<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 20, 1999
-----------------
BANK ONE CORPORATION
- ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-60313 31-0738296
- ----------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
One First National Plaza, Chicago, IL 60670
- -----------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code 312-732-4000
------------
<PAGE>
Item 5. Other Events
- ------
On July 20, 1999, the Registrant issued a press release announcing its
second quarter 1999 earnings. A copy of such press release, including unaudited
financial information released as a part thereof, is attached as Exhibit 99(a)
to this Current Report on Form 8-K and incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ------
(c) Exhibits.
Exhibit Number Description of Exhibits
-------------- -----------------------
99(a) Registrant's July 20, 1999 Press Release regarding 2nd
Quarter 1999 earnings.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BANK ONE CORPORATION
---------------------
(Registrant)
Date: July 20, 1999 By: /s/ M. Eileen Kennedy
---------------- -----------------------
Title: Treasurer
2
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibits
- -------------- -----------------------
99(a) Registrant's July 20, 1999 Press Release regarding 2nd Quarter
1999 earnings.
3
<PAGE>
[BANK ONE CORPORATION Press Release Letterhead] Exhibit 99(a)
FOR IMMEDIATE RELEASE
- ---------------------
BANK ONE'S SECOND QUARTER EARNINGS INCREASE 21%,
EXCLUDING MERGER CHARGES
CHICAGO, July 20, 1999 - BANK ONE CORPORATION (NYSE: ONE) today announced second
quarter operating earnings of $1.112 billion, excluding merger-related and
restructuring costs, or $0.93 per diluted share, a 21% increase from 1998's
second quarter. Reported net income for the 1999 second quarter was $992
million, or $0.83 per diluted share.
"Strong revenue generation and disciplined expense management were the
highlights of the second quarter, while credit quality remained stable," said
John B. McCoy, president and chief executive officer. "Bank One has reduced
noninterest expense for two consecutive quarters and is already operating at a
rate that will produce 75% of our targeted merger expense savings for this year.
Another highlight was the launch of WingspanBank, our Internet-only bank."
The 1999 second quarter results included merger-related and restructuring costs
of $179 million pre-tax, or $0.10 per share. The year-ago quarter included
gains on branch sales of $155 million related to the Retail Delivery Initiative
and merger-related expenses of $182 million, which combined to reduce earnings
per share by $0.02.
1999 Second Quarter Highlights
The second quarter's highlights included:
. Managed revenue grew 9% from 1998's second quarter on an operating
basis.
. Managed net interest income rose 10%, while average managed loans
increased 9%. The managed net interest margin was 5.55%, compared to
5.42% in the 1998 second quarter.
. Credit quality was strong and stable.
. Managed noninterest income increased 6% from 1998's second quarter,
driven by 13% growth of fee-based revenue.
. Return on common equity was 21.4%, excluding merger-related costs.
(more)
<PAGE>
-2-
. Noninterest expense on an operating basis increased 4% from the 1998
second quarter and declined 4% from the first quarter. The related
managed efficiency ratio was 49.0% in the 1999 second quarter.
. Merger integration activities were completed in Michigan and Indiana as
scheduled.
. The Year 2000 regulatory guidelines for June 30, 1999, were achieved.
SECOND QUARTER PERFORMANCE REVIEW
The following discussion is on a managed basis, excluding merger-related and
restructuring costs as well as branch sale gains noted above, in order to better
describe underlying operating trends. Managed information has been adjusted to
include credit card loans that were securitized and removed from the balance
sheet. The net earnings on securitized credit card loans are reclassified from
noninterest income to net interest income and provision for loan losses as if
the securitization had not occurred.
Net Interest Income and Margin
Managed net interest income on a tax-equivalent basis was $3.675 billion in the
second quarter, a 10% increase from 1998's second quarter, reflecting increases
in both average earning assets and the net interest margin. Average earning
assets rose 7% from the year-ago period, led by loan growth of 9%, while other
earning assets were essentially unchanged. An improved earning asset mix and
lower funding costs were the most significant contributors to a 13 basis point
increase in the net interest margin from the prior year's quarter to 5.55%.
Credit card loans were 18% higher than in the year-ago quarter, commercial loans
increased 8%, and other consumer loans rose 1%. Excluding the effect of loan
sales and securitizations, other consumer loans as of June 30, 1999, were 6%
higher than one year ago.
Compared with the 1999 first quarter, managed net interest income was unchanged
for the second quarter. Average commercial and consumer loans were up an
annualized 9% and 6%, respectively, from the prior quarter, while credit card
loans were essentially flat. However, managed credit card loans grew an
annualized 6% from March 31, to $69 billion at June 30, 1999, reflecting the
typical seasonal pattern of receivables growth resuming in the second quarter.
