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1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of the Report: October 20, 1994 Commission file number 1-5805 ------------------ ------- CHEMICAL BANKING CORPORATION ---------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-2624428 - ---------------------- ---------------------- (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No. 270 Park Avenue, New York, NY 10017 - ------------------------------ -------------- (Address of principal executive Offices) (Zip Code) Registrant's telephone number, including area code (212) 270-6000 -------------- 2 Item 5. Other Events - --------------------- 1.Chemical Banking Corporation ("the Corporation") announced on October 18, 1994, that 1994 third quarter net income was $439 million, or $1.60 per common share, up 24 percent from earnings on a comparable basis of $355 million, or $1.26 per share, in the third quarter of 1993. Reported net income in the 1993 third quarter was $502 million, or $1.84 per common share, when the Corporation recognized income tax benefits of $214 million and incurred a one-time merger related charge of $115 million ($67 million after tax). For the first nine months of 1994, net income was $1,115 million, an increase of 16 percent from $958 million on a comparable basis in the same period of 1993. Reported net income for the first nine months of 1993 was $1,257 million, when the Corporation benefited from $366 million in accounting changes and tax benefits and incurred the aforementioned one- time merger related charge. A copy of the Corporation's Press Release announcing the results of operations for the 1994 third quarter is incorporated herein. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits - ------------------------------------------------------------------- The following exhibits are filed with this Report: Exhibit Number Description -------------- ----------------------------------- 99 Press Release - 1994 Third Quarter Earnings. 3 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CHEMICAL BANKING CORPORATION (Registrant) Dated October 20, 1994 ----------------- by /s/Joseph L. Sclafani ----------------------- Joseph L. Sclafani Controller [Principal Accounting Officer] 4 EXHIBIT INDEX Exhibit Number Description Page at Which Located - -------------- ----------- --------------------- 99 Press Release 5
5 Press Contact: Ken Herz (212) 270-4621 John Meyers (212) 270-7454 Investor Contact: John Borden (212) 270-7318 For Immediate Release Tuesday, October 18, 1994 New York, October 18 -- Chemical Banking Corporation today reported third quarter net income of $439 million, or $1.60 per common share, up 24 percent from earnings on a comparable basis of $355 million, or $1.26 per share, in the third quarter of 1993. Reported net income in last year's third quarter was $502 million, or $1.84 per share, which included income tax benefits of $214 million and a one-time merger-related charge of $115 million ($67 million after-tax). For the first nine months of 1994, net income was $1.115 billion, an increase of 16 percent from $958 million on a comparable basis in the same period a year ago. "Earnings benefited from solid performances in several core businesses, including national consumer services and capital markets-related activities, while credit costs continued to decrease significantly," said Walter V. Shipley, chairman and chief executive officer. "We also increased the common dividend by 16 percent and completed a stock repurchase program during the quarter, reflecting our continued positive outlook for the corporation." The provision for losses for the third quarter was $100 million, down 38 percent from $160 million in the second quarter and down 66 percent from $298 million in the third quarter a year ago. At September 30, total nonperforming assets were $2,193 million, down 12 percent from $2,493 million at June 30 and down 47 percent from $4,132 