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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (10347)	12/8/1999 7:15:00 PM
From: Justa Werkenstiff	Respond to of 15132

US Bancorp Warns 4th-Qtr, 2000 Profit to Fall Short Minneapolis, Dec. 6 (Bloomberg) -- U.S. Bancorp, the 12th- largest U.S. bank, warned fourth quarter and next year's profit won't meet its expectations after consumer lending slumped and higher interest rates made it difficult to boost profit from loans. The stock fell 28 percent. The Minneapolis-based bank said fourth-quarter earnings per share would be 52 cents to 54 cents, missing the average analyst estimate of 59 cents. For 2000, the bank expects to earn from $2.30 to $2.35 a share. Analysts expected $2.45 a share. Its stock fell 10 on the New York Stock Exchange to 25 1/8, a 52-week low. Trading volume was 18.3 million shares, making it the third most active of any NYSE stock. Chairman and Chief Executive Jack Grundhofer, whose strategy of buying banks and firing workers to cut costs earned him the nickname ''Jack the Ripper,'' said the bank will now spend more money to hire tellers to lure back borrowers and depositors. ''They've been so eager on taking out some of these expenses after acquisitions that they've taken their eye off their existing customer or franchise,'' bank analyst Diana Yates of A.G. Edwards & Sons said. She said that's the problem at U.S. Bancorp and other big Midwest banks that have run into trouble recently, as rising interest rates and competition for customers squeeze profit. Chicago-based Bank One Corp., the fifth-largest U.S. bank, warned twice in less than three months that 1999 profit would miss estimates because of lower profit from credit cards. Bank One was formed in last year's merger with First Chicago NBD Corp. National City Corp., Ohio's biggest bank, said last month that fourth-quarter profit would fall short of expectations as shrinking deposits and higher interest rates force the bank to pay more for the money it lends. KeyCorp, Ohio's No. 2 bank, said it would fire 11 percent of its staff, in a restructuring aimed at boosting profit at the 11th-largest U.S. bank. Hiring Tellers Grundhofer now says he will spend more to lure customers into branches. In 2000, U.S. Bancorp will spend an extra $50 million on additional tellers, branches and sales offices. Banks that a decade ago hoped to cut costs by eliminating tellers and pushing customers to automated teller machines and online banking are now returning to a more personal touch. They now want to use branches to sell customers non-banking products. Citigroup Inc.'s Citibank, one of the first to offer computer banking, is adding branch employees to help sell mutual funds and other investment products. Interest Squeeze At U.S. Bancorp, retail customers are valuable because they take high-interest home loans and credit card loans. But retail profit declined slightly this year, and the company projects it will grow just 3 percent to 5 percent next year. The bank also benefits from customer deposits, which haven't been as high as expected. Banks traditionally pay low interest on deposits, and then lend out that money at higher interest. When deposits are low, a bank borrows funds elsewhere at higher rates in order to satisfy loan demand from corporate customers. The result is a shrinking spread between what U.S. Bancorp pays for funds and charges on loans, which is hurting net interest income. While net interest income grew 8.5 percent in the third quarter of 1999 from the year-earlier period, it's expected to grow at half that pace in the fourth quarter, company executives said in a conference call. Grundhofer earned his nickname ''Jack the Ripper'' by cutting 2,000 jobs, or 20 percent of First Bank Systems' staff, when he became president of the bank in 1990. First Bank merged with U.S. Bancorp in 1997, taking its name. Last year the bank bought the Piper Jaffray brokerage, and has been acquiring small banks California. Dec/06/1999 16:26

To: Justa Werkenstiff who wrote (10347)	12/8/1999 7:27:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

Cracks in the Wall at Bank One Investors await answers as John McCoy's strategy unravels John B. McCoy cut a high profile as head of Bank One Corp., snatching rivals and shaking up the hidebound banking business. He transformed a regional company into a national contender, capped by last year's $19 billion buyout of First Chicago NBD Corp. But after a career of buying banks, McCoy himself may be forced to sell. Chicago-based Bank One is beset with problems--when most big banks are enjoying growing profits. Troubles range from a near disaster at First USA, the giant credit-card company it bought for $7 billion in 1997, to turmoil in the executive suite. McCoy promises that by early January, he'll provide answers about the future of the nation's fourth-largest and most ailing major bank. SECOND WARNING. But answers are late: Bank One's management was scheduled to brief Wall Street on Nov. 15 on its outlook for 2000. But five days earlier, execs called it off and instead stunned investors with their second warning in three months that profits would fall far short of earlier targets. Some analysts are increasingly skeptical about whether McCoy, the third generation of McCoys to run Bank One, can lead the behemoth he built. A spate of managerial shuffling doesn't augur well. Just a year after the First Chicago deal closed, Bank One's board in October stripped McCoy of most of his operating responsibilities and swapped his president's title for chairman. The board then handed Verne G. Istock, the 59-year-old former CEO of First Chicago NBD and then-chairman of Bank One, the president's title and responsibility for all of the bank's operations except First USA. Yet McCoy, 56, remains CEO, with the job of cleaning up First USA. As to questions about his leadership, he says: ''I'm comfortable with the support of the board, and we are moving forward.'' Meanwhile, high-level departures continue. James W. Stewart III, the head of Bank One's new Internet bank, Wingspanbank.com, is the latest: He announced his exit after First USA's chief executive and two key vice-chairmen said they were leaving. Now some investors are asking: Is First USA the only thing that ails Bank One? ''They keep assuring people it's First USA,'' says regional bank analyst Lisa Welch of John Hancock Funds Inc. ''It's still a question mark until management provides more information.'' Analyst Nancy A. Bush of Ryan, Beck & Co. adds: ''How long [McCoy] can stand this, I don't know. My guess is he gets out by engineering a sale of the company.'' A sale would be a cruel comedown for McCoy, who since the '80s had led the bank on a series of daring, high-stakes acquisitions. Fallout from the First USA deal has put a stop to that. The credit-card company produces both a third of the bank's earnings and most of its profit woes, according to the bank. While other huge issuers face similar pressures, Donaldson, Lufkin & Jenrette Securities Corp. analyst Moshe A. Orenbuch says First USA's problems are largely of its own making. It hooked customers with teaser rates as low as 2.9%. But when it jacked them up, many fled--especially when the company unfairly tacked on late charges, he notes. CUSTOMER FLIGHT. Big cracks appeared in the third quarter: 1.1 million customers left, new accounts plunged, earnings growth fell from 20% to below 15%. McCoy says the problems surprised him: ''This happened faster than I've seen things happen in the banking business.'' After Bank One issued its first profit warning on Aug. 24, shares plunged over 40%. Profits are off roughly 17% from original targets. And the bank is behind in delivering $275 million in revenue growth promised by 2001 from the First Chicago merger. With shares down and no plan yet for a First USA fix, Wall Street has labeled the company a takeover candidate. Asked about a sale, McCoy responds: ''You've got to do the right thing for the shareholder.'' But he adds: ''I don't think that there's any chance of somebody trying to take us over. I'll put it at 10%.'' Given the bank's recent history, investors may be hoping for higher odds.