Bank One’s EPS has been increasing since 1996, despite many mergers and acquisitions. The projected EPS for 1999 is $3.60 versus EPS of $2.61 in 1998 and $1.91 in 1999. Even though the company revised its earnings projections for the year due to a reassessment of earnings in the credit card segment, the projections still represent double-digit annual growth. With Bank One’s minor presence in capital markets businesses and limited international exposure, the company’s earnings should have greater protection from equity market disruption and global turmoil than at other major banks.
Bank One’s major local competitors are Comerica,
National City, and Standard Federal. Bank
One is the nation’s fifth largest bank, so it competes with the likes of Chase
Manhattan, Wells Fargo, Bank of America, and First Union.
Bank One, unlike other large conservative banks, is
making an explosive entrance into the online banking industry with its Wingspan
Bank. The first few entrants are
primarily creating the market for online banking, and as we have seen in other
online industries, the first few companies that create the market tend to also
dominate it. I find great growth
opportunities for Bank One through their online banking, in addition to the
wonderful banking model it provides.
The marketing strategy of Bank One is simple: Provide
customers with the service of a small community bank, while also providing them
with all the benefits of a large bank. Bank One keeps their customer’s needs in mind while
servicing them. Bank One keeps the
customer priority One.
The banking industry, heading into the new
millennium, is going to become more and more computerized and electronic.
Better technology will be needed as more consumers adapt to using the
internet, telephones, and ATMs for their transactions.
Customers want to feel secure with their money while making these
electronic transactions. I feel
that the banks with superior technology will have the best opportunities for
expansion, as many nation-wide customers can be added via the internet.
In the near future, with the passing of the recent financial industry
policies and bills, there will be many added mergers and acquisitions within the
financial industry as companies will want to become the one-stop-shop for all
your financial needs. This bill
will allow banks, insurance companies, and securities firms to merger, creating
financial giants.
Bank One’s strengths include its early position in
the online banking industry and also its limited exposure to equity market
disruption and global turmoil. Its
weakness is primarily the slowing credit card earnings.
This is a result of intensified competition and decreased margins.
I would rate this stock a buy right now, as it has declined dramatically
in the past few months, and due to the recent passing of policies having fired
up the under-performing financial industry.
I may wait a week or so to see if the price comes down after this run it
has made since the policy news, but if not, I would say this suggests strength
within the sector.