million on September 30 a year ago. 6 CAPITAL ACTIONS On September 20, the corporation increased the quarterly dividend on the outstanding shares of its common stock to 44 cents per share, up 16 percent from 38 cents per share. On an annual basis, this represents an increase in the dividend rate to $1.76, from $1.52. Since March 1993, the corporation has increased the common dividend by 47 percent. In addition, during the third quarter the corporation completed the repurchase of 10 million shares of its common stock in the open market under a stock repurchase plan originally announced on May 27, 1994. The corporation also redeemed its approximately $400 million of Adjustable Rate Series C Preferred Stock on July 15, 1994 and issued $200 million of Series L Adjustable Rate Cumulative Preferred Stock on June 8, 1994. The one-time premium paid upon redemption to holders of the Series C Preferred Stock reduced net income per common share in the current quarter by $.05. The corporation's estimated Tier I risk-based capital ratio was 8.1 percent at September 30, compared with 7.9 percent a year ago. At September 30, the estimated total risk-based capital ratio was 12.3 percent, compared with 12.1 percent a year ago. NET INTEREST INCOME Net interest income for the third quarter was $1,177 million, compared with $1,163 million in the same year-ago period. The rise in net interest income is attributable to an increase in average interest-earning assets. Average interest-earning assets for the third quarter were $129.5 billion, compared with $125.8 billion in the same year-ago period. The net yield on average interest-earning assets was 3.63 percent in the third quarter, compared with 3.68 percent in the third quarter of 1993. Average interest-earning assets increased when compared with the second quarter of 1994, primarily reflecting growth in consumer loans, particularly from mortgage and credit card activities, and in commercial loans, including those to middle market companies. NONINTEREST REVENUE Noninterest revenue for the third quarter was $984 million, compared with $1,004 million in the same period a year ago. Trust and investment management fees were $104 million in the third quarter, compared with $97 million in the year-ago quarter, reflecting the acquisition of Ameritrust Texas Corporation. 7 Corporate finance fees were $97 million in the third quarter, up from $95 million in the third quarter a year ago. Fees for other banking services were $285 million in the quarter, up from $266 million in the year-ago third quarter. This improvement primarily reflected increased revenues generated by the new co-branded Shell MasterCard. Combined revenues from all trading activities were $212 million in the third quarter versus $268 million in the same year- ago period, but up from $203 million in the second quarter and from $185 million in the first quarter of 1994. The consistent results of the past three quarters reflected the corporation's emphasis on market-making and customer-related activities in its trading business, while results for the third quarter of 1993 were affected by a more favorable trading environment in certain markets such as domestic fixed income and foreign exchange. Other noninterest revenue for the third quarter was $202 million versus $154 million in the same period a year ago. Revenues on equity-related investments in the third quarter were $86 million, compared with $57 million in the same year-ago period. The current quarter included $80 million from the sale of LDC- related past-due interest bonds, versus $52 million from the sale of such bonds in the 1993 third quarter. NONINTEREST EXPENSE Noninterest expense in the third quarter was $1,311 million, compared with $1,255 million (excluding the one-time merger-related charge of $115 million) in the third quarter of 1993. Noninterest expense for the third quarter of 1994 included $28 million of expenses resulting from the