Back to GetFilings.com

Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002Commission file number 001-15323

BANK ONE CORPORATION

(Exact name of registrant as specified in its charter)

1 Bank One Plaza, Chicago, Illinois 60670

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (312) 732-4000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [ü] No [    ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ü] No [    ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [    ]

At December 31, 2002, the Corporation had 1,164,041,356 shares of its Common Stock, $0.01 par value, outstanding. The aggregate market value of voting stock held by nonaffiliates of the Corporation at December 31, 2002, was approximately $43 billion (based on the closing price of such stock as of the last business day of the registrant’s most recently completed second fiscal quarter).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s 2002 Annual Report to Shareholders are incorporated by reference into Parts I, II and IV. Portions of the registrant’s Proxy Statement relating to the registrant’s 2003 Annual Meeting of Stockholders are incorporated by reference into Part III.

Table of Contents

BANK ONE CORPORATION

2002 ANNUAL REPORT ON FORM 10-K

Item 10—“Proposal 1—Election of Directors—Directors and Nominees’’ and ‘‘Section 16(a) Beneficial Ownership Reporting Compliance.’’

Item 11—‘‘Compensation of Executive Officers,’’ ‘‘Director Meeting Attendance and Fee Arrangements,’’ and ‘‘Transactions with Directors, Executive Officers, Stockholders and Associates—Compensation Committee Interlocks and Insider Participation.’’

Table of Contents

DESCRIPTION OF BUSINESS

Bank One Corporation (“Bank One” or the “Corporation”) is a multibank bank holding company registered under the Bank Holding Company Act of 1956 (the “BHC Act”), and is headquartered in Chicago, Illinois. Bank One became a financial holding company (“FHC”) under the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) in August 2001. Bank One was incorporated in Delaware on April 9, 1998, to effect the merger (the “Merger”) of Banc One Corporation and First Chicago NBD Corporation. The Merger became effective on October 2, 1998.

Bank One provides domestic retail banking, finance and credit card services; worldwide commercial banking services; and trust and investment management services. Bank One operates banking offices in Arizona, Colorado, Florida, Illinois, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin and in certain international markets. Bank One also engages in other businesses related to banking and finance, including credit card and merchant processing, consumer and education finance, real estate-secured lending and servicing, insurance, venture capital, investment and merchant banking, trust, brokerage, investment management, leasing, community development and data processing. These activities are conducted through bank subsidiaries (collectively, the “Banks”) and nonbank subsidiaries. Prior to 2001, the Banks were operated under separate national or state charters in the 14 states in which the banking offices are located. In 2001, the Arizona, Florida, Louisiana, Texas and Utah Banks were consolidated into Bank One, National Association, headquartered in Chicago, Illinois. In 2002, the Colorado, Illinois, Indiana, Michigan and Wisconsin Banks were consolidated into the Chicago Bank. Further consolidations are contemplated for 2003.

Available Information: Bank One’s Internet address is www.bankone.com. Electronic copies of Bank One’s annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K are available free of charge by visiting the “About Bank One” section of www.bankone.com. These reports are posted as soon as reasonably practicable after they are electronically filed with the Securities and Exchange Commission.

EMPLOYEES

As of December 31, 2002, Bank One and its subsidiaries had 73,685 full time and part time employees with benefits. This figure does not include employees on long-term disability or employees of unconsolidated subsidiaries.

COMPETITION

Bank One and its subsidiaries face active competition in all of their principal activities, not only from other financial holding companies and commercial banks, but also from savings and loan associations, credit unions, finance companies, mortgage companies, leasing companies, insurance companies, mutual funds, securities brokers and dealers, other domestic and foreign financial institutions, and various nonfinancial institutions.

MONETARY POLICY AND ECONOMIC CONTROLS

The earnings of the Banks, and therefore the earnings of Bank One, are affected by the policies of regulatory authorities, including the Board of Governors of the Federal Reserve System (the ‘‘Federal Reserve Board’’). An important function of the Federal Reserve Board is to promote orderly economic growth by influencing interest rates and the supply of money and credit. Among the methods that have been used to achieve this objective are open market operations in United States government securities, changes in the discount rate for member bank borrowings and changes in reserve requirements against bank deposits. These methods are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, interest rates on loans and securities, and rates paid for deposits.

