Bank One Corp.'s credit card problems brought down both its third-quarter earnings and the chief executive officer of its First USA subsidiary.

Along with its posting of a 12% earnings decline -- one that marred the otherwise stellar string of gains reported by top banking companies in recent days -- Bank One said Tuesday that Richard W. Vague, who until recently had been increasing his consumer credit responsibilities and taking on rising-star status, had "decided to resign to pursue other interests."

Bank One also announced a reshuffling of responsibilities between its top two executives, John B. McCoy and Verne G. Istock. Mr. McCoy, who had been president and chief executive officer, becomes chairman and CEO, with credit cards among the functions reporting to him.

Mr. Istock traded in the title of chairman for president and expanded his oversight in such areas as commercial and retail banking and investment management.

William Boardman, the architect of Bank One's mergers-and-acquisitions strategy in recent years and current chairman of the Visa International board, has moved into Mr. Vague's post as head of First USA, one of the two largest bank credit card companies.

The executive changes were announced after the stock market closed. Bank One shares fell 37.5 cents, or 1.13%, to $32.875 on a day when the American Banker index of the top 50 banking companies rose 3.23%. The stock prices of two other bank holding companies reporting earnings Tuesday, Wells Fargo & Co. and State Street Corp., jumped by around 5%.

Chicago-based Bank One, which warned analysts in August that it would be hurt by problems in its First USA subsidiary, saw its credit card net interest margin contract by 40 basis points from the second quarter to the third. That took the margin for the entire Bank One holding company down by 23 basis points.

"As expected, earnings from our credit card business declined," said Mr. McCoy. "We continue to be highly focused on stabilizing returns at First USA and generating fundamental growth for the future."

In a statement later in the day, after the Bank One board's announced endorsement of the organizational changes, Mr. McCoy said First USA and its "powerful information systems and direct marketing expertise remain key competitive strengths of the company." He said "marketing, pricing, and customer service issues" had slowed First USA's momentum, but he expressed confidence in Mr. Boardman's ability to turn things around.

Meanwhile, he said, he and Mr. Istock "are moving forward on several strategic initiatives regarding corporate direction, future earnings expectations, and cost structure," and a detailed report will be forthcoming at a previously scheduled presentation to analysts next month.

The $264 billion-asset holding company had net income of $925 million, depressed by $132 million in pretax merger charges as well as by the credit card performance. The earnings per share of 86 cents were in line with analysts' lowered expectations.

Within the First USA unit, cardholders declined by 2% from the second quarter to the third, to less than 65 million. New accounts shrank 20%, to 1.8 million. Total managed loans were $70 billion at the end of the quarter, a mere 1% increase from June 30. The growth pace is well below that of other major banking companies and monoline lenders.

Volumes and margins at First USA declined dramatically, pushing net interest income down to $2.2 billion, 3% below the second-quarter figure.

"If it weren't for First USA, the company would have posted a pretty solid quarter," said Joseph Duwan, an analyst with Keefe, Bruyette & Woods in New York. "The other aspects of the company are delivering as expected."

Analysts also said they are starting to see results from Bank One's merger last year with First Chicago NBD Corp.

Noninterest expense declined 2% from the second quarter, to $2.6 billion. The company said this reflects additional merger-related savings of $50 million, partially offset by higher marketing and consulting expenses. For the year to date, the company has achieved $450 million, or 97%, of its promised merger savings for 1999.

"Costs have really leveled off," said Pacific Crest Securities analyst James R. Bradshaw in Portland, Ore. "While they work through their revenue problems, at least expenses aren't really growing and they are well on track to achieve all their merger savings."

Bank One's commercial loan portfolio grew 14%, to $93.2 billion. Consumer loans climbed 5%, to $58.9 billion.

Record gains in retail and small-business banking helped Wells Fargo to a 30% year-to-year increase in earnings, to $962 million. At 57 cents a share, they matched the analysts' consensus estimate.

The $207 billion-asset banking company said net income from community banking, which includes all services and products offered to consumers and small businesses, increased 33%, to a record $747 million.

