<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) January 18, 2000
----------------------------
BANK ONE CORPORATION
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 001-15323 31-0738296
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1 Bank One 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 January 18, 2000, the Registrant issued a press release announcing its
fourth 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 January 18, 2000 Press Release regarding 4th
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: January 18, 2000 By: /s/ M. Eileen Kennedy
------------------- ------------------------------------
Title: Treasurer
2
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibits
- -------------- -----------------------
99(a) Registrant's January 18, 2000 Press Release regarding 4th
Quarter 1999 earnings.
3
<PAGE>
[BANK ONE CORPORATION Press Release Letterhead] Exhibit 99(a)
FOR IMMEDIATE RELEASE
BANK ONE ANNOUNCES 1999 FOURTH QUARTER
AND FULL YEAR EARNINGS
CHICAGO, January 18, 2000 - BANK ONE CORPORATION (NYSE: ONE) today announced
fourth quarter, 1999 operating earnings of $904 million, or $0.78 per diluted
share, excluding a special charge of $725 million pre-tax. The year-earlier
operating earnings were $1.041 billion, or $0.88 per share, excluding the merger
and restructuring charge and other one-time charges of $1.159 billion pre-tax
($815 million after tax). Reported net income for the 1999 fourth quarter was
$411 million, or $0.36 per diluted share, compared to $226 million, or $0.19 per
share, one year ago.
The full year operating earnings for 1999 were $4.076 billion, or $3.46 per
diluted share, compared to $3.869 billion, or $3.25 per share, a year earlier.
Excluded from operating earnings for 1999 are the pre-tax charge of $725 million
and merger-related and restructuring costs of $515 million, as well as gains on
banking center divestitures of $249 million and $111 million from an investment
in Concord EFS, Inc. Reported net income for 1999 was $3.479 billion, or $2.95
per share, versus $3.108 billion, or $2.61 per share, for 1998.
"Bank One's operating results for the fourth quarter and full year are
consistent with previously communicated expectations," said Verne Istock,
President and acting Chief Executive Officer. "All of Bank One's businesses,
except Credit Card, continue to perform within targeted ranges. We have a
comprehensive plan to rebuild First USA's performance close to industry levels
by the end of 2000."
1999 Fourth Quarter Highlights - Operating Results
Highlights for the 1999 fourth quarter, compared with the year-ago quarter and
excluding items that are part of the special charge, were:
. Net interest margin declined to 4.98% on a managed basis, and managed
net interest income decreased 5%. Credit card margin compression was the
most significant factor.
. Managed noninterest income increased 2%, with increases in several
categories partially offset by lower credit card fees.
. Noninterest expense declined $135 million, or 5%.
. Return on average common equity was 18.0%.
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<PAGE>
-2-
1999 Fourth Quarter Special Charge
Several items comprise the $725 million pre-tax special charge in the 1999
fourth quarter, including the following:
. $197 million related to the early adoption of the Federal Financial
Institutions Examination Council's (FFIEC) new consumer credit guidelines. Of
that, $176 million represented an increase in provisions for credit losses,
reflecting Bank One's overall assessment of its allowance for credit losses
in light of the FFIEC's new guidelines and other relevant risk factors. An
additional $21 million of noninterest expense for credit card fraud losses is
related to the new guidelines, which require a shorter time frame for
recognizing fraud losses.
. $187 million for the write-down of certain assets and other charges at First
USA, Bank One's credit card company. The projected earnings decline at First
USA, including revised marketing plans, led to the impairment of such assets,
including purchased account relationships, affinity programs and interest-
only strips.
. $80 million for deterioration in auto lease residual values.
. $261 million related to specific business restructuring plans and other
charges. The restructuring component of this charge is for personnel-related
costs, identified asset write-offs, and termination costs associated with
lease and other vendor contracts.
The financial information attached to this press release includes a supplemental
income statement that adjusts the individual income and expense categories for
the $725 million charge.
FOURTH QUARTER PERFORMANCE REVIEW - OPERATING BASIS
The following discussion is on a managed basis, excluding the special charge in
the 1999 fourth quarter and merger-related and restructuring costs and gains in
1999 and in the 1998 fourth quarter. 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 credit losses as if
the securitization had not occurred.
Net Interest Income and Margin
Managed net interest income was $3.497 billion on a tax equivalent basis in the
fourth quarter, compared with $3.682 billion in the 1998 fourth quarter. This
5% decrease reflected the decline in the net interest margin to 4.98% from
5.67%, partially offset by 8% growth of earning assets. Compared with the year-
ago quarter, average commercial and consumer loans increased 10% and 11%,
respectively, while credit card loans grew 4%. The most significant causes of
the declining margin were the lower margin on credit card loans, reflecting
customer attrition and lower late fees, and modestly higher funding costs.
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-3-
The fourth quarter's managed net interest income was down 4% from the 1999 third
quarter. The managed net interest margin declined 34 basis points to 4.98%,
principally reflecting credit card margin compression and modestly higher
funding costs. Average loans grew 8% on an annualized basis.
