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Commercial National and City Bank of Commerce of Columbus, Ohio merged to form City National Bank and Trust in 1.John H. McCoy became president in 15, starting a family dynasty. His son John G. McCoy took over for him in 158.In the 160's, City National hired a comedienne, Phyllis Diller to do its radio and TV commercials.The commercials launched Diller's career and made the bank famous.In 166, City National offered the first Visa credit Card outside of California.It also created the first drive-up bank, and was one of the first banks to use ATM's.Later, McCoy formed a holding company called First Bank Group of Ohio, which became Banc One in 17.As soon as interstate barriers collapsed, the bank moved into India, Kentucky, Michigan, and Wisconsin.
John B. McCoy, third generation of the banking family, became CEO in 184.During his reign, the bank acquired over 100 banks in the Midwest.The bank also bought over twenty failed banks and expanded into Texas in 18.In 11, the bank moved into Illinois.The bank entered a development alliance with Banco Nacional de Mexico in 1.The number three bank in Louisiana, Premier Bancorp, was purchased in 16.A year later, it added Liberty Bancorp, based in Oklahoma City.With the purchase of First USA in 17, Banc One became the third largest credit card issuer behind Citicorp and MBNA.
Bank One formed after a $ billion merger in 18 between Banc One of Columbus, OH and First Chicago NBD.The combined Bank One was 40% owned y First Chicago stockholders and 60% owned by Banc One, to become the fifth largest bank in the nation. (Later dropping to sixth)
In 11, Banc One's annual report announced the slogan "Building share-holder value by sticking to the nuts and bolts", with a focus on having a good understanding of the 'nuts and bolts' of the business.The strategy developed was straightforward and simple to continue the success of the organization.The 1 annual report, almost identical to the prior year, cited three basic strategies
Serving retail and middle market customers through community banks, with operation on local autonomy, plus a strong central financial and credit controls
Enhancements of retail products, competitive advantages, operating efficiencies and the generation of nontraditional bank revenue source, technologies
Bank acquisitions to be treated as ongoing lines of business, with a focus on pricing and management disciplines
Banc One had many challenges implementing the above strategies.Once having overcome the major tasks profits would increase.With opportunities, risks are also involved, with risk a strong management system must be in place to succeed. Banc One overcame acquiring problems by implementing "Uncommon Partnership philosophy".In this area Banc One would decentralize the people side of the business, centralize the paper and electronic transactions, and operations would occur under a 'superb financial management system'.Banc One also focused on the customer needs, with strong attention given to 'total quality management'.Banc One understood that measurement of an organizations competitiveness returns to the human and financial capital in place.Human capital was a focus with the decentralization of people.Financial capital was based on the Equity, according to McCoy.
"As to financial capital, equity is a prime determinant of growth, even survival, in the new banking environment.Banking organizations with the strongest capital positions have the most options as the industry continues to consolidate… they will be the survivors."
An extremely important element to the success of Banc One was the "McCoy factor." The bank was able to trace its roots back to 1868, with three generations of McCoy's molding the policies and practices of the bank.In the three generation of McCoy's in charge, Banc One began to invest in marketing, research and technologies, which would bring the organization ahead of the competition.As government regulations also changed, John G. McCoy expanded into other states successfully.As Banc One acquired banks, the local autonomy and keeping the existing management team in place was a primary focus.Systems were in place to assess these new "uncommon partnerships" by peer banks.These systems caused a great deal of "healthy competition" between the affiliates.Awards systems were implemented, a corporate ethics program was executed, new ways of communication were presented and many other systems of keeping employees involved and interested.A share and compare system was formed.Banc One also relied on its powerful financial control system, MICS to provide key operating information to assist with performance targets at all levels of the bank.
The uncommon partnership was a strategy that remained unchanged since the beginning of Banc One's time.Banc One focused on successful banks with proven records of accomplishment, with the policy of not overpaying, no hostile takeovers, and make no single acquisition with assets greater than one-third Banc One's size. In case of failure, it will not affect the bank dramatically.
Banc One's 10 year average performance from 18-1 was the perfect testament to their success. The below table includes ratios in comparison to the industry (competition).