The merger of the old Wells Fargo in San Francisco with Norwest Corp. of Minneapolis "has produced sales momentum in community banking for the third consecutive quarter," said Wells Fargo chief operating officer Leslie S. Biller. In California, he noted, Wells sold 780,000 core banking products during the third quarter, an increase of nearly 5% from the second quarter.

Analysts said that injecting the much-touted Norwest sales philosophy into the Wells Fargo distribution network is starting to pay off.

"The adoption of the Norwest principles are certainly ringing up some big numbers in community banking," said Mr. Bradshaw, of Pacific Crest. "There's no question that the merger is doing well on revenue and asset growth," he added.

Norwest Mortgage reported a 32% decline from a year earlier in the origination of home loans. However, earnings from this business line still increased 25%, to $70 million, largely because of an 18% increase in Wells Fargo's servicing portfolio. Analysts said the decline in originations was due to the industrywide drop in refinancing, and was expected.

Shares of Wells Fargo ended Tuesday's trading at $41.625, up $2.125.

State Street of Boston reported a 13.5% gain in third-quarter profits, to $126 million, on double-digit increases in revenue from processing and asset management. The results, amounting to 77 cents a share, beat Wall Street's expectations by a penny.

Total revenues rose 10% over the 1998 third quarter, to $765 million. Fee revenues rose 12%, to $571 million, including a 17% gain from fund accounting, custody, and processing, to $297 million, and a 24% rise in revenue from investment management activities, to $155 million.

Expenses rose 9%, to $576 million.

Ronald L. O'Kelley, chief financial officer at the $53 billion-asset company, said it has been benefiting from technology efficiencies, which help to push costs down and attract new business.

Analysts said they were generally pleased with the results, though some said they had lingering concerns about prospects for revenue growth. Nancy Bush of Ryan Beck & Co. called it a "mixed picture."

State Street shares plummeted about 7% in one day in July after executives suggested that the rate of revenue growth may slow in the third and fourth quarters.

On Tuesday, the shares rose $3 to $63.0625.

Total revenues were flat from the second quarter to the third quarter. However, revenues from processing and asset management -- which analysts tend to track more closely at State Street -- grew at an annualized 18% rate.

State Street's results will not reflect the sale of the company's commercial banking operations until the fourth quarter. The company sold its remaining commercial operations -- $2.2 billion of assets and $1.6 billion of deposits -- to Providence, R.I.-based Citizens Financial Group earlier this month. Citizens is a subsidiary of Royal Bank of Scotland.

The bank estimated the sale, and thus the loss of interest income, would hurt earnings per share by five cents.

Pittsburgh-based Mellon, which officially changed its name this week from Mellon Bank Corp., said profits rose 6%, to $231 million, helped by strong growth in trust and investment management activities.

The $46.8 billion-asset company completed the sale of its mortgage operations to Chase Manhattan Corp. during the quarter, the last of three businesses it put up for auction in January. Proceeds from those sales were to be reinvested in faster-growing operations such as investment management.

Third-quarter results included a $8 million pretax loss related to the divestitures, which included the company's credit card, network servicing, and mortgage operations.

At 45 cents a share earnings missed analysts' expectations by a penny, if the loss is included.

Martin G. McGuinn, chairman and chief executive officer, said the performance indicates "our plans for investing in and building our high-growth, high-return businesses have been set in motion."

Fee income rose 6.3%, to $757 million. Trust and investment management revenue, which includes asset management, processing and custody, brokerage, and benefits consulting services, rose 18%, to $509 million.

Mellon said fees would have risen 9% if the effects of the divestitures were excluded. The third quarter did not include income from credit card operations and network servicing, both of which contributed in the corresponding quarter last year.

Because of the sale of the credit card business, which had $1.9 billion of receivables, to Citigroup in June, Mellon lowered its reserve for credit losses to $405 million from $498 million a year earlier.

The stock price rose 43.75 cents Tuesday, to $32.6875.

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