In July, James Dimon told Wall Street that Bank One Corp. was halving its dividend to conserve $1 billion per year.

On Wednesday, Wall Street learned where that billion dollars was going.

Bank One reported a $512 million loss for the fourth quarter, citing a $1 billion increase in loan reserves and steep losses in commercial and retail banking.

In a conference call with analysts Wednesday, James Dimon, chief executive officer of the Chicago banking company, promised to do better. It was the second time Bank One has reported a loss under his watch.

"These short-term results are absolutely unacceptable to our shareholders and to Bank One management," Mr. Dimon said.

The results amounted to a loss of 44 cents a share compared to the profit of 46 cents per share expected by analysts. In the fourth quarter of 1999, Bank One had gains of $411 million, or 36 cents a share, and its chairman, John B. McCoy, resigned after a series of disappointing quarters.

Mr. Dimon, the former president of Citigroup, was hired last March to shore up profits at the beleaguered company. He assured Wall Street Wednesday that he has not dropped the ball.

Bank One is making moves to jump-start the company and has undergone an "intensive review of businesses, systems, operations and the balance sheet," he said. "These actions bring us into 2001 with a strong balance sheet and capital position."

By reviewing its business units and operations, Bank One will have an "improved operating margin and solid core businesses," Mr. Dimon said. "The highest priority is to strengthen this company to become a top performer in all types of environments," he said.

Wall Street has an almost universal faith in Mr. Dimon's abilities to turn the company around, but some were skeptical Wednesday that the process would move ahead quickly.

"We wonder if there is not a bit of 'restructuring fatigue' that has set in," wrote Nancy Bush, an analyst at Prudential Securities, in a research note. "The rather dramatic and rapid way that he has shaken up this franchise is likely to result in some period of time in which the focus is inward - not toward the customer."

Bank One's moves in the fourth quarter reflect Mr. Dimon's determination to put the company's problems behind it for good.

"This is probably our last messy quarter," Mr. Dimon said Wednesday. "The substantial progress made this year on a number of fronts is crucial as we face a weakening economy with a possibility of further deterioration."

Bank One lost $385 million in its commercial banking unit in the fourth quarter and $17 million in its retail unit. The full year also ended up in the red, with a loss of $511 million, or 45 cents a share, compared to $3.4 billion of net income in 1999.

The company increased its allowance for loan losses by $1 billion, increasing the reserve ratio to 2.36%. Also, Bank One increased its auto lease loss reserve by $225 million, mainly because used car prices are declining and pinching margins, executives said. The bank also took a $100 million charge for miscellaneous balance sheet adjustments.

Bank One cut its 20 domestic bank charters to three, saving approximately $30 million. Bank One also consolidated its seven deposit systems into one.

To improve customer service and broaden its marketing, Bank One placed 14,500 personal computers in bank branches. The company also changed its compensation structure, slashing entitlement benefits for executives and increasing pay-for-performance incentives.

Mr. Dimon also pointed to Bank One's aggressive cutbacks. The company is in the process of eliminating approximately 5,800 jobs, or 7% of its work force.

Bank One's provision for credit losses was $1.078 billion, an increase of $965 million from the same period in 1999. Commercial nonperforming loans were 1.87% of total commercial loans, an increase from 1.10% in the fourth quarter of 1999.

Net chargeoffs were 1.24% of average commercial loans in the quarter, up from 0.33% a year ago. Meanwhile nonperforming assets, including commercial and consumer loans, were $2.5 billion in the fourth quarter, an increase of $437 million from the third quarter. Commercial nonperforming assets increased $285 million, while the consumer assets jumped $152 million.

Total managed net chargeoffs were $1.3 billion in the fourth quarter, 2.2% of total average managed loans.

Despite the fourth-quarter loss, Bank One is on the right track, said Brian Stephens, a partner at KPMG Financial Services. "It is mixed news," he said. "They have done a lot of hard work in 2000, but they have a lot of work to do. They have made all the right moves and have moved the ball substantially."

But the company will need to focus on revenue growth and concentrate on the credit cycle, Mr. Stephens said, and the rebound might take some time. "You don't turn these organizations around in one quarter," he said.

Bank One's stock fell 0.82%, to $38, in trading Wednesday.

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