<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) April 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 April 18, 2000, the Registrant issued a press release announcing its
first quarter 2000 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 April 18, 2000 Press Release regarding 1st
Quarter 2000 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: April 18, 2000 By: /s/ M. Eileen Kennedy
----------------- ------------------------------------
Title: Treasurer
2
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibits
- -------------- -----------------------
99(a) Registrant's April 18, 2000 Press Release
regarding 1st Quarter 2000 earnings.
3
<PAGE>
[BANK ONE CORPORATION Press Release Letterhead] Exhibit 99(a)
FOR IMMEDIATE RELEASE
- ---------------------
BANK ONE ANNOUNCES FIRST QUARTER NET INCOME
OF $0.60 PER SHARE
CHICAGO, April 18, 2000 - BANK ONE CORPORATION (NYSE: ONE) today announced 2000
first quarter net income of $689 million, or $0.60 per diluted share. Net income
was $1.151 billion in 1999's first quarter, or $0.96 per share, and $411 million
in the fourth quarter, or $0.36 per share.
The key factors in the first quarter's $462 million decline in net income
compared to the year-ago quarter were:
. A $233 million decline in Credit Card's net income contribution from $303
million to $70 million. The pretax return on average outstandings declined
to 0.6% from 2.6% in the year-ago period. Credit Card results do not
include a $78 million write-down of the interest-only (I/O) strip related
to securitizations.
. A $149 million, or 47%, increase in Commercial Banking's net income
contribution reflecting strong revenue growth, higher equity securities
gains, and lower expenses. Excluding the performance of Corporate
Investments, the Corporation's venture capital and leasing activities,
Commercial Banking's net income contribution grew 29%.
. A $24 million, or 10%, increase in Retail's net income contribution to $274
million.
. A $36 million, or 41%, increase in Investment Management's net income
contribution, which is included in the other lines of business results.
. A $296 million decline in the net income contribution from Other Activities
and Corporate/Unallocated. The principle causes of the decrease were:
. A $107 million pretax net gain ($0.06 per share) related to the sale
or committed disposition of up to $3.9 billion in non-strategic and
underperforming assets.
. A $78 million pretax charge ($0.04 per share) to reduce the carrying
value of the I/O strip. This impairment write-down reflects the
projected shortfall in cash flows in the credit card master trusts
associated with higher interest rates and credit costs.
. A $35 million pretax addition to the legal reserve ($0.02 per share)
based on the Corporation's current assessment of litigation exposures.
(more)
<PAGE>
-2-
. A $32 million pretax provision for credit losses not allocated to
business lines. The total provision for credit losses for the
Corporation exceeded net charge-offs by $96 million pretax ($0.05 per
share), primarily reflecting growth in commercial and non-credit card
consumer portfolios and deterioration in the commercial portfolio. The
allowance for credit losses at March 31, 2000, increased $53 million
from December 31, 1999, reflecting this $96 million net addition to
the allowance for credit losses, partially offset by a $43 million
reduction related to asset sales.
. Also contributing to the decline was the operating loss for
WingspanBank.com, lower investment security gains, and the effect of
higher interest rates not allocated to business lines.
. The 1999 first quarter included $105 million in after-tax gains from the
divestiture of Indiana banking centers and sale of an investment in
Electronic Payment Services, Inc. (EPS), which were partially offset by
merger-related expenses.
BASIS OF PRESENTATION
The following consolidated results and line of business presentations are on a
managed basis with information adjusted to include credit card loans that were
securitized and removed from the balance sheet. The net revenue related to these
securitized loans are reclassified from noninterest income to net interest
income and provision for credit losses as if the securitization had not
occurred.
CONSOLIDATED RESULTS
The 1999 quarters included a number of significant items primarily related to
merger activity and the impact of strategic initiatives, which are noted below
in the Line of Business Results discussion. The impact of these items was
excluded for comparison purposes.
On this basis, net income in the current quarter was down $357 million, or 34%,
from the year-ago quarter and down $215 million, or 24%, from the 1999 fourth
quarter. The highlights for the 2000 first quarter compared with the year-ago
quarter on this same basis were:
. Managed net interest income decreased $216 million, or 6%, reflecting a
decline in the net interest margin that was partially offset by the
positive impact of loan growth.
The managed net interest margin was 4.91%, down 75 basis points from a year
ago, primarily driven by the continued compression in the credit card
margin.
Average managed loans increased 8%, with strong growth in commercial and
consumer loans offsetting lower credit card receivables.
(more)
<PAGE>
-3-
. The provision for credit losses increased $244 million and exceeded current
period charge-offs by $96 million, primarily reflecting growth in
commercial and non-credit card consumer portfolios and deterioration in the
commercial portfolio.
