John B. McCoy has just come off a dream year.

Banc One Corp., of which he has been chairman since 1987 and chief executive officer since 1984, reported a strapping 1.34% return on assets in 1992. Assets grew during the year by $15 billion, to $61 billion.

Deals struck last year made Columbus-based Banc One a major player in the recovering Southwest, and other acquisitions are pending.

But it was the managerial and strategic qualities underlying these feats that prompted the American Banker to name Mr. McCoy Banker of the Year.

Through his sharp focus on retail and middle-market banking, grasp of loan diversification, emphasis on management information technology, and overall leadership, "John hasdemonstrated that larger banking companies can operate at higher and more consistent levels of profitability than previously thought possible," says Henry Dickson, a banking analyst with Kemper Securities Inc., Chicago.

And in a deregulated and overcrowded industry, where commodity pricing prevails and differentiation rests squarely on service and a distinct corporate persona, "Banc One is the closest of any bank in the nation to having a sales culture," says Dennis Shea, a banking analyst with Morgan Stanley & Co.

Finally, the more than 100 acquisitions pulled off by Mr. McCoy have kept him at the forefront of industry consolidation. Acquisitions are a well-oiled line of business at Banc One, and Mr. McCoy has shown that he understands the difference between constructive assimilation and crude empire-building.

To be sure, Mr. McCoy, 49, is taking his share of risks.

As Banc One treasurer George Meiling puts it: "John didn't take this company from 71st largest to seventh largest by being scared of his shadow." Nowhere is it guaranteed that local economies, employees, and customers will rally to make each forthcoming Banc One takeover a success. And Mr. McCoy runs a balance sheet that is bursting with loans, yet relatively light on loss reserves.

Wall Street is impressed

Still, the depth of experience and skills in Mr. McCoy's management team go a long way toward reassuring Wall Street that Banc One can sustain its expansive and winning ways. Indeed, Mr. McCoy foresees at least a decade's worth of additional expansion.

Among acquisitive superregional banking companies, "Banc One is one of only two or three having a shot at becoming a truly national franchise," says George Salem, an analyst with Prudential-Bache Securities Inc.

Mr. McCoy's vision for Banc One says a lot about where the industry is going.

This lover of growth does not expect to see much support in the way of a strengthening economy and robust loan demand. "Life will be a little bit like it was after the Great Depression," he says.

Gun-shy lenders, regulatory red tape

Banc One and the industry at large will probably overreact to recent realty and commercial lending losses by limiting credit availability, Mr. McCoy says. Further inhibiting the industry, he says, will be the maze of new regulations.

As if conjuring up a long-lost era, Mr. McCoy fondly recalls how in 1955 forerunner City National Bank and Trust Co. accepted the pledge of a $1,000 car as collateral for a $5,000 loan. The recipient was John McConnell, who used the funds to establish Worthington Industries.

The banking industry is so far removed from being comfortable with risks of that sort "that no matter what President Clinton does, the economy won't grow," he says.

Going after market share

Marketing is one of Mr. McCoy's responses. By focusing on customer retention and distinctive service, Mr. McCoy wants to usher in an era when Banc One can grind out steady 1% and 2% annual gains in market share. "They do it in the toothpaste business," he says.

Shedding the traditionally dour banker's persona is key, and Mr. McCoy has taken the lead. Officers delight in recounting how Mr. McCoy and marketing executive Charles Sulerzyski once dressed up as the Blues Brothers for a product launch, dancing across a stage while mimicking a soul tune, then tossing dark sunglasses to the audience. In another episode, Mr. McCoy bounded into a meeting with officers of J.P. Morgan & Co. carrying a basketball and decked out in a gym uniform bearing the Banc One logo.

In a more serious vein, a major initiative supporting the marketing strategy is a $100 million computer system under joint development by Banc One, Norwest Corp., and Electronic Data Systems Corp. Not only does Mr. McCoy want to organize information around customers instead of accounts, he also wants software so adept that it alerts bank personnel to sales opportunities, and even makes credit pricing recommendations.

Overhauling incentive compensation is another key. Even though branch managers are the focal points of accountability and initiatives in marketing and customer service, "some branch managers may not make as much as the mortgage originators or brokers who work for them," Mr. McCoy says. "So part of the problem is the way we pay."

Expanding investment products

One challenge is partially out of Mr. McCoy's hands, and that is product expansion. This year the executive will install about 400 "personal investment centers" in branches, offering products such as discount brokerage, annuities, and mutual funds. But federal laws will have to be relaxed before he can generously blend depository, financial market, and insurance products.

"We must have an expansion of powers. We need to be able to offer the whole financial supermarket. The great risk in the 1990s is that choking rules make banks a non-event."

Mr. McCoy proposes to make capital even more of a determinant of bank powers. "Banks in great shape should get to do multiple things. Companies in poor shape don't get to do anything. Life is a hard road, and he who doesn't have capital doesn't get to do anything."

