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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of the Report: January 23, 1997 Commission file number 1-5805
---------------- ------
THE CHASE MANHATTAN 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
-1
Item 5. Other Events
On January 21, 1997, The Chase Manhattan Corporation (the
"Corporation") reported that net income for full year 1996 was $3.586 billion,
excluding merger-related restructuring costs, and was $2.461 billion including
merger-related costs. Net income in the fourth quarter of 1996 was $901 million,
excluding merger-related restructuring costs, and was $836 million including
merger-related costs.
Also on January 21, 1997, the Corporation announced that Edward D.
Miller, Senior Vice Chairman, will retire on April 1, and that Thomas G.
Labrecque, President and Chief Operating Officer, would assume leadership of the
Corporation's regional banking and nationwide consumer businesses as well as
information technology, operations and administration at the Corporation.
In connection with reporting its 1996 year-end and fourth quarter
results, management of the Corporation stated that (i) it currently expects the
Corporation to realize annual revenue growth, on an "operating basis" (that is,
on a basis that excludes special one-time items and the effects of
securitizations), of approximately 6%-8% in 1997, and (ii) it continued to
target as financial goals for the Corporation double digit operating earnings
per share growth in each of 1997 and 1998, a return on average common equity of
18% or higher by 1998, and an efficiency ratio in the low 50% range by 1998.
With respect to expenses, management indicated that the "underlying operating
noninterest expense" of the Corporation (that is, noninterest expense excluding
merger-related costs, foreclosed property expense, minority interest expense and
non-recurring items and before the effects of any merger-related cost savings)
is expected be approximately 5%-6% higher in 1997 than it was in 1996.
Management stated that it maintained its belief that the Corporation would
realize annual merger-related cost savings of approximately $1.2 billion by the
end of 1997 and $1.7 billion by the end of 1998.
With respect to credit quality, management indicated that it continued
to believe that the credit quality of the Corporation's overall commercial and
industrial portfolio would remain relatively stable in 1997; that it expected
the Corporation to continue over the year to take provisions that were equal to
net charge-offs; that, primarily as a result of growth in consumer loans, higher
delinquencies in credit card loans and lower recoveries in commercial loans, the
total provision in 1997 would be higher than in 1996; and that, specifically,
with respect to the Corporation's credit card portfolio, it expected credit card
net charge-offs, as a percentage of average managed credit card receivables, to
increase modestly in 1997.
Finally, with respect to the Corporation's capital policies, management
of the Corporation noted that the Corporation had purchased $1 billion of its
common equity during the fourth quarter of 1996. Management stated that it now
expected to purchase equity on a more accelerated time schedule than previously
thought, and that therefore it was likely that the previously-announced buy-back
program would be completed more quickly than previously anticipated. Management
reiterated its disciplined approach to the use of the Corporation's capital,
indicating that its current expectation is that the Board of Directors of the
Corporation would review the dividend on the Corporation's common stock in the
normal course in March 1997 and that management currently anticipates that the
dividend policy of the Corporation would continue to be generally to pay a
common stock dividend equal to approximately 25%-35% of the Corporation's net
income (excluding restructuring costs) and less preferred stock dividends.
Copies of the Corporation's press releases are attached as exhibits
hereto. Those press releases and this Current Report on Form 8-K contain
statements that are forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to risks and
uncertainties and the Corporation's actual results may differ materially from
those set forth in such forward-looking statements. Factors that would affect
the prospects of the Corporation's business are discussed in the Corporation's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and the
Corporation's Annual Report to Stockholders (as filed with the Corporation's
Current Report on Form 8-K dated April 16, 1996), to each of which reference is
hereby made.
2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following exhibits are filed with this Report:
Exhibit Number Description
99.1 Press Release - 1996 Fourth Quarter Earnings.
99.2 Press Release - Senior Vice Chairman Miller
to Retire in April
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE CHASE MANHATTAN CORPORATION
(Registrant)
Dated January 23, 1997 by _____________________________
Joseph L. Sclafani
Controller
[Principal Accounting Officer]
4
EXHIBIT INDEX
Exhibit Number Description Page at Which Located
99.1 Press Release - 1996 Fourth
Quarter Earnings 6
99.2 Press Release - Senior Vice Chairman
Miller to Retire in April 21
5
Investor Contact: John Borden Press Contacts: Kathleen Baum
212-270-7318 212-270-5089
John Stefans
For Immediate Release 212-270-7438
Chase's Operating EPS Up 22 percent for 1996 and 9 Percent in the Fourth Quarter
New York, January 21, 1997 -- The Chase Manhattan Corporation today reported
that net income for the full year, before merger-related restructuring costs,
rose 20 percent to $3.586 billion from $2.979 billion. Primary earnings per
share for the year rose to $7.54 per share from $6.25 and fully diluted earnings
per share rose 22 percent to $7.43 from $6.09 in 1995.
Net income in the fourth quarter of 1996, before merger costs, rose 9
percent to $901 million from $827 million in the fourth quarter 1995. Primary
earnings per share were $1.89 compared with $1.73; fully diluted earnings per
share were $1.88 compared with $1.73 in the year-ago quarter.
FINANCIAL HIGHLIGHTS
--------------------
- Operating revenue on a managed basis grew 5 percent when compared with the
strong 1995 fourth quarter and 9 percent for the year, exceeding Chase's 5
to 7 percent target range;
- Expenses declined 3 percent in the quarter, resulting in a one percent
decline for the year; Merger savings of $235 million for the quarter led
to annual savings of $555 million, above the original target;
- The provision for credit losses was $182 million for the quarter and $897
million for the year, reflecting continued strong asset quality;
- The Corporation repurchased $1 billion of its common equity during the
quarter under the terms of a stock buyback plan announced in October.