. Managed noninterest income declined $111 million or 7%. This primarily
reflected a $53 million decline in credit card fees, a $47 million
reduction of securitization gain income, the $78 million I/O strip write-
down, and a $36 million increase in realized auto lease residual losses in
Retail. These decreases were partially offset by the $107 million net gain
related to the sale or committed disposition of non-strategic and
underperforming assets and other items.
. Noninterest expense decreased $76 million, or 3%, reflecting the benefits
of continued merger-related synergies, as well as the positive impact of
expense initiatives.
Credit Quality
Nonperforming assets were $1.190 billion at the end of the first quarter, up $31
million from $1.159 billion at December 31, 1999. The nonperforming asset ratio
was 0.71% at March 31, 2000, and the allowance for credit losses was 1.39% of
loans, both unchanged from December 31, 1999.
Total managed net charge-offs in the first quarter were $1.176 billion, or 2.04%
of total average managed loans, compared to $1.446 billion, or 2.57% in the
fourth quarter and $1.028 billion, or 1.93%, in 1999's first quarter. Excluding
the Federal Financial Institutions Examination Council (FFIEC)-related charge-
offs, managed net charge-offs were $1.120 billion, or 1.99%, in the 1999 fourth
quarter. The managed loan loss provision of $1.272 billion in the first quarter
exceeded managed net charge-offs by $96 million, consistent with growth in
commercial and non-credit card consumer portfolios, as well as identified credit
deterioration in the commercial loan portfolio.
Credit card managed net charge-offs were 5.78% in the first quarter, compared to
6.52% in the prior quarter (5.45% excluding the FFIEC-related charge-offs) and
4.89% in the year-ago quarter. As expected, account attrition and the seasoning
of the 1998 loan portfolio vintages were primarily responsible for the increase
during the quarter. Consumer loan net charge-offs of 0.76% were down from 1.64%
in the prior quarter (0.72% excluding the FFIEC-related charge-offs) and 0.84%
in the year-ago quarter. Commercial net charge-offs in the first quarter of 2000
were 0.34%, up from 0.30% in the fourth quarter and 0.29% in 1999's first
quarter. Continued credit quality deterioration in the commercial loan portfolio
is anticipated consistent with industry trends.
Capital Management
The common equity to assets ratio was 7.4% at March 31, 2000, unchanged from
December 31, 1999. Tier 1 and total capital ratios were 7.7% and 10.6%,
respectively, unchanged from December 31, 1999.
(more)
<PAGE>
-4-
LINE OF BUSINESS RESULTS
The following line of business review is on a managed basis. The Corporation's
1999 Annual Report on Form 10-K provides a description of the methodology used
to prepare the line of business financial information.
Highlights - Net Income by Line of Business
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
($ millions) % change vs.
1Q99 4Q99 1Q00 1Q99 4Q99
--------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Commercial banking $ 315 $ 388 $ 464 47% 20%
Credit card 303 205 70 (77) (66)
Retail 250 253 274 10 8
Other activities / unallocated 177 58 (119) NM NM
------ ----- -----
Total managed business segment
results 1,046 904 689 (34) (24)
Merger-related and other
significant items 105 (493) 0 NM NM
------ ----- -----
Total Corporation $1,151 $ 411 $ 689 (40) 68
Investment management $ 87 $ 122 $ 123 41 1
(included above)
Note: Amounts may not add due to rounding
NM = not meaningful
- -------------------------------------------------------------------------------------------------------
</TABLE>
Merger-Related and Other Significant Items
- ------------------------------------------
Merger-related and other significant items in the 1999 first quarter totaled
$156 million pretax ($105 million after-tax). These included a $249 million gain
on divestiture of Indiana banking centers and a $111 million gain on investment
in EPS, partially offset by $204 million of merger-related expenses.
In the 1999 fourth quarter such items totaled $725 million pretax ($493 million
after-tax). These consisted of $207 million for business restructuring charges,
$209 million of asset impairment charges, $197 million related to new guidelines
of the FFIEC, and $112 million for legal reserves and other asset write-offs.
All of the significant items for the 2000 first quarter were allocated to the
Corporate / Unallocated line of business.
(more)
<PAGE>
-5-
Commercial Banking
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Income Statement ($ millions)
Balance Sheet ($ billions) % change vs.