Noninterest Income
Managed noninterest income was $1.577 billion in the fourth quarter, 2% higher
than the 1998 fourth quarter.
Market-driven revenue was $123 million in the fourth quarter, compared to $99
million in the 1998 quarter. Higher trading profits and equity securities gains
were partially offset by lower net gains on investment securities. During 1999,
market-driven revenue averaged $165 million per quarter.
Fee-based revenue was $1.268 billion in the fourth quarter, down 4% from 1998's
fourth quarter. Credit card fee revenue declined $92 million, or 21%, almost
entirely due to an $85 million decrease in net securitization gains. There were
net maturities of credit card securitizations totalling $1.7 billion in the 1999
fourth quarter.
Other noninterest income increased to $186 million in the 1999 fourth quarter
from 1998's $122 million. The increase was related to several items, including
gains on sales of banking centers and other assets. Other noninterest income
levels were relatively constant throughout the 1999 quarters.
Noninterest Expense
Noninterest expense was $2.672 billion in the fourth quarter, excluding special
charges, down $135 million or 5% from the 1998 fourth quarter.
Noninterest expense increased $91 million or 4% from the third quarter, the
largest component of which reflects higher incentive compensation and retention
benefits for middle management. There were smaller increases in other
categories. Offsetting these increases was a $111 million decrease in marketing
expense, reflecting lower credit card solicitation costs.
Merger-related expense synergies continue to reduce operating expenses.
Incremental merger synergies were $25 million in the fourth quarter, bringing
the cumulative merger savings for 1999 to $475 million, slightly exceeding the
original target of $465 million for the full year.
For the twelve months, total operating expense increased 3% over 1998, in line
with the target for the year.
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<PAGE>
-4-
Provision for Credit Losses and Credit Quality
The managed net charge-off ratio was 1.99% in the fourth quarter, down from
2.01% in the third quarter, but higher than last year's 1.88%. The 1999 fourth
quarter ratio excludes the one-time $143 million of consumer loan charge-offs
and $183 million of securitized credit card charge-offs related to the early
adoption of the new FFIEC's guidelines. These are not indicative of the ongoing
charge-off rate for such assets.
Total managed net charge-offs were $1.446 billion, an increase from $1.105
billion in the third quarter and $976 million in 1998's fourth quarter.
Excluding the one-time charge-offs associated with the early adoption of the new
FFIEC guidelines, managed net charge-offs were $1.120 billion in the 1999 fourth
quarter.
Credit card managed net charge-offs increased to 5.45% in the fourth quarter
from 5.33% in the prior quarter and 4.79% in the year-ago quarter. Commercial
net charge-offs were 0.30%, reflecting strong recoveries, down from 0.40% in the
third quarter and 0.38% in 1998's fourth quarter. Consumer loan net charge-offs
of 0.72% were up from 0.62% in the prior quarter, but down slightly from 0.74%
in the year-ago quarter.
Nonperforming assets were $1.159 billion at the end of the fourth quarter, up
slightly from $1.140 billion at September 30, 1999. The nonperforming asset
ratio was 0.71% at December 31, 1999, and the allowance for credit losses was
1.39% of loans.
Capital
The common equity to assets ratio was 7.4% at December 31, 1999. Tier 1 and
total capital ratios were 7.5% and 10.5%, respectively. Since the authorization
of a 65 million-share repurchase program in the 1999 second quarter, 37 million
shares have been repurchased. No shares were repurchased in the fourth quarter.
BANK ONE CORPORATION, headquartered in Chicago, is the nation's fourth largest
bank holding company, with assets of more than $260 billion. Bank One offers a
full range of financial services to commercial and business customers and
consumers. It is the world's second largest VISA/Mastercard issuer, the third
largest bank lender to small businesses, a leading national automotive lender,
and one of the top 25 managers of mutual funds. A leader in the retail market,
Bank One operates more than 1,800 banking centers and a nationwide network of
ATMs. In addition, it is a major commercial bank in the United States and in
select international markets.
###
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<PAGE>
-5-
Information about Bank One's financial results can be accessed on the Internet
at www.bankone.com or through fax-on-demand at 877-ONE-FACT. The telephone
number for the recorded message discussing the fourth quarter's results is 888-
203-1112 (domestic) or 719-457-0820 (international), access code 877212. The
replay of the January 11, 2000, analyst presentation and conference call has
been extended to Friday, January 21. The telephone number for the replay is
800-625-5288, access code 645205.
