1863; 163 years ago in Chicago, Illinois, United States
Founder	Edmund Aiken
Defunct	1998
Fate	Merged with Banc One Corporation to form Bank One Corporation
Successor	Bank One Corporation
Headquarters	Chicago, United States
Area served	United States
Key people	Barry F. Sullivan (CEO, 1980s), John Canning Jr.
Products	Banking, Credit cards, Financial services

First Chicago Bank, established in Chicago in 1863 by Edmund Aiken, was among the earliest banks to receive a charter under the National Bank Act. Throughout its history, it operated under various names, such as The First National Bank of Chicago and, following its 1995 merger with the National Bank of Detroit, First Chicago NBD. In 1998, it combined with Banc One Corporation, leading to the creation of Bank One Corporation, which has since become part of Chase.

Origins and Early Development

On July 1, 1863, Edmund Aiken and his associates invested $100,000 to launch The First National Bank of Chicago, designated as charter No. 8 under the National Banking Act. The institution expanded steadily during the American Civil War by providing financial support.

The bank grew through mergers with Union National Bank in 1900 and Metropolitan National Bank in 1902. Notable early investors included prominent figures such as J. Pierpont Morgan, James Stillman, Jacob H. Schiff, E. H. Harriman, and Marshall Field. In 1913, it became a charter member of the Federal Reserve System and weathered the Great Depression by acquiring Foreman State Banks in 1931 and promptly reopening following the 1933 National Bank Holiday.

In 1903, First Trust and Savings Bank was established to serve retail savings customers; it later merged with Union Trust Company in 1928 to form First Union Trust and Savings Bank. During the Great Depression era, these operations were absorbed by First Chicago. The bank played an active role in promoting War Bonds during World War II and broadened its reach domestically and abroad during the 1950s and 1960s with offices opening in London (1959), Tokyo (1962), and Beijing (1980).

First Chicago Era

In 1969, a restructuring led to the creation of First Chicago Corporation, a bank holding company with the bank as its main subsidiary. That same year marked the debut of the First Chicago brand along with a relocation to a new skyscraper in Chicago's Loop—originally named First National Plaza and now known as Chase Tower. The bank experienced steady growth throughout the early 1970s; however, this expansion came at the cost of weakened underwriting standards. By 1975–76, non-performing loans had escalated to approximately 11%, which was twice the national average for commercial banks. Efforts to rectify this situation were unsuccessful, resulting in financial difficulties for First Chicago during the late 1970s due to risky interest rate speculation.

Illinois legislation at that time limited branch banking expansion and prohibited holding companies from owning multiple banks. Consequently, First Chicago opened its initial branch only in 1977 when regulations permitted two limited branches within a radius of 1,500 feet from the main office.

Following a change in Illinois law in 1981 that allowed holding companies to possess multiple banks, First Chicago waited two years before pursuing acquisitions. In 1984, it purchased American National Corporation—the parent company of American National Bank and Trust Company of Chicago—from Walter E. Heller International Corporation for $275 million, thereby enhancing its position within the Loop banking market.

Leadership

During the 1980s, CEO Barry F. Sullivan, formerly associated with Chase Manhattan Bank, orchestrated a successful recovery for First Chicago. The bank’s private equity division gained recognition as a fertile ground for independent venture creation. Stanley Golder, who had developed this division during the 1970s, departed in 1980 to establish GTCR. In the following decade, under John Canning Jr., members of this group spun off to form private equity firm Madison Dearborn. Additionally, Midwestern private equity firm Primus Capital traces its origins back to alumni from First Chicago.

Growth beyond downtown Chicago into suburban areas

First Chicago broadened its reach into the northwest suburbs of Chicago in 1987 by acquiring First United Financial Services, a holding company headquartered in Arlington Heights that controlled five banks. The subsequent year, the bank expanded its presence in DuPage County through the purchase of Gary-Wheaton Corp., another bank holding entity.

In 1989, First Chicago completed the acquisition of Ravenswood Financial Corp. for $55.1 million, subsequently rebranding its sole banking operation as First Chicago Bank of Ravenswood. That same year, it also acquired Winnetka Bank for $21.6 million in stock.

By 1993, First Chicago further extended its footprint by buying Lake Shore Bancorp, a bank holding company based in Chicago, for $323 million.

Due to Illinois regulations limiting bank mergers until as late as 1993, most of these acquired banks operated under the name First Chicago Bank of followed by their respective locations.

Credit card operations

To strengthen its credit card division, First Chicago purchased Beneficial National Bank USA, based in Delaware, in 1987 and renamed it FCC National Bank. This $247 million acquisition expanded First Chicago’s Visa and MasterCard loan portfolio by nearly 33%, bringing it to approximately $4.4 billion distributed across four million cards. The Delaware charter offered regulatory benefits since the state did not impose caps on credit card interest rates or annual fees. At that time, First Chicago ranked as the fifth-largest issuer of charge cards in the United States.

Formation of Bank One

During the early 1990s, First Chicago encountered difficulties related to loan quality and sought a merger with the National Bank of Detroit (NBD), which was then ranked as the 18th largest U.S. bank. The $5 billion transaction, completed in 1995, resulted in the creation of First Chicago NBD Corporation, which became the seventh-largest bank nationwide with $72 billion in assets and a robust credit card portfolio. Although NBD was technically the surviving entity, the corporate headquarters remained located in Chicago.

In April 1998, First Chicago NBD combined with Banc One Corporation from Columbus, Ohio—a significant credit card issuer through its First USA division. This $30 billion merger led to the establishment of Bank One Corporation, headquartered in Chicago. By 1999, both the First Chicago and NBD brand names were phased out. In 2004, Bank One merged into JPMorgan Chase & Co., with its banking operations absorbed into JPMorgan Chase Bank, National Association.

Additional information

Lyman J. Gage, who served as both bank president and Secretary of the Treasury under Presidents William McKinley and Theodore Roosevelt, began his career at the institution as a cashier.
In 1882, The First established a dedicated women's banking department aimed at attracting female clientele.
The First introduced the first corporate pension plan offered by any U.S. bank in 1899.

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