Bank One Corp. said it will spotlight its fast-growing First USA credit card division-including the unit's full balance sheet-in its annual report this month.
This would be the first time since it bought the card company in 1997 that Chicago-based Bank One would disclose the unit's full balance sheet. In doing so, Bank One would adhere to new accounting procedures and following the lead of First Chicago NBD Corp., which it acquired last year.
The move is likely to set apart Bank One's annual report from most other banking companies' books, with their glossy covers, catchy slogans, and glowing letters from company chairmen.
"It is important, because Bank One has become more complex in the past few years," said analyst Joseph Duwan of Keefe, Bruyette & Woods Inc. "Some of the parts exceed the valuation of the company."
Bank One officials have long hoped the market would recognize the growth potential of First USA, which delivered about one-third of the parent's $3.1 billion of 1998 earnings.
Though shares of some of First USA's major competitors trade at more than 20 times estimated earnings, Bank One's shares trade at about 13 times estimated earnings. The stock was trading at $56.75 a share early Thursday afternoon, up 50 cents.
Bank One's shares "look especially undervalued when we consider the high value of First USA," Ruchi Madan, an analyst at PaineWebber Inc., wrote in a report this month. "However, we do not expect investors to appreciate the value of this company until clearer business line reporting is available and Bank One begins to produce merger synergies."
Some analysts have maligned Bank One for its high expenses, which have scared off some investors. Company officials contend they must invest heavily in high-growth areas of the company, including credit cards.
Mr. Duwan said the market would be more forgiving if it sees the company is spending a large amount on credit cards but that the business is producing high returns.
With $70 billion of receivables, Bank One's credit card operation is the nation's largest. In addition to First Chicago, which had a large credit card portfolio, Bank One bought the $4.9 billion portfolio of Chevy Chase Bank last year.
Bank One is not alone in highlighting a high-growth business. Mellon Bank Corp. of Pittsburgh has showcased since 1993 its huge asset management and trust operations. Other big banking companies reporting along business lines include Minneapolis-based U.S. Bancorp and Pittsburgh-based PNC Bank Corp.
"We want investors to understand, yes, it is Bank One, but here are the pieces of Bank One," said Thomas Kelly, a Bank One spokesman. "We think the more people understand our business, the more fairly and accurately they can value the company."
The other lines of business at Bank One are retail banking, commercial lending, consumer finance, and investment management.