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Kathy Panagopouloskathy.panagopoulos@morningstar.com
Morningstar Names Bank One's Dimon as 2002 CEO of the Year

CHICAGO, Jan 03, 2003 – Morningstar, Inc. today named James Dimon, chief executive officer of Bank One (ONE), as winner of its 2002 CEO of the Year award. The award recognizes a chief executive who has put his or her stamp on an industry, demonstrated independent thinking, and turned corporate success into greater wealth for shareholders. 

"The 2002 winner of Morningstar's CEO of the Year award proves that you don't need a grand strategy to run a great business–you just need to get the basics right," said Patrick Dorsey, director of stock analysis for Morningstar. "Jamie Dimon has transformed what once was considered one of the most poorly run banks in the country into a solidly profitable firm with a bright future."

"In doing so, Dimon made difficult decisions and greatly enhanced shareholder value–qualities we look for in a CEO of the Year," Dorsey said. 

Chicago-based Bank One is the sixth-largest U.S. bank holding company, based on total assets of $274 billion as of Sept. 30, 2002. Since Dimon took office in March 2000, Bank One stock has increased in value by more than 30 percent. In 2002, the company's stock dropped 4 percent, compared with a 13 percent loss for the average large bank. 

When Dimon joined the company in early 2000, he inherited a troubled bank with a bloated cost structure, poor returns, and many unprofitable loans. His leadership has transformed Bank One into a leaner, stronger company.

  • The firm's tier one capital ratio–a measure of core equity capital–is 9.5 percent, the highest among the nation's top 10 banks. The average for the industry is 8.7 percent.       
  • Among big banks, Bank One has the highest level of loan-loss reserves, which protect against defaults. Its reserves are close to 3 percent compared with 2.1 percent for the industry.        
  • During his tenure, Dimon has eliminated nearly $1.8 billion in operating costs, while increasing customer satisfaction.       
  • The company's credit card unit, until recently branded primarily with the First USA name, is the nation's third largest card issuer and has become the lowest-cost producer in the industry.        
  • By consolidating its bank charters, the firm will save about $200 million in operating costs on an annual basis. 

After two years of restructuring Bank One, Dimon has positioned the company for strong growth. He has followed a straightforward strategy that includes slashing costs, reducing the number of bank branches, and tightening lending standards in order to make profitable loans. In addition, he consolidated all of the company's computer systems into one platform so all branch operations will be consistent. 

"Tackling these challenges has made the company strong when its basic survival was in question a few years ago," Dorsey said. "Dimon's handiwork is obvious. He has made Bank One a much better financial institution by focusing on basic business principles–keep costs low, serve customers, and focus on profitability rather than growth at any cost."

Dimon was named chairman and chief executive officer of Bank One Corporation on March 27, 2000. He is the former president of Citigroup, the global financial services company formed by the combination of Travelers Group and Citibank in 1998. Prior to the formation of Citigroup, he was president and chief operating officer of Travelers Group for seven years. Dimon also served as chairman and co-chief executive officer of Salomon Smith Barney Holdings, Inc.

Other contenders for Morningstar's 2002 CEO of the Year award were: Ralph Larsen, retiring CEO of Johnson & Johnson (JNJ), Richard Kinder, founder and CEO of Kinder Morgan (KMI), and Mike Eskew, CEO of United Parcel Service (UPS). 

The nominees were diverse, but all qualified as strong managers who have increased shareholder value over the long haul. During Larsen's 13 years at the helm, Johnson & Johnson's revenues more than tripled to $33 billion, and its market capitalization increased from $14 billion to $182 billion. Kinder Morgan has grown into one of the country's largest owners and operators of energy pipelines since its inception in 1997. The company has stayed focused on generating income by investing in pipelines and other hard assets. In contrast, firms that jumped on the energy-trading bandwagon often sold off these materials. Eskew handled a crucial test as CEO for UPS when he successfully negotiated a new six-year contract with the Teamsters, the union that represents nearly two thirds of the company's 270,000 employees. UPS' operating margins, at more than 12 percent, are double those of rival FedEx. 

The Morningstar CEO of the Year award, introduced in January 2000, recognizes leaders who maximize shareholder value and demonstrate independent thinking. Winners are chosen by Morningstar analysts and senior management, based on the company's independent research. Charles R. Schwab and David Pottruck, co-CEOs of Charles Schwab, were the first recipients of the Morningstar CEO of the Year for 1999. Jorma Ollila, CEO of Nokia, was the 2000 winner. Jim Parker and Herb Kelleher, the current and former CEOs of Southwest Airlines, were named joint winners in 2001. 

For the complete report, go to:
http://news.morningstar.com/doc/article/0,1,85014,00.html

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors, institutions, and the media. The company is a trusted source for investment information, data, and analysis of stocks, mutual funds, exchange-traded funds, closed-end funds, and variable annuity/life subaccounts.

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