1Q99 4Q99 1Q00 1Q99 4Q99
----------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net interest income FTE $ 722 $ 791 $ 792 10% --%
Provision 105 114 103 (2) (10)
Noninterest income 582 618 721 24 17
Noninterest expense 754 765 754 -- (1)
Net income 315 388 464 47 20
Return on equity 18% 22% 24%
Efficiency ratio 58 54 50
Average loans $ 80.0 $ 87.1 $ 89.7 12 3
Average assets 116.2 122.7 125.6 8 2
Average deposits 46.1 47.8 47.9 4 --
Average common equity 7.1 7.1 7.8 10 10
Note: Amounts may not add due to rounding
NM = not meaningful
- --------------------------------------------------------------------------------------------------
</TABLE>
The 47% increase in Commercial Banking net income from 1999's first quarter
reflected a 16% increase in revenues and flat expenses. Commercial Banking
results excluding Corporate Investments increased 29%. Return on equity
increased to 24% in the first quarter with the efficiency ratio improving
significantly to 50%.
Net interest income increased 10% from the year-ago quarter, reflecting 12% loan
growth.
The provision, which is determined using the standard credit cost methodology,
was down slightly from a year ago. Nevertheless, the provision of $103 million
exceeded net charge-offs of $81 million.
Noninterest income rose 24%, related to higher market-driven revenue
(principally a $47 million increase in equity securities gains) and higher
revenue from treasury management products.
Improved efficiency held expenses flat with 1999's first quarter, partially due
to staff reductions.
(more)
<PAGE>
-6-
Credit Card
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Income Statement ($ millions)
Balance Sheet ($ billions) % change vs.
1Q99 4Q99 1Q00 1Q99 4Q99
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net interest income FTE $1,801 $1,572 $1,529 (15)% (3)%
Provision 840 933 969 15 4
Noninterest income 417 478 321 (23) (33)
Noninterest expense 927 815 776 (16) (5)
Net income 303 205 70 (77) (66)
Return on outstandings (pretax) 2.6% 1.7% 0.6%
Return on equity 20 13 4
Efficiency ratio 42 40 42
Managed net charge-off ratio 4.89 6.52 5.78
Average loans $ 69.1 $ 68.7 $ 67.1 (3) (2)
Average assets 75.2 75.2 73.0 (3) (3)
Average common equity 6.2 6.2 6.4 3 3
Note: Amounts may not add due to rounding
NM = not meaningful
- -------------------------------------------------------------------------------------------------------
</TABLE>
As expected, Credit Card earnings continued to be under pressure due to several
factors, including margin compression, receivables attrition, lower
securitization activity, and higher credit costs. Credit card net income
declined $233 million to $70 million, while the pretax return on outstandings
decreased to 0.6%.
Revenue in the first quarter declined 17% from the year-ago quarter and
noninterest expense was 16% lower. Average credit card receivables decreased 3%
to $67.1 billion from $69.1 billion. At quarter end, Credit Card had 56.4
million cardmembers. The decrease of 7.8 million cardmembers from 1999 year-end
reflected a purge of approximately 7 million inactive accounts following a year
of significant portfolio conversions. About one million new accounts were opened
during the quarter. Receivables attrition declined from about 17% at year-end to
16% at the end of the first quarter.
Significant margin compression and, to a lesser degree, lower receivables were
the principal causes of the 15% decline in net interest income from 1999's first
quarter.
The 23% decrease in noninterest income was related to net securitization
amortization expense in the current quarter, compared to securitization gains a
year ago, and lower service fee income. Noninterest expense declined 16% related
to reduced marketing, transaction volumes, staff reductions, and expense
initiatives. The impairment charge related to the I/O strip is included in
Corporate / Unallocated results.
The provision for credit losses increased to $969 million in the current quarter
from $840 million in the 1999 first quarter. The managed net charge-off ratio
was 5.78% for the first quarter, slightly better than expected. The managed
delinquency ratio was 4.08%, down from 4.57% at December 31, 1999.
(more)
<PAGE>
-7-
Retail
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Income Statement ($ millions)
Balance Sheet ($ billions) % change vs.
1Q99 4Q99 1Q00 1Q99 4Q99
---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net interest income FTE $1,083 $1,119 $1,221 13% 9%
Provision 133 116 166 25 43
Noninterest income 456 367 364 (20) (1)
Noninterest expense 1,034 999 1,010 (2) 1
Net income 250 253 274 10 8
Return on equity 22% 21% 20%
Efficiency ratio 67 67 64
Average loans $ 64.0 $ 68.8 $ 73.3 15 7
Average assets 70.7 75.1 79.7 13 6
Average deposits 90.9 87.6 88.3 (3) 1
Average common equity 4.7 4.7 5.4 15 15
Note: Amounts may not add due to rounding
NM = not meaningful
- -------------------------------------------------------------------------------------------------------
</TABLE>
Retail net income increased 10% from the 1999 first quarter to $274 million.