Media Contact:
Thomas A. Kelly (312) 732-7007
Investor Contacts:
Jay S. Gould (312) 732-5771
Holly E. Hobson (312) 732-5782
Sandra M. Catanzaro (312) 732-8013
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Dec 31 Three Months
Financial Highlights ---------------------------------- Ended
($ millions, except per-share amounts) 1999 1998 % Change Sept 30, 1999
- -------------------------------------- --------- -------- -------- -------------
<S> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Earnings -- Basic $ 0.36 $ 0.19 89 $ 0.79
-- Diluted 0.36 0.19 89 0.79
Dividends 0.42 0.38 11 0.42
INCOME STATEMENT DATA
- ---------------------
Net income $ 411 $ 226 82 $ 925
Net interest income (FTE) 2,221 2,368 (6) 2,271
Provision for credit losses 416 272 53 277
Noninterest income 1,782 2,068 (14) 2,098
Restructuring charges and merger-related costs 358 1,049 (66) 132
Operating expense(1) 2,672 2,807 (5) 2,581
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin -- managed 4.98% 5.67% 5.32%
-- reported 3.79 4.40 4.04
Return on assets 0.62 0.37 1.44
Return on common equity 8.2 4.4 18.2
Efficiency -- managed 62.1 75.4 52.1
-- reported 75.7 86.9 62.1
BALANCE SHEET DATA
- ------------------
Average: Loans -- managed $224,746 $207,471 8 $ 220,215
-- reported 160,594 149,146 8 157,967
Earning assets -- managed 278,703 257,413 8 270,279
-- reported 232,380 213,411 9 223,205
Total assets 265,025 243,515 9 254,643
Deposits 157,619 150,247 5 155,612
Common equity 19,817 20,067 (1) 20,142
End of Period: Loans -- managed 229,196 216,391 6 222,117
-- reported 163,877 155,398 5 158,143
Total assets 269,425 261,496 3 264,135
Deposits 162,278 161,542 - 156,900
Common equity 19,900 20,370 (2) 19,860
Twelve Months Ended Dec 31
Financial Highlights ----------------------------------
($ millions, except per-share amounts) 1999 1998 % Change
- -------------------------------------- --------- -------- --------
<S> <C> <C> <C>
PER SHARE DATA
- --------------
Earnings -- Basic $ 2.97 $ 2.65 12
-- Diluted $ 2.95 2.61 13
Dividends 1.68 1.52 11
INCOME STATEMENT DATA
- ---------------------
Net income $ 3,479 $ 3,108 12
Net interest income (FTE) 9,142 9,469 (3)
Provision for credit losses 1,249 1,408 (11)
Noninterest income 8,692 8,071 8
Restructuring charges and merger-related costs 873 1,231 (29)
Operating expense(1) 10,617 10,314 3
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin -- managed 5.37% 5.56%
-- reported 4.09 4.52
Return on assets 1.36 1.30
Return on common equity 17.1 15.9
Efficiency -- managed 54.5 57.6
-- reported 64.4 65.8
BALANCE SHEET DATA
- ------------------
Average: Loans -- managed $218,602 $199,856 9
-- reported 156,855 154,952 1
Earning assets -- managed 269,237 248,621 8
-- reported 223,539 209,514 7
Total assets 256,491 239,790 7
Deposits 155,184 150,172 3
Common equity 20,264 19,508 4
</TABLE>
(1) Noninterest expense reduced by restructuring charges and merger-related
costs, including certain merger integration costs.
6
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Three Months Ended
----------------------------------------------------------
Consolidated Statement of Income Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
($ millions, except per-share amounts) 1999 1999 1999 1999 1998
- --------------------------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Interest income $4,548 $4,314 $4,236 $4,196 $4,326
Interest expense 2,360 2,072 1,925 1,916 1,989
----------------------------------------------------------
Net interest income 2,188 2,242 2,311 2,280 2,337
Provision for credit losses 416 277 275 281 272
----------------------------------------------------------
Net interest income after provision for credit losses 1,772 1,965 2,036 1,999 2,065
----------------------------------------------------------
Noninterest Income
Trading profits 17 30 33 67 (2)
Equity securities gains(losses) 100 86 133 96 61
Investment securities gains 2 6 34 52 32
----------------------------------------------------------
Market-driven revenue 119 122 200 215 91
Credit card revenue 648 907 920 952 1,078
Fiduciary and investment management fees 216 201 197 179 199
Service charges and commissions 701 671 723 690 680
----------------------------------------------------------
Fee-based revenue 1,565 1,779 1,840 1,821 1,957
Other income 98 197 182 554 20
----------------------------------------------------------
Total noninterest income 1,782 2,098 2,222 2,590 2,068
----------------------------------------------------------
Noninterest Expense
Salaries and benefits 1,081 970 1,073 1,147 1,167
Net occupancy and equipment expense 244 220 219 227 217
Depreciation and amortization 186 167 169 175 180
Outside services and processing 459 458 420 406 410
Marketing and development 230 341 302 315 340
Communication and transportation 216 205 208 200 214
Merger-related and restructuring charges 189 56 145 164 935
Other expense 425 296 270 307 393
----------------------------------------------------------
Total noninterest expense 3,030 2,713 2,806 2,941 3,856
----------------------------------------------------------
Income before income taxes 524 1,350 1,452 1,648 277
Provision for income taxes 113 425 460 497 51
----------------------------------------------------------
Net income $ 411 $ 925 $ 992 $1,151 $ 226
==========================================================
Net income attributable to common stockholders' equity $ 408 $ 922 $ 989 $1,148 $ 223
==========================================================
Earnings per common share