"Led by strong earnings across the full breadth of our businesses, Chase had
an excellent year and quarter," said Walter V. Shipley, chairman and chief
executive officer. "The Corporation exceeded 1996 performance goals while
executing the merger integration and putting in place a superior set of
franchises for long term growth."
6
Including merger-related costs, net income for the full year was $2.461
billion compared with $2.959 billion for 1995. Primary earnings per share were
$5.02 compared with $6.20 in 1995; fully diluted earnings per share were $4.94
and $6.04, in 1996 and 1995, respectively. Fourth quarter 1996 net income,
including merger costs, was $836 million compared with $827 million in the
year-ago quarter. Primary earnings per share were $1.74 versus $1.73 and fully
diluted earnings per share were $1.74 and $1.73, in the 1996 and 1995 fourth
quarters, respectively.
The corporation's return on average common stockholders' equity, excluding
merger costs, for the 1996 full year was 18.7 percent compared with 16.3 percent
in 1995; return on average common stockholders' equity for the fourth quarter
was 18.1 percent compared to 17.3 percent in the year-ago quarter. The
efficiency ratio for the full year stood at 59 percent versus 63 percent in
1995.
REVENUES
- --------
Total revenue for the year rose 6 percent to $15,852 million from $14,960
million in 1995. On an operating basis, adjusting for securitizations, total
revenue for the year rose 9 percent to $16,431 million. Total revenue in the
1996 fourth quarter was $3,938 million versus $3,843 million in the same 1995
period. On an operating basis, total revenue in the latest quarter rose 5
percent to $4,100 million.
Net interest income in the 1996 fourth quarter was $2,082 million compared
with $2,078 million in the fourth quarter of 1995. Average interest-earning
assets were $268.5 billion, compared with $253.7 billion in the prior year
quarter. The net yield on average interest-earning assets was 3.10 percent in
the 1996 fourth quarter compared with 3.27 percent in the fourth quarter of
1995. These results were affected by an increase in average consumer loan
securitizations of approximately $6.3 billion from the 1995 fourth quarter
level. Including securitizations, the net yield on average interest-earning
assets was 3.35 percent in the 1996 fourth quarter compared with 3.39 percent in
the 1995 quarter.
Total noninterest revenue was $1,856 million in the 1996 fourth quarter
compared with $1,765 million in the 1995 quarter.
Total revenues from trading activities were $457 million in the fourth
quarter of 1996, including $209 million of net interest income. In the fourth
quarter of 1995, total revenues from trading activities were $399 million,
including $125 million of net interest income.
7
Fees related to credit cards were $320 million compared to $246 million in
the fourth quarter of 1995, reflecting the growth in average receivables as well
as the effect of securitizations. Corporate finance and syndication fees were
$213 million compared with $220 million in the 1995 fourth quarter, reflecting
continued strong activity in this area. Trust and investment management fees
rose to $294 million in the fourth quarter of 1996 from $277 million, reflecting
a higher level of assets under management, including the Vista mutual funds and
growth in Chase's global services and securities processing activities.
Revenues from equity-related investments totaled $172 million in the fourth
quarter of 1996, compared with $131 million in the same quarter of 1995.
EXPENSES
- --------
Before merger-related costs and foreclosed property expense, total
noninterest expenses in the 1996 fourth quarter were $2,304 million, a decrease
of 3.2 percent from $2,379 million in the fourth quarter of 1995, and declined
1.1 percent to $9,346 million from $9,450 million for the full year. Merger
savings for the fourth quarter were $235 million, bringing savings for the full
year to $555 million.
Fourth quarter and full year 1996 expenses included first time costs
associated with the launch of Chase's new co-branded credit card with Wal-Mart
($44 million) and minority interest costs related to recently-issued
REIT/Preferred securities ($13 million).
The total number of employees was 67,785 at December 31, 1996 compared with
72,696 at December 31, 1995.
Merger-related expenses in the fourth quarter of 1996 were $104 million.
CREDIT COSTS
- ------------
The provision for credit losses in the fourth quarter of 1996 was $182
million and $186 million in the fourth quarter of 1995, equal to charge-offs in
both periods. The provision for credit losses for the full year was $897 million
in 1996 and $758 million in 1995.
Total commercial net recoveries were $22 million in both the fourth quarters
of 1996 and 1995. Total consumer net charge-offs in the fourth quarter were $212
million, of which credit card charge-offs, on retained receivables, accounted
for $156 million. Total consumer net charge-offs in the fourth quarter of 1995
were $214 million, of which credit card net charge-offs, on retained
receivables, were $172 million.
Credit card net charge-offs on a managed basis were $311 million, or 5.11
percent of average managed receivables in the fourth quarter compared with $238
million or 4.18 percent of average managed receivables in the fourth quarter of
1995, reflecting growth in receivables of 7 percent, year-over-year, and higher
bankruptcies.
8
Managed credit card receivables past due 90 days and over and accruing were
$564 million at December 31, 1996, or 2.31 percent of average credit card
receivables, compared with $498 million, or 2.19 percent at December 31, 1995.
OTHER FINANCIAL DATA
- --------------------
Nonperforming assets, at December 31, 1996, were $1,151 million, compared
with $1,517 million on September 30, 1996, and $1,664 million on December 31,
1995.
The corporation's effective tax rate was 38 percent in the fourth quarter of
1996, and 36 percent in the fourth quarter of 1995.
At December 31, 1996, the aggregate allowance for credit losses was $3,694
million and $3,784 million on the same date a year ago.
