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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: July 17, 1996 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
Item 5. Other Events
On July 16, 1996, The Chase Manhattan Corporation (the "Corporation")
reported that earnings for the second quarter of 1996 were $856 million, a 17
percent increase when compared with 1995 second quarter earnings of $729
million. Primary earnings per share and fully diluted earnings per share for the
second quarter of 1996 were $1.80 and $1.79, respectively, compared with $1.54
and $1.52, respectively, in the prior year's second quarter.
The Corporation's net income, including restructuring charges and
merger-related expenses of $1,040 million, after-tax, was $767 million for the
first six months of 1996, compared with $1,368 million for the first six months
of 1995. Primary earnings per share and fully diluted earnings per share were
$1.48 and $1.46, respectively, for the first half of 1996, compared with $2.89
and $2.83, respectively, for the same 1995 period.
In connection with reporting its 1996 second quarter earnings, the
Corporation reaffirmed its previously-announced operating goals for 1996
(earnings per share growth in excess of 15%; efficiency ratio in the high 50%
range; operating revenue growth of 5-7%; non-interest expense of approximately
$9.1 billion; and a return on common shareholders' equity of 17%). The
Corporation emphasized that its target of overall revenue growth of 5-7% for
1996 was on an "operating basis" (that is, on a basis that excludes special
one-time items but reflects the impact of securitizations), rather than on a
"reported" basis.
With respect to credit quality, management indicated that it currently
expected that the Corporation's credit card net charge-offs, as a percentage of
average managed credit card receivables, for full year 1996 will be higher than
the 1996 second quarter net charge off number, but will be lower than 5% (as
compared with approximately 4.0% for full year 1995), principally as a result of
(i) continuing higher levels of personal bankruptcies and delinquencies in 1996
when compared to 1995 levels and (ii) slower growth in credit card outstandings
in 1996 than previously anticipated (that is, growth in credit card outstandings
for 1996 when compared to 1995 would be at the lower range of the Corporation's
previously announced forecast).
Finally, the Corporation noted, with respect to its capital policies,
that the staff of the Securities and Exchange Commission (the "Commission") had
recently clarified certain interpretations of Staff Accounting Bulletin No. 96
(SAB 96) relating to pooling-of-interests accounting for business combinations.
The Corporation stated that it understood the Commission staff's position to be
that, in calculating the number of shares to be used to determine compliance
with the "90% test" of paragraph 47 of APB Opinion 16, Business Combinations,
such number of shares should not be reduced by "cures" (or reissuances from
treasury) subsequent to the consummation date of the business combination. The
Corporation stated that it was calculating the number of shares held in its
treasury that were considered "tainted" for pooling-of-interests accounting
purposes in accordance with the staff's interpretation and that, as a result of
calculating "tainted" shares in accordance with such interpretation, the
Corporation expected that the number of shares outstanding in the third quarter
of 1996 would be somewhat higher than the 1996 second quarter number.
The Corporation also indicated it is evaluating the opportunity for
future redemptions of its outstanding preferred stock in light of the fact that
it currently has approximately $1.1 billion of fixed rate preferred stock that
becomes callable in 1997. In that regard, the Corporation noted that a
subsidiary, organized as a real estate investment trust, had recently filed a
registration statement covering $500 million of preferred stock intended to be
issued to pre-fund some of the Corporation's preferred stock that may be
redeemed. The Corporation stated that, given the tax deductible features of the
REIT preferred stock, it believed the cost to the Corporation of issuing the
REIT preferred would be approximately 150-200 basis points lower than
traditional preferred stock.
A copy of the Corporation's press release is attached as an exhibit
hereto. That press release 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 might cause
such a difference include, but are not limited, to the following:
The Corporation's revenue growth outlook assumes retention of the major
clients of the Corporation with minimal merger-related revenue loss. However,
the Corporation operates in a highly competitive environment, which is expected
to become increasingly competitive, and there is no assurance that current
customers will continue to do the same level of business with the Corporation in
the periods following the merger.
Furthermore, the Corporation has identified its global markets, global
services, investment banking, private banking and national consumer business as
businesses that it believes will be primarily responsible for providing the
anticipated revenue growth of the Corporation. However, as previously noted with
respect to its credit card business, there is no assurance that such businesses
will experience revenue growth at the rates forecasted. The profitability of
these businesses, as well as the Corporation's credit quality, could be
adversely affected by a worsening of general economic conditions, particularly
by a higher domestic interest rate environment, as well as by foreign and
domestic trading market conditions. An economic downturn or significantly higher
interest rates could increase the risk that a greater number of the
Corporation's customers would become delinquent on their loans or other
obligations to the Corporation, or would refrain from securing additional debt.