Compared to a year ago, consumer lending and indirect auto results were down,
though this was more than offset by strong performance in core Retail activities
including deposits, retail channels, and business banking. Return on equity was
20% in the first quarter.
The gain resulting from the sale of Banc One Financial Services' consumer
finance loans is included in Corporate / Unallocated results.
The 13% increase in net interest income was driven by improved deposit margin
and continued consumer loan growth.
The increase in provision also reflected consumer loan growth. The $166 million
of provision exceeded $126 million of charge-offs.
Noninterest income was down 20% versus one year ago reflecting a $36 million
increase in realized auto lease residual losses, lower gains on loan and
servicing sales, and the absence of securitization gains in the current quarter.
Total revenue increased 10% excluding these items, as well as the run-rate
effect of banking centers sold in 1999. Auto lease residual values continue to
be a risk that is monitored closely. The used car market continues to experience
pricing declines and, should this trend continue, could lead to impairment
charges.
Noninterest expense was down 2% versus 1999's first quarter related to ongoing
productivity gains, as well as the run-rate effect of banking centers sold. The
efficiency ratio of 64% demonstrates improvement from a year ago.
(more)
<PAGE>
-8-
Investment Management
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Income Statement ($ millions)
Balance Sheet ($ billions) % change vs.
1Q99 4Q99 1Q00 1Q99 4Q99
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total revenue $ 439 $ 442 $ 442 1% --%
Provision -- 1 2 NM 100
Noninterest expense 308 261 257 (17) (2)
Net income 87 122 123 41 1
Assets under management 124.8 126.0 126.0 1 --
Net income attribution:
Commercial Banking 59 85 86
Credit Card 15 25 20
Retail 13 12 17
------ ------ ------
Total 87 122 123
Note: Amounts may not add due to rounding
NM = not meaningful
- -------------------------------------------------------------------------------------------------------
</TABLE>
Investment Management net income, which is allocated to the other lines of
business, increased 41% to $123 million in the first quarter. Revenue increased
1% to $442 million. Year-over-year comparisons for Investment Management are
impacted by two items. The first was the sale of Roney & Company in May 1999,
and the second was the change to the equity method of accounting for the
investment in EquiServe Limited Partnership. Excluding these two items, revenues
increased 10% and expenses were essentially unchanged.
Compared with the 1999 fourth quarter assets under management were unchanged.
However, mutual fund assets increased 4%, while trust assets decreased 5%.
Other Activities
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Income Statement ($ millions)
Balance Sheet ($ billions)
% change vs.
1Q99 4Q99 1Q00 1Q99 4Q99
-------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net interest income FTE $ 25 $ (9) $ (5) NM% (44)%
Provision -- -- 1 NM NM
Noninterest income 136 48 60 (56) 25
Noninterest expense 32 50 37 16 (26)
Net income 96 (3) 11 (89) NM
Average assets 35.2 38.3 35.2 -- (8)
Average common equity 0.8 0.8 0.6 (25) (25)
Note: Amounts may not add due to rounding
NM = not meaningful
- ------------------------------------------------------------------------------------------------
</TABLE>
(more)
<PAGE>
-9-
Other Activities principally include the Corporation's investment portfolio and
WingspanBank.com. The 1999 quarters also included certain equity investment
activities that were targeted for exit and not managed by Commercial Banking. In
2000, the related residual activity is part of Commercial Banking. The $85
million decline in net income from the 1999 first quarter reflects this
organizational change, as well as lower realized investment securities gains as
interest rates have risen. Additionally, the 2000 first quarter includes the
operating loss of WingspanBank.com, which had not begun operations in the 1999
period.
Corporate / Unallocated
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Income Statement ($ millions)
Balance Sheet ($ billions) % change vs.
1Q99 4Q99 1Q00 1Q99 4Q99
--------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net interest income FTE $ 32 $ 22 $ (92) NM% NM%
Provision (49) (44) 32 NM NM
Noninterest income 32 68 48 50 (29)
Noninterest expense (9) 43 84 NM 95
Net income 81 61 (130) NM NM
Average common equity 1.5 1.1 (0.4) NM NM
Note: Amounts may not add due to rounding
NM = not meaningful
- -------------------------------------------------------------------------------------------------------
</TABLE>
Since the first quarter of 1999, the Corporation has followed a set of
allocation methodologies to develop line of business financial information. The
guiding principle is to closely reflect the core business performance and trends
through the use of standard allocations for items such as credit costs, funds
transfer pricing, economic capital, and indirect charges from corporate support
organizations. Unusual transactions are typically excluded from individual line
of business results with material items identified and quantified in Corporate /
Unallocated.
