Photo: A U.S. Bank branch on 1st Avenue in downtown Seattle.
First Bank System Inc.
In April 1929, dozens of small banks located in the Ninth Federal Reserve District (the states of Minnesota, Montana, the Dakotas, northwestern Wisconsin and the Upper Peninsula of Michigan) formed a loose confederation called First Bank Stock Investment Corp. The purpose of the confederation was to provide mutual financial support during difficult economic times, as the Federal Deposit Insurance Corp. (FDIC) had not been created at the time. Of those that came into the First Bank federation, the two leading ones were the First National Bank of Minneapolis and the First National Bank of St. Paul, both of which were founded in 1864.
The timing of the banking confederation’s creation was fortunate, as barely six months later, the Great Stock Market Crash hit Wall Street and led to the decade-long Great Depression. In 1933, amidst a widespread panic, U.S. president Franklin Roosevelt passed an emergency act to shut down all American banks to prevent a nationwide bank run, which could easily have ruined the entire banking system. Financial inspections were carried out on all U.S. banks during the 10-day closure, and only the financially viable banks were permitted to re-open. As a testimony to their conservative management, all of First Bank Stock Investment’s subsidiary banks were found to be financially sound.
However, despite their common ownership, the First Bank banks operated independently and each bank had its own management. In the Twin Cities of Minneapolis and St. Paul, member banks actually fought fiercely and counter-productively with each other for business.
In 1954, the passing of the new Bank Holding Company Act prohibited a bank holding company headquartered in one state from acquiring out-of-state banks. However, existing multi-state banks such as First Bank were exempted from the new restriction. First Bank at the time already had operations in Montana, South Dakota, North Dakota and Minnesota.
In 1968, First Bank Stock Investment Corp. adopted the new name First Bank System. Throughout much of the latter half of the 20th century, the group’s member banks continued to fight for business individually without coordinating with each other, collectively offering hundreds of different saving and loan products, each with its own interest rate terms and features. The group’s disorganization also led to dozens of antiquated data processing systems.
Meaningful restructuring finally was carried out in the early 1990s, when major upgrades and streamlining of the computer systems and product lineup were carried out to improved efficiency, as well as to finally integrate all member banks into one network.
Firstar traces its history to 1853 when the Farmers and Millers Bank was established in Milwaukee, Wisconsin. In 1863, the bank obtained a national charter and changed its name to First National Bank of Milwaukee. In 1919, First National merged with Wisconsin National Bank to become First Wisconsin National Bank of Milwaukee. During the Great Depression, both First Wisconsin and its holding company Wisconsin Bankshares Corp. experienced severe financial difficulties but survived following a series of reorganizations. In 1960, the bank holding company was renamed First Wisconsin Bancshares Corp.
First Wisconsin’s first expansion outside of the state only became possible when legislation changes allowing inter-state banking within regional zones were passed in 1987. The new law permitted banks within the eight Midwestern states of Wisconsin, Illinois, Minnesota, Ohio, Michigan, Iowa, Indiana, Missouri and Kentucky to acquire or be acquired each other. First Wisconsin then promptly bought a bank in Illinois, followed by other purchases in Iowa and Minnesota. In 1989, to remove the impression that it is a Wisconsin-only bank, First Wisconsin renamed itself Firstar Corp.
In 1891, a group of businessmen in Oregon organized the United States National Bank of Portland. U.S. National, as the bank became commonly known, acquired rival Oregon bank Ainsworth National in 1902, then another venerable Portland bank Ladd and Tilton in 1925.
Still, by 1965, U.S. National remained a single-state bank with all 100 branches in Oregon. In 1968, reflecting new banking legislation, a holding company called U.S. Bancorp was created. U.S. Bancorp’s expansion outside of Oregon began in the 1980s when it acquired banks in Wisconsin, Utah, Colorado and Washington. In the 1990s, California became a new market for U.S. Bank when several small banks were purchased.
- In 1993, First Bank System purchased Colorado National Bancshares Inc.
- In 1994, First Bank System bought Metropolitan Financial Corp. of North Dakota for USD $863-million. Metropolitan was a multi-state bank holding company with 211 offices across the Midwest. Following the purchase, First Bank sold 60 of Metropolitan’s branches that didn’t fit the expansion plan.
