Banc One Corp. chairman John B. McCoy says his national ambitions are not just about empire-building. He views coast-to- coast capability as a key to survival in a rapidly consolidating industry.

Although Banc One already spans a dozen states from Ohio to Arizona, it still falls short geographically, Mr. McCoy said in a recent interview.

"Certain things we do are national," Mr. McCoy said, "but I don't think it's a truly national banking company."

That longing explains why Banc One, largely out of the acquisition game in 1995 and 1996, made a big splash in January with its surprising $7 billion deal to buy First USA Inc. The transaction came on the heels of a major internal restructuring.

If the First USA acquisition was a risky proposition, the restructuring, begun two years earlier and slated for completion by the end of this year, was a painful one. Both measures were critical to the company's future, observers said.

The restructuring brought in new management, cut 5,800 jobs (10% of the total), and is reducing the number of subsidiary banks to 12 from 59.

The consolidation of the banks will be completed in May, but the company has already been streamlined along five lines of business-retail, commercial, consumer finance, investment management, and credit cards.

All are national in scope, with the First USA acquisition underscoring where Banc One wants to go in the card game.

Through all this, Banc One has evolved into something vastly different from the loosely knit coalition of banks-which the company touted as its "uncommon partnership" system-that existed a few years ago.

It adds up to a radical turnabout for a company that fell from a perch as perhaps the most respected bank on Wall Street.

"I don't think they have any choice," said analyst Anthony Davis of Dean Witter Reynolds. "The pace at which banking is changing at this point doesn't allow them to sit idle."

After Banc One's earnings began to slide three years ago, analysts' love affair came to an abrupt halt.

"We had a feud-a lovers' quarrel-back in 1994, but the proclivity here is to fall in love with this company again," Mr. Davis said.

Even analysts who have been critical of Banc One are back to recommending its stock, the restructuring foremost on their minds. "We've not been an avid (Banc One) admirer for a while," wrote Nancy A. Bush, an analyst with Brown Brothers Harriman & Co. She called a recent upgrade "a bit of a shift in direction for us."

Mr. McCoy has attracted some intriguing new management blood, including former Pepsico executive Kenneth T. Stevens as chairman of the retail banking group. Richard W. Vague, president of First USA, will stay on to run the entire credit card business.

Mr. Stevens, who formerly ran Pepsico's Taco Bell unit, is promoting the Banc One brand nationally through a $9 million advertising campaign. He also is overhauling the sales and marketing culture.

The management of First USA is seen as vital to Banc One's success. If the economy tanks, the credit card specialist may have significantly increased Banc One's exposure to consumer losses.

Banc One estimates 28% of its 1997 earnings will come from credit cards, the single largest contributor. The $101.8 billion-asset bank will be the third-largest credit card issuer in the nation after the First USA purchase is completed.

"Did they just double down and throw their bet on a losing hand?" asked Mr. Davis. "That's the question being asked."

"What you're seeing in the credit card industry is an increase in bankruptcies, but everyone's still making money," Mr. McCoy responded. "It's not necessarily what the losses are. It's that you make more money than the losses."

Despite the risks, Mr. McCoy maintained that a primarily consumer banking company that makes no large corporate loans-which describes Banc One-has a low risk profile.

"I think being in the consumer business is the safest to be in," said Mr. McCoy. "It has much higher margins and much smaller loans. I can't tell you of a bank that has failed because of bad consumer loans."

But analysts also want to see strong revenue growth, something Banc One hasn't delivered over the past couple of years.

McDonald & Company Securities analyst Fred Cummings in Cleveland said he wonders whether Banc One will be able to meet its own revenue estimates.

The company predicts that 27% of its 1997 income will come from consumer, mortgage, and small business banking.

The reorganization is also expected to boost annual pretax income by more than $1 billion by 1999, Mr. McCoy said.

On the consumer finance front, Donald A. Winkler, chairman of the Finance One unit, said that Banc One will look to acquire companies or portfolios. Finance companies recently put on the market by Transamerica Corp. and BankAmerica Corp. will get a look, he said. Consumer finance is expected to provide 13% of the company's earnings, commercial lending 22%.

"Anything in financial services is fair game, so we're going to be constantly looking" at mergers in general, Mr. McCoy said. But the First USA deal will take at least a year or two to digest, he added.

The drive to buy First USA developed after Banc One was outbid for Boatmen's Bancshares of St. Louis last summer. Banc One wasn't willing to go as high as the $9.8 billion that NationsBank Corp. paid, Mr. McCoy said.

After losing Boatmen's, Mr. McCoy went on the prowl for a credit card specialist along with his merger expert, senior executive vice president William P. Boardman. Drawing on a prior relationship Mr. McCoy had with First USA chairman John C. Tolleson, the two Banc One executives went to Dallas. The negotiations that began at a dinner with Mr. Tolleson took about a month to hash out.

Mr. McCoy said the transaction came together at just the right time. He had been interested in acquiring a business outside traditional banking for a while.

"We looked quite hard at a very large asset management company a few years ago and we realized we didn't have the capability to make it work," Mr. McCoy said. Knowledgeable sources said that company was Dreyfus Corp., which was later acquired by Mellon Bank Corp.

Mr. McCoy said he felt Banc One could more easily integrate First USA than a large mutual fund company.

But that doesn't mean Banc One is no longer interested in going farther afield. "People say, 'When do you suppose McCoy is going to buy a mutual fund company?' " Mr. McCoy said. "But the time to buy one is not when it's at its peak."

The new Banc One looks markedly different than the one Mr. McCoy's father, John G., or his grandfather, John L., operated. About 25 years ago it began moving aggressively to expand throughout Ohio. In the 1980s that expansion went beyond Ohio and has since reached into 12 states.

Mr. McCoy, a lifelong Columbus resident, said he will continue to look outside his native Midwest for growth, including the Southeast, Southwest, and West Coast.

Mr. Cummings said Banc One would have liked to buy U.S. Bancorp, the Portland, Ore., holding company that agreed to a buyout by First Bank System Inc. two weeks ago. "But timing is everything in acquisitions," the analyst said.

"We'll continue to do deals until we can figure out how to acquire customers without acquiring banks," Mr. McCoy said.

In December, Banc One said it would buy $2.9 billion-asset Liberty Bancorp of Oklahoma City, strengthening its presence in the Sooner State. Banc One will rely on such smaller, "fill-in" acquisitions to keep up its short-term momentum while it integrates First USA.

"We have a big bird in the oven, and we want to make sure that bird is fully cooked," Mr. McCoy said.

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