The effects of the various Federal Reserve Board policies on the future business and earnings of Bank One cannot be predicted. Other economic controls also have affected Bank One’s operations in the past. Bank One cannot predict the nature or extent of any effects that possible future governmental controls or legislation might have on its business and earnings.

1

Table of Contents

SUPERVISION AND REGULATION

GENERAL

As a bank holding company, Bank One is regulated under the BHC Act, and is subject to inspection, examination and supervision by the Federal Reserve Board.

The GLB Act eliminated many of the restrictions placed on the activities of bank holding companies that become FHCs. Bank One became a FHC in August 2001. Among other things, the GLB Act repealed certain Glass-Steagall Act restrictions on affiliations between banks and securities firms, and amended the BHC Act to permit bank holding companies that are FHCs to engage in activities, and acquire companies engaged in activities, that are: financial in nature (including insurance underwriting, insurance company portfolio investment, financial advisory, securities underwriting, dealing and market-making, and merchant banking activities); incidental to financial activities; or complementary to financial activities if the Federal Reserve Board determines that they pose no substantial risk to the safety or soundness of depository institutions or the financial system in general. The GLB Act also permits national banks, under certain circumstances, to engage through special financial subsidiaries in the financial and other incidental activities authorized for FHCs.

LIABILITY FOR BANK SUBSIDIARIES

The Federal Reserve Board requires that a bank holding company act as a source of financial and managerial strength to each of its subsidiary banks and to maintain resources adequate to support each subsidiary bank. In addition, the National Bank Act permits the Office of the Comptroller of the Currency (“OCC”) to order the pro rata assessment of shareholders of a national bank whose capital has become impaired. If a shareholder fails to pay such an assessment, the OCC can order the sale of the shareholder’s stock to cover the deficiency. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank would be assumed by the bankruptcy trustee and entitled to priority of payment.

Under the Federal Deposit Insurance Act, the Federal Deposit Insurance Corporation (“FDIC”) can hold any FDIC-insured depository institution liable for any loss the FDIC incurs, or reasonably expects to incur, in connection with (1) the default of any commonly controlled FDIC-insured depository institution or (2) any assistance provided by the FDIC to any commonly controlled depository institution that is in danger of default. ‘‘Default’’ is defined generally as the appointment of a conservator or receiver and ‘‘in danger of default’’ is defined generally as the existence of certain conditions indicating that a ‘‘default’’ is likely to occur absent regulatory assistance. All of the Banks are FDIC-insured depository institutions.

CAPITAL REQUIREMENTS

Bank One is subject to capital requirements and guidelines imposed on bank holding companies by the Federal Reserve Board. The OCC, the FDIC and the Federal Reserve Board impose similar requirements on the Banks within their respective jurisdictions. These capital requirements establish higher capital standards for banks and bank holding companies that assume greater risks. For this purpose, a bank holding company’s or bank’s assets and certain off-balance sheet commitments are assigned to four risk categories, each weighted differently based on credit risk. Total capital, in turn, is divided into three tiers:

Goodwill, certain intangible assets, and certain other assets must be deducted in calculating the sum of the core capital elements.

2

Table of Contents

Bank One, like other bank holding companies, is required to maintain Tier 1 and total capital equal to at least 4% and 8%, respectively, of its total risk-weighted assets. At December 31, 2002, Bank One met both requirements, with Tier 1 and total capital equal to 9.9% and 13.7%, respectively, of its total risk-weighted assets. Each of the Banks was in compliance with its applicable minimum capital requirement at December 31, 2002.

The Federal Reserve Board, the FDIC and the OCC have incorporated market and interest rate risk components into their risk-based capital standards. Under these market risk requirements, capital is allocated to support the amount of market risk related to a financial institution’s ongoing trading activities.

The Federal Reserve Board also requires a minimum “leverage ratio” (Tier 1 capital to adjusted average assets) of 3% for bank holding companies that have the highest regulatory rating or have implemented the risk-based capital measures for market risk, or 4% for holding companies that do not meet either of these requirements. Each of the Banks is subject to similar requirements adopted by the applicable federal regulatory agency. At December 31, 2002, Bank One’s leverage ratio was 8.9%, and each of the Banks was in compliance with its applicable leverage ratio requirement.

