For all their apparent earnestness and openness, corporate confessions are carefully managed affairs designed to give investors the impression that the bad days are over and recovery is under way. Bank One's (ONE) - Get Report extended mea culpa Tuesday was a classic in this genre.

Represented by a raft of top execs at a much-anticipated, two-and-a-half-hour meeting in New York, the beleaguered bank outlined a plan to repair its troubled

First USA

credit card business and took some bitter medicine in the form of a low 2000 earnings forecast and a hefty $725 million charge in 1999's fourth quarter to help repair messes in the card business and elsewhere. But while analysts and investors say this dutiful show of penitence was useful and may have kept potential predators at bay, they add that the nation's fourth-largest bank still has some way to go before regaining their confidence.

These people think the bank, which slashed earnings projections twice in 1999, has set overly ambitious 2000 targets for its non-credit card businesses. And they stress that the bank quickly needs to find a permanent chief executive to replace John McCoy, who

resigned last month. Acting CEO Verne Istock, at the New York meeting, reiterated his interest in the permanent post, but the bank underlined its desire to interview outside candidates by also announcing Tuesday that it's hiring headhunters

Russell Reynolds Associates

to look for a CEO.

In addition, Istock stressed many times Tuesday that neither the bank nor First USA is up for sale.

Skeptics Abound

"There's still a fair amount of skepticism after the meeting," says Joe Duwan, Midwestern banks analyst at New York-based brokers

Keefe Bruyette & Woods

. "In a way, the meeting may have generated more doubts about the bank." (Keefe Bruyette rates the bank a hold and has done no underwriting for the company.)

"They really need to complete the CEO search to regain credibility," says Mike Mayo, banks analyst at

Credit Suisse First Boston

, which rates Bank One a sell and has done no underwriting for the company.

Bank One's stock finished down 11/16, or 2.3%, at 29 9/16 on a down day in the market in which the

S&P Bank Index

showed a 1.93% decline. The bank's stock is off 42% since the beginning of 1999. Frank Barkocy, analyst at

Keefe Managers

, a New York bank-stock hedge fund, thinks the executives' performance Tuesday is unlikely to light a fire under the stock. "Bank One should trade in the 27 to 30 range for some time to come," he reasons. (Keefe Managers has no position in Bank One.)

The Message

Bank One said that 1999 full-year operating earnings, which exclude special charges, will be $3.45 a share, which is 12% below the $3.92 analysts expected when surveyed in June 1999 by

First Call/Thomson Financial

. After the fourth quarter's special charge, which is equivalent to 42 cents a share, the bank expects to make $3.03 per share. For 2000, the bank said both net and operating earnings would be between $2.80 and $3, far below the $3.42 per share forecast by First Call before Tuesday.

Bill Boardman, head of First USA, laid out restructuring plans for the unit, which had contributed a sizable 33% of net income in 1999's first half. He said First USA aims in 2000 to change its pricing strategies, focus on higher-grade customers, keep a tight hold on expenses and improve customer service. The bank expects First USA to make a 1% return on assets in 2000, vs. 1.46% in 1999. In 2000, First USA aims to bring its attrition rate -- or the proportion of customers it loses -- down to around 13%, against 16% to 17% in 1999.

Looking at Vulnerabilities

While credit card problems had been known since August last year, the time of the first earnings shortfall, some Bank One watchers had wondered whether the institution may be vulnerable elsewhere. Their suspicions were confirmed Tuesday. In taking the $725 million charge, Bank One apparently chose to deal with some issues that had long been threatening to hit earnings. Charles Peabody, banks analyst at New York-based

Mitchell Securities

, had

warned that the bank would have to take a charge when reducing the value of certain assets it had retained on its balance sheet. (Peabody rates Bank One a sell, and Mitchell has done no underwriting for the bank.)

The bank Tuesday said $80 million of the charge would go to cover the lower value of retained auto loans, and a further undisclosed amount is being charged after some retained securitizations (called interest-only strips) were also marked down. The undisclosed amount for the interest-only strips comes out of the $185 million of the charge that covers writedowns of assets at First USA and other unspecified charges there.

Some $200 million of the charge was taken to increase provisions against delinquent loans. Bank One said this was done to bring it into line with new tougher provisioning rules being instituted by the regulatory body, the

Federal Financial Institutions Examination Council

. But this also signals that the bank may have been lax before, since other consumer finance institutions have already met most of the new guidelines.

Another $260 million is to implement restructuring plans -- mostly severance packages -- in the consumer and First USA businesses.

Optimistic Forecasting?

The executives were keen to stress that the other parts of the bank were functioning well. For 2000, they're forecasting 10% to 12% earnings growth in the commercial lending business and an 8% to 10% increase in profits in the retail segment. "The bank is still in denial about its other

non-credit card businesses," says First Boston's Mayo, explaining that all banks are entering a period where it's tough to make those sort of returns. Keefe's Barkocy adds: "Some of the projections for 2000 were kind of optimistic. Any shortfall will be dealt with severely."

However, after tasting all heavy skepticism at the Tuesday meeting, one observer wonders whether the market may have gotten too gloomy about Bank One. "You can't imagine a meeting a lot more negative than today's," says Tom Brown, CEO of

Bankstocks.com

. "If I had any money to manage today, I'd be a buyer of Bank One." Brown is in the process of setting up his own financial-services hedge fund.