But even before Congress can be expected to loosen the reins, the banking industry must definitively put its house in order, says Mr. McCoy. "We've got to prove that the system works, and that the Federal Deposit Insurance Corp. won't pose a burden for taxpayers."

At the same time, federal lawmakers should correct disparities in the treatment of various financial intermediaries.

"Are we unique, or are there other financial industries deserving of close federal oversight? I think we eventually will witness the failure of a mutual fund, and when that happens, there will be a hoot, a holler, and yell like you've never heard before," he says. "And the Community Reinvestment Act ought to apply to everybody."

In the short run, ironically, the ever-tightening regulatory and economic constraints on the banking industry are very much to Mr. McCoy's liking. The costs of compliance, heaped atop outlays for technology and product development, help persuade targets to accept buyouts, knowing "they won't be able to play at our level," says Mr. McCoy, who holds out impending merger partner Valley National Corp. as an example.

Mr. McCoy, whose 1991 cash compensation was $1.8 million, enjoys buying banks, independent of the compelling rationale. And he has an enormous appetite. The executive gets tight-jawed, says Mr. Meiling, when he hears "of the closing of a deal where we didn't get invited to bid."

Will his weakness for deals get Banc One in trouble?

Investor concerns certainly erupted in 1992, when Mr. McCoy, in rapid fire succession, agreed to buy Team Bancshares Inc., Dallas; Affiliated Bancshares Inc., Denver; First Security Corporation of Kentucky, Lexington; and Valley National Corp., Phoenix.

And after explicitly promising not to do any more big deals after the Valley transaction in 1992, Mr. McCoy hauled off and bought $3 billion asset Key Centurion Bancshares, Charleston, W.Va. "He went ahead and did it, knowing there would be a reaction," confirmed a senior officer of Banc One.

Investors responded by knocking Banc One's stock for a loop. From $47.125 the day before the Valley announcement, it fell 10.6%, or $5 a share, to a third-quarter low of $42.125. "Obviously, Wall Street punished John for doing so many deals so close to each other," says Mr. Salem, the Pru-Bache analyst.

Critics do an about-face

Happily for Mr. McCoy, all of the banks he recently agreed to buy have shown sharply improving results, so much so that even formerly outspoken critics have changed their tune. "It seemed a big chunk to swallow, but now I feel confident all the deals will work," says Mr. Salem. The stock has more than regained all the ground it lost. It closed Tuesday at $52.50, or 245.9% of yearend book value.

Assimilation hasn't always been pretty, nor will it be. After buying the collapsed MCorp, for example, Banc One officials did not get all the cooperation they had counted on.

"We assumed that when certain problems were identified, people would take action, but that didn't always follow," says Thomas Hoaglin, former president and chief operating officer of Bank One Texas, in a 1992 interview. "Some people, who could not make the transition, we had to sever."

That's not to say that Mr. McCoy cut a raw deal in the Lone Star State.

Sure, it took federal property management fees, massive transfers of loans booked in the Midwest, and management strain that appeared to age Mr. Hoaglin 10 years, but Bank One Texas is now making money. The unit's third-quarter annualized return on average assets was 1.39% - better than any showing in the history of predecessor MCorp.

And Mr. McCoy has extended some truly auspicious opportunities to newcomers.

The first deal brokered by executive vice president William Boardman, who oversees the merger unit at Banc One, was for a $50 million-asset bank in Bellaire, Ohio, in 1984. In 1992, he presided over announced or completed deals encompassing $27.25 billion of assets and valued at $2.4 billion.

'Watching People Grow'

"I think of myself as chief personnel officer - the most fun thing is watching people grow," says Mr. McCoy.

That is not to say Mr. McCoy is a pushover. Appearing in Denver after agreeing to buy Affiliated, he was asked what he thinks about people who make mistakes. "You learn from mistakes, not from successes, so hold up your hand and tell us," he recalls replying. "But if you have a problem and don't tell, and it's a disaster, it's your ass."

The essential feedback mechanism for Mr. McCoy is his management information system, which allows virtually no significant transaction to go unreported for more than a week. The officers of PNC Financial Corp. have a saying: "If you can't measure it, you can't manage it." At Banc One, says Mr. Meiling, "If you can't measure it, it doesn't exist."

In a crisis, Mr. McCoy pulls together exactly the people he needs and focuses intently on the problem at hand. "His reaction is, 'Get the people we need, in this room, right now,' " says a Banc One officer. He shuns memos. His frequent response to suggestions: "Why would we want to do that?" Turf battles and parochial interests are squelched with a sometimes thundering, "We've got to do what's best for Banc One Corporation."

Unquestionably, the stakes are high for Mr. McCoy. Upon completion of all pending acquisitions, he will preside over a $74 billion-asset company with about 50,000 employees operating 1,300 offices in 11 states. That's a far cry from the $5 billion-asset company Banc One was a decade ago.

Perhaps not surprisingly, the growing complexity of the highly profitable Banc One is an elixir for Mr. McCoy. "If there isn't change," he says, "then I'm not going to be here, because it wouldn't be fun anymore."

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