While the federal banking regulators may set capital requirements higher than the minimums noted above if circumstances warrant it, no federal banking regulator has imposed any such special capital requirement on Bank One or the Banks.

Failure to meet capital requirements could subject a bank to a variety of enforcement remedies, including the termination of deposit insurance by the FDIC, and to certain restrictions on its business, which are described below.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), among other things, identifies five capital categories (from “well capitalized” to “critically undercapitalized”) for insured depository institutions, and requires the respective federal bank regulatory agencies to take “prompt corrective action” for insured depository institutions that do not meet minimum capital requirements within these categories.

Failure to meet the capital guidelines could subject a depository institution to capital-raising requirements. An “undercapitalized” depository institution must develop a capital restoration plan, and its parent holding company must guarantee the bank’s compliance with the plan. In the event of the bankruptcy of the parent holding company, this guarantee would take priority over the parent’s general unsecured creditors. In addition, FDICIA requires the federal bank regulatory agencies to prescribe certain non-capital standards for safety and soundness relating generally to operations and management, asset quality and executive compensation, and it permits regulatory action against a financial institution that does not meet these standards.

As of December 31, 2002, each Bank was “well capitalized”. It should be noted, however, that a Bank’s capital category is determined solely for the purpose of applying the federal banking agencies’ “prompt corrective action” regulations; the capital category may not constitute an accurate representation of a Bank’s overall financial condition or prospects.

THE BANKS

The Banks are national banking associations and, as such, are subject to regulation primarily by the OCC and, secondarily, by the FDIC and the Federal Reserve Board. The Banks’ operations in other countries are subject to various restrictions imposed by the laws of those countries.

Federal law limits the amount of dividends the Banks can pay to Bank One without regulatory approval. In addition, federal bank regulatory agencies have authority to prohibit the Banks from engaging in unsafe or unsound practices in conducting their business. The payment of dividends, depending upon the financial condition of the bank in question, could be deemed to constitute an unsafe or unsound practice.

DEPOSITOR PREFERENCE STATUTE

Federal law provides that deposits and certain claims for administrative expenses and employee compensation against an insured depository institution are afforded a priority over other general unsecured claims against such institution, including federal funds and letters of credit, in the liquidation or other resolution of the institution by any receiver.

3

Table of Contents

OTHER

Bank One’s nonbank subsidiaries and banking-related business units are subject to regulation by various state and federal regulatory agencies and self-regulatory organizations. Activities subject to such regulation include investment management, investment advisory services, commodities and securities brokerage, insurance services and products, and securities dealing.

PROPERTIES

Bank One and its subsidiaries occupy more than 2,200 owned or leased domestic properties, including banking centers, operations facilities and commercial banking offices. In addition, Bank One has 14 foreign offices in leased premises in major cities in Canada, Mexico, Europe, Asia and Australia.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, Bank One may make or approve certain statements in future filings with the Securities and Exchange Commission (the “Commission”), in press releases, and in oral and written statements made by or with Bank One’s approval that are not statements of historical fact and may constitute forward-looking statements. Forward-looking statements may relate to, without limitation, Bank One’s financial condition, results of operations, plans, objectives, future performance or business.

Words such as “believes”, “anticipates”, “expects”, “intends”, “plans”, “estimates”, “targeted” and similar expressions are intended to identify forward-looking statements but are not the only means to identify these statements.

Forward-looking statements involve risks and uncertainties. Actual conditions, events or results may differ materially from those contemplated by a forward-looking statement. Factors that could cause this difference – many of which are beyond Bank One’s control – include the following, without limitation:

Forward-looking statements speak only as of the date they are made. Bank One undertakes no obligation to update any forward-looking statement to reflect subsequent circumstances or events.

4

Table of Contents

[This page intentionally left blank.]

5

Table of Contents

BANK ONE CORPORATION and Subsidiaries

Average Balances/Net Interest Margin/Rates

6

Table of Contents

7

Table of Contents

Analysis of Changes in Net Interest Income

The approximate effect on net interest income of volume and rate changes for 2002 and 2001 for the year ended December 31 follows:

For purposes of this table, changes that are not due solely to volume or rate changes are allocated to volume.