The $211 million decline in net income for Corporate / Unallocated in the 2000
first quarter was driven by the following:
. Net interest income declined $124 million from the 1999 first quarter to a
net expense of $92 million. Net interest income reflects $44 million of
interest rate risk not allocated to the lines of business and $47 million
for the cost to carry of unallocated net assets.
. The provision of $32 million related to credit costs not reflected in
standard credit costs allocated to the lines of business.
. Noninterest income of $48 million included the $29 million net impact of
the following two items:
(more)
<PAGE>
-10-
. A $107 million pretax net gain from the sale or committed disposition
of assets related to the Corporation's program announced in January
2000 to reduce non-strategic and underperforming assets. This
reflected a $157 million pretax gain from the sale of the $2.2 billion
of consumer finance loans by Banc One Financial Services to Household
International. This gain was partially offset by a net loss of $50
million related to the committed sale of $1.7 billion of consumer and
commercial real estate loans and investment securities.
. A $78 million impairment write-down of the I/O strip resulting from
credit card securitizations. The I/O strip write-down was the result
of reduced expectations for certain cash flows in the master trusts.
. Noninterest expense increased to $84 million due to the $35 million
addition to the litigation reserve and the timing of unallocated expenses
from the support areas.
BANK ONE CORPORATION is the nation's fourth largest bank holding company, with
assets of more than $270 billion. Bank One offers a full range of financial
services to commercial and business customers and consumers. It is the world's
second largest VISA/MasterCard issuer, the third largest bank lender to small
businesses, a leading national automotive lender, and one of the top 25 managers
of mutual funds. A leader in the retail market, Bank One operates more than
1,800 banking centers and a nationwide network of ATMs. In addition, it is a
major commercial bank in the United States and in select international markets.
###
Information about Bank One's financial results can be accessed on the
Internet at www.bankone.com or through fax-on-demand at 877-ONE-FACT. The
---------------
telephone number for the recorded message discussing the first quarter's results
is 888-203-1112 (domestic) or 719-457-0820 (international), access code 248665.
A conference call discussing the results will be held at 4:30 p.m. (EDT) today.
To participate, call 800-665-0430 (domestic) or 913-981-5591 (international); no
access code is needed.
Media Contact:
Thomas A. Kelly (312) 732-7007
Investor Contacts:
Jay S. Gould (312) 732-5771
Holly E. Hobson (312) 732-5782
Sandra M. Catanzaro (312) 732-8013
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months
Financial Highlights Three Months Ended Mar 31 Ended
--------------------------------------
($ millions, except per-share amounts) 2000 1999 % Change Dec 31, 1999
- --------------------------------------------------- --------- -------- -------- ------------
<S> <C> <C> <C> <C>
PER SHARE DATA
- --------------
Earnings -- Basic $ 0.60 $ 0.97 (38) $ 0.36
-- Diluted 0.60 0.96 (38) 0.36
Dividends 0.42 0.42 - 0.42
INCOME STATEMENT DATA
- ---------------------
Net income $ 689 $ 1,151 (40) $ 411
Net interest income (FTE) 2,228 2,309 (4) 2,221
Provision for credit losses 362 281 29 416
Noninterest income 1,821 2,590 (30) 1,782
Noninterest expense 2,661 2,941 (10) 3,030
FINANCIAL PERFORMANCE RATIOS
- ----------------------------
Net interest margin -- managed 4.91% 5.66% 4.98%
-- reported 3.78 4.30 3.79
Return on assets 1.03 1.85 0.62
Return on common equity 13.9 22.9 8.2
Efficiency -- managed 53.7 52.1 62.1
-- reported 65.7 60.0 75.7
BALANCE SHEET DATA
- ------------------
Average: Loans -- managed $ 230,186 $ 213,379 8 $ 224,746
-- reported 167,423 153,271 9 160,594
Earning assets -- managed 282,152 262,283 8 278,703
-- reported 237,313 217,909 9 232,380
Total assets 268,718 252,922 6 265,025
Deposits 160,730 154,148 4 157,619
Common equity 19,781 20,361 (3) 19,817
End of Period: Loans -- managed 229,673 213,814 7 229,196
-- reported 168,078 154,850 9 163,877
Total assets 273,008 250,402 9 269,425
Deposits 164,643 153,699 7 162,278
Common equity 20,081 20,870 (4) 19,900
</TABLE>
11
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------------------