Total assets at December 31, 1996, were $336 billion, compared with $304
billion on the same date a year ago. Total loans at December 31, 1996, were $155
billion, compared with $150 billion at December 31, 1995. Total deposits at
year-end 1996 stood at $181 billion and $172 billion on December 31, 1995.
The return on average assets for the fourth quarter of 1996 was 1.08
percent, compared with 1.04 percent for the same 1995 quarter.
During the 1996 fourth quarter, the Corporation purchased approximately 11.5
million common shares ($1.0 billion) as part of a stock repurchase plan
announced in October. The Corporation reissued approximately 1.6 million
treasury shares under the Corporation's employee benefit plans, resulting in a
net repurchase of 9.9 million shares ($890 million) of its common stock.
At December 31, 1996, the estimated Tier I risk-based capital ratio was 8.2
percent, compared with 8.2 percent at December 31, 1995. The estimated Total
risk-based capital ratio was 11.8 percent at December 31, 1996, and 12.3 percent
at December 31, 1995.
# # #
Note: On March 31, 1996, The Chase Manhattan Corporation merged with and into
Chemical Banking Corporation. Upon consummation of the merger, Chemical changed
its name to The Chase Manhattan Corporation. The merger was accounted for as a
pooling-of-interests and, accordingly, the information included in this release
reports the combined results of Chase and Chemical as though the merger had been
in effect for all periods presented.
9
THE CHASE MANHATTAN CORPORATION and Subsidiaries
FINANCIAL HIGHLIGHTS
(in millions, except per share data)
Three Months Ended For The Year Ended
December 31, December 31,
------------------------------------ -------------------------------------
1996 1995 1996 1995
----------------- -------------- --------------- --------------
EARNINGS:
Income Before Restructuring Charge $ 901 $ 827 $ 3,586 $ 2,979
Restructuring Charge (After-Tax) (65)(a) -- (1,125)(a) (9)(b)
--------- --------- ---------- ----------
Income After Restructuring Charge and
Before Effect of Accounting Change $ 836 $ 827 $ 2,461 $ 2,970
Effect of Change in Accounting Principle -- -- -- (11)(c)
--------- --------- ---------- ----------
Net Income $ 836 $ 827 $ 2,461 $ 2,959
======== ========= =========== ==========
Net Income Applicable to Common Stock $ 781 $ 773 $ 2,242 $ 2,732
======== ========== =========== ==========
INCOME PER COMMON SHARE:
Primary:
Income Before Restructuring Charge $ 1.89 $ 1.73 $ 7.54 $ 6.25
Restructuring Charge (After-Tax) (0.15)(a) -- (2.52)(a) (0.02)(b)
-------- --------- ----------- ----------
Income After Restructuring Charge and
Before Effect of Accounting Change $ 1.74 $ 1.73 $ 5.02 $ 6.23
Effect of Change in Accounting Principle -- -- -- (0.03)(c)
------- --------- ----------- ----------
Net Income $ 1.74 $ 1.73 $ 5.02 $ 6.20
======= ========= =========== ==========
Assuming Full Dilution:
Income Before Restructuring Charge $ 1.88 $ 1.73 $ 7.43 $ 6.09
Restructuring Charge (After-Tax) (0.14) (a) -- (2.49)(a) (0.02)(b)
------- --------- ----------- ----------
Income After Restructuring Charge and
Before Effect of Accounting Change $ 1.74 $ 1.73 $ 4.94 $ 6.07
Effect of Change in Accounting Principle -- -- -- (0.03)(c)
------- ---------- ----------- ---------
Net Income $ 1.74 $ 1.73 $ 4.94 $ 6.04
======= ========== =========== =========
PER COMMON SHARE:
Book Value at December 31, $ 42.58 $ 41.81 $ 42.58 $ 41.81
Market Value at December 31, $ 89.38 $ 58.75 $ 89.38 $ 58.75
Common Stock Dividends Declared (d) $ 0.56 $ 0.50 $ 2.24 $ 1.94
COMMON SHARES OUTSTANDING:
Average Common and Common Equivalent Shares 447.7 446.0 446.4 440.8
Average Common Shares Assuming Full Dilution 448.8 447.7 453.4 453.5
Common Shares at Period End 430.8 435.0 430.8 435.0
(a) Reflects merger-related restructuring charge of $1,022 million, after-tax,
which was recorded on March 31, 1996. In addition, $103 million, after-tax,
of merger-related expenses were incurred during 1996 ($4 million in the
first quarter, $14 million in the second quarter, $20 million in the third
quarter and $65 million in the fourth quarter) and recognized under an
existing accounting pronouncement.
(b) Reflects restructuring charge related to exiting from a futures brokerage
business.
(c) On January 1, 1995, the Corporation adopted SFAS 106 for the accounting for
other postretirement benefits relating to its foreign plans.
(d) The Corporation increased its quarterly common stock dividend from $0.50
per share to $0.56 per share in the first quarter of 1996.
