Bank One Meets Lowered Expectations; No Surprises at Wells Fargo

Earnings continue to show strength as banks recover from last year's meltdown.
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Two months after it issued a profit warning that left some analysts feeling blindsided,

Bank One

(ONE) - Get Report

Tuesday met the Street's significantly lowered earnings expectations.

The Chicago-based bank reported third-quarter earnings of $1.014 billion, or 86 cents a diluted share, in line with the projections from analysts surveyed by

First Call/Thomson Financial

. The year-ago quarter's operating earnings were $1.005 billion, or 84 cents a diluted share.

But operating earnings omit restructuring costs, which have been the monkey on Bank One's back since it bought credit card issuer

First USA

at a significant premium in 1997. Profits from First USA's credit card business were supposed to pay for the merger-related costs, but so far that hasn't panned out.

"As expected, earnings from our credit card business declined," John McCoy, president and CEO, said in a statement. "We continue to be highly focused on stabilizing returns at First USA."

The bank bought back 32 million shares during the quarter, at a low price. The company's stock has been languishing in the low 30s, off a 52-week high of 63 9/16, since late August. The company revealed its troubles with the First USA business in an Aug. 24 announcement that some analysts said caught them off guard.

Diana Yates, analyst for

A.G. Edwards

, said the company showed good loan growth this quarter, but "it's hard to say any of this is a trend when we're missing so much" in the credit card business. Edwards hasn't done underwriting for the bank, which Yates rates a maintain, the equivalent of a hold.

Wells Fargo

(WFC) - Get Report

, meanwhile, met analysts' expectations, reporting quarterly earnings of 57 cents a diluted share.

The company earned $962 million, up 30% from last year's $742 million. Diluted per-share earnings rose 27% from the year-ago quarter's 45 cents.

Yates, whose firm hasn't done underwriting for Wells, said the bank showed strong revenue growth. She rates the stock a buy.

Banks this week have shown signs of recovery from a dismal year-ago quarter, when Russian debt troubles, Asian financial jitters and the collapse of

Long Term Capital Management

depressed the banking industry.

Wells' announcement follows similarly sunny reports

yesterday from


(C) - Get Report


Bank of America

(BAC) - Get Report


Bank of New York

(BK) - Get Report


J.P. Morgan

(JPM) - Get Report