July 1, 1994 acquisition of Margaretten Financial Corporation. Expenses for the third quarter of 1994 also reflected operating expenses of approximately $11 million associated with Ameritrust and $30 million in operating costs connected with the Shell MasterCard. Foreclosed property expense was $2 million in the quarter, compared with $70 million in the third quarter a year ago, reflecting significant progress in managing the corporation's foreclosed real estate portfolio. Total headcount at September 30, 1994 was 42,492 (including 1,574 from the Margaretten acquisition), compared with 41,670 at September 30, 1993. 8 PROVISION AND ALLOWANCE FOR LOSSES The provision for losses was $100 million in the third quarter, compared with $160 million in the second quarter of 1994 and $298 million in the third quarter of 1993. Total net charge-offs were $125 million in the third quarter, compared with $185 million (excluding the final valuation of the LDC portfolio) in the second quarter of 1994 and $325 million in the third quarter a year ago. Included in these amounts were consumer net charge-offs of $100 million in the third quarter, compared with consumer net charge-offs of $94 million in the second quarter and $84 million in the third quarter a year ago. Recoveries in the third quarter were $76 million, compared with $55 million in the second quarter and $67 million in the third quarter a year ago. At September 30, the total allowance for losses was $2,650 million, compared with $2,972 million on the same date a year ago. The LDC allowance was transferred to the general reserve in the second quarter of 1994 following completion of the Brazilian refinancing package and the final valuation of the LDC portfolio. NONPERFORMING ASSETS At September 30, total nonperforming assets were $2,193 million, down $300 million from June 30 and down $1,939 million, or 47 percent, from September 30, 1993. Nonperforming loans at September 30 were $1,524 million, down from $1,758 million at June 30 and down from $3,046 million at September 30 last year. Assets acquired as loan satisfactions were $669 million at September 30, down from $735 million at June 30 and down $417 million from $1,086 million on September 30 a year ago. OTHER FINANCIAL DATA As previously mentioned, on July 1 Chemical completed its tender offer for all of the outstanding common stock and the depositary shares representing the preferred stock of Margaretten Financial Corporation, a leading mortgage banking company. With this acquisition, Chemical now ranks fourth nationwide in mortgage originations and fifth in mortgage servicing. The corporation's effective tax rate was 41.5 percent in the third quarter. Tax expense in the year-ago third quarter included an income tax benefit of $214 million. The impact of marking the "Available for Sale" securities to market resulted in a net unfavorable impact of approximately $296 million after-tax on the corporation's stockholders' equity at September 30, 1994, compared with a net unfavorable impact of 9 $291 million after-tax at June 30, 1994. The market valuation does not include the favorable impact of related funding sources. On January 1, 1994, the corporation adopted FASB Interpretation No. 39, which changed the reporting of unrealized gains and losses on interest rate and foreign exchange contracts on the balance sheet. The adoption of this Interpretation has resulted in an increase of assets and liabilities of $17.0 billion at September 30, 1994, with unrealized gains reported as Trading Assets-Risk Management Instruments and the unrealized losses reported in Other Liabilities. Net income for the first nine months of 1993 included a $35 million net favorable impact from the January 1, 1993 adoption of two accounting standards relating to the recognition of tax benefits and the costs associated with postretirement benefits. Total assets at September 30 were $169.3 billion, versus $149.4 billion on the same