In addition, a higher level of domestic interest rates could affect the amount
of assets under management by the Corporation (for example, by affecting the
flows of moneys to or from the mutual funds managed by the Corporation), impact
the willingness of financial investors to participate in loan syndications and
underwritings managed by the Corporation's corporate finance business, adversely
impact the Corporation's loan and deposit spreads and affect its domestic
trading revenues. Revenues from foreign trading markets may also be subject to
negative fluctuations as a result of the impact of unfavorable political and
diplomatic developments, social instability and changes in the policies of
central banks or foreign governments, and the impact of these fluctuations could
be accentuated by the volatility and lack of relative liquidity in some of these
foreign trading markets.
Finally, because of the inherent uncertainties associated with merging
two large companies, there can be no assurance that the Corporation will be able
to realize fully the $1.7 billion of cost savings it currently expects to
realize as a result of the merger, that such savings will be realized at the
times currently anticipated, or that the $1.9 billion of anticipated merger
related costs will reflect the actual costs ultimately incurred by the
Corporation in implementing the merger. Currently unforseen changes in real
estate markets or personnel requirements, if they occur, could affect the timing
and magnitude of the anticipated savings and costs. Further, the technology
integration and systems conversions undertaken in connection with the merger
include 67 major suites of systems and over 1,500 underlying individual
applications. Each suite will be processing volumes at much higher levels than
previously and operating feeds to the selected suites have had to be adapted to
conform to processing requirements. Since these activities are highly complex
and technologically sophisticated, currently unanticipated problems, if they
occur, could adversely affect the ability of the Corporation to implement
successfully such conversions or could cause such conversions to cost more than
anticipated.
Additional factors that could affect the prospects of the Corporation's
businesses are further discussed in the Corporation's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996 and the Corporation's 1995 Annual
Report to Stockholders (as filed with the Corporation's Current Report on Form
8-K dated April 16, 1996), to both of which reference is hereby made.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following exhibits are filed with this Report:
Exhibit Number Description
------------------- ---------------------------------------------
23.1 Consent of Independent Accountants.
99.1 Press Release - 1996 Second Quarter Earnings.
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 July 17, 1996 by /s/JOSEPH L. SCLAFANI
-------------- ----------------------
Joseph L. Sclafani
Controller
[Principal Accounting Officer]
EXHIBIT INDEX
------------------------
Exhibit Number Description Page at Which Located
- -------------- ---------------------------------- ---------------------
23.1 Consent of Independent Accountants 6
99.1 Press Release - 1996 Second
Quarter Earnings 7
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (Nos. 33-18640,
33-21488, 33-24224, 33-24654, 33-33220, 33-45228, 33-47105, 33-53306, 33-57104,
33-58634, 33-49965, 33-63833, 33-67742, 33-68724 and 333-01415) and in the
Registration Statements on Form S-8 (Nos. 33-01776, 33-13457, 33-14997,
33-19852, 33-26523, 33-40272, 33-40675, 33-45017, 33-45018, 33-49909, 33-49911,
33-49913, 33-54547, 33-54949, 33-59543 , 33-62453, 333-02073 and 333-07941) of
The Chase Manhattan Corporation (the "Company") of our report dated March 31,
1996 appearing on page 50 of the Company's 1995 Annual Report.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
New York, New York
July 16, 1996
Investor Contact: John Borden Press Contacts: Kathleen Baum
212-270-7318 212-270-5089
John Stefans
For Immediate Release 212-270-7438
Tuesday, July 16, 1996
Chase's Net Income Up 17 Percent to $856 Million in Second Quarter
New York, July 16, 1996 -- The Chase Manhattan Corporation today reported
second quarter 1996 net income of $856 million, a 17 percent increase from
second quarter 1995 net income of $729 million. Primary earnings per share were
$1.80 compared with $1.54 in the prior year second quarter, and fully diluted
earnings per share were $1.79 compared with $1.52.
"It was an excellent quarter for us with earnings increases across the
board, solid revenue growth in global banking and nationwide consumer finance,
and $120 million in merger savings," said Walter V. Shipley, chairman and chief
executive officer. "The merger of our flagship banks, completed on July 14,
should add to this strong momentum."
The corporation's return on average common stockholders' equity was 18.7
percent compared with 16.3 percent in the prior year second quarter. The
efficiency ratio stood at 58 percent compared with 63 percent in the second
quarter of 1995.
In the first six months of 1996, the corporation's earnings, excluding
restructuring charges and merger-related expenses, rose 30 percent to $1,807
million from $1,388 million in the first half of 1995. Primary earnings per
share were $3.81 and fully diluted earnings per share were $3.77; primary
earnings per share were $2.93 and fully diluted earnings per share were $2.87 in
the same 1995 period.
(More)
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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.
Reported net income, including restructuring charges and merger-related
expenses of $1,040 million, after-tax, was $767 million compared with $1,368
million in the first six months of 1995. Primary earnings per share and fully
diluted earnings per share, on a reported basis, were $1.48 and $1.46, and $2.89
and $2.83, respectively.
