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Bank One cuts more jobs, shores up earnings
Bank One Corp. has shed another 2,282 employees since October, the bank disclosed today, or 3 percent of its workforce. And its cost cutting is falling to the Chicago-based banks bottom line.
The bank recorded in $765 million operating income today, then trimmed that quarterly profit by nearly one-third with a $224 million restructuring charge announced last July. A year ago, Bank One posted a fourth-quarter loss.
While no Chicago bank branches were closed during the quarter, Bank One slimmed down throughout the system, closing an Austin, Texas credit-card call center. "We have several million square feet of real estate we dont need," said Bank One spokesman Thomas Kelly.
No report was available on Chicago job cuts, Kelly said. In 2001, the head count was cut by 7,259, or 9 percent. More job cuts are in the offing this year, including 800 previously announced in its Phoenix credit-card call center.
Even as the bottom line improved, the threat of business-loan defaults looms. Commercial banking profit dropped 28 percent as the bank raised its provisions for credit defaults and noninterest expense.
"While the credit deterioration in middle market has been disappointing, portfolio management efforts are in place to return the financial performance of this valuable franchise to an appropriate level," said Jamie Dimon, Bank One chairman and chief executive, in a statement.
Dimon said the bank expects consumer and middle market commercial nonperforming loans to increase, "given the current state of the economy." Dimon said he sees "managed charge-offs rising modestly for the foreseeable future."
The reported earnings of $541 million, or 46 cents a diluted share, were in line with Wall Street expectations.
"On the cost side, and the revenue side, theyve done a good job," said Robert Smalley, fixed income analyst with the HSBC Group in New York. "Their nonperforming loans were up about 14 percent (from the third quarter), which is in line with the other big banks in the industry, but their reserves have dropped in the quarter.
"Given that we are in a recession, I think they missed an opportunity to use the fourth quarter -which is a cleanup quarter for the industry - to set aside more reserves. I think this will increase their costs going forward."
Bank One shares closed 2.2 percent lower, trading down 85 cents on the New York Stock Exchange at $37.75.
Tribune news services contributed to this report. E-mail firstname.lastname@example.org