Bank One Corp. stunned the markets once again Wednesday, reporting that its fourth-quarter operating earnings would be as much as 15% lower than expected.
The banking company said in a statement released after a halt in the trading of its stock that its operating earnings for 1999 would be $3.45 to $3.55 a share.
The announcement came after the 4 p.m. close of the markets, but rumors earlier in the day drove Bank One's stock down 11.2%, to $34.625. The New York Stock Exchange halted trading in the stock minutes before the close, but the damage had been done.
The rumors were based on reports that the Chicago-based banking company had canceled an analysts' meeting scheduled to be held in New York on Monday. The bank did not return phone calls from journalists or analysts, but New York's St. Regis Hotel, where the meeting was to have been held, confirmed that the bank had canceled it before 1 p.m. Wednesday.
Wednesday's plunge in Bank One's stock aggravated its steep decline since late August, when the banking company said it would fail to meet third-quarter earnings expectations. The decline accelerated in mid-October when Bank One said its third-quarter earnings had dropped 12%.
With Wednesday's decline, Bank One's stock is down 37% from $55.8125 on Aug. 24, before the company announced it would not meet third-quarter earnings expectations.
Speculation became widespread that chief executive officer John B. McCoy's job would be on the line if he failed to fix Bank One's ills. In an interview with American Banker in October, Mr. McCoy acknowledged that "any CEO is in danger of losing his job." He said, however, that he expects to be in his job until he reaches retirement age of 65. He is now 56.
To assuage investors following the third-quarter earnings report, Bank One reshuffled its top management. Richard W. Vague, who was a rising star at the bank, suddenly resigned. Mr. Vague had been in charge of Bank One's First USA credit card unit and also had been responsible for the company's ambitious Internet banking strategy. The company attributed most of its problems to First USA.
At the time, Mr. McCoy's responsibilities were narrowed, and he now focuses primarily on getting the First USA Inc. unit back in shape. Though still CEO, Mr. McCoy's other title was changed to chairman, from president.
In his written statement Wednesday, Mr. McCoy again blamed Bank One's problems primarily on First USA: "In August we advised investors of the earnings pressure we were seeing at First USA," he said. "Bill Boardman, newly appointed head of First USA, and his team have done an excellent job in examining and understanding the details necessary to evaluate the core trends of First USA's businesses. Part of this review's findings, as well as the continuation of the trends noted in August, have resulted in the lower 1999 fourth quarter earnings outlook."