The net interest margin decreased 11 basis points from the first quarter,
principally related to lower yields on credit card and consumer loans.
Noninterest Income
Managed noninterest income was $1.688 billion in the second quarter, a 6%
increase from the year-ago quarter, excluding $155 million of gains on branch
sales.
(more)
<PAGE>
-3-
Fee-based revenue increased 13% from the prior year to $1.306 billion in the
second quarter. Credit card fees were 33% higher due to transaction volume
growth and gains related to increased securitization activity. New
securitizations, net of maturities, were $2.5 billion in the 1999 second quarter
versus $1.6 billion in the 1998 quarter. Investment management, capital
markets, insurance, and other retail banking fees also increased from the
comparable year-ago period.
Market-driven revenue was $200 million in the quarter, down from $235 million in
1998's strong second quarter. Lower trading account profits and investment
securities gains were partially offset by higher equity securities gains.
Included in equity securities gains this quarter was the gain related to the
liquidation of Concord EFS, Inc. securities.
Other noninterest income was reduced by $20 million in the 1999 second quarter
due to a valuation adjustment related to auto lease residual values.
Noninterest Expense
Noninterest expense was $2.627 billion, excluding merger-related costs, 4%
higher than the year-ago period. Merger-related costs were $179 million in the
1999 second quarter and $182 million in the 1998 second quarter. Growth of the
credit card business continued to be a significant cause of underlying expense
growth, while other expense categories benefited from merger-related expense
synergies.
Noninterest expense was $110 million lower than in the first quarter.
Incremental merger synergy cost savings contributed approximately $50 million of
the decrease, with the remainder related to improved operating efficiencies.
The second quarter's $50 million of incremental merger expense synergies was in
addition to the $50 million achieved in the first quarter. The combined impact
of these savings will produce $350 million, or 75%, of this year's $465 million
in targeted merger expense synergies.
Provision for Credit Losses and Credit Quality
The managed net charge-off ratio was 1.99% for the second quarter, compared to
2.15% in the year-ago quarter and 1.93% in the 1999 first quarter. Managed net
charge-offs were $1.075 billion in the second quarter, slightly higher than
$1.065 billion for the 1998 quarter and $1.028 billion in the first quarter. The
managed provision was $1.075 billion in the 1999 second quarter.
The managed net charge-off ratio for credit card loans was 5.25% for the second
quarter, down from 6.11% for the year-ago quarter. The 1999 first quarter net
charge-off ratio was 4.89%; excluding the positive impact of the conformance of
charge-off policies, the ratio was 5.32%.
(more)
<PAGE>
-4-
Commercial net charge-offs were 0.36% for the second quarter, lower than the
year-ago quarter's 0.39%, though up slightly from 0.29% in the first quarter.
Consumer net charge-offs declined to 0.61% in the second quarter from 0.66% one
year ago and from 0.84% in the first quarter.
Nonperforming assets of $1.137 billion at June 30, 1999, were down slightly from
$1.148 billion at March 31, 1999. The nonperforming assets ratio was 0.72% at
June 30, 1999. The allowance for credit losses was 1.43% of loans as of June
30, 1999.
Capital
The common equity to assets ratio was 8.1% as of June 30, 1999, and tangible
common equity to assets was 7.3%. Tier 1 and total capital ratios were 8.1% and
11.4%, respectively. A share repurchase program was authorized in the second
quarter for 65 million shares; 5.4 million shares were repurchased during the
quarter.
BANK ONE CORPORATION, headquartered in Chicago, is the nation's fifth largest
bank holding company, with assets of more than $256 billion. Bank One offers a
full range of financial services to commercial and business customers and
consumers. It is the world's largest VISA issuer, the third largest bank lender
to small businesses, a leading national automotive lender, and one of the top 25
managers of mutual funds. A leader in the retail market, Bank One operates
approximately 1,900 banking centers and a nationwide network of ATMs. In
addition, it is a major commercial bank in the United States and in select
international markets.
###
Information about Bank One's financial results can be accessed on the Internet
at www.bankone.com or through fax-on-demand at 877-ONE-FACT. The telephone
---------------
number for the recorded message discussing the second quarter's results is 888-
203-1112 (domestic) or 719-457-0820 (international), access code 732256.