date a year ago. Total loans at September 30 were $77.1 billion, compared with $77.8 billion a year ago. At the end of the third quarter, total deposits were $93.0 billion, compared with $95.5 billion at September 30, 1993. The return on average total assets was 1.03 percent for the third quarter, compared with 1.39 percent (.98 percent excluding tax benefits and the one-time charge to expense) in the same year- ago period. The return on average common stockholders' equity was 16.92 percent for the third quarter, compared with 20.90 percent (14.26 percent excluding tax benefits and the one-time charge to expense) in the year-ago third quarter. Book value per common share was $38.29 at September 30, versus $35.96 per share on the same date a year ago. TEXAS COMMERCE BANCSHARES Texas Commerce Bancshares (TCB) reported net income of $57 million in the third quarter, unchanged from a year ago. Its net yield on interest-earning assets was 4.29 percent in the third quarter, versus 3.75 percent in the 1993 third quarter. At September 30, total assets of TCB were $20.1 billion, versus $22.0 billion a year ago. -- 30 -- 10 11 UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries CONSOLIDATED STATEMENT OF INCOME (in millions, except per share data) Three Months Ended September 30, ------------------- 1994 1993 -------- -------- INTEREST INCOME Loans $1,473 $ 1,372 Securities 422 428 Trading Assets 181 117 Federal Funds Sold and Securities Purchased Under Resale Agreements 151 89 Deposits with Banks 86 67 ------ ------ Total Interest Income 2,313 2,073 ------ ------ INTEREST EXPENSE Deposits 597 537 Short-Term and Other Borrowings 405 238 Long-Term Debt 134 135 ------ ------ Total Interest Expense 1,136 910 ------ ------ NET INTEREST INCOME 1,177 1,163 Provision for Losses 100 298 ------ ------ NET INTEREST INCOME AFTER PROVISION FOR LOSSES 1,077 865 ------ ------ NONINTEREST REVENUE Trust and Investment Management Fees 104 97 Corporate Finance and Syndication Fees 97 95 Service Charges on Deposit Accounts 78 73 Fees for Other Banking Services 285 266 Trading Account and Foreign Exchange Revenue 212 268 Securities Gains 6 51 Other Revenue 202 154 ------ ------ Total Noninterest Revenue 984 1,004 ------ ------ NONINTEREST EXPENSE Salaries 574 518 Employee Benefits 108 94 Occupancy Expense 145 148 Equipment Expense 100 81 Foreclosed Property Expense 2 70 Restructuring Charge -- 115 Other Expense 382 344 ------ ------ Total Noninterest Expense 1,311 1,370 ------ ------ INCOME BEFORE INCOME TAX EXPENSE 750 499 Income Tax Expense (Benefit) 311 (3) ------ ------ NET INCOME $ 439 $ 502 ====== ====== NET INCOME APPLICABLE TO COMMON STOCK $ 396 $ 464 ====== ====== NET INCOME PER COMMON SHARE $ 1.60 $ 1.84 ====== ====== AVERAGE COMMON SHARES OUTSTANDING 246.6 252.1 12 UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries CONSOLIDATED STATEMENT OF INCOME (in millions, except per share data) Nine Months Ended September 30, ------------------- 1994 1993 ------- ------- INTEREST INCOME Loans $4,155 $ 4,270 Securities 1,270 1,299 Trading Assets 545 314 Federal Funds Sold and Securities Purchased Under Resale Agreements 372 245 Deposits with Banks 280 201 ------ ------ Total Interest Income 6,622 6,329 ------ ------ INTEREST EXPENSE Deposits 1,660 1,699 Short-Term and Other Borrowings 1,056 743 Long-Term Debt 401 400 ------ ------ Total Interest Expense 3,117 2,842 ------ ------ NET INTEREST INCOME 3,505 3,487 Provision for Losses 465 973 ------ ------ NET INTEREST INCOME AFTER PROVISION FOR LOSSES 3,040 2,514 ------ ------ NONINTEREST REVENUE Trust and Investment Management Fees 322 297 Corporate Finance and Syndication Fees 272 250 Service Charges on Deposit Accounts 222 217 Fees for Other Banking Services 854 789 Trading Account and Foreign Exchange Revenue 600 818 Securities Gains 65 126 Other Revenue 447 474 ------ ------ Total Noninterest Revenue 2,782 2,971 ------ ------ NONINTEREST EXPENSE Salaries 1,634 