Revenues
Total revenue was $3,954 million, up 5 percent from $3,754 million in the
second quarter of 1995. For the first six months of 1996, total revenue rose
9 percent to $7,989 million.
Net interest income was $2,023 million compared with $2,028 million in the
prior year second quarter. Average interest-earning assets were $257 billion,
compared with $241 billion in the prior year quarter. The net yield on average
interest-earning assets was 3.18 percent, compared with 3.39 percent in the
second quarter of 1995.
These results were affected by an increase in average securitizations of
approximately $6 billion in national consumer credit receivables, compared with
the 1995 period. On a managed basis, which includes securitizations, net
interest was $2,231 million, average interest-earning assets were $267 billion,
and the net yield on average interest-earning assets was 3.38 percent. On a
managed basis for the second quarter of 1995, net interest was $2,105 million,
average interest-earning assets were $245 billion and the net yield on average
interest-earning assets was 3.47 percent.
Total revenues from trading activities were $521 million, up 27 percent in
the second quarter of 1996. This included $142 million of net interest income.
Trading activities continued the high level of revenue generation seen in the
first quarter with particularly strong performance in emerging markets. Total
revenues from trading activities in the second quarter of 1995 were $409
million, including $108 million of net interest income.
Fees related to credit cards were $233 million, 19 percent higher than in
the second quarter of 1995, reflecting both increased receivables and the effect
of securitizations. Corporate finance and syndication fees rose 31 percent to
$258 million, the result of strong loan syndication, underwriting and advisory
activity. Trust and investment management fees rose 24 percent to $302 million,
reflecting increased global services and securities processing activities,
growth in the Vista mutual funds and higher trust fees attributable to growth in
assets under management.
Revenues from equity-related investments totaled $219 million in the second
quarter of 1996, compared with $208 million in the second quarter of 1995.
Expenses
Total noninterest expenses, before merger-related expenses and foreclosed
property costs, were $2,310 million in the 1996 second quarter, down from $2,372
million in 1995. Merger savings in the quarter were $120 million, primarily
reflecting lower salaries and benefits related to personnel reductions.
Incentive costs related to stronger revenue growth, however, were higher in the
quarter. The total number of employees was 68,828 at June 30, 1996 and 72,696 at
December 31, 1995.
Merger-related expenses in the second quarter of 1996 were $22 million.
In the second quarter of 1995, there was a restructuring charge of $15 million.
Credit Costs
The provision for losses in the second quarter of 1996 was $250 million,
compared with $195 million in the second quarter of 1995.
Net charge-offs in the quarter were $250 million, and $222 million in the
same 1995 quarter.
Total commercial net charge-offs were $76 million, and $14 million in the
second quarter of 1995. Total consumer net charge-offs in the second quarter
were $192 million, of which credit card charge-offs, on retained receivables,
accounted for $145 million. Total consumer net charge-offs in the prior year
quarter were $220 million, of which credit card net charge-offs, on retained
receivables, were $173 million.
Credit card net charge-offs were $279 million, or 4.78 percent of average
managed receivables, compared with $207 million, or 4.09 percent of average
managed receivables, as of June 30, 1995, reflecting growth in managed
receivables of 15 percent, year-over-year, and higher bankruptcies.
Managed credit card receivables past due 90 days and over and accruing were
$461 million at June 30, 1996, or 1.97 percent of average credit card
receivables, compared with $390 million, or 1.93 percent at June 30, 1995.
Other Financial Data
The corporation's effective tax rate was 38 percent in the second quarter of
1996, and 39 percent in the second quarter of 1995.
At June 30, 1996, the allowance for credit losses was $3,692 million,
compared with $3,846 million on the same date a year ago.
Nonperforming assets, at June 30, 1996, were $1,639 million, compared with
$1,686 million on March 31, 1996, and $2,011 million on June 30, 1995.
Nonperforming loans were $1,498 million, compared with $1,537 million on March
31, 1996, and $1,864 million on June 30, 1995. Assets acquired as loan
satisfactions were $141 million on June 30, 1996, $149 million on March 31,
1996, and $147 million on June 30, 1995.
Total assets at June 30, 1996, were $322 billion, compared with $297 billion
on the same date a year ago. Total loans at June 30, 1996, were $151 billion,
compared with $150 billion at June 30, 1995. At end of the second quarter of
1996, total deposits stood at $168 billion; that figure was $163 billion on June
30, 1995.
The return on average assets for the second quarter of 1996 was 1.08
percent, compared with .95 percent for the second 1995 quarter.
At June 30, 1996, the estimated Tier I risk-based capital ratio was 8.0
percent, compared with 7.9 percent at June 30, 1995. The estimated Total
risk-based capital ratio at June 30, 1996, was 11.9 percent, compared with 12.0
percent at June 30, 1995.