Media Contact:
Thomas A. Kelly (312) 732-7007
Investor Contacts:
Jay S. Gould (312) 732-5771
Holly E. Hobson (312) 732-5782
Sandra M. Catanzaro (312) 732-8013
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Financial Highlights Three Months
Three Months Ended June 30 Ended
-----------------------------------------
($ millions, except per-share amounts) 1999 1998 % Change Mar 31, 1999
- -------------------------------------------------------------------- ---------- ---------- -------- -------------
<S> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Earnings -- Basic $ 0.84 $ 0.76 11 $ 0.97
-- Diluted 0.83 0.75 11 0.96
Dividends 0.42 0.38 11 0.42
INCOME STATEMENT DATA
- ---------------------
Net income $ 992 $ 895 11 $ 1,151
Net interest income (FTE) 2,341 2,379 - 2,309
Provision for credit losses 275 400 (31) 281
Noninterest income 2,222 2,088 6 2,590
Restructuring charges and merger-related costs 179 182 N/M 204
Operating expense(1) 2,627 2,537 4 2,737
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin -- managed 5.55% 5.42% 5.66%
-- reported 4.26 4.53 4.30
Return on assets 1.57 1.49 1.85
Return on common equity 19.1 18.6 22.9
Efficiency -- managed 52.3 53.4 52.1
-- reported 61.5 60.9 60.0
BALANCE SHEET DATA
- ------------------
Average: Loans -- managed $ 215,923 $ 197,867 9 $ 213,379
-- reported 155,496 158,207 (2) 153,271
Earning assets -- managed 265,488 247,152 7 262,283
-- reported 220,505 210,628 5 217,909
Total assets 253,266 241,010 5 252,922
Deposits 153,315 151,594 1 154,148
Common equity 20,744 19,246 8 20,361
End of Period: Loans -- managed 218,795 200,726 9 213,814
-- reported 157,464 160,023 (2) 154,850
Total assets 256,033 244,178 5 250,402
Deposits 156,454 154,507 1 153,699
Common equity 20,860 19,575 7 20,870
<CAPTION>
Financial Highlights
Six Months Ended June 30
-----------------------------------------
($ millions, except per-share amounts) 1999 1998 % Change
- -------------------------------------------------------------------- ---------- ---------- --------
<S> <C> <C> <C>
PER SHARE DATA
- --------------
Earnings -- Basic $ 1.81 $ 1.56 16
-- Diluted $ 1.79 1.53 17
Dividends 0.84 0.76 11
INCOME STATEMENT DATA
- ---------------------
Net income $ 2,143 $ 1,828 17
Net interest income (FTE) 4,650 4,699 (1)
Provision for credit losses 556 791 (30)
Noninterest income 4,812 4,004 20
Restructuring charges and merger-related costs 383 182 N/M
Operating expense(1) 5,364 4,968 8
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin -- managed 5.61% 5.47%
-- reported 4.28 4.54
Return on assets 1.71 1.54
Return on common equity 21.0 19.4
Efficiency -- managed 52.2 51.9
-- reported 60.7 59.2
BALANCE SHEET DATA
- ------------------
Average: Loans -- managed $ 214,659 $ 196,940 9
-- reported 154,390 158,150 (2)
Earning assets -- managed 263,895 245,776 7
-- reported 219,214 208,947 5
Total assets 253,095 239,532 6
Deposits 153,730 151,038 2
Common equity 20,553 18,923 9
</TABLE>
(1) Noninterest expense reduced by restructuring charges and merger-related
costs, including certain merger integration costs.