8

Table of Contents

EQUITY COMPENSATION PLAN INFORMATION

The above total number of shares available for grant in any plan year may not exceed 5% of the outstanding common stock as reported in the annual report on Form 10-K for the fiscal year ending immediately prior to the plan year.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS

Bank One’s management evaluated its disclosure controls and procedures as of December 31, 2002. Based on this evaluation, the Principal Executive Officer and Principal Financial Officer each concludes that as of December 31, 2002, Bank One maintained effective disclosure controls and procedures in all material respects, including those to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate to allow for timely disclosure.

There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the most recent evaluation by the Principal Executive Officer and the Principal Financial Officer.

9

Table of Contents

The following is a copy of Arthur Andersen LLP’s previously issued report. Arthur Andersen LLP has ceased practicing before the Commission and is therefore unable to reissue this report.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors

of BANK ONE CORPORATION:

We have audited the accompanying consolidated balance sheet of BANK ONE CORPORATION (a Delaware corporation) and subsidiaries as of December 31, 2000 and the related consolidated statements of income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2000. These financial statements are the responsibility of BANK ONE CORPORATION’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BANK ONE CORPORATION and subsidiaries as of December 31, 2000, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

Chicago, Illinois

January 17, 2001

/S/    ARTHUR ANDERSEN LLP

10

Table of Contents

EXECUTIVE OFFICERS OF THE REGISTRANT

Messrs. Donovan, Helm, Kundert and Miller, and Ms. McClelland, each have served as an officer of Bank One, or a subsidiary or predecessor, for more than five years. The prior business experience of the other executive officers is set forth below:

James Dimon: November 1998-March 2000—private investor; October-November 1998—President, Citigroup, Inc., and Chairman and Co-Chief Executive Officer of Citigroup subsidiary Salomon Smith Barney Holdings, Inc.; November 1993-October 1998—President and Chief Operating Officer, Travelers Group, as well as executive positions with Travelers’ subsidiaries Smith Barney, Inc. and Salomon Smith Barney Holdings, Inc. during that period.

Austin A. Adams: 1985-February 2001—Executive Vice President of the Automation and Operations Group, First Union Corporation.

Linda Bammann: October 2000-May 2001—Senior Managing Director, Banc One Capital Markets, Inc.; April 1992-June 2000—Managing Director, UBS Warburg.

James S. Boshart, III: June 1998-September 2000—Co-Chief Executive Officer, Schroder Salomon Smith Barney; January 1998-June 1998—Head of Transition Team, Salomon Smith Barney; 1997-January 1998—Vice Chairman and Co-Head of Investment Banking, Salomon Smith Barney; 1995-1997—Head of Capital Markets, Smith Barney, Inc.

Christine A. Edwards: 1999-May 2000—Executive Vice President and Chief Legal Officer, ABN AMRO North America; 1997-1999—Executive Vice President, Chief Legal Officer and Secretary, Morgan Stanley Dean Witter; 1990-1997—Executive Vice President, General Counsel and Secretary, Dean Witter Discover & Co.

Philip G. Heasley: July 1999-November 2000—President and Chief Operating Officer, U.S. Bancorp; 1994-July 1999—Vice Chairman, U.S. Bancorp.

Jay Mandelbaum: September 2000-August 2002—Vice Chairman and Chief Executive Officer, Private Client Group, Salomon Smith Barney, Inc.; August 1997-August 2000—Executive Vice President/Senior Vice President, Private Client Sales and Marketing, Salomon Smith Barney, Inc.

Heidi Miller: January 2001-March 2002—Vice Chairman, Marsh, Inc.; March-November 2000—Senior Executive Vice President, Chief Financial Officer and Head of Strategic Planning, Priceline.com; 1998-March 2000—Chief Financial Officer, Citigroup, Inc.; 1995-1998—Chief Financial Officer, Travelers Group.

Charles W. Scharf: 1998-June 2000—Chief Financial Officer, Citigroup Global Corporate and Investment Bank; 1995-1998—Chief Financial Officer, Salomon Smith Barney, Inc.

Bank One’s executive officers serve until the annual meeting of the Board of Directors (April 15, 2003).

11

Table of Contents

EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1) Financial Statements.

All schedules normally required by Form 10-K are omitted, since either they are not applicable or the required information is shown in the financial statements or the notes thereto.

(3) Exhibits.

12

Table of Contents