--Basic $ 0.36 $ 0.79 $ 0.84 $ 0.97 $ 0.19
--Diluted $ 0.36 $ 0.79 $ 0.83 $ 0.96 $ 0.19
Average common shares outstanding(millions)
--Basic 1,147 1,167 1,180 1,178 1,175
--Diluted 1,154 1,177 1,195 1,193 1,188
</TABLE>
7
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Twelve Months Ended
--------------------
<S> <C> <C>
Consolidated Statement of Income Dec 31 Dec 31
($ millions, except per-share amounts) 1999 1998
- -------------------------------------- ---------------------
Interest income $ 17,294 $17,524
Interest expense 8,273 8,177
---------------------
Net interest income 9,021 9,347
Provision for credit losses 1,249 1,408
---------------------
Net interest income after provision for credit losses 7,772 7,939
---------------------
Noninterest Income
Trading profits 147 141
Equity securities gains(losses) 415 250
Investment securities gains 94 155
---------------------
Market-driven revenue 656 546
Credit card revenue 3,427 3,276
Fiduciary and investment management fees 793 807
Service charges and commissions 2,785 2,645
---------------------
Fee-based revenue 7,005 6,728
Other income 1,031 797
---------------------
Total noninterest income 8,692 8,071
---------------------
Noninterest Expense
Salaries and benefits 4,271 4,477
Net occupancy and equipment expense 910 845
Depreciation and amortization 697 680
Outside services and processing 1,743 1,349
Marketing and development 1,188 1,024
Communication and transportation 829 781
Merger-related and restructuring charges 554 1,062
Other expense 1,298 1,327
---------------------
Total noninterest expense 11,490 11,545
---------------------
Income before income taxes 4,974 4,465
Provision for income taxes 1,495 1,357
---------------------
Net income $ 3,479 $ 3,108
=====================
Net income attributable to common stockholders' equity $ 3,467 $ 3,094
=====================
Earnings per common share
--Basic $ 2.97 $ 2.65
--Diluted $ 2.95 $ 2.61
Average common shares outstanding(millions)
--Basic 1,168 1,170
--Diluted 1,178 1,189
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Consolidated Balance Sheet Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
($ millions) 1999 1999 1999 1999 1998
- --------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 16,076 $ 15,325 $ 15,336 $ 13,854 $ 19,878
Interest bearing due from banks 6,645 5,145 3,953 4,130 4,642
Federal funds sold and securities under resale agreements 9,782 13,257 10,633 9,209 9,862
Trading assets 7,952 6,561 5,157 5,660 5,345
Derivative product assets 3,372 3,746 4,270 4,510 6,954
Investment securities (1) 47,912 47,971 45,197 44,565 44,852
Loans
Commercial 96,352 93,183 89,723 87,581 88,438
Consumer 63,488 58,944 59,613 57,869 57,926
Credit Card 4,037 6,016 8,128 9,400 9,034
--------------------------------------------------------
Total loans 163,877 158,143 157,464 154,850 155,398
Allowance for credit losses (2,285) (2,252) (2,250) (2,270) (2,271)
--------------------------------------------------------
Loans, net 161,592 155,891 155,214 152,580 153,127
Other assets:
Bank premises and equipment, net 3,317 3,279 3,253 3,235 3,340
Other 12,777 12,960 13,020 12,659 13,496
--------------------------------------------------------
Total other assets 16,094 16,239 16,273 15,894 16,836
--------------------------------------------------------
Total assets $269,425 $264,135 $256,033 $250,402 $261,496
========================================================
Liabilities
Deposits
Demand $ 31,194 $ 29,979 $ 33,881 $ 35,110 $ 39,854
Savings 64,435 65,906 64,511 63,378 62,645
Time 36,877 35,136 33,613 34,844 36,302
Foreign offices 29,772 25,879 24,449 20,367 22,741
--------------------------------------------------------
Total deposits 162,278 156,900 156,454 153,699 161,542
Federal funds purchased and repurchase agreements 18,720 20,493 19,710 20,111 23,164
Other short-term borrowings 21,211 19,405 16,649 16,780 16,937
Long-term borrowings 33,857 33,157 26,725 23,985 21,295
Guaranteed preferred beneficial interest in the
Corporation's junior subordinated debt 1,578 1,578 1,003 1,003 1,003
Derivative product liabilities 3,332 3,902 4,619 4,772 7,147
Other liabilities 8,359 8,650 9,823 8,992 9,848
--------------------------------------------------------
Total liabilities 249,335 244,085 234,983 229,342 240,936
--------------------------------------------------------
Stockholders' Equity
Preferred stock 190 190 190 190 190
Common stock 12 12 12 12 12
Surplus 10,799 10,740 10,762 10,734 10,769
Retained earnings 11,037 11,099 10,673 10,179 9,528
Accumulated other adjustments to stockholders' equity (263) (258) (146) 96 239
Deferred compensation (118) (128) (137) (151) (94)
Treasury stock (1,567) (1,605) (304) - (84)
--------------------------------------------------------
Total stockholders' equity 20,090 20,050 21,050 21,060 20,560
--------------------------------------------------------
Total liabilities and stockholders' equity $269,425 $264,135 $256,033 $250,402 $261,496
========================================================
Common Shares -- period-end (millions)
Common shares issued 1,182 1,182 1,182 1,180 1,179
Treasury shares 35 35 5 - 2
--------------------------------------------------------
Common shares outstanding 1,147 1,147 1,177 1,180 1,177
========================================================
(1) Includes the Corporation's undivided interest in securitized credit card receivables. As part of conforming accounting
practices, the Corporation's undivided interest in such receivables was reclassified from loans to investment securities in
1998.