5
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------------------
Consolidated Statement of Income Jun 30 Mar 31 Dec 31 Sep 30 Jun 30
($ millions, except per-share amounts) 1999 1999 1998 1998 1998
- -------------------------------------------------------------------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest income $ 4,236 $ 4,196 $ 4,326 $ 4,412 $ 4,432
Interest expense 1,925 1,916 1,989 2,039 2,084
------------------------------------------------------------
Net interest income 2,311 2,280 2,337 2,373 2,348
Provision for credit losses 275 281 272 345 400
------------------------------------------------------------
Net interest income after provision for credit losses 2,036 1,999 2,065 2,028 1,948
------------------------------------------------------------
Noninterest Income
Trading profits 33 67 (2) 18 65
Equity securities gains(losses) 133 96 61 (4) 121
Investment securities gains 34 52 32 41 49
--------------------------------------------------------------
Market-driven revenue 200 215 91 55 235
Credit card revenue 920 952 1,078 867 630
Fiduciary and investment management fees 197 179 199 207 203
Service charges and commissions 723 690 680 639 666
--------------------------------------------------------------
Fee-based revenue 1,840 1,821 1,957 1,713 1,499
Other income 182 554 20 231 354
--------------------------------------------------------------
Total noninterest income 2,222 2,590 2,068 1,999 2,088
--------------------------------------------------------------
Noninterest Expense
Salaries and benefits 1,073 1,147 1,167 1,080 1,123
Net occupancy and equipment expense 219 227 217 217 209
Depreciation and amortization 169 175 180 167 167
Outside services and processing 420 406 410 318 348
Marketing and development 302 315 340 264 221
Communication and transportation 208 200 214 192 190
Merger-related and restructuring charges 145 164 935 - 127
Other expense 270 307 393 301 334
--------------------------------------------------------------
Total nonininterest expense 2,806 2,941 3,856 2,539 2,719
--------------------------------------------------------------
Income before income taxes 1,452 1,648 277 1,488 1,317
Provision for Income Taxes 460 497 51 434 422
--------------------------------------------------------------
Net income $ 992 $ 1,151 $ 226 $ 1,054 $ 895
==============================================================
Net income attributable to common stockholders' equity $ 989 $ 1,148 $ 223 $ 1,051 $ 891
==============================================================
Earnings per common share
--Basic $ 0.84 $ 0.97 $ 0.19 $ 0.90 $ 0.76
--Diluted 0.83 0.96 0.19 0.89 0.75
Average common shares outstanding(millions)
--Basic 1,180 1,178 1,175 1,172 1,169
--Diluted 1,195 1,193 1,188 1,188 1,189
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Six Months Ended
--------------------------------
Consolidated Statement of Income Jun 30 Jun 30
($ millions, except per-share amounts) 1999 1998
- -------------------------------------------------------------------- -------------- -------------
<S> <C> <C>
Interest income $ 8,432 $ 8,786
Interest expense 3,841 4,149
--------------------------------
Net interest income 4,591 4,637
Provision for credit losses 556 791
--------------------------------
Net interest income after provision for credit losses 4,035 3,846
--------------------------------
Noninterest Income
Trading profits 100 125
Equity securities gains(losses) 229 193
Investment securities gains 86 82
--------------------------------
Market-driven revenue 415 400
Credit card revenue 1,872 1,331
Fiduciary and investment management fees 376 401
Service charges and commissions 1,413 1,326
--------------------------------
Fee-based revenue 3,661 3,058
Other income 736 546
--------------------------------
Total noninterest income 4,812 4,004
--------------------------------
Noninterest Expense
Salaries and benefits 2,220 2,230
Net occupancy and equipment expense 446 411
Depreciation and amortization 344 333
Outside services and processing 826 621
Marketing and development 617 420
Communication and transportation 408 375
Merger-related and restructuring charges 309 127
Other expense 577 633
--------------------------------
Total nonininterest expense 5,747 5,150
--------------------------------
Income before income taxes 3,100 2,700
Provision for Income Taxes 957 872
--------------------------------
Net income $ 2,143 $ 1,828
================================
Net income attributable to common stockholders' equity $ 2,137 $ 1,820
================================
Earnings per common share
--Basic $ 1.81 $ 1.56
--Diluted $ 1.79 $ 1.53
Average common shares outstanding(millions)
--Basic 1,179 1,167
--Diluted 1,194 1,190
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Consolidated Balance Sheet Jun 30 Mar 31 Dec 31
($ millions) 1999 1999 1998