1,548 Employee Benefits 329 301 Occupancy Expense 431 438 Equipment Expense 275 244 Foreclosed Property Expense 39 226 Restructuring Charge 48 158 Other Expense 1,160 1,043 ------ ------ Total Noninterest Expense 3,916 3,958 ------ ------ INCOME BEFORE INCOME TAX EXPENSE AND EFFECT OF ACCOUNTING CHANGES 1,906 1,527 Income Tax Expense 791 305 ------ ------ INCOME BEFORE EFFECT OF ACCOUNTING CHANGES 1,115 1,222 Net Effect of Changes in Accounting Principles -- 35 ------ ------ NET INCOME $1,115 $ 1,257 ====== ====== NET INCOME APPLICABLE TO COMMON STOCK $1,007 $ 1,140 ====== ====== PER COMMON SHARE: Income Before Effect of Accounting Changes $ 4.01 $ 4.41 Net Effect of Changes in Accounting Principles -- .14 ------- -------- Net Income $ 4.01 $ 4.55 ======= ======== AVERAGE COMMON SHARES OUTSTANDING 251.0 250.8 On January 1, 1993, the Corporation adopted SFAS 106 which resulted in a charge of $415 million relating to postretirement benefits and also adopted SFAS 109 which resulted in an income tax benefit of $450 million. 13 UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries NONINTEREST REVENUE DETAIL (in millions) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 1994 1993 1994 1993 ------ ------ ------ ------ TRUST AND INVESTMENT MANAGEMENT FEES: Personal Trust Fees $ 49 $ 46 $ 156 $ 143 Corporate and Institutional Trust Fees 45 40 136 125 Other, primarily Foreign Asset Management 10 11 30 29 ----- ----- ----- ----- Total $104 $ 97 $ 322 $ 297 ===== ===== ===== ===== FEES FOR OTHER BANKING SERVICES: Credit Card Services Revenue $ 79 $ 59 $ 229 $ 167 Fees in Lieu of Compensating Balances 49 52 156 156 Commissions on Letters of Credit and Acceptances 40 39 116 119 Loan Commitment Fees 21 23 66 69 Mortgage Servicing Fees 23 16 57 48 Other Fees 73 77 230 230 ----- ----- ----- ----- Total $285 $266 $ 854 $ 789 ===== ===== ===== ===== TRADING ACCOUNT AND FOREIGN EXCHANGE REVENUE: Interest Rate Contracts $ 95 $116 $ 318 $ 342 Foreign Exchange Revenue 56 79 156 243 Debt Instruments and Other 61 73 126 233 ----- ----- ----- ----- Total $212 $268 $ 600 $ 818 ===== ===== ===== ===== OTHER REVENUE: Revenue from Equity-Related Investments $ 86 $ 57 $ 235 $ 200 Net Gains on LDC-Related Interest Bond Sales 80 52 125 152 All Other Revenue 36 45 87 122 ----- ----- ----- ----- Total $202 $154 $ 447 $ 474 ===== ===== ===== ===== CHEMICAL BANKING CORPORATION and Subsidiaries NONINTEREST EXPENSE DETAIL (in millions) Three Months Nine Months Ended Ended September 30, September 30, ------------- ------------- 1994 1993 1994 1993 ------ ------ ------ ------ OTHER EXPENSE: Professional Services $ 55 $ 48 $ 160 $ 145 Marketing Expense 45 40 142 108 FDIC Assessments 39 42 122 134 Telecommunications 39 30 102 84 Amortization of Intangibles 29 26 85 76 All Other 175 158 549 496 ----- ----- ----- ----- Total $382 $344 $1,160 $1,043 ===== ===== ====== ====== 14 UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries CONSOLIDATED BALANCE SHEET (in millions) September 30, September 30, 1994 1993 ------------- ------------- ASSETS Cash and Due from Banks $ 8,080 $ 7,335 Deposits with Banks 5,256 4,920 Federal Funds Sold and Securities Purchased Under Resale Agreements 13,173 11,782 Trading Assets: Debt and Equity Instruments 11,467 9,547 Risk Management Instruments 18,711 -- Securities: Held-to-Maturity 8,695 16,639 Available-for-Sale 16,271 7,210 Loans (Net of Unearned Income) 77,138 77,779 Allowance for Losses (2,650) (2,972) Premises and Equipment 2,114 1,811 Due from Customers on Acceptances 1,200 1,262 Accrued Interest Receivable 1,106 1,140 Assets Acquired as Loan Satisfactions 669 1,086 Other Assets 8,104 11,869 --------- -------- TOTAL ASSETS $ 169,334 $149,408 ========= ======== LIABILITIES Deposits: Demand (Noninterest Bearing) $ 20,430 $ 21,813 Time and Savings 46,338 52,158 Foreign 26,193 21,497 --------- -------- Total Deposits 92,961 95,468 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 19,469 