10
THE CHASE MANHATTAN CORPORATION and Subsidiaries
FINANCIAL HIGHLIGHTS (CONTINUED)
Three Months Ended For The Year Ended
December 31, December 31,
----------------------------------- ---------------------------------
1996 1995 1996 1995
------------- --------------- ---------------- ----------
PERFORMANCE RATIOS: (Average Balances) (e)
Income Before Restructuring Charge:
Return on Assets 1.08% 1.04% 1.12% 0.97%
Return on Common Stockholders' Equity 18.12% 17.33% 18.74% 16.27%
Return on Total Stockholders' Equity 16.89% 16.13% 17.40% 15.17%
Net Income:
Return on Assets 1.00% 1.04% 0.77% 0.96%
Return on Common Stockholders' Equity 16.73% 17.33% 12.48% 16.15%
Return on Total Stockholders' Equity 15.67% 16.13% 11.94% 15.06%
Efficiency Ratio (f) 59% 62% 59% 63%
CAPITAL RATIOS AT DECEMBER 31:
Common Stockholders' Equity to Assets 5.5% 6.0%
Total Stockholders' Equity to Assets 6.2% 6.9%
Tier 1 Leverage 6.8% 6.7%
Risk-Based Capital: (g)
Tier 1 (4.0% required) 8.2%* 8.2%
Total (8.0% required) 11.8%* 12.3%
(e) Performance ratios for three months ended December 31, 1996 and 1995 are
based on annualized amounts.
(f) Excludes restructuring charges, foreclosed
property expense and nonrecurring items.
(g) The 1996 ratios include the impact of the issuance of $550 million of
preferred stock (the "Series A Preferred Shares") of Chase Preferred
Capital Corporation, which qualifies as a real estate investment trust
(REIT), and the issuance of $600 million of Guaranteed Preferred
Beneficial Interests in Corporation's Junior Subordinated Deferrable
Interest Debentures (the "Series A Subordinated Debentures").
* Estimated
11
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Three Months Ended
--------------------------------------------
Dec. 31, Sept.30, Dec. 31,
1996 1996 1995
------------ ------------ -----------
INTEREST INCOME
Loans $ 3,048 $ 3,042 $ 3,252
Securities 767 690 718
Trading Assets 656 525 402
Federal Funds Sold and Securities Purchased Under Resale Agreements 571 549 491
Deposits with Banks 97 112 187
-------- -------- --------
Total Interest Income 5,139 4,918 5,050
-------- -------- --------
INTEREST EXPENSE
Deposits 1,520 1,416 1,602
Short-Term and Other Borrowings 1,304 1,213 1,139
Long-Term Debt 233 220 231
-------- -------- -------
Total Interest Expense 3,057 2,849 2,972
-------- -------- -------
NET INTEREST INCOME 2,082 2,069 2,078
Provision for Credit Losses 182 220 186
-------- -------- -------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 1,900 1,849 1,892
-------- -------- -------
NONINTEREST REVENUE
Corporate Finance and Syndication Fees 213 234 220
Trust and Investment Management Fees 294 295 277
Credit Card Revenue 320 277 246
Service Charges on Deposit Accounts 98 97 101
Fees for Other Financial Services 377 393 363
Trading Revenue 248 304 274
Securities Gains 25 34 25
Other Revenue 281 222 259
-------- -------- -------
Total Noninterest Revenue 1,856 1,856 1,765
-------- -------- -------
NONINTEREST EXPENSE
Salaries 1,070 1,040 1,130
Employee Benefits 185 211 206
Occupancy Expense 192 204 224
Equipment Expense 180 179 187
Foreclosed Property Expense (1) 2 (15)
Other Expense 677 652 632
-------- -------- -------
Total Noninterest Expense Before Restructuring Charge 2,303 2,288 2,364
Restructuring Charge and Expenses 104 32 --
-------- -------- -------
Total Noninterest Expense 2,407 2,320 2,364
-------- -------- -------
INCOME BEFORE INCOME TAX EXPENSE 1,349 1,385 1,293
Income Tax Expense 513 527 466
-------- -------- -------
NET INCOME $ 836 $ 858 $ 827
========= ========= ========
NET INCOME APPLICABLE TO COMMON STOCK $ 781 $ 803 $ 773
========= ========= ========
NET INCOME PER COMMON SHARE:
Primary $ 1.74 $ 1.80 $ 1.73
======== ======== =======
Assuming Full Dilution $ 1.74 $ 1.78 $ 1.73
======== ======== =======
12
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
For The Year Ended
December 31,
-------------------------------------
1996 1995
---------------- -------------
INTEREST INCOME
Loans $ 12,359 $ 12,842
Securities 2,862 2,591
Trading Assets 2,016 1,464
Federal Funds Sold and Securities Purchased Under Resale Agreements 2,135 1,889
Deposits with Banks 537 824
----------- -----------
Total Interest Income 19,909 19,610
----------- -----------
INTEREST EXPENSE
Deposits 6,038 6,291
Short-Term and Other Borrowings 4,630 4,175
Long-Term Debt 901 942
------------ -----------
Total Interest Expense 11,569 11,408
------------ -----------
NET INTEREST INCOME 8,340 8,202
Provision for Credit Losses 897 758
------------ -----------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 7,443 7,444
------------ -----------
NONINTEREST REVENUE
Corporate Finance and Syndication Fees 929 796
Trust and Investment Management Fees 1,176 1,018
Credit Card Revenue 1,063 834
Service Charges on Deposit Accounts 394 417
Fees for Other Financial Services 1,529 1,453
Trading Revenue 1,270 1,016
Securities Gains 135 132
Other Revenue 1,016 1,092
------------ -----------
Total Noninterest Revenue 7,512 6,758
------------ -----------
NONINTEREST EXPENSE
Salaries 4,232 4,208
Employee Benefits 926 899
Occupancy Expense 824 897
Equipment Expense 724 755
Foreclosed Property Expense (16) (75)
Other Expense 2,640 2,691
------------ -----------
Total Noninterest Expense Before Restructuring Charge 9,330 9,375
Restructuring Charge and Expenses 1,814 15
------------ -----------
Total Noninterest Expense 11,144 9,390
------------ -----------
INCOME BEFORE INCOME TAX EXPENSE
AND EFFECT OF ACCOUNTING CHANGE 3,811 4,812
Income Tax Expense 1,350 1,842
------------ -----------
INCOME BEFORE EFFECT OF ACCOUNTING CHANGE 2,461 2,970
Effect of Change in Accounting Principle -- (11)
------------ -----------
NET INCOME $ 2,461 $ 2,959
============ ===========
NET INCOME APPLICABLE TO COMMON STOCK $ 2,242 $ 2,732