</TABLE>
9
<PAGE>[B
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Fourth Quarter 1999 Third Quarter 1999 Fourth Quarter 1998
-------------------------- -------------------------- ------------------------
Average Balance Sheet, Yields, & Rates Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
($ millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate
- -------------------------------------- -------- ------- ------ -------- -------- ------ -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short-term investments $ 15,985 $ 215 5.34% $ 13,164 $ 159 4.79% $ 15,871 $ 177 4.42%
Trading assets (1) 6,614 125 7.50 6,185 110 7.06 5,961 85 5.66
Investment securities: (1)
U.S. government and federal agency 15,046 264 6.96 15,111 240 6.30 14,739 243 6.54
States and political subdivisions 1,646 30 7.23 1,765 32 7.19 2,086 43 8.18
Other (2) 32,495 567 6.92 29,013 522 7.14 25,608 568 8.80
----------------- ------------------- ------------------
Total investment securities 49,187 861 6.94 45,889 794 6.86 42,433 854 7.98
Loans (1) (3)
Commercial 93,491 1,862 7.90 91,186 1,719 7.48 85,018 1,633 7.62
Consumer 62,577 1,334 8.46 59,876 1,285 8.51 56,263 1,284 9.05
Credit Card (2) 4,526 184 16.13 6,905 276 15.86 7,865 324 16.34
----------------- ------------------- ------------------
Total loans, net 160,594 3,380 8.35 157,967 3,280 8.24 149,146 3,241 8.62
Total earning assets 232,380 4,581 7.82 223,205 4,343 7.72 213,411 4,357 8.10
Allowance for credit losses (2,294) (2,283) (2,700)
Other assets 34,939 33,721 32,804
-------- --------- --------
Total assets $265,025 $254,643 $243,515
======== ======== ========
Deposits -- interest-bearing
Savings $ 18,955 $ 70 1.47% $ 19,705 $ 74 1.49% $ 19,260 $ 105 2.16%
Money market 46,066 379 3.26 46,526 367 3.13 41,064 362 3.50
Time 36,083 481 5.29 34,842 425 4.84 36,790 496 5.35
Foreign offices 27,292 338 4.91 25,350 296 4.63 19,853 238 4.76
----------------- ------------------- ------------------
Total deposits -- interest-bearing 128,396 1,268 3.92 126,423 1,162 3.65 116,967 1,201 4.07
Federal funds purchased and securities
under repurchase agreements 19,126 245 5.08 17,557 213 4.81 23,171 260 4.45
Other short-term borrowings 19,550 297 6.03 17,337 237 5.42 13,847 181 5.19
Long-term debt 35,672 550 6.12 31,326 460 5.83 22,208 347 6.20
----------------- ------------------- ------------------
Total interest-bearing liabilities 202,744 2,360 4.62 192,643 2,072 4.27 176,193 1,989 4.48
Demand deposits 29,223 29,189 33,280
Other liabilities 13,051 12,479 13,784
Preferred stock 190 190 191
Common stockholders' equity 19,817 20,142 20,067
-------- -------- --------
Total liabilities and equity $265,025 $254,643 $243,515
======== ======== ========
Interest income/earning assets $ 4,581 7.82% $4,343 7.72% $ 4,357 8.10%
Interest expense/earning assets 2,360 4.03 2,072 3.68 1,989 3.70
---------------- -------------- --------------
Net interest margin $ 2,221 3.79% $2,271 4.04% $ 2,368 4.40%
================ ============== ==============
</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 $17.8 billion for
the fourth quarter of 1999, $15.2 billion for the third quarter of 1999, and
$14.3 billion for the fourth quarter of 1998.
(3) Nonperforming loans are included in balances used to determine the average
rate.