- --------------------------------------------------------------------- ------------ ------------- ------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 15,336 $ 13,854 $ 19,878
Interest bearing due from banks 3,953 4,130 4,642
Federal funds sold and securities under resale agreements 10,633 9,209 9,862
Trading assets 5,157 5,660 5,345
Derivative product assets 4,270 4,510 6,954
Investment securities (1) 45,197 44,565 44,852
Loans
Commercial 89,723 87,581 88,438
Consumer 59,613 57,869 57,926
Credit Card 8,128 9,400 9,034
--------------------------------------------
Total loans 157,464 154,850 155,398
Allowance for credit losses (2,250) (2,270) (2,271)
--------------------------------------------
Loans, net 155,214 152,580 153,127
Other assets:
Bank premises and equipment, net 3,253 3,235 3,340
Other 13,020 12,659 13,496
--------------------------------------------
Total other assets 16,273 15,894 16,836
--------------------------------------------
Total assets $256,033 $250,402 $261,496
============================================
Liabilities
Deposits
Demand $ 33,881 $ 35,110 $ 39,854
Savings 64,511 63,378 62,645
Time 33,613 34,844 36,302
Foreign offices 24,449 20,367 22,741
--------------------------------------------
Total deposits 156,454 153,699 161,542
Federal funds purchased and repurchase agreements 19,710 20,111 23,164
Other short-term borrowings 16,649 16,780 16,937
Long-term borrowings 26,725 23,985 21,295
Guaranteed preferred beneficial interest in the
Corporation's junior subordinated debt 1,003 1,003 1,003
Derivative product liabilities 4,619 4,772 7,147
Other liabilities 9,823 8,992 9,848
--------------------------------------------
Total liabilities 234,983 229,342 240,936
--------------------------------------------
Stockholders' Equity
Preferred stock 190 190 190
Common stock 12 12 12
Surplus 10,762 10,734 10,769
Retained earnings 10,673 10,179 9,528
Accumulated other adjustments to stockholders' equity (146) 96 239
Deferred compensation (137) (151) (94)
Treasury stock (304) - (84)
--------------------------------------------
Total stockholders' equity 21,050 21,060 20,560
--------------------------------------------
Total liabilities and stockholders' equity $256,033 $250,402 $261,496
============================================
Common Shares -- period-end (millions)
Common shares issued 1,182 1,180 1,179
Treasury shares 5 - 2
--------------------------------------------
Common shares outstanding 1,177 1,180 1,177
============================================
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Consolidated Balance Sheet Sep 30 Jun 30
($ millions) 1998 1998
- --------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Assets
Cash and due from banks $ 14,109 $ 16,217
Interest bearing due from banks 4,621 5,590
Federal funds sold and securities under resale agreements 10,066 9,040
Trading assets 5,770 5,342
Derivative product assets 4,600 4,342
Investment securities (1) 32,658 31,863
Loans
Commercial 81,895 83,279
Consumer 56,379 58,737
Credit Card 15,783 18,007
---------------------------
Total loans 154,057 160,023
Allowance for credit losses (2,751) (2,752)
---------------------------
Loans, net 151,306 157,271
Other assets:
Bank premises and equipment, net 3,431 3,433
Other 12,097 11,080
---------------------------
Total other assets 15,528 14,513
---------------------------
Total assets $238,658 $244,178
===========================
Liabilities
Deposits
Demand $ 34,757 $ 38,551
Savings 58,813 59,542
Time 36,694 37,887
Foreign offices 18,660 18,527
---------------------------
Total deposits 148,924 154,507
Federal funds purchased and repurchase agreements 20,619 19,088
Other short-term borrowings 13,223 15,768
Long-term borrowings 21,138 21,245
Guaranteed preferred beneficial interest in the
Corporation's junior subordinated debt 1,003 1,003
Derivative product liabilities 4,749 4,327
Other liabilities 8,384 8,475
---------------------------
Total liabilities 218,040 224,413
---------------------------
Stockholders' Equity
Preferred stock 190 190
Common stock 12 12
Surplus 12,488 12,549
Retained earnings 9,750 9,094
Accumulated other adjustments to stockholders' equity 244 177
Deferred compensation (157) (182)
Treasury stock (1,909) (2,075)
---------------------------
Total stockholders' equity 20,618 19,765
---------------------------
Total liabilities and stockholders' equity $238,658 $244,178
===========================
Common Shares -- period-end (millions)
Common shares issued 1,223 1,222
Treasury shares 47 52
---------------------------
Common shares outstanding 1,176 1,170
===========================
</TABLE>
(1) Includes the Corporation's undivided Interest in securitized credit card
receivables. As part of conforming accounting practices, the Corporation's
undivided Interest in such receivables was reclassified from loans to
Investment securities in 1998.
