Magazine article American Banker

Bank One Reports Its 'Last Messy Quarter'

Magazine article American Banker

Bank One Reports Its 'Last Messy Quarter'

Article excerpt

In July, James Dimon told Wall Street that Bank One Corp. was halving its dividend to conserve $1 billion per year.

On Wednesday, Wall Street learned where that billion dollars was going.

Bank One reported a $512 million loss for the fourth quarter, citing a $1 billion increase in loan reserves and steep losses in commercial and retail banking.

In a conference call with analysts Wednesday, James Dimon, chief executive officer of the Chicago banking company, promised to do better. It was the second time Bank One has reported a loss under his watch.

"These short-term results are absolutely unacceptable to our shareholders and to Bank One management," Mr. Dimon said.

The results amounted to a loss of 44 cents a share compared to the profit of 46 cents per share expected by analysts. In the fourth quarter of 1999, Bank One had gains of $411 million, or 36 cents a share, and its chairman, John B. McCoy, resigned after a series of disappointing quarters.

Mr. Dimon, the former president of Citigroup, was hired last March to shore up profits at the beleaguered company. He assured Wall Street Wednesday that he has not dropped the ball.

Bank One is making moves to jump-start the company and has undergone an "intensive review of businesses, systems, operations and the balance sheet," he said. "These actions bring us into 2001 with a strong balance sheet and capital position."

By reviewing its business units and operations, Bank One will have an "improved operating margin and solid core businesses," Mr. Dimon said. "The highest priority is to strengthen this company to become a top performer in all types of environments," he said.

Wall Street has an almost universal faith in Mr. Dimon's abilities to turn the company around, but some were skeptical Wednesday that the process would move ahead quickly.

"We wonder if there is not a bit of 'restructuring fatigue' that has set in," wrote Nancy Bush, an analyst at Prudential Securities, in a research note. "The rather dramatic and rapid way that he has shaken up this franchise is likely to result in some period of time in which the focus is inward -- not toward the customer."

Bank One's moves in the fourth quarter reflect Mr. Dimon's determination to put the company's problems behind it for good.

"This is probably our last messy quarter," Mr. Dimon said Wednesday. "The substantial progress made this year on a number of fronts is crucial as we face a weakening economy with a possibility of further deterioration."

Bank One lost $385 million in its commercial banking unit in the fourth quarter and $17 million in its retail unit. …

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