10
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Twelve Months Ended
------------------------------------------------------------------------
Dec 31, 1999 Dec 31, 1998
----------------------------------- -----------------------------------
Average Balance Sheet, Yields, & Rates Average Income Yield/ Average Income Yield/
($ millions) Balance Expense Rate Balance Expense Rate
-------- ------- ------ -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Short-term investments $ 13,976 $ 678 4.85% $ 14,632 $ 754 5.15%
Trading assets (1) 6,128 429 7.00 6,203 366 5.90
Investment securities: (1)
U.S. government and federal agency 15,228 1,008 6.62 16,683 1,102 6.61
States and political subdivisions 1,835 135 7.36 2,211 176 7.96
Other (2) 29,517 2,072 7.02 14,833 1,101 7.42
---------------------- ---------------------
Total investment securities 46,580 3,215 6.90 33,727 2,379 7.05
Loans (1) (3)
Commercial 90,182 6,812 7.55 82,118 6,382 7.77
Consumer 59,440 5,142 8.65 57,206 5,360 9.37
Credit card (2) 7,233 1,139 15.75 15,628 2,405 15.39
---------------------- ---------------------
Total loans, net 156,855 13,093 8.35 154,952 14,147 9.13
Total earning assets 223,539 17,415 7.79 209,514 17,646 8.42
Allowance for credit losses (2,290) (2,731)
Other assets 35,242 33,007
--------- ---------
Total assets $ 256,491 $ 239,790
========= =========
Deposits -- interest-bearing
Savings $ 19,866 $ 310 1.56% $ 20,710 $ 470 2.27%
Money market 44,730 1,445 3.23 39,115 1,458 3.73
Time 35,202 1,784 5.07 38,211 2,066 5.41
Foreign offices 24,157 1,112 4.60 18,489 949 5.13
---------------------- ---------------------
Total deposits -- interest-bearing 123,955 4,651 3.75 116,525 4,943 4.24
Federal funds purchased and securities
under repurchase agreements 19,711 935 4.74 21,685 1,090 5.03
Other short-term borrowings 17,857 942 5.28 13,790 737 5.34
Long-term debt 29,367 1,745 5.94 22,089 1,407 6.37
---------------------- ---------------------
Total interest-bearing liabilities 190,890 8,273 4.33 174,089 8,177 4.70
Demand deposits 31,229 33,647
Other liabilities 13,918 12,323
Preferred stock 190 223
Common stockholders' equity 20,264 19,508
--------- ---------
Total liabilities and equity $ 256,491 $ 239,790
========= =========
Interest income/earning assets $17,415 7.79% $17,646 8.42%
Interest expense/earning assets 8,273 3.70 8,177 3.90
-------------------- --------------------
Net interest margin $ 9,142 4.09% $ 9,469 4.52%
==================== ====================
</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 $16.0 billion for
the twelve months of 1999 and $5.8 billion for the twelve months of 1998.
(3) Nonperforming loans are included in balances used to determine the
average rate.
11
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------
Credit Quality Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
($ millions) 1999 1999 1999 1999 1998
- ------------------------------------------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Provision for credit losses $ 416 $ 277 $ 275 $ 281 $ 272
Gross charge-offs $ 468 $ 342 $ 354 $ 367 $ 377
Recoveries 85 75 79 86 80
----------------------------------------------------------
Net charge-offs $ 383 $ 267 $ 275 $ 281 $ 297
Net charge-offs
Commercial $ 71 $ 91 $ 81 $ 63 $ 80
Consumer 256 93 89 120 104
Credit card 56 83 105 98 113
----------------------------------------------------------
Total net charge-offs $ 383 $ 267 $ 275 $ 281 $ 297
Total net charge-offs -- managed $1,446 $1,105 $1,075 $1,028 $ 976
Net charge-off ratios
Commercial 0.30% 0.40% 0.36% 0.29% 0.38%
Consumer (a) 0.72 0.62 0.61 0.84 0.74
Credit card 4.95 4.81 4.93 4.34 5.75
Total net charge-off ratio (a) 0.60 0.68 0.71 0.73 0.80
Total net charge-off ratio -- managed (a) 1.99 2.01 1.99 1.93 1.88
Allowance for credit losses -- period-end $2,285 $2,252 $2,250 $2,270 $2,271
Nonperforming assets -- period-end
Nonperforming loans $1,053 $1,027 $1,032 $1,031 $ 729
Other, including other real estate owned 106 113 105 117 90
----------------------------------------------------------
Total nonperforming assets $1,159 $1,140 $1,137 $1,148 $ 819
Allowance to ending loans 1.39% 1.42% 1.43% 1.47% 1.46%
Allowance to nonperforming loans 217 219 218 220 312
Nonperforming assets ratio 0.71 0.72 0.72 0.74 0.53
Capital
($ millions, except per-share amounts)
- ------------------------------------------------
Common equity/assets ratio 7.4% 7.5% 8.1% 8.3% 7.8%
Tier 1 capital ratio 7.5 7.7 8.1 8.2 7.9
Total risk adjusted capital ratio 10.5 10.8 11.4 11.7 11.3
Regulatory leverage ratio 7.7 7.9 8.1 8.0 8.0
Book value of common equity per share $17.34 $17.32 $17.73 $17.68 $17.31
Intangibles -- period-end
Goodwill $ 934 $ 955 $ 973 $1,048 $1,075
Other intangibles 1,252 1,315 1,340 1,407 1,621
----------------------------------------------------------
Total intangibles $2,186 $2,270 $2,313 $2,455 $2,696
</TABLE>
(a) Ratios exclude $143 million of consumer charge-offs and $183 million of
securitized charge-offs taken in the fourth quarter of 1999, related to
early adoption of the Federal Financial Institutions Examination Council's
new consumer credit guidelines.