8
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Second Quarter 1999 First Quarter 1999
-------------------------------- ---------------------------------------
Average Balance Sheet, Yields, & Rates Average Income/ Yield/ Average Income/ Yield/
($ millions) Balance Expense Rate Balance Expense Rate
- ----------------------------------------------- ------------- ------- --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Short-term investments $ 12,602 $ 142 4.52% $ 14,141 $ 162 4.65%
Trading assets (1) 6,046 98 6.50 5,655 96 6.88
Investment securities: (1)
U.S. government and federal agency 15,395 275 7.16 15,365 245 6.47
States and political subdivisions 1,909 34 7.14 2,023 39 7.82
Other (2) 29,057 500 6.90 27,454 483 7.13
----------------------- ----------------------------
Total investment securities 46,361 809 7.00 44,842 767 6.94
Loans (1) (3)
Commercial 88,911 1,649 7.44 87,058 1,582 7.37
Consumer 58,065 1,240 8.57 57,177 1,282 9.09
Credit Card 8,520 328 15.44 9,036 336 15.08
----------------------- ----------------------------
Total loans, net 155,496 3,217 8.30 153,271 3,200 8.47
Total earning assets 220,505 4,266 7.76 217,909 4,225 7.86
Allowance for credit losses (2,260) (2,324)
Other assets 35,021 37,337
------------- -------------
Total assets $ 253,266 $ 252,922
============= =============
Deposits -- interest-bearing
Savings $ 20,843 $ 110 2.12% $ 19,975 $ 83 1.69%
Money market 42,903 316 2.95 43,377 356 3.33
Time 34,097 428 5.03 35,786 450 5.10
Foreign offices 22,548 245 4.36 21,357 233 4.42
----------------------- ----------------------------
Total deposits -- interest-bearing 120,391 1,099 3.66 120,495 1,122 3.78
Federal funds purchased and securities
under repurchase agreements 20,354 231 4.55 21,862 246 4.56
Other short-term borrowings 17,655 210 4.77 16,861 198 4.76
Long-term debt 26,417 385 5.85 23,903 350 5.94
----------------------- ----------------------------
Total interest-bearing liabilities 184,817 1,925 4.18 183,121 1,916 4.24
Preferred stock 32,924 33,653
Other liabilities 14,591 15,597
Preferred stock 190 190
Common stockholders' equity 20,744 20,361
------------- -------------
Total liabilities and equity $ 253,266 $ 252,922
============= =============
Interest income/earning assets $ 4,266 7.76% $ 4,225 7.86%
Interest expense/earning assets 1,925 3.50 1,916 3.56
------------------ -----------------------
Net interest margin $ 2,341 4.26% $ 2,309 4.30%
================== =======================
<CAPTION>
Second Quarter 1998
---------------------------------
Average Balance Sheet, Yields, & Rates Average Income/ Yield/
($ millions) Balance Expense Rate
- ----------------------------------------------- ------------- ------- ------
<S> <C> <C> <C>
Short-term investments $ 14,832 $ 198 5.35%
Trading assets (1) 5,972 90 6.04
Investment securities: (1)
U.S. government and federal agency 17,763 293 6.62
States and political subdivisions 2,258 45 7.99
Other (2) 11,596 187 6.47
-----------------------
Total investment securities 31,617 525 6.66
Loans (1) (3)
Commercial 82,427 1,602 7.80
Consumer 57,207 1,253 8.79
Credit Card 18,573 795 17.17
-----------------------
Total loans,net 158,207 3,650 9.25
Total earning assets 210,628 4,463 8.50
Allowance for credit losses (2,748)
Other assets 33,130
-------------
Total assets $ $241,010
=============
Deposits -- interest-bearing
Savings $ 21,566 $ 123 2.29%
Money market 38,624 366 3.80
Time 38,956 532 5.48
Foreign offices 17,840 234 5.26
-----------------------
Total deposits -- interest-bearing 116,986 1,255 4.30
Federal funds purchased and securities
under repurchase agreements 20,956 270 5.17
Other short-term borrowings 14,969 202 5.41
Long-term debt 22,404 357 6.39
-----------------------
Total interest-bearing liabilities 175,315 2,084 4.77
Preferred stock 34,608
Other liabilities 11,646
Preferred stock 195
Common stockholders' equity 19,246
-------------
Total liabilities and equity $ 241,010
=============
Interest income/earning assets $4,463 8.50%
Interest expense/earning assets 2,084 3.97
-------------------
Net interest margin $2,379 4.53%
===================
</TABLE>
(2) As part of conforming accounting practices, the Corporation's undivided
interest in securitized credit card receivables was reclassified from loans
to investment securities in 1998. Such amounts averaged $15.4 billion for
the second quarter of 1999, $15.7 billion for the first quarter of 1999,
and $3.1 billion for the second quarter of 1998.