13,530 Other Borrowed Funds 14,969 13,699 Acceptances Outstanding 1,207 1,279 Accounts Payable and Accrued Liabilities 2,385 3,093 Other Liabilities 18,980 3,109 Long-Term Debt 8,555 8,303 --------- --------- TOTAL LIABILITIES 158,526 138,481 --------- --------- STOCKHOLDERS' EQUITY Preferred Stock 1,450 1,854 Common Stock 254 253 Capital Surplus 6,545 6,545 Retained Earnings 3,221 2,287 Net Unrealized Loss on Securities Available-for-Sale, Net of Taxes (296) -- Treasury Stock, at Cost (366)[C] (12) --------- --------- TOTAL STOCKHOLDERS' EQUITY 10,808 10,927 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 169,334 $149,408 ========= ========= On January 1, 1994, the Corporation adopted FASB Interpretation No. 39. As a result, assets and liabilities increased by $17.0 billion at September 30, 1994 with unrealized gains reported as Trading Assets-Risk Management Instruments and the unrealized losses reported in Other Liabilities. Prior to adoption, unrealized gains and losses were reported net in Other Assets. On December 31, 1993, the Corporation adopted SFAS 115. Securities that are identified as available-for-sale are accounted for at fair value with the related unrealized gains and losses included in stockholders' equity. [C] During the 1994 third quarter, the Corporation completed the repurchase of 10 million shares of its common stock in the open market under a stock repurchase plan. 15 UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (in millions) Nine Months Ended September 30, ------------------- 1994 1993 ------ ------ BALANCE AT JANUARY 1, $11,164 $ 9,851 Net Income 1,115 1,257 Dividends Declared: Preferred Stock (96) (117) Common Stock (299) (249) Issuance of Preferred Stock 200 400 Redemption of Preferred Stock (404) (394) Premium on Redemption of Preferred Stock (12) -- Issuance of Common Stock 16 177 Restricted Stock Granted (11) -- Net Changes in Treasury Stock (354) -- Net Change in the Fair Value of Available-for-Sale Securities, Net of Taxes (511) -- Accumulated Translation Adjustment -- 2 -------- -------- Net Change in Stockholders' Equity (356) 1,076 -------- -------- BALANCE AT SEPTEMBER 30, $10,808 $10,927 ======== ======== During the 1994 third quarter, the Corporation completed the repurchase of 10 million shares of its common stock in the open market under a stock repurchase plan. 16 UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries LOAN INFORMATION (in millions) September 30, September 30, 1994 1993 ------------- ------------- LOANS: Domestic Commercial: Commercial Real Estate $ 6,361 $ 7,797 Other Commercial 23,867 26,851 ------- ------- Total Commercial Loans 30,228 34,648 ------- ------- Domestic Consumer: Residential Mortgage 13,152 11,492 Credit Card 8,329 6,436 Other Consumer 6,990 6,084 ------- ------- Total Consumer Loans 28,471 24,012 ------- ------- Total Domestic Loans 58,699 58,660 Foreign 18,439 19,119 ------- ------- Total Loans $77,138 $77,779 ======= ======= Included in Foreign are loans previously classified as LDC loans. Previously reported loan amounts have been reclassified to conform with the September 30, 1994 presentation. UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries ALLOWANCE RELATED INFORMATION (in millions, except ratios) Three Months Nine Months Ended Ended Allowance for Losses September 30, September 30, -------------- ------------- 1994 1993 1994 1993 ---- ---- ---- ---- Non-LDC Allowance: Balance at Beginning of Period $ 2,676 $2,421 $ 2,423 $ 2,206 Provision for Losses 100 298 465 973 Net Charge-Offs (125) (298) (540) (973) Transfer from LDC Allowance -- -- 300 200 Allowance Related To Purchased Assets of First City Banks -- -- -- 19 Other (1) 8 2 4 ------ ------ ------ ------ Balance at End of Period 2,650 2,429 2,650 2,429 ------ ------ ------ ------ LDC Allowance: Balance at Beginning of Period -- 570 597 819 Provision for Losses -- -- -- -- Net (Charge-Offs) Recoveries -- (1) (239) 70 Losses on Sales and Swaps -- (26) (58) (146) Transfer to Non-LDC Allowance -- -- (300) (200) ------ ------ ------ ------ Balance at End of Period -- 543 0 543 ------ ------ ------ ------ Total Allowance for Losses $ 2,650 $2,972 $ 2,650 $ 2,972 ======= ====== ======= ======= Allowance Coverage Ratios: Allowance for Losses to: Loans at Period-End 3.44% 3.82% Average Loans 3.55% 3.73% Nonperforming Loans 173.88% 97.57% The provision and non-LDC net charge-offs included $55 million related to the decision to accelerate the disposition of certain nonperforming residential mortgages. 