============ ===========
INCOME PER COMMON SHARE:
Primary:
Income Before Effect of Accounting Change $ 5.02 $ 6.23
Effect of Change in Accounting Principle -- (0.03)
------------ -----------
Net Income $ 5.02 $ 6.20
============ ===========
Assuming Full Dilution:
Income Before Effect of Accounting Change $ 4.94 $ 6.07
Effect of Change in Accounting Principle -- (0.03)
------------ -----------
Net Income $ 4.94 $ 6.04
============ ===========
13
THE CHASE MANHATTAN CORPORATION and Subsidiaries
NONINTEREST REVENUE DETAIL
(in millions)
Three Months Ended For The Year Ended
---------------------------------- ------------------------------
Dec. 31, Sept. 30, Dec. 31, December 31,
1996 1996 1995 1996 1995
---------- --------- ----------- ------------ -----------
Fees for Other Financial Services:
Commissions on Letters of Credit and Acceptances $ 78 $ 81 $ 88 $ 330 $ 350
Fees in Lieu of Compensating Balances 72 75 68 295 281
Mortgage Servicing Fees 45 55 53 204 212
Loan Commitment Fees 28 32 27 120 123
Other Fees 154 150 127 580 487
------- ------ ------ ------- -------
Total $ 377 $ 393 $ 363 $ 1,529 $ 1,453
======= ======= ====== ======= ========
Trading-Related Revenue: (a)
Interest Rate Contracts $ 85 $ 124 $ 137 $ 535 $ 445
Foreign Exchange Revenue 103 108 125 444 584
Debt Instruments and Other 269 247 137 994 429
------- ------ ------ ------- -------
Total $ 457 $ 479 $ 399 $ 1,973 $ 1,458
======= ======= ====== ======= =======
Other Revenue:
Revenue from Equity-Related Investments $ 172 $ 112 $ 131 $ 726 $ 626
Net Gains (Losses) on Emerging Markets Securities Sales (15) -- 13 (80) (49)
Gain on Sale of Investment in Far East Bank and Trust Co. -- -- -- -- 85
Residential Mortgage Origination/Sales Activities 22 15 67 63 179
Loss on Sale of a Building in Japan -- -- -- (60) --
All Other Revenue 102 95 48 367 251
------ ------- ------ ------- -------
Total $ 281 $ 222 $ 259 $ 1,016 $ 1,092
====== ======= ======= ======= =======
(a) Includes net interest income attributable to trading activities.
- -----------------------------------------------------------------------------------------------------------------------------------
THE CHASE MANHATTAN CORPORATION and Subsidiaries
NONINTEREST EXPENSE DETAIL
(in millions)
Three Months Ended For The Year Ended
-------------------------------------------------- ------------------------------
Dec.31, Sept. 30, Dec. 31, December 31,
1996 1996 1995 1996 1995
----------- --------- ----------- ------------ -----------
Other Expense:
Professional Services $ 133 $ 127 $ 152 $ 530 $ 559
Marketing Expense 110 (a) 73 88 346 (a) 372
FDIC Assessments 1 (b) 6 (b,c) 10 (b) 9 (b) 117
Telecommunications 77 82 84 326 333
Amortization of Intangibles 42 42 43 169 182
Minority Interest 18 (d) 16 7 54 (d) 27
All Other 296 306 248 1,206 1,101
------- ----- ------ ------- -------
Total $ 677 (a) $ 652 $ 632 $ 2,640 (a) $ 2,691
======= ======= ======= ======= ========
(a) Includes total expenses related to the Wal-Mart program of $44 million,
which includes $30 million of marketing expense.
(b) Reflects the impact of a reduction in the FDIC assessment rate.
(c) Includes a special assessment for Savings Association Insurance Fund-related
deposits.
(d) Includes minority interest related to the Series A Preferred Shares of $13
million.
14
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
December 31, December 31,
1996 1995
-------------- --------------
ASSETS
Cash and Due from Banks $ 14,605 $ 14,794
Deposits with Banks 8,344 8,468
Federal Funds Sold and Securities
Purchased Under Resale Agreements 28,966 17,461
Trading Assets:
Debt and Equity Instruments 30,377 26,212
Risk Management Instruments 29,579 (a) 25,825
Securities:
Available-for-Sale 44,691 37,141
Held-to-Maturity 3,855 4,628
Loans (Net of Allowance for Loan Losses of $3,549 in 1996 and $3,784 in 1995) 151,543 (a) 146,423
Premises and Equipment 3,642 3,757
Due from Customers on Acceptances 2,322 1,896
Accrued Interest Receivable 3,020 2,541
Other Assets 15,155 14,843
-------- --------
TOTAL ASSETS $ 336,099 $ 303,989
========= =========
LIABILITIES
Deposits:
Domestic:
Noninterest-Bearing $ 42,726 $ 36,983
Interest-Bearing 67,186 63,071
Foreign:
Noninterest-Bearing 4,331 3,849
Interest-Bearing 66,678 67,631
--------- ---------
Total Deposits 180,921 171,534
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 53,868 37,263
Other Borrowed Funds 13,731 13,936
Acceptances Outstanding 2,276 1,915
Trading Liabilities 38,136 34,341
Accounts Payable, Accrued Expenses and Other Liabilities 12,309 (a) 11,339
Long-Term Debt 13,314 (b) 12,825
--------- ---------
TOTAL LIABILITIES 314,555 283,153
--------- ---------
PREFERRED STOCK OF SUBSIDIARY 550 (c) --
--------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock 2,650 2,650
Common Stock 441 458
Capital Surplus 10,459 11,075
Retained Earnings 8,627 7,997
Net Unrealized Loss on Securities Available-for-Sale, Net of Taxes (288) (237)
Treasury Stock, at Cost (895) (1,107)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 20,994 20,836
--------- ---------
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY
AND STOCKHOLDERS' EQUITY $ 336,099 $ 303,989
========= =========
(a) At December 31, 1996, in accordance with a recently issued accounting
pronouncement, the allowance for credit losses has been allocated into
three components: a $3,549 million allowance for loan losses, which is
reported net in Loans; an allowance for credit losses on derivative
and foreign exchange financial instruments of $75 million, which is
reported net in Trading Assets - Risk Management Instruments; and an
allowance for credit losses on letters of credit and guarantees of $70
million, which is reported in Other Liabilities. Prior period amounts
have not been reclassified due to immateriality.