(3) Nonperforming loans are included in balances used to determine the average
rate
9
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended
----------------------------------------------------------------------------
June 30, 1999 June 30, 1998
------------------------------------- ------------------------------------
Average Balance Sheet, Yields, & Rates Average Income Yield/ Average Income Yield/
($ millions) Balance Expense Rate Balance Expense Rate
- ----------------------------------------------- ------------ --------- ------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Short-term investments $ 13,367 $ 304 4.59% $ 14,865 $ 399 5.41%
Trading assets (1) 5,852 194 6.69 6,191 182 5.93
Investment securities: (1)
U.S. government and federal agency 15,380 520 6.82 17,983 592 6.64
States and political subdivisions 1,966 73 7.49 2,296 92 8.08
Other (2) 28,259 983 7.01 9,462 283 6.03
---------------------------- -------------------------
Total investment securities 45,605 1,576 6.97 29,741 967 6.56
Loans (1) (3)
Commercial 87,990 3,231 7.40 81,083 3,158 7.85
Consumer 57,623 2,522 8.83 57,469 2,714 9.52
Credit card 8,777 664 15.26 19,598 1,428 14.69
---------------------------- -------------------------
Total loans,net 154,390 6,417 8.38 158,150 7,300 9.31
Total earning assets 219,214 8,491 7.81 208,947 8,848 8.54
Allowance for credit losses (2,292) (2,756)
Other assets 36,173 33,341
------------- ---------
Total assets $ 253,095 $239,532
============= =========
Deposits -- interest-bearing
Savings $ 20,411 $ 193 1.91% $ 21,543 $ 248 2.32%
Money market 43,139 672 3.14 38,255 726 3.83
Time 34,937 878 5.07 39,405 1,073 5.49
Foreign offices 21,956 478 4.39 17,848 465 5.25
---------------------------- -------------------------
Total deposits -- interest-bearing 120,443 2,221 3.72 117,051 2,512 4.33
Federal funds purchased and securities
under repurchase agreements 21,104 477 4.56 21,383 552 5.21
Other short-term borrowings 17,260 408 4.77 13,831 375 5.47
Long-term debt 25,167 735 5.89 22,190 710 6.45
---------------------------- -------------------------
Total interest-bearing liabilities 183,974 3,841 4.21 174,455 4,149 4.80
Demand deposits 33,287 33,987
Other liabilities 15,091 11,911
Preferred stock 190 256
Common stockholders' equity 20,553 18,923
------------- ---------
Total liabilities and equity $ 253,095 $239,532
============= =========
Interest income/earning assets $ 8,491 7.81% $ 8,848 8.54%
Interest expense/earning assets 3,841 3.53 4,149 4.00
------------------- -------------------
Net interest margin $ 4,650 4.28% $ 4,699 4.54%
=================== ===================
</TABLE>
(1) Includes tax-equivalent adjustments based on a 35% federal income tax rate
(2) As part of conforming accounting practices, the Corporation's undivided
interest in securitized credit card receivables was reclassified from loans
to investment securities in 1998. Such amounts averaged $15.6 billion for
the first six months of 1999 and $2.0 billion for the first six months of
1998.
(3) Nonperforming loans are included in balances used to determine the average
rate
10
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Three Months Ended
-------------------------------------------------------------
Credit Quality Jun 30 Mar 31 Dec 31 Sep 30 Jun 30
($ millions) 1999 1999 1998 1998 1998
- -------------------------------------------------------------------- --------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Provision for credit losses $ 275 $ 281 $ 272 $ 345 $ 400
Gross charge-offs $ 354 $ 367 $ 377 $ 443 $ 560
Recoveries 79 86 80 98 118
-------------------------------------------------------------
Net charge-offs $ 275 $ 281 $ 297 $ 345 $ 442
Net charge-offs
Commercial $ 81 $ 63 $ 80 $ 43 $ 80
Consumer 89 120 104 98 95
Credit card 105 98 113 204 267
-------------------------------------------------------------
Total net charge-offs $ 275 $ 281 $ 297 $ 345 $ 442
Total net charge-offs -- managed $ 1,075 $ 1,028 $ 976 $ 943 $ 1,065
Net charge-off ratios
Commercial 0.36% 0.29% 0.38% 0.21% 0.39%
Consumer 0.61 0.84 0.74 0.68 0.66
Credit card 4.93 4.34 5.75 5.24 5.75
Total net charge-off ratio 0.71 0.73 0.80 0.89 1.12
Total net charge-off ratio -- managed 1.99 1.93 1.88 1.91 2.15