- In May 1995, U.S. Bank acquired West One Bancorp of Idaho for USD $1.6-billion.
- In 1995, First Bank System acquired FirsTier Financial Inc. of Omaha, Nebraska for USD $700-million. Firstier had 63 offices in Nebraska and Iowa. It was First Bank’s 3rd purchase in Nebraska in the year; earlier in 1995, it had bought Southwest Bank and First Bank of Omaha.
- In 1996, First Bank System offered to buy Los Angeles-based First Interstate Bancorporation for USD $10-billion. But First Interstate later accepted a USD $12.3-billion offer from Wells Fargo & Co. As part of the agreement, Wells Fargo paid a USD $200-million break fee to First Bank System.
- In 1997, First Bank System of Minneapolis purchased U.S. Bancorp Inc. of Portland, Oregon, for USD $8.4-billion. First Bank System adopted the U.S. Bank name. First Bank was said to have been anxious to shed its First Bank name as the U.S. is awash with hundreds of banks with similar “First” names.
- In 1998, the new U.S. Bancorp bought investment bank Piper Jaffray Cos. Inc. for USD $730-million. But in 2003, Piper Jaffray was spun off, becoming an independent, listed company again.
- In 1998, Star Banc Corp. of Cincinnati bought Firstar Corp. of Milwaukee for USD $7.2-billion. The name Firstar was retained. Star Banc was a successor bank of the First National Bank of Cincinnati (founded in 1863). Interestingly, it’s this First National Bank of Cincinnati’s banking charter that was retained by the future U.S. Bank, and these days U.S. Bank considers its founding year to be 1863.
- In 1999, the new Firstar Corp. acquired Mercantile Bancorporation of St. Louis, Missouri, for USD $9.9-billion. Mercantile Bank had USD $36-billion in assets and operated 500 branches in Missouri, Iowa, Kansas, Illinois, Arkansas and Kentucky.
- In 2000, Firstar Corp. of Wisconsin bought U.S. Bancorp for USD $21.2-billion but decided to retain the U.S. Bancorp/ U.S. Bank names. Before the merger, First Star had 1,200 branches in 13 states and U.S. Bancorp had 1,000 branches in 16 states.
- In March 2008, U.S. Bank acquired Mellon 1st Business Bank from the Bank of New York Mellon for an undisclosed amount. Mellon 1st Business Bank had 7 branches in California with USD $2.9-billion in assets and USD $2.7-billion in deposits.
- During the Credit Crisis of 2008, U.S. Bancorp received USD $6.6-billion of TARP fund from the Federal Reserve, which was fully repaid during the summer of 2009.
- In September 2009, U.S. Bank acquired Citibank’s Diners Club Card merchant-location portfolio in Western Europe representing 75,000 merchants. U.S. Bank also gained Diners Club card’s processing and customer support business for merchants in the UK, Ireland, France, Benelux, Switzerland and Germany through a separate agreement with Discover’s Diners Club International Ltd.
- In October 2009, U.S. Bank acquired USD $850-million in deposits and 14 branches of BB&T Bank’s Nevada operations.
- In October 2009, U.S. bank acquired nine different banks that were part of the FBOP Corp. of Illinois from an FDIC-brokered transaction. U.S. Bank gained USD $18.0-billion in assets, USD $15.4-billion in deposits, and 150 branches in California, Illinois, Arizona and Texas. The nine banks acquired included: BankUSA, California National Bank, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank and Community Bank of Lemont.
- In January 2011, U.S. Bank acquired the banking operations of First Community Bank, a subsidiary of New Mexico’s First State Bancorporation from the FDIC. The purchase included USD $2.1-billion of assets, USD $1.8-billion of deposits and 38 branches in New Mexico and Arizona.
- In January 2012, U.S. Bank acquired the operations of BankEast Corp. of Tennessee through an FDIC-brokered deal. U.S. Bank gained USD $272-million of assets, USD $268-million of deposits and ten branches.
- In March 2013, U.S. Bank acquired the municipal bond trustee business of Deutsche Bank. Terms of the deal were not disclosed, but U.S. Bank would add USD $57-billion of assets to the USD $3-trillion already under administration in the corporate trust division.
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