Bank One Sticks to Plan as Revamp Continues

Bank One (ONE) Tuesday reported third-quarter results in line with Wall Street's expectations as its aggressive restructuring program continues.

Dimon Lovers? Bank One up since exec's arrival

The bank posted earnings of 50 cents a share, in line with the 23-analyst estimate but down from the year-ago 79 cents. Excluding a restructuring charge, year-ago operating earnings were 86 cents. Third-quarter net operating income totaled $581 million, a 37.2% drop from $925 million in the year-earlier period.

Bank One was off 44 cents to $34.19 Tuesday morning.

Since Jamie Dimon arrived as CEO in early 2000, the former Citigroup (C) executive implemented a huge restructuring program calling for layoffs and a dividend cut. Judging from the stock's performance, investors have been optimistic that Dimon will succeecd in transforming the company. The stock is up 31% since March, when the executive took over, compared with a 20% gain in the Philadelphia Stock Exchange/KBW Banks Index, which tracks 24 of the nation's largest banks.

Third-quarter net interest income of $2.24 billion was basically flat with the year-ago quarter, while noninterest income fell 17.3% to $1.7 billion from $2.1 billion. Noninterest expense declined a modest 4.4%.

In a press release, Dimon said the results were in line with expectations for financial performance, waste reduction and credit quality. But he acknowledged that the current earnings level is "still not acceptable" and emphasized that the company expects to earn between $2.86 and $2.99 a share for 2001.

Amid overall concerns about credit quality, investors will likely home in on several issues in Bank One's loan operations. Dimon noted that an increase in nonperforming loans, which are loans that are past due but have not been written off yet, warranted their continued attention. In its commercial banking business, Bank One reported a $116 million increase in the provision for credit losses, up 106% over the year-ago $109 million. The bank said the increase reflects loan growth as well as continued deterioration in the commercial portfolio across several industies.

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