Average 18-1Banc OneMedian 5 largest U.S. BanksBanc One Rank
ROA1.8%.67%1st
ROE16.11.71st
E/A7.75.61st
Efficiency Ratio65.00%
Bank One was formed after a $billion merger in 18 between Banc One of Columbus, OH and First Chicago NBD.Banc One had a large retail operation located primarily in the Midwest and Southwest.First Chicago NBD's strength lay in its long history of corporate lending to medium sized manufacturers.40% belonged to First Chicago stockholders and 60% owned by Banc One.With this merger, McCoy did something he had never done before, merged with an equal, thus causing the movement of the Bank One headquarters to Chicago.McCoy left the bank after both sides battled as to who was in charge and who should manage the business, as a result regional practices prevailed; resulting in the stock losing half its value in two years.
In 000, Bank One's board asked Jamie Dimon to take over as CEO.He inherited a badly managed, poorly organized bank.Dimon invested $56 million of his own fortune into the bank, and cut 8000 jobs.Dimon replaced 1 of the 1 top executive managers at the bank.Today Bank One is the sixth largest bank holding company in the U.S., with assets over $60 billion.The bank has 74,000 employees at ,000 branches in 14 states.
Below is a list of recent valuation ratios
Valuation RatiosCompanyIndustry
P/E Ratio (TTM)14.815.50
P/E High - Last 5 Yrs.115..44
P/E Low - Last 5 Yrs.8.810.45
Beta0.11.08
Price to Sales (TTM).754.7
Price to Book (MRQ).11.4
Price to Tangible Book (MRQ).11.84
Price to Cash Flow (TTM)1.61.0
Price to Free Cash Flow (TTM)NM4.77
% Owned Institutions6.766.48
Strength of Bank One is its management effectiveness.Below is a list comparing them to the industry
Management Effectiveness (%)CompanyIndustry
Return On Assets (TTM)1.181.5
Return On Assets - 5 Yr. Avg.0.11.
Return On Investment (TTM)5.6.
Return On Investment - 5 Yr. Avg.4.786.8
Return On Equity (TTM)15.1516.8
Return On Equity - 5 Yr. Avg.11.16.01
Bank One has a strong basis for future success.The bank was able to overcome culture changes, from the historic McCoy's to the strong leadership of Jamie Dimon.The most overwhelming weakness of different decentralized twisted mix of computer systems was triumphed over.A current weakness to the organization would be the continued lack of strong customer service.Dimon has placed that as a focus for future company success.Bank One also faces threats from competition in different regions that the bank hosted depending on the market.Bank One has great opportunities with future acquisitions, but also a focus on quality improvement in customer service.Although the challenges faced were for maintaining quality service, technical knowledge and teamwork.For the future Bank One should continue working on quality into customer service with in the middle market.The focus needs placement on empowerment of service individuals, professionalization of customer service and customer service technology.In the field of technology and the advancement of XML, the ability to call tracking is great opportunity for the banking industry.
The below list describes the ranking areas of Bank One
Rankings
6th largest bank holding company in the U.S.
#1 in ACH debit transactions; # overall
#1 Visa® credit card issuer
4th largest worldwide investment manager
7 million households served by our Retail Bank
# provider in the U.S. of corporate investment sweep accounts
5 million credit cards in circulation
4th largest active domestic fixed income manager and the 1th largest U.S. institutional internal tax-exempt manager
#5 lender to small businesses
5th largest Commercial Bank in the U.S.
The One Group® is the 16th largest mutual fund group in the U.S. and the rd largest bank-sponsored fund group
#11 in League Tables for full credit to book manager in investment grade securities
1 percent of One Group® assets are in funds ranked three-stars or better by Morningstar®, compared to 67 percent of funds industry wide
rd largest provider nationally of treasury management services to corporations
# bank provider of direct home equity loans
Banc One Insurance Group is the 4th largest bank-owned insurance group in
the U.S.
#4 as lead arranger by volume in syndicated loans
One of the top banks in the U.S. in selling annuities
#1 in retail and # in wholesale lockbox processing
rd largest credit card issuer in the U.S.
Banc One Capital Markets, Inc. ranked #6 in first half of 00 for Public/144A asset-backed securities
The Private Client Services group is one of the top 10 personal trust banks in the U.S.
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