Bank One Corporation


Bank One Corporation was an American bank founded in 1968 and at its peak the sixth-largest bank in the United States. It traded on the New York Stock Exchange under the stock symbol ONE. The company merged with JPMorgan Chase & Co. on July 1, 2004, with Bank One CEO Jamie Dimon soon becoming CEO and Chairman of the combined company but under JPMorgan Chase branding. The company had its headquarters in the Bank One Plaza in the Chicago Loop in Chicago, Illinois, now the headquarters of Chase's retail banking division.
Bank One traces its roots to the merger of Illinois based First Chicago NBD, and Ohio-based First Banc Group, a holding company for the City National Bank in Columbus, Ohio.

History

First Banc Group

The First Banc Group, Inc. was formed in 1968 as a holding company for City National Bank and was used as a vehicle to acquire other banks. As Ohio began to gradually relax its very restrictive Great Depression era banking laws that had severely restricted bank branching and ownership, City National Bank, through its First Banc Group parent, started to purchase banks outside of its home county. The first acquisition by the new bank holding company was the 1968 acquisition of the Farmers Saving & Trust Company in Mansfield, Ohio. With each acquisition, new member banks kept their name, employees, and management while obtaining new resources from the parent holding company. This is very important when the bank holding company was expanding into primarily rural and extremely conservative markets.
In 1971, First Banc acquired Security Central National in Portsmouth, Ohio.
Initially, Ohio law did not permit bank mergers across county lines but allowed bank holding companies to own multiple banks across the state with some geographical restrictions. The newly acquired banks had to maintain their existing banking charters while each bank had to operate separately. Holding companies also were not allowed to have the word "bank" in their names so the word "banc" was used in its place.

Expansions by Banc One

Expansion in central Ohio by Banc One Corp.

Although Ohio law still had restricted bank mergers outside a certain geographic area, the holding company management decided to unify the marketing efforts of its member banks by having all of its members banks adopt similar names. In October 1979, First Banc Group, Inc. became Banc One Corporation, and each member bank became Bank One followed by the city or the geographic area that the member bank served. For example, City National Bank was renamed Bank One Columbus, Security Central National Bank became Bank One Portsmouth, and Farmers Saving & Trust Company became Bank One Mansfield.
In 1980, Banc One acquired banks in Painesville, Ohio, Akron, Ohio, and Youngstown, Ohio.
Winters National Bank in Dayton, Ohio, was acquired in 1982 and renamed Bank One Dayton. The merger with Winters National Corporation brought into the Bank One organization 42 Winters National Bank & Trust Co. branch offices in the greater Dayton area, a branch in Cincinnati and three offices in Circleville. Also added were 21 Euclid National Bank branch offices in the Cleveland area which were renamed Bank One Cleveland.

Early expansion outside Ohio

With the change in federal and state banking laws in 1985, Banc One began to rapidly expand outside of Ohio. Its first out-of-state acquisition was of Purdue National Bank in Lafayette, Indiana, which occurred just after the new laws went into effect. This bank was renamed Bank One Lafayette. This merger was quickly followed by the purchase of other small banks in Indiana and Kentucky, the only states that initially allowed bank purchases by Ohio-based banks.
The bank entered Kentucky by acquiring Citizens Union National Bank & Trust Co. of Lexington, Kentucky, in 1986. This bank was renamed Bank One Lexington.
Banc One acquired the Merrillville, Indiana–based Bank of Indiana and rename it Bank One Merrillville in early 1986. This was quickly followed by acquisitions in Marion, Indiana, Crawfordsville, Indiana, Rensselaer, Indiana and Richmond, Indiana.
The first major merger that had an effect on the management of the holding company occurred in 1986 with the acquisition of Indianapolis-based American Fletcher Corporation, a multi-bank holding company, with its lead bank, American Fletcher National Bank & Trust Company, which resulted in giving 20% of the voting stock in the new company to the former managers of American Fletcher and also had Frank E. McKinney, Jr., the head of American Fletcher, replaced John B. McCoy as president of Banc One Corp. and moved McCoy up to chairman of the combined organization. Another change made in the corporate organization was the formation of a two-tiered management system with the formation of statewide holding companies that were placed in between the regional member banks and the ultimate Banc One parent holding company. So, in Indiana, American Fletcher Corporation became Indianapolis-based Banc One Indiana and all member banks in Indiana, such as Bank One Lafayette, which previously reported directly to the main parent in Columbus, reported to management in Indianapolis instead. The merger resulted in a $597.3 million swap of stock.
The merger with American Fletcher Corp. also brought along four small banks that American Fletcher had just recently acquired or was in the process of acquiring. These banks included Citizens Northern Bank of Elkhart, Carmel Bank & Trust Co., First American National Bank of Plainfield, and Union Bank & Trust Co. of Franklin. Under Indiana law at that time, American Fletcher was not permitted to merge these banks into its main American Fletcher National Bank.
The First National Bank of Bloomington in Bloomington, Indiana, was acquired in 1987. This bank became Bank One Bloomington. With the acquisition of the Bloomington-based bank, Banc One temporarily ceased further acquisitions in the state in Indiana since they had reached that state's cap of the percentage of ownership within that state at that time.