Consolidated Statement of Income Mar 31 Dec 31 Sep 30 Jun 30 Mar 31
($ millions, except per-share amounts) 2000 1999 1999 1999 1999
- --------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Interest income $ 4,753 $ 4,548 $ 4,314 $ 4,236 $ 4,196
Interest expense 2,560 2,360 2,072 1,925 1,916
-----------------------------------------------------------
Net interest income 2,193 2,188 2,242 2,311 2,280
Provision for credit losses 362 416 277 275 281
-----------------------------------------------------------
Net interest income after provision for credit losses 1,831 1,772 1,965 2,036 1,999
-----------------------------------------------------------
Noninterest Income
Trading profits 64 17 30 33 67
Equity securities gains 143 100 86 133 96
Investment securities gains 15 2 6 34 52
-----------------------------------------------------------
Market-driven revenue 222 119 122 200 215
Credit card revenue 578 714 897 873 929
Fiduciary and investment management fees 195 216 201 197 179
Service charges and commissions 713 701 671 723 690
-----------------------------------------------------------
Fee-based revenue 1,486 1,631 1,769 1,793 1,798
Other income 113 32 207 229 577
-----------------------------------------------------------
Total noninterest income 1,821 1,782 2,098 2,222 2,590
-----------------------------------------------------------
Noninterest Expense
Salaries and benefits 1,098 1,081 970 1,073 1,147
Net occupancy and equipment expense 222 244 220 219 227
Depreciation and amortization 163 186 167 169 175
Outside services and processing 408 459 458 420 406
Marketing and development 226 230 341 302 315
Communication and transportation 212 216 205 208 200
Merger-related and restructuring charges (19) 189 56 145 164
Other expense 351 425 296 270 307
-----------------------------------------------------------
Total noninterest expense 2,661 3,030 2,713 2,806 2,941
-----------------------------------------------------------
Income before income taxes 991 524 1,350 1,452 1,648
Provision for income taxes 302 113 425 460 497
-----------------------------------------------------------
Net income $ 689 $ 411 $ 925 $ 992 $ 1,151
===========================================================
Net income attributable to common stockholders' equity $ 686 $ 408 $ 922 $ 989 $ 1,148
===========================================================
Earnings per common share
--Basic $ 0.60 $ 0.36 $ 0.79 $ 0.84 $ 0.97
--Diluted $ 0.60 $ 0.36 $ 0.79 $ 0.83 $ 0.96
Average common shares outstanding(millions)
--Basic 1,149 1,147 1,167 1,180 1,178
--Diluted 1,155 1,154 1,177 1,195 1,193
</TABLE>
12
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Balance Sheet Mar 31 Dec 31 Sep 30 Jun 30 Mar 31
($ millions) 2000 1999 1999 1999 1999
- ----------------------------------------------------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets
Cash and due from banks $ 15,267 $ 16,076 $ 15,325 $ 15,336 $ 13,854
Interest bearing due from banks 8,105 6,645 5,145 3,953 4,130
Federal funds sold and securities under resale agreements 10,998 9,782 13,257 10,633 9,209
Trading assets 5,587 7,952 6,561 5,157 5,660
Derivative product assets 3,207 3,372 3,746 4,270 4,510
Investment securities 47,459 47,912 47,971 45,197 44,565
Loans
Commercial 98,099 96,352 93,183 89,723 87,581
Consumer 65,087 63,488 58,944 59,613 57,869
Credit Card 4,892 4,037 6,016 8,128 9,400
-----------------------------------------------------------
Total loans 168,078 163,877 158,143 157,464 154,850
Allowance for credit losses (2,338) (2,285) (2,252) (2,250) (2,270)
-----------------------------------------------------------
Loans, net 165,740 161,592 155,891 155,214 152,580
Other assets:
Bank premises and equipment, net 3,266 3,317 3,279 3,253 3,235
Other 13,379 12,777 12,960 13,020 12,659
-----------------------------------------------------------
Total other assets 16,645 16,094 16,239 16,273 15,894
-----------------------------------------------------------
Total assets $ 273,008 $ 269,425 $ 264,135 $ 256,033 $ 250,402
===========================================================
Liabilities
Deposits
Demand $ 29,923 $ 31,194 $ 29,979 $ 33,881 $ 35,110
Savings 65,292 64,435 65,906 64,511 63,378
Time 40,263 36,877 35,136 33,613 34,844
Foreign offices 29,165 29,772 25,879 24,449 20,367
-----------------------------------------------------------
Total deposits 164,643 162,278 156,900 156,454 153,699
Federal funds purchased and repurchase agreements 18,451 18,720 20,493 19,710 20,111