(b) The 1996 amount includes $600 million of Series A Subordinated
Debentures, issued in December 1996, which qualify as Tier I Capital
for the Corporation.
(c) Reflects the issuance in September 1996 of Series A Preferred Shares,
which qualify as Tier I Capital for the Corporation.
15
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(in millions)
For the Year Ended
December 31,
--------------------------------------------
1996 1995
----------------- -------------
Preferred Stock:
Balance at Beginning of Year $ 2,650 $ 2,850
Conversion of Stock -- (200)
--------- ----------
Balance at End of Period $ 2,650 $ 2,650
--------- ----------
Common Stock:
Balance at Beginning of Year $ 458 $ 447
Retirement of Treasury Stock (20) (a) --
Issuance of Common Stock 3 11
--------- ----------
Balance at End of Period $ 441 $ 458
--------- ----------
Capital Surplus:
Balance at Beginning of Year $ 11,075 $ 10,671
Retirement of Treasury Stock (433) (a) --
New Issuances of Common Stock 42 307
Shares Issued for Employee Stock-Based
Awards and Certain Related Tax Benefits (225) 97
--------- ----------
Balance at End of Period $ 10,459 $ 11,075
--------- ----------
Retained Earnings:
Balance at Beginning of Year $ 7,997 $ 6,045
Net Income 2,461 2,959
Retirement of Treasury Stock (557) (a) --
Cash Dividends Declared:
Preferred Stock (219) (227)
Common Stock (1,061) (789)
Accumulated Translation Adjustment 6 9
--------- ----------
Balance at End of Period $ 8,627 $ 7,997
---------- ----------
Net Unrealized Loss on Securities Available-for-Sale:
Balance at Beginning of Year $ (237) $ (473)
Net Change in Fair Value of Securities Available-for-Sale,
Net of Taxes (51) 236
---------- ----------
Balance at End of Period $ (288) $ (237)
----------- ----------
Common Stock in Treasury, at Cost:
Balance at Beginning of Year $ (1,107) $ (667)
Retirement of Treasury Stock 1,010 (a) --
Purchase of Treasury Stock (2,037) (1,389)
Reissuance of Treasury Stock 1,239 949
---------- ----------
Balance at End of Period $ (895) $ (1,107)
----------- ----------
Total Stockholders' Equity $ 20,994 $ 20,836
========== ==========
(a) Under the terms of the merger agreement, on March 31, 1996,
all of the former Chase Manhattan Corporation's treasury stock
was cancelled and retired.
16
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CREDIT RELATED INFORMATION
(in millions)
Loans Outstanding Nonperforming Assets
----------------------------------- -------------------------------------
December 31, December 31,
1996 1995 1996 1995
--------------- --------------- ---------------- ----------
Domestic Commercial:
Commercial Real Estate $ 5,934 $ 6,660 $ 156 $ 375
Other Commercial 40,282 37,990 446 498
---------- ---------- -------- --------
Total Commercial Loans 46,216 44,650 602 873
---------- ---------- -------- --------
Domestic Consumer:
Residential Mortgage 36,621 34,060 249 238
Credit Card 12,157 17,078 -- --
Other Consumer 20,306 18,293 35 39
---------- ---------- -------- --------
Total Consumer Loans 69,084 69,431 284 277
---------- ---------- -------- --------
Total Domestic Loans 115,300 114,081 886 1,150
Foreign 39,792 36,126 135 343
---------- ---------- -------- --------
Total Loans $ 155,092 $ 150,207 1,021 1,493
========== ==========
Assets Acquired as Loan Satisfactions 130 171
-------- --------
Total Nonperforming Assets $ 1,151 $ 1,664
======== ========
Assets Held For Accelerated Disposition $ 274 $ 412
======== ========
Three Months Ended For The Year Ended
December 31, December 31,
----------------------------------- -------------------------------------
1996 1995 1996 1995
--------------- --------------- ----------------- ---------------
Net Charge-Offs:
Domestic Commercial:
Commercial Real Estate $ (18) $ 9 $ 14 $ 31
Other Commercial (4) (31) 86 (16)
--------- ---------- -------- --------
Total Commercial (22) (22) 100 15
--------- ---------- -------- --------
Domestic Consumer:
Residential Mortgage 8 11 30 62
Credit Card 156 172 618 675
Other Consumer 48 31 176 122
--------- ---------- -------- --------
Total Consumer 212 214 824 859
--------- ---------- -------- --------
Total Domestic Net Charge-offs 190 192 924 874
Foreign (8) (6) (27) (34)
---------- ---------- -------- --------
Subtotal Net Charge-offs 182 186 897 840
Charge Related to Conforming Credit
Card Charge-off Policies -- -- 102 --
---------- ---------- -------- --------
Total Net Charge-offs $ 182 $ 186 $ 999 $ 840
========== ========= ======== ========
17
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CREDIT CARD RELATED INFORMATION
(in millions, except ratios)
As of or For The As of or For The
Three Months Ended Year Ended
December 31, December 31,
------------------------------ ----------------------------
1996 1995 1996 1995
--------------- ------------ ----------- -----------
MANAGED CREDIT CARD PORTFOLIO:
Average Managed Credit Card Receivables $ 24,382 $ 22,777 $ 23,709 $ 20,980
Past Due 90 Days & Over and Accruing $ 564 $ 498 $ 564 $ 498
As a Percentage of Average Credit Card Receivables 2.31% 2.19% 2.38% 2.37%
Net Charge-offs $ 311 (a) $ 238 $ 1,156 (a) $ 849
As a Percentage of Average Credit Card Receivables 5.11% 4.18% 4.87% 4.05%
(a) Excludes a charge related to conforming credit card charge-off policies.
