Bank One Corp.'s second-quarter earnings report, viewed favorably by some analysts, has drawn a scathing response from Nancy Bush of Ryan, Beck & Co.
"We're finished with this one," Ms. Bush said, downgrading the company's shares to "hold" from "buy."
Bank One had a 9% increase in revenues for the quarter, on par with other banking companies. But Ms. Bush said she did not like the quality of these results.
"The company struggled to meet the numbers this quarter, and this battle is not going to get any easier," Ms. Bush said. "We think it is more likely the company will have to increasingly rely on equity gains and other financial engineering methods."
"We lowered our rating and will turn to companies where we have greater faith in the near-term earnings outlook and the long-term strategy," Ms. Bush said.
Bank One "may have thought it was a clean, strong quarter-but we didn't," she added.
Ms. Bush did give the company credit for expense reductions but said, "Revenue growth was not quite up to par, and it looks increasingly like the company will have to stretch to make consensus numbers this year."
The same earnings that Ms. Bush pilloried drew a different reaction from Joseph Duwan of Keefe, Bruyette & Woods Inc. They "were right in line with expectations," he said. "The expense side was among the positives."
"We're seeing more cost savings coming to the bottom line," Mr. Duwan added.
Diana P. Yates of A.G. Edwards & Sons said the Chicago banking company met her firm's expense reduction targets and the figure given for "other expenses" dropped $110 million from the first quarter on an operating basis.
"Following company guidance, we expect to see further progress on expense reductions related to the merger with First Chicago NBD and additional initiatives under way within the former Banc One operating structure," Ms. Yates said.
Bank One shares slipped 1.32%, to $56.0625, on Friday, as many bank stocks sold off.
Analysts attributed the activity to Fed Chairman Alan Greenspan's testimony before Congress on Thursday, which many saw as a hint that the central bank may hike rates again this year.
The Standard & Poor's bank index shed 1.18%, and the Dow Jones industrial average 0.53%. The S&P 500 dropped 0.30% and the Nasdaq bank index 0.87%.
Bank of America Corp. dropped 1.08%, to $66.625; Citigroup Inc. 1.17%, to $47.3125; and J.P. Morgan & Co. 2.02%, to $133.526.