Other short-term borrowings 18,261 21,211 19,405 16,649 16,780
Long-term borrowings 37,175 33,857 33,157 26,725 23,985
Guaranteed preferred beneficial interest in the
Corporation's junior subordinated debt 1,578 1,578 1,578 1,003 1,003
Derivative product liabilities 3,100 3,332 3,902 4,619 4,772
Other liabilities 9,529 8,359 8,650 9,823 8,992
-----------------------------------------------------------
Total liabilities 252,737 249,335 244,085 234,983 229,342
-----------------------------------------------------------
Stockholders' Equity
Preferred stock 190 190 190 190 190
Common stock 12 12 12 12 12
Surplus 10,679 10,799 10,740 10,762 10,734
Retained earnings 11,242 11,037 11,099 10,673 10,179
Accumulated other adjustments to stockholders' equity (358) (263) (258) (146) 96
Deferred compensation (165) (118) (128) (137) (151)
Treasury stock (1,329) (1,567) (1,605) (304) -
-----------------------------------------------------------
Total stockholders' equity 20,271 20,090 20,050 21,050 21,060
-----------------------------------------------------------
Total liabilities and stockholders' equity $ 273,008 $ 269,425 $ 264,135 $ 256,033 $ 250,402
===========================================================
Common Shares -- period-end (millions)
Common shares issued 1,181 1,182 1,182 1,182 1,180
Treasury shares 29 35 35 5 -
-----------------------------------------------------------
Common shares outstanding 1,152 1,147 1,147 1,177 1,180
===========================================================
</TABLE>
13
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 2000 Fourth Quarter 1999 First Quarter 1999
Managed (1) --------------------------- ---------------------------- -------------------------
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>
Assets
Short-term investments $ 15,451 $ 226 5.88% $ 15,985 $ 215 5.34% $ 14,141 $ 162 4.65%
Trading assets (2) 6,909 127 7.39 6,614 125 7.50 5,655 96 6.88
Investment securities: (2)
U.S. government and federal agency 15,641 258 6.63 15,046 264 6.96 15,365 245 6.47
States and political subdivisions 1,483 28 7.59 1,646 30 7.23 2,023 39 7.82
Other 12,482 138 4.45 14,666 155 4.19 11,720 120 4.15
------------------- ------------------ -----------------
Total investment securities 29,606 424 5.76 31,358 449 5.68 29,108 404 5.63
Loans (2) (3)
Commercial 97,973 1,941 7.97 93,491 1,862 7.90 87,058 1,582 7.37
Consumer 65,118 1,493 9.22 62,577 1,334 8.46 57,177 1,282 9.09
Credit Card 67,095 2,499 14.98 68,678 2,570 14.85 69,144 2,653 15.56
------------------- ------------------ ------------------
Total loans, net 230,186 5,933 10.37 224,746 5,766 10.18 213,379 5,517 10.49
Total earning assets 282,152 6,710 9.56 278,703 6,555 9.33 262,283 6,179 9.55
Allowance for credit losses (2,367) (2,294) (2,324)
Other assets 33,772 34,939 37,337
---------- ---------- ---------
Total assets $ 313,557 $ 311,348 $297,296
========== ========== =========
Liabilities and Stockholders' Equity
Deposits -- interest-bearing
Savings $ 21,828 $ 61 1.12% $ 18,955 $ 70 1.47% $ 19,975 $ 83 1.69%
Money market 42,720 400 3.77 46,066 379 3.26 43,377 356 3.33
Time 38,818 550 5.70 36,083 481 5.29 35,786 450 5.10
Foreign offices 29,443 378 5.16 27,292 338 4.91 21,357 233 4.42
------------------- ------------------ -----------------
Total deposits -- interest-bearing 132,809 1,389 4.21 128,396 1,268 3.92 120,495 1,122 3.78
Federal funds purchased and securities
under repurchase agreements 19,316 266 5.54 19,126 245 5.08 21,862 246 4.56
Other short-term borrowings 64,751 1,003 6.23 65,873 995 5.99 61,235 800 5.30
Long-term debt 36,484 607 6.69 35,672 550 6.12 23,903 350 5.94
------------------- ------------------ -----------------
Total interest-bearing liabilities 253,360 3,265 5.18 249,067 3,058 4.87 227,495 2,518 4.49
Demand deposits 27,921 29,223 33,653
Other liabilities 12,305 13,051 15,597
Preferred stock 190 190 190
Common stockholders' equity 19,781 19,817 20,361
---------- ---------- ---------
Total liabilities and equity $ 313,557 $ 311,348 $297,296
========== ========== =========
Interest income/earning assets $ 6,710 9.56% $6,555 9.33% $6,179 9.55%
Interest expense/earning assets 3,265 4.65 3,058 4.35 2,518 3.89
---------------- --------------- ---------------
Net interest margin $ 3,445 4.91% $3,497 4.98% $3,661 5.66%
================ =============== ===============
</TABLE>
(1) Managed data adjusted for credit card securitization activity.