17 UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries NONPERFORMING ASSETS INFORMATION (in millions) September 30, September 30, 1994 1993 ------------- ------------- NONPERFORMING ASSETS: Domestic Commercial: Commercial Real Estate $ 570 $ 767 Other Commercial 474 1,150 ------- ------- Total Commercial Loans 1,044 1,917 ------- ------- Domestic Consumer: Residential Mortgage 147 93 Other Consumer 23 22 ------- ------- Total Consumer Loans 170 115 ------- ------- Total Domestic 1,214 2,032 Foreign, primarily commercial 310 1,014 ------- ------- Total Nonperforming Loans 1,524 3,046 Assets Acquired as Loan Satisfactions 669 1,086 ------- ------- Total Nonperforming Assets $2,193 $ 4,132 ======= ======= Includes nonperforming loans previously classified as LDC nonperforming loans. Previously reported loan amounts have been reclassified to conform with the September 30, 1994 presentation. UNAUDITED CHEMICAL BANKING CORPORATION and Subsidiaries NET CHARGE-OFFS INFORMATION (in millions) Three Months Nine Months Ended Ended September 30, September 30, -------------- -------------- 1994 1993 1994 1993 ---- ---- ---- ---- NET CHARGE-OFFS: Domestic Commercial: Commercial Real Estate $ 20 $ 51 $ 143 $ 178 Other Commercial 9 118 96 331 ----- ----- ----- ------ Total Commercial 29 169 239 509 ----- ----- ----- ------ Domestic Consumer: Residential Mortgage 12 2 24 65 Credit Card 84 76 247 245 Other Consumer 4 6 13 20 ----- ----- ----- ------ Total Consumer 100 84 284 330 ----- ----- ----- ------ Total Domestic Charge-offs 129 253 523 839 Foreign (4) 72 314 210 ----- ----- ----- ------ Total Net Charge-offs $125 $325 $ 837 $1,049 ===== ===== ===== ====== Includes charge-offs previously classified as LDC charge-offs. Previously reported net charge-off amounts have been reclassified to conform with the 1994 presentation. 18 19 ----- ----- ----- ----- Income Before Income Tax Expense and Effect of Accounting Changes 89 77 265 162 Income Tax Expense 32 20 97 46 ----- ----- ----- ----- Income Before Effect of Accounting Changes 57 57 168 116 Net Effect of Changes in Accounting Principles -- -- -- 14 ------ ----- ----- ----- NET INCOME $ 57 $ 57 $ 168 $ 130 ====== ===== ===== ===== Includes $43 million restructuring charge related to the acquisition of certain former First City assets. UNAUDITED TEXAS COMMERCE BANCSHARES, INC. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEET (in millions) September 30, -------------------- 1994 1993 -------- ------- ASSETS Cash and Due from Banks $ 1,783 $ 1,867 Deposits with Banks 5 5 Federal Funds Sold and Securities Purchased Under Resale Agreements 3,584 5,966 Trading Assets 39 12 Securities: Held-to-Maturity 1,454 1,765 Available-for-Sale 1,569 359 Loans (Net of Unearned Income) 10,185 10,431 Allowance for Losses (320) (370) Assets Acquired as Loan Satisfactions 69 113 All Other Assets 1,731 1,812 ------- ------- TOTAL ASSETS $20,099 $21,960 ======= ======= LIABILITIES Demand Deposits (Noninterest Bearing) $ 5,425 $ 5,808 Domestic and Foreign Interest Bearing Deposits 10,125 11,490 All Other Liabilities 2,805 2,851 ------- ------- TOTAL LIABILITIES 18,355 20,149 STOCKHOLDER'S EQUITY 1,744 1,811 ------- ------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $20,099 $21,960 ======= ======= Includes $14 million of risk management instruments as a result of the adoption of FASB Interpretation No. 39.