Early expansion into Michigan

Bank One expanded into the state of Michigan in late 1986 by acquiring the Citizens State Bank in Sturgis, Michigan, and convert it into Bank One Sturgis. Within a few months of the Sturgis acquisition, additional acquisitions were quickly made in East Lansing, Michigan, Fenton, Michigan and Ypsilanti, Michigan a few months later.
Seven years later, Citizens Banking Corp. announced in September 1994 that they were acquiring all four Michigan banks in East Lansing, Fenton, Sturgis, and Ypsilanti from Banc One for $115 million. The divestiture was completed in February 1995.
The Bank One brand did not return to Michigan until the 1998 merger with First Chicago NBD which resulted in the rebranding of the former NBD offices.

Expansion into Wisconsin

Banc One's first acquisition in a state that did not share a common border with the state of Ohio occurred in 1987 with the acquisition of Marine Corporation, the third-largest bank holding company in Wisconsin, after First Wisconsin Corporation and Marshall & Ilsley Corporation. The result of this merger brought into organization 21 banks and 76 offices in Wisconsin with Marine Corp. being renamed Banc One Wisconsin Corp. and each of the subsidiary Marine Banks were renamed Bank One along their respective affiliated geographical based name. The lead bank, Marine Bank, N.A., became Bank One Milwaukee. The merger came about Marine was trying to resist an unwanted acquisition attempt by Marshall & Ilsley that was initiated in June 1987 which would have resulted in massive firings.
Prior to the unwanted overtures by Marshall & Ilsley, Marine went on a buying spree as soon as Wisconsin and surrounding states started loosening their restrictive bank branching and ownership laws and Marine had recently purchased banks throughout Wisconsin and most recently had purchased a bank with three branch offices in the state of Minnesota and another bank in the state of Illinois just a few months before. In late December 1986, Marine entered the Chicago market by initiating the purchase of the American branch of the Italian bank Banco di Roma, which was renamed Marine Bank Chicago. Since Minnesota and Illinois forbade the bank ownership by companies based in Ohio, Marine had to sell those banks before the merger was permitted to proceed. The Minnesota banks were sold to First Bank System while the Chicago bank was sold to a lawyer with the understanding that Banc One wanted the Chicago bank back as soon as the Illinois banking laws would permit ownership by Ohio-based companies, which eventually happened in December 1990. The lawyer was able to sell the bank back to Banc One within two years at a substantial profit.

Expansion into Texas

Banc One entered the state of Texas in 1989 through the acquisition of a number of failed banks that were seized by the Federal Deposit Insurance Corporation as a result of the late 1980s banking crises in Texas that was caused by the defaulting of a large number of real estate and energy sector loans when energy prices dropped and large numbers of people lost their jobs as a result. Although Banc One could obtain failed banks at a discount that were subsidized by the Federal government, they could also be stuck with loans in which borrowers could later default on if the economic crises worsen.
The first banks to be acquired were 20 banks that were formerly owned by MCorp, which the FDIC had consolidated into a single bank that they named the Deposit Insurance Bridge Bank. The FDIC had seized the banks in March 1989. The failure of 20 of MCorp's 24 banks cost the FDIC $2.8 billion. MCorp was the second largest bank holding company in Texas at the time of its failure. MCorp was formed in 1984 through the merger of Mercantile National Bank of Dallas with Bank of the Southwest of Houston with Mercantile becoming MBank Dallas and Southwest becoming MBank Houston.
After the acquisition, the Deposit Insurance Bridge Bank became Bank One Texas with Banc One Texas formed as the state holding company. Banc One brought in managers from other parts of the Banc One organization to correct mistakes which led to the insolvency, though they kept on a few key MCorp staff whose leadership and connections were considered crucial to the transformation. Laws were changed in Texas that would allow Banc One, and other purchasers of failed banks, to operate a single bank statewide instead of being restricted by narrow geographical regions.
The next acquisition that occurred in Texas was the purchase of the failed Bright Banc Savings a few months later from the Resolution Trust Corporation in 1990. This failed savings and loan association cost the federal government $1.4 billion. The 48 former branch offices were integrated into Bank One Texas, which had 63 branch offices at that time. The following year, Banc One acquired 13 Houston-area offices of the failed Benjamin Franklin Savings from the RTC for $36 million.
In 1992, Banc One acquired Team Bancshares of Dallas, a company that was formed by a private investor group in 1988 to acquire failed and weak Texas banks, for $782 million in Banc One stock. The acquisition of Team Bank brought 56 branches into Banc One Texas, which then had 146, though a few branches needed to be closed because of branch overlaps. After this acquisition, Bank One Texas remained as the next largest bank in the state after NationsBank. The acquisition of Team Bancshares was unusual in Texas during this period since Team was making a profit at the time of sale.