Favorable (unfavorable) impact of credit card Three Months Ended For The Year Ended
securitizations on reported
Consolidated Statement of Income line items: December 31, December 31,
------------------------------ -----------------------------
1996 1995 1996 1995
----------- ------------ ----------- -----------
Net Interest Income $ (275) $ (134) $ (914) $ (360)
Provision for Losses 161 62 570 170
Credit Card Revenue 101 61 318 173
Other Revenue 12 7 23 24
--------- --------- ---------- ---------
Pre-tax Income (Loss) Impact of Securitizations $ (1) $ (4) $ (3) $ 7
========= ========= ========= =========
18
THE CHASE MANHATTAN CORPORATION and Subsidiaries
Condensed Average Consolidated Balance Sheet, Interest and Rates
(Taxable-Equivalent Interest and Rates; in millions)
Three Months Ended Three Months Ended
December 31, 1996 December 31, 1995
------------------------------------------ ---------------------------------
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
------- -------- ------------ ------- -------- ------------
ASSETS
Liquid Interest-Earning Assets $ 71,724 $ 1,324 7.34% $ 64,290 $ 1,080 6.66%
Securities 47,103 772 6.52% 41,153 723 6.98%
Loans 149,665 3,053 8.11% 148,217 3,256 8.73%
--------- -------- --------- ------
Total Interest-Earning Assets 268,492 5,149 7.63% 253,660 5,059 7.93%
Total Noninterest-Earning Assets 62,924 61,097
------- ---------
Total Assets $ 331,416 $ 314,757
========== =========
LIABILITIES
Total Interest-Bearing Deposits $ 130,453 1,520 4.64% $ 131,201 1,602 4.86%
Total Short-Term and Other Borrowings 82,024 1,304 6.32% 68,540 1,139 6.60%
Long-Term Debt 12,901 233 7.16% 13,166 231 6.96%
---------- -------- --------- ------
Total Interest-Bearing Liabilities 225,378 3,057 5.40% 212,907 2,972 5.55%
-------- ------
Noninterest-Bearing Deposits 40,787 39,449
Other Noninterest-Bearing Liabilities 43,479 42,056
---------- ---------
Total Liabilities 309,644 294,412
---------- ---------
PREFERRED STOCK OF SUBSIDIARY 550 --
---------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock 2,650 2,650
Common Stockholders' Equity 18,572 17,695
---------- ---------
Total Stockholders' Equity 21,222 20,345
---------- ---------
Total Liabilities and Stockholders' Equity $ 331,416 $ 314,757
========== =========
INTEREST RATE SPREAD 2.23% 2.38%
===== ====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 2,092 3.10% $ 2,087 3.27%
======== ==== ======== ====
For The Year Ended For The Year Ended
December 31, 1996 December 31, 1995
------------------------------ -------------------------------------------
Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ----- ------- -------- ----
ASSETS
Liquid Interest-Earning Assets $ 67,239 $ 4,688 6.97% $ 61,277 $ 4,177 6.82%
Securities 43,712 2,882 6.59% 36,702 2,615 7.12%
Loans 149,996 12,373 8.25% 146,528 12,863 8.78%
-------- -------- --------- --------
Total Interest-Earning Assets 260,947 19,943 7.64% 244,507 19,655 8.04%
Total Noninterest-Earning Assets 60,293 62,878
-------- ---------
Total Assets $ 321,240 $ 307,385
========= =========
LIABILITIES
Total Interest-Bearing Deposits $ 130,022 6,038 4.64% $ 130,613 6,291 4.82%
Total Short-Term and Other Borrowings 76,549 4,630 6.05% 63,425 4,175 6.58%
Long-Term Debt 12,811 901 7.03% 13,080 942 7.20%
--------- --------- --------- --------
Total Interest-Bearing Liabilities 219,382 11,569 5.27% 207,118 11,408 5.51%
--------- --------
Noninterest-Bearing Deposits 39,562 37,698
Other Noninterest-Bearing Liabilities 41,523 42,926
--------- ---------
Total Liabilities 300,467 287,742
--------- ---------
PREFERRED STOCK OF SUBSIDIARY 158 --
--------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock 2,650 2,730
Common Stockholders' Equity 17,965 16,913
--------- ---------
Total Stockholders' Equity 20,615 19,643
--------- ---------
Total Liabilities and Stockholders' Equity $ 321,240 $ 307,385
========= =========
INTEREST RATE SPREAD 2.37% 2.53%
==== ====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 8,374 3.21% $ 8,247 3.37%
======= ==== ======== ====
19
THE CHASE MANHATTAN CORPORATION and Subsidiaries
Lines of Business Results
(in millions, except ratios)
Regional and Nationwide
Consumer Bank Global Bank Global Services
-------------------------- ------------------------- ---------------------------
Three Months Ended
December 31, 1996 1995 1996 1995 1996 1995
- --------------------------- ------------ ------------ ------------ ----------- ----------- ------------
Revenues $ 2,069 $ 1,977 $ 1,550 $ 1,475 $ 491 $ 487
Operating Net Income (a) 318 333 411 356 60 51
Average Common Equity 6,437 6,667 8,595 8,214 1,066 1,080
Average Assets 113,474 109,172 217,910 203,140 10,590 7,430
Return on Common Equity 18.5% 18.5% 17.9% 15.8% 21.3% 17.1%
Efficiency Ratio 56% 58% 53% 58% 81% 83%
Corporate Total
-------------------------- -----------------------------