Allowance for credit losses -- period-end $ 2,250 $ 2,270 $ 2,271 $ 2,751 $ 2,752
Nonperforming assets -- period-end
Nonperforming loans $ 1,032 $ 1,031 $ 729 $ 718 $ 640
Other, including other real estate owned 105 117 90 87 70
-------------------------------------------------------------
Total nonperforming assets $ 1,137 $ 1,148 $ 819 $ 805 $ 710
Allowance to ending loans 1.43% 1.47% 1.46% 1.79% 1.72%
Allowance to nonperforming loans 218 220 312 383 430
Nonperforming assets ratio 0.72 0.74 0.53 0.52 0.44
Capital
($ millions, except per-share amounts)
- --------------------------------------------------------------------
Common equity/assets ratio 8.1% 8.3% 7.8% 8.6% 8.0%
Tier 1 capital ratio 8.1 8.2 7.9 8.6 8.3
Total risk adjusted capital ratio 11.4 11.7 11.3 12.4 12.3
Regulatory leverage ratio 8.1 8.0 8.0 8.5 8.0
Tangible common equity to net assets 7.3 7.4 6.8 7.7 7.4
Book value of common equity per share $ 17.73 $ 17.68 $ 17.31 $ 17.37 $ 16.72
Intangibles -- period-end
Goodwill $ 973 $ 1,048 $ 1,075 $ 1,094 $ 1,117
Other intangibles 1,340 1,407 1,621 1,125 631
---------------------------------------------------------------
Total intangibles $ 2,313 $ 2,455 $ 2,696 $ 2,219 $ 1,748
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Managed Income Statement Statistics(1) Jun 30 Mar 31 Dec 31 Sep 30 Jun 30
($ millions) 1999 1999 1998 1998 1998
- -------------------------------------------------------------------- -------- -------- -------- -------- --------
Reported
- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net interest income -- FTE $ 2,341 $ 2,309 $ 2,368 $ 2,402 $ 2,379
Provision for credit losses 275 281 272 345 400
Noninterest income 2,222 2,590 2,068 1,999 2,088
Noninterest expense 2,806 2,941 3,856 2,539 2,719
Net income 992 1,151 226 1,054 895
Securitized
- --------------------------------------------------------------------
Net interest income -- FTE $ 1,334 $ 1,352 $ 1,314 $ 1,083 $ 962
Provision for credit losses 800 747 679 598 623
Noninterest income (534) (605) (635) (484) (339)
Noninterest expense - - - 1 -
Net income - - - - -
Managed
- --------------------------------------------------------------------
Net interest income -- FTE $ 3,675 $ 3,661 $ 3,682 $ 3,485 $ 3,341
Provision for credit losses 1,075 1,028 951 943 1,023
Noninterest income 1,688 1,985 1,433 1,515 1,749
Noninterest expense 2,806 2,941 3,856 2,540 2,719
Net income 992 1,151 226 1,054 895
Managed balance sheet and net interest margin
- --------------------------------------------------------------------
Total average loans $215,923 213,379 $207,471 $197,978 $197,867
Total average earning assets 265,488 262,283 257,413 245,422 247,152
Total average assets 298,249 297,296 287,517 275,259 277,534
Net interest margin 5.55% 5.66% 5.67% 5.63% 5.42%
</TABLE>
(1) Managed data only adjusted for credit card securitization activity
12
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Managed Credit Card Detail Jun 30 Mar 31 Dec 31 Sep 30 Jun 30
($ millions) 1999 1999 1998 1998 1998
- -------------------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Period-end loans - managed $ 69,459 $ 68,364 $ 70,027 $ 65,169 $ 58,710
- securitized (61,331) (58,964) (60,993) (49,386) (40,703)
- reported 8,128 9,400 9,034 15,783 18,007
Average loans - managed $ 68,947 $ 69,144 $ 66,190 $ 59,090 $ 58,233
- securitized (60,427) (60,108) (58,325) (43,512) (39,660)
- reported 8,520 9,036 7,865 15,578 18,573
Net charge-offs -- amount - managed $ 905 $ 845 $ 792 $ 802 $ 890
- securitized (800) (747) (679) (598) (623)
- reported 105 98 113 204 267
Net charge-offs -- rate - managed 5.25% 4.89% 4.79% 5.43% 6.11%
- securitized 5.30 4.97 4.66 5.50 6.28
- reported 4.93 4.34 5.75 5.24 5.75
Delinquency rate -- 30+ days - managed 4.30% 4.51% 4.47% 4.50% 4.34%
- securitized 4.42 4.67 4.64 4.49 4.34
- reported 3.37 3.51 3.34 4.54 4.34
Delinquency rate -- 90+ days - managed 1.96% 2.06% 1.98% 1.90% 1.97%
- securitized 2.03 2.15 2.06 1.94 2.02
- reported 1.47 1.51 1.41 1.79 1.85
Credit card charge volume - managed $ 28,912 $ 26,863 $ 29,237 $ 25,106 $ 24,091
New accounts opened (thousands) - managed 2,287 2,910 2,919 2,538 2,271
Card members (thousands) - managed 59,133 58,316 56,568 57,204 52,805
</TABLE>
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