(2) Includes tax-equivalent adjustments based on a 35% federal income tax rate.
(3) Nonperforming loans are included in balances used to determine the average
rate.
14
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------
Credit Quality Mar 31 Dec 31 Sep 30 Jun 30 Mar 31
($ millions) 2000 1999 1999 1999 1999
- -------------------------------------- --------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Provision for credit losses $ 362 $ 416 $ 277 $ 275 $ 281
Gross charge-offs $ 338 $ 468 $ 342 $ 354 $ 367
Recoveries 72 85 75 79 86
-----------------------------------------------------------
Net charge-offs $ 266 $ 383 $ 267 $ 275 $ 281
Net charge-offs
Commercial $ 84 $ 71 $ 91 $ 81 $ 63
Consumer 123 256 93 89 120
Credit card 59 56 83 105 98
-----------------------------------------------------------
Total net charge-offs $ 266 $ 383 $ 267 $ 275 $ 281
Credit card net charge-offs -- managed $ 969 $ 1,119 $ 921 $ 905 $ 845
Net charge-off ratios
Commercial 0.34% 0.30% 0.40% 0.36% 0.29%
Consumer 0.76 1.64 0.62 0.61 0.84
Credit card 5.45 4.95 4.81 4.93 4.34
Total net charge-off ratio 0.64 0.95 0.68 0.71 0.73
Total net charge-off ratio -- managed 2.04 2.57 2.01 1.99 1.93
Credit card net charge-off ratio-- managed 5.78 6.52 5.33 5.25 4.89
Allowance for credit losses -- period-end $ 2,338 $ 2,285 $ 2,252 $ 2,250 $ 2,270
Nonperforming assets -- period-end
Nonperforming loans $ 1,093 $ 1,053 $ 1,027 $ 1,032 $ 1,031
Other, including other real estate owned 97 106 113 105 117
-----------------------------------------------------------
Total nonperforming assets $ 1,190 $ 1,159 $ 1,140 $ 1,137 $ 1,148
Allowance to ending loans 1.39% 1.39% 1.42% 1.43% 1.47%
Allowance to nonperforming loans 214 217 219 218 220
Nonperforming assets ratio 0.71 0.71 0.72 0.72 0.74
Credit card delinquency rate - managed
30+ days 4.08% 4.57% 4.74% 4.30% 4.51%
90+ days 1.91% 2.13% 2.07% 1.96% 2.06%
</TABLE>
15
<PAGE>
BANK ONE CORPORATION and Subsidiaries
<TABLE>
<CAPTION>
Capital Mar 31 Dec 31 Sep 30 Jun 30 Mar 31
($ millions, except per-share amounts) 2000 1999 1999 1999 1999
- --------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Common equity/assets ratio 7.4% 7.4% 7.5% 8.1% 8.3%
Tier 1 capital ratio 7.7 7.7 7.7 8.1 8.2
Total risk adjusted capital ratio 10.6 10.7 10.8 11.4 11.7
Regulatory leverage ratio 7.7 7.7 7.9 8.1 8.0
Book value of common equity per share $ 17.43 $ 17.34 $ 17.32 $ 17.73 $ 17.68
Intangibles -- period-end
Goodwill $ 916 $ 934 $ 955 $ 973 $ 1,048
Other intangibles 1,192 1,252 1,315 1,340 1,407
--------------------------------------------------------
Total intangibles $ 2,108 $ 2,186 $ 2,270 $ 2,313 $ 2,455
Managed Income Statement Statistics(1)
($ millions)
- ---------------------------------------
Net interest income -- FTE $ 3,445 $ 3,497 $ 3,624 $ 3,675 $ 3,661
Provision for credit losses 1,272 1,296 1,115 1,075 1,028
Noninterest income 1,514 1,386 1,583 1,688 1,985
Noninterest expense 2,661 3,030 2,713 2,806 2,941
Net income 689 411 925 992 1,151
Managed credit card statistics
- ---------------------------------------
Period end loans - managed $66,487 $69,356 $69,990 $69,459 $68,364
Credit card charge volume 33,959 37,455 36,128 35,616 33,484
New accounts opened (thousands) 950 1,076 1,835 2,287 2,910
Cardmembers (thousands) 56,378 64,191 64,523 65,620 64,863
</TABLE>
(1) Managed data adjusted for credit card securitization activity
16