Three Months Ended
December 31, 1996 1995 1996 1995
- --------------------------- ----------- ------------- ------------ ------------
Revenues NM NM $ 3,938 $ 3,847
Operating Net Income (a) $ 112 $ 61 901 801
Average Common Equity 2,474 1,734 18,572 17,695
Average Assets NM NM 331,416 314,757
Return on Common Equity NM NM 18.1% 16.8%
Efficiency Ratio NM NM 59% 62%
Regional and Nationwide
Consumer Bank Global Bank Global Services
-------------------------- ------------------------- ---------------------------
Year Ended December 31, 1996 1995 1996 1995 1996 1995
- ------------------------ ------------- ------------ ------------ ----------- -------------- ------------
Revenues $ 8,099 $ 7,726 $ 6,615 $ 5,679 $ 1,930 $ 1,735
Operating Net Income (a) 1,343 1,164 1,911 1,423 255 220
Average Common Equity 6,415 6,698 8,598 8,207 1,065 1,058
Average Assets 111,914 106,906 213,824 196,787 7,856 6,909
Return on Common Equity 19.7% 16.1% 21.0% 15.9% 22.7% 19.1%
Efficiency Ratio 55% 61% 49% 56% 79% 80%
Corporate Total
-------------------------- ---------------------------
Year Ended December 31, 1996 1995 1996 1995
- ------------------------ ----------- ------------- ------------ ---------
Revenues NM NM $15,860 $14,879
Operating Net Income (a) $ 7 $ 96 3,516 2,903
Average Common Equity 1,887 950 17,965 16,913
Average Assets NM NM 321,240 307,385
Return on Common Equity NM NM 18.4% 15.8%
Efficiency Ratio NM NM 59% 64%
(a) Operating net income excludes restructuring
charges/expenses and special items.
NM - Not meaningful
20
Investor Contact: John Borden Press Contact: John Stefans
212-270-7318 212-270-7438
Senior Vice Chairman Miller to Retire in April
NEW YORK, January 21, 1997 -- The Chase Manhattan Corporation
announced today that Edward D. Miller, senior vice chairman, will retire from
the company on April 1 to pursue a second career.
In announcing Mr. Miller's plans, Walter V. Shipley, chairman and
chief executive officer, said:
"Ed Miller has been an invaluable employee of this company and its
predecessor institutions for more than 35 years. He was central in implementing
both the Chemical-Manufacturers Hanover and Chase-Chemical mergers. He built our
regional and national consumer bank into a true powerhouse and positioned us in
the forefront of technological advances. I obviously want him to stay, but I
have to respect his wish, expressed to me over time, to choose a second career
while he was still in his mid fifties. Our highest regard and our warm good
wishes go with him in that endeavor."
Mr. Miller said:
"I've long had a desire to run something, either in another facet of
financial services, the public sector or in the non-profit area. I didn't feel
comfortable exploring those possibilities while still at the bank, so I decided
to call it a career in one field and consider my options while I'm relatively
young and in good health. With the merger completed, an exceptionally strong
management team in place and a very positive outlook for the future of the bank,
this is a particularly appropriate time for me to retire. At Walter's request, I
will be continuing my association with Chase as chairman of its Regional
Advisory Board."
Mr. Shipley said that Thomas G. Labrecque, in addition to his current
responsibilities as president and chief operating officer, would assume
day-to-day leadership of Chase's regional banking and nationwide consumer
businesses as well as information technology, operations and administration.
Mr. Miller, 56, began his banking career at Manufacturers Hanover in
1959. Following service in the U.S. Marine Corps, he returned to the bank in
1963 as a management trainee. After building and developing numerous and diverse
business units, including credit cards, consumer credit and the bank's branch
system, he was named executive vice president for retail banking in 1982.
In 1988, he was elected vice chairman and a director, adding
responsibilities for operations, technology, and information and transaction
services. Following the Chemical-Manufacturers Hanover merger in 1991, Mr.
Miller assumed identical titles at Chemical Banking Corporation. He was named
president of the bank in 1994, serving in that post until the Chemical-Chase
merger was completed and he undertook his present responsibilities.
A graduate of Pace University, Mr. Miller is a director of Brooklyn
Union Gas Company and a member of the Bankers Roundtable, currently serving as
vice chairman of its Bankers Information Technology Secretariat (BITS). He is
also on the Board of Directors of Phoenix House Foundation and a member of the
Executive Council of the Inner-City Scholarship Fund. In addition, he is past
president and a current member of the Board of Directors and Governing Council
of the New York State Bankers Association, a trustee of Pace University and of
the New York Blood Center.
# # #
21