12
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Managed Income Statement Statistics(1) Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
($ millions) 1999 1999 1999 1999 1998
- ----------------------------------------------- -------- -------- -------- -------- --------
Reported
- -----------------------------------------------
Net interest income -- FTE $ 2,221 $ 2,271 $ 2,341 $ 2,309 $ 2,368
Provision for credit losses 416 277 275 281 272
Noninterest income 1,782 2,098 2,222 2,590 2,068
Noninterest expense 3,030 2,713 2,806 2,941 3,856
Net income 411 925 992 1,151 226
Securitized
- -----------------------------------------------
Net interest income -- FTE $ 1,276 $ 1,353 $ 1,334 $ 1,352 $ 1,314
Provision for credit losses $ 880 838 800 747 679
Noninterest income $ (396) (515) (534) (605) (635)
Noninterest expense - - - - -
Net income - - - - -
Managed
- -----------------------------------------------
Net interest income -- FTE $ 3,497 $ 3,624 $ 3,675 $ 3,661 $ 3,682
Provision for credit losses $ 1,296 1,115 1,075 1,028 951
Noninterest income $ 1,386 1,583 1,688 1,985 1,433
Noninterest expense 3,030 2,713 2,806 2,941 3,856
Net income $ 411 925 992 1,151 226
Managed balance sheet and net interest margin
- -----------------------------------------------
Total average loans $224,746 $220,215 $215,923 213,379 $207,471
Total average earning assets 278,703 270,279 265,488 262,283 257,413
Total average assets 311,348 301,717 298,249 297,296 287,517
Net interest margin 4.98% 5.32% 5.55% 5.66% 5.67%
(1) Managed data only adjusted for credit card securitization activity
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Managed Credit Card Detail Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
($ millions) 1999 1999 1999 1999 1998
- --------------------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Period-end loans - managed $ 69,356 $ 69,990 $ 69,459 $ 68,364 $ 70,027
- securitized (65,319) (63,974) (61,331) (58,964) (60,993)
- reported 4,037 6,016 8,128 9,400 9,034
Average loans - managed $ 68,678 $ 69,153 $ 68,947 $ 69,144 $ 66,190
- securitized (64,152) (62,248) (60,427) (60,108) (58,325)
- reported 4,526 6,905 8,520 9,036 7,865
Net charge-offs -- amount - managed $ 1,119 $ 921 $ 905 $ 845 $ 792
- securitized (1,063) (838) (800) (747) (679)
- reported 56 83 105 98 113
Net charge-offs -- rate (b) - managed 5.45% 5.33% 5.25% 4.89% 4.79%
- securitized 5.49 5.38 5.30 4.97 4.66
- reported 4.95 4.81 4.93 4.34 5.75
Delinquency rate -- 30+ days - managed 4.57% 4.74% 4.30% 4.51% 4.47%
- securitized 4.60 4.80 4.42 4.67 4.64
- reported 4.06 4.06 3.37 3.51 3.34
Delinquency rate -- 90+ days - managed 2.13% 2.07% 1.96% 2.06% 1.98%
- securitized 2.15 2.10 2.03 2.15 2.06
- reported 1.87 1.81 1.47 1.51 1.41
Credit card charge volume - managed $ 37,455 $ 36,128 $ 35,616 $ 33,484 $ 36,084
New accounts opened (thousands) - managed 1,076 1,835 2,287 2,910 2,919
Cardmembers (thousands) - managed 64,191 64,523 65,620 64,863 63,079
</TABLE>
(b) Ratios exclude $183 million of securitized charge-offs taken in the fourth
quarter of 1999, related to early adoption of the Federal Financial
Institutions Examination Council's new consumer credit guidelines.
