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Sunday, 01/14/2001

ONE - Bank One

Company Description

Bank One Corporation (NYSE:ONE), headquartered in Chicago, is the nation's fourth-largest bank holding company, with assets of more than $280 billion. Bank One offers a full range of financial services to large corporate and middle market commercial customers and retail consumers. It is the largest Visa(TM) credit card issuer, the third-largest bank lender to small businesses and one of the top 25 managers of mutual funds. A leader in the retail market, Bank One operates more than 1,800 banking centers and a nationwide network of ATMs.

(source: Bank One)

Reasons to Invest

Despite the turmoil in the finance sector over the past two quarters resulting from credit concerns, we are attracted to shares of Bank One at its current levels. Major regional banks have fallen out of favor on Wall Street recently due to bad loans to, and the subsequent defaults by, many telecom and Internet-related companies. The dot-com bubble was far reaching and afflicted the bottom-line of many investors and companies. In fact, Bank One reported a steep loss in its last quarter due to losses stemming from bad loans. The company was expected to report a profit of 45 cents per share, but actually recorded a loss of 44 cents. Staggering, to say the least! It begs the questions: Why Bank One and why now?

The answers to the two aforementioned questions are rudimentary: Interest rates are coming down and Bank One makes more money as that happens. With its surprise rate cut by 50 basis points earlier this year, the Federal Reserve made it clear that they were on the offensive in stimulating the economy. In an effort to fend off inflation and remove excesses from the capital markets, the Fed went on an interest rate raising binge over the last year, which caused many of the problems that Bank One subsequently faced. However, now that the tables have turned, Bank One stands to rebound as the cost of capital comes down.

Wall Street refers to Bank One as a spread-based financial institution. That is, the company makes money from lending. And as interest rates come down, Bank One purchases cheaper capital and loans it for a premium, thus making the spread.

Although we may here more of the bad loans on Bank One's books, the bad news has already been factored into its share price. While the good news of additional interest rate cuts has not been discounted into the stock. And as rates are slowly, but surely, ratcheted down, Bank One's shares should sail higher.

In our view of Bank One, it should be obvious that the company is highly impacted by the direction of interest rates. That said, the company's stock price will fluctuate with the ebbs and flows of rates over the long-term. However, Bank One would fill the niche of the finance component of an investor's properly diversified portfolio. Additionally, the stock does represent an attractive investment over the next 12 to 18 months as lower interest rates filter through the economy.

DRIP Information:

Shares to Qualify = 1		 Accept Foreign Accounts: Yes
Autoreinvestment  = no		 Temper Enrollment Serv:  Yes

Min/Max investment = $25 - $5,000/month
Reinvestment Fees: 
Dividend: 0   	   Cash:  0       Auto ReInvest: 0

Transfer Agent:

EquiServe - First Chicago Trust Division
P.O. Box 2500
Jersey City, NJ 07303-2500

(888)-764-5592 (toll-free)
(201)-324-0498 (outside the United States or Canada)
(201)-222-4955 (TDD for the hearing impaired)

Fundamentals            Company Profile

Industry Group:  Regional Banks   52-week high=$41.56
Annual Dividend Per Share=$0.84   52-week low =$23.19
Last earnings 12/00    est=0.44   actual= -0.44
Next earnings 01-17    est=0.62   versus=  0.60
                                  P/E = N/A
               Analysts Ratings
                 Strong Buy =  3
               Moderate Buy =  5
                       Hold = 15
              Moderate Sell =  1
                Strong Sell =  1

Six Month Chart of ONE


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