# # #
- ----------------------------------------------------------------------------
THE CHASE MANHATTAN CORPORATION and Subsidiaries
FINANCIAL HIGHLIGHTS
(in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------------
1996 1995 1996 1995
------ ------ ------ ------
EARNINGS:
Income Before Restructuring Charge $ 870 $ 738 $ 1,807 $ 1,388
Restructuring Charge (After-Tax) (14)(a) (9)(b) (1,040)(a) (9)(b)
------- ------- ------- -------
Income After Restructuring Charge and
Before Effect of Accounting Change $ 856 $ 729 $ 767 $ 1,379
Effect of Change in Accounting Principle -- -- -- (11)(c)
------- ------ -------- ------
Net Income $ 856 $ 729 $ 767 $ 1,368
======= ======= ======== ========
Net Income Applicable to Common Stock $ 801 $ 673 $ 658 $ 1,251
======= ======= ======== ========
INCOME PER COMMON SHARE:
Primary:
Income Before Restructuring Charge $ 1.83 $ 1.56 $ 3.81 $ 2.93
Restructuring Charge (After-Tax) (0.03)(a) (0.02)(b) (2.33)(a) (0.02)(b)
------- ------- ------- ------
Income After Restructuring Charge and
Before Effect of Accounting Change $ 1.80 $ 1.54 $ 1.48 $ 2.91
Effect of Change in Accounting Principle -- -- -- (0.02)(c)
------- ------- ------- ------
Net Income $ 1.80 $ 1.54 $ 1.48 $ 2.89
======= ======= ======= ======
Assuming Full Dilution:
Income Before Restructuring Charge $ 1.82 $ 1.54 $ 3.77 $ 2.87
Restructuring Charge (After-Tax) (0.03)(a) (0.02)(b) (2.31)(a) (0.02)(b)
------- ------ ------- ------
Income After Restructuring Charge and
Before Effect of Accounting Change $ 1.79 $ 1.52 $ 1.46 $ 2.85
Effect of Change in Accounting Principle -- -- -- (0.02)(c)
-------- ------- ------- ------
Net Income $ 1.79 $ 1.52 $ 1.46 $ 2.83
======== ======= ======= ======
PER COMMON SHARE:
Book Value at June 30, $ 40.47 $ 39.66 $ 40.47 $ 39.66
Market Value at June 30, $ 70.63 $ 47.25 $ 70.63 $ 47.25
Common Stock Dividends Declared (d) $ 0.56 $ 0.50 $ 1.12 $ 0.94
COMMON SHARES OUTSTANDING:
Average Common and Common Equivalent Shares 444.8 436.2 445.4 433.5
Average Common Shares Assuming Full Dilution 448.4 444.4 450.2 444.7
Common Shares at Period End 437.1 430.9 437.1 430.9
(a) Reflects the after-tax impact of a $1,650 million merger-related
restructuring charge, which was recorded on March 31, 1996. In addition, $28
million of merger-related expenses were incurred ($6 million in the first
quarter and $22 million in the second quarter) and recognized under a recently
issued accounting pronouncement.
(b) 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.
- --------------------------------------------------------------------------
THE CHASE MANHATTAN CORPORATION
FINANCIAL HIGHLIGHTS (CONTINUED)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------------------------
1996 1995 1996 1995
------ ------ ------ ------
PERFORMANCE RATIOS: (Average Balances) (e)
Income Before Restructuring Charge:
Return on Assets 1.10% 0.96% 1.15% 0.92%
Return on Common Stockholders' Equity 19.00% 16.53% 19.27% 15.74%
Return on Total Stockholders' Equity 17.58% 15.32% 17.84% 14.66%
Net Income:
Return on Assets 1.08% 0.95% 0.49% 0.91%
Return on Common Stockholders' Equity 18.67% 16.31% 7.47% 15.50%
Return on Total Stockholders' Equity 17.30% 15.13% 7.57% 14.45%
Efficiency Ratio (f) 58% 63% 59% 65%
CAPITAL RATIOS AT JUNE 30:
Common Stockholders' Equity to Assets 5.5% 5.8%
Total Stockholders' Equity to Assets 6.3% 6.6%
Tier 1 Leverage 6.6% 6.4%
Risk-Based Capital:
Tier 1 (4.0% required) 8.0% * 7.9%
Total (8.0% required) 11.9% * 12.0%
(e) Performance ratios are based on annualized net income amounts.
(f) Excludes restructuring charges, foreclosed property expense and
nonrecurring items.
* Estimated
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Three Months Ended
--------------------------------------------------
June 30, March 31, June 30,
1996 1996 1995
-------- --------- --------
INTEREST INCOME
Loans $ 3,028 $ 3,241 $ 3,