14
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------
Supplemental Consolidated Statement of Income (1) Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
($ millions, except per-share amounts) 1999 1999 1999 1999 1998
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Interest income $ 6,522 $6,330 $6,171 $6,150 $6,283
Interest expense 3,058 2,735 2,526 2,518 2,632
-----------------------------------------
Net interest income 3,464 3,595 3,645 3,632 3,651
Provision for credit losses 1,120 1,115 1,075 1,028 951
-----------------------------------------
Net interest income after provision for credit losses 2,344 2,480 2,570 2,604 2,700
-----------------------------------------
Noninterest Income
Trading profits 21 30 33 67 6
Equity securities gains (losses) 100 86 133 96 61
Investment securities gains 2 6 34 52 32
-----------------------------------------
Market-driven revenue 123 122 200 215 99
Credit card revenue 351 392 386 347 443
Fiduciary and investment management fees 216 201 197 179 199
Service charges and commissions 701 671 723 690 680
-----------------------------------------
Fee-based revenue 1,268 1,264 1,306 1,216 1,322
Other income 186 197 182 194 122
-----------------------------------------
Total noninterest income 1,577 1,583 1,688 1,625 1,543
-----------------------------------------
Noninterest Expense
Salaries and benefits 1,081 970 1,073 1,147 1,167
Net occupancy and equipment expense 244 220 219 227 217
Depreciation and amortization 164 167 169 175 180
Outside services and processing 459 458 420 406 410
Marketing and development 230 341 302 315 340
Communication and transportation 216 205 208 200 214
Merger-related and restructuring charges - - - - -
Other expense 278 220 236 267 279
-----------------------------------------
Total noninterest expense 2,672 2,581 2,627 2,737 2,807
-----------------------------------------
Income before income taxes 1,249 1,482 1,631 1,492 1,436
Provision for income taxes 345 468 519 446 395
-----------------------------------------
Net income $ 904 $1,014 $1,112 $1,046 $1,041
=========================================
Net income attributable to common stockholders' equity $ 901 $1,011 $1,109 $1,043 $1,038
=========================================
Earnings per common share
--Basic $ 0.78 $ 0.86 $ 0.94 $ 0.89 $ 0.88
--Diluted $ 0.78 $ 0.86 $ 0.93 $ 0.88 $ 0.88
Average common shares outstanding(millions)
--Basic 1,147 1,167 1,180 1,178 1,175
--Diluted 1,154 1,177 1,195 1,193 1,188
</TABLE>
The above schedule is prepared on an operating managed basis.
- - Operating meaning that it excludes merger and restructuring related costs,
items making up the fourth quarter 1999 pretax special charge as well as the
effects of unusual events or transactions.
- - Managed results adds data on securitized credit card loans to reported data on
loans. The above schedule should be read in conjunction with the Corporation's
reported results. (see attached)
15
<PAGE>
<TABLE>
<CAPTION>
BANK ONE CORPORATION and Subsidiaries
Three Months Ended
------------------------------------------------------------------
Supplemental Managed / Operating Adjustments Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
($ millions, except per-share amounts) 1999 1999 1999 1999 1998
- -------------------------------------------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Interest income $ 1,974 $ 2,016 $ 1,935 $ 1,954 $1,957
Interest expense 698 663 601 602 643
--------------------------------------------------------------
Net interest income 1,276 1,353 1,334 1,352 1,314
Provision for credit losses 704 838 800 747 679
--------------------------------------------------------------
Net interest income after provision for credit losses 572 515 534 605 635
--------------------------------------------------------------
Noninterest Income
Trading profits 4 - - - 8
Equity securities gains(losses) - - - - -
Investment securities gains - - - - -
--------------------------------------------------------------
Market-driven revenue 4 - - - 8
Credit card revenue (297) (515) (534) (605) (635)
Fiduciary and investment management fees - - - - -
Service charges and commissions - - - - -
--------------------------------------------------------------
Fee-based revenue (297) (515) (534) (605) (635)
Other income 88 - - (360) 102
--------------------------------------------------------------
Total noninterest income (205) (515) (534) (965) (525)
--------------------------------------------------------------
Noninterest Expense
Salaries and benefits - - - - -
Net occupancy and equipment expense - - - - -
Depreciation and amortization (22) - - - -
Outside services and processing - - - - -
Marketing and development - - - - -
Communication and transportation - - - - -
Merger-related and restructuring charges (189) (56) (145) (164) (935)
Other expense (147) (76) (34) (40) (114)
--------------------------------------------------------------
Total noninterest expense (358) (132) (179) (204) (1,049)
--------------------------------------------------------------
Income before income taxes 725 132 179 (156) 1,159
Provision for income taxes 232 43 59 (51) 344
--------------------------------------------------------------
Net income $ 493 $ 89 $ 120 $ (105) $ 815
==============================================================
Net income attributable to common stockholders' equity $ 493 $ 89 $ 120 $ (105) $ 815
==============================================================
Earnings per common share
--Basic $ 0.42 $ 0.07 $ 0.10 $ (0.08) $ 0.69
--Diluted $ 0.42 $ 0.07 $ 0.10 $ (0.08) $ 0.69
</TABLE>
(1)The above schedule reflects the operating managed adjustments.
- Operating meaning that it excludes merger and restructuring related costs,
items making up the fourth quarter 1999 pretax special charges, as well as
the effects of unusual events or transactions.
- - Managed results adds data on securitized credit card loans to reported data
on loans. The above schedule should be read in conjunction with the
Corporation's reported results.
16
