Bank One Corporation - Page 18

                                        -107-                                         
               market rates on a present value basis.  Realized and                   
               unrealized gains and losses are included in noninterest                
               income as trading account profits, foreign exchange                    
               trading profits and equities securities gains.  Where                  
               appropriate, compensation for credit risk and ongoing                  
               servicing is deferred and taken into income over the                   
               term of the derivatives.  Any gain or loss on the early                
               termination of an interest rate swap used in trading                   
               activities is recognized currently in trading account                  
               profits.                                                               
               This description related exclusively to the income                     
          statements and the balance sheets.  It is different from the                
          description used for the fair value disclosure in the footnotes,            
          which omitted any reference to adjustments for administrative               
          costs and/or credit risk.  FNBC used midmarket values for SFAS              
          No. 107 footnote disclosure purposes, and it used adjusted                  
          midmarket values for other financial reporting purposes.                    
               B.  Uses of Valuation                                                  
               FNBC was required to value its swaps in conformance with               
          regulatory accounting principles (RAP), GAAP, and Federal income            
          tax laws.  Tax considerations were not a factor when FNBC                   
          determined how it would calculate the value of its swaps, and               
          FNBC did not consult with anyone to ascertain whether its                   
          adjustments were appropriate for section 475 purposes.  Tax                 
          considerations were not mentioned when the valuation methodology            
          was presented to FNBC and its parent’s board of directors.                  
          Midmarket values were used in the presentation to the board.                
               There is no line item on any report that FNBC filed with the           
          OCC that set forth, or specifically identified, the amount of               





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