More details are emerging about Bank One's (ONE) - Get Report recent gatherings with selected market professionals, and they appear to support the assertion that the nation's fourth-largest bank has been selectively disclosing important information.
reported that the beleaguered Chicago-based bank held two small, private meetings with analysts and investors in New York Monday. The article also quoted an analyst who was present at one of the get-togethers saying that nothing material was disclosed by the two senior execs who hosted the events, acting CEO Verne Istock and CFO Bob Rosholt.
But it appears that much material information was imparted at the lunchtime gathering with brokerage analysts at The Pierre hotel, going by accounts of the meeting published by two analysts who attended. Among other things, data on customer attrition, bad loan levels and asset writedowns were given out, all topics that are key to understanding the depth of Bank One's current problems and determining when any recovery might take place at the bank.
Securities and Exchange Commission
rules aimed at preventing selective disclosure of material information by companies. In its proposal, the Washington-based regulator wants companies that do happen to release information selectively to rectify the situation by quickly disseminating that information to the public through a press release. Bank One hasn't issued a press release referring to any of the matters discussed at the Monday meetings.
A spokesman says Bank One doesn't believe that the information disclosed at the New York meetings was material, and he denies that the meetings were instances of selective disclosure. The SEC didn't comment on Bank One's New York meetings.
banks analyst Sandra Flannigan is one analyst who was there. (Merrill rates Bank One a long-term accumulate and the firm didn't immediately say whether it has done recent underwriting for Bank One.) Flannigan's March 14 note focuses on Bank One's faltering credit card division,
. Perhaps most interesting, she writes that Bank One execs said credit card-related bad loans are likely to be up $100 million in the year's first quarter from fourth-quarter levels.
That increase would mean annualized loan losses will jump to around 6% of managed loans in the first quarter from 5.45% in the fourth, according to Katrina Blecher, a
Brown Brothers Harriman
analyst who also attended the lunch. (Brown Brothers gives Bank One a neutral rating and didn't immediately say whether it has done underwriting for the company.)
In addition, Bank One is writing down the value of credit card securitizations that it has retained on its books, Flannigan learned at the meeting. This writedown is equivalent to 3 to 4 cents a share in the first quarter, she adds. Bank One is expected to earn 61 cents a share in the first quarter, according to analysts surveyed by
First Call/Thomson Financial
Charles Peabody, a banks analyst at New York-based
, says he wasn't able to get into the analyst meeting, despite making several requests. He says that the information imparted was material. (Peabody rates Bank One a hold and Mitchell has done no underwriting for the company.)
Bank One stock was up 1 1/2, or 6.0%, at 26 1/4 at midafternoon Wednesday.
On a more positive note, Bank One shared that its attrition rate, or the proportion of customers it loses, has been around 16% in the first quarter, down slightly from 17% in the fourth. In addition, the bank said its First USA expenses will be $25 million-$50 million lower in the first quarter than in the fourth, the Merrill analyst wrote. First USA will return around 1% on managed receivables in the second quarter, vs. the 0.5% expected for the first, Flannigan wrote.