Bank One's McCoy Real Gone Dave Marino-Nachison (TMF Braden)
December 21, 1999
Following a late 1999 that saw his company's stock take a dive Rodney Dangerfield would envy, longtime Bank One (NYSE: ONE) Chairman and CEO John McCoy resigned today, effective immediately. Investors cheered the news -- as they often do in the short term when management is shaken up during hard times -- as the shares rose more than 10% today.
McCoy, a member of the company's board since 1983 and the man who once relished the job of leading Bank One into the next decade -- the company merged with First Chicago NBD last year -- will be replaced as chairman by board member John Hall, retired chairman and chief executive officer of oil refiner and chemicals company Ashland Inc. Bank One President Verne Istock -- who ran First Chicago -- will act as CEO while the company looks for a full-time replacement.
While the company didn't issue an official reason for McCoy's departure, the Fool's archive tells the story pretty well. In late August, the company said slowing growth and margin pressure at its First USA credit card division (the nation's leading Visa issuer, purchased in 1997) was going to hurt results for the rest of the year as customer attraction and retention has become both more difficult and more costly. Click here for a Foolish take on the story.
And though some Fools might rejoice at tales of a credit card company hitting the skids -- and one did in a column that followed closely on the news' heels -- Bank One shareholders have suffered. Though we're not the types to have fun at investors' expense, readers might do well to revisit Bill Mann's Aug. 27 Fool on the Hill column, in which he notes that an environment that's bad for credit card issuers can be a good one for penny-wise Fools.
The bad news continued into the fall. Whether one saw the writing on the wall or not, the October management reshuffling has turned out quite portentous. Istock gave his chairmanship to McCoy and took over the president's duties, taking over the daily operations of some of the company's key businesses, a move precipitated in part by the resignation of First USA head and then-Chairman Dick Vague.
Not only did it presage further changes at the top, though, it also served as a precursor to a further scaling back of financial estimates thanks to a familiar problem. On Nov. 10, Bank One scaled full-year estimates even further back as Bill Boardman had filled in for Vague and his team's review found the picture even less attractive than it looked over the summer. McCoy canceled a scheduled investor update soon after; the CEO of the company's fledgeling WingSpanBank.com Internet operation trumped him a few days later by jumping ship.
Now investors are waiting not only to see who will step in and try to right Bank One's ship but just how leaky it really is; an update scheduled for next month will be hotly awaited. Investors should keep in mind that today's move was predicated not by change so much as the promise of it, and watch what follows closely. Despite its damaged stock, Bank One is still a large and powerful financial institution. What new leadership will do with it remains to be seen.
Bank One Message Board
Fool on the Hill, 8/27/99, "Reveling in Bank One's Struggles"
Breakfast With the Fool, 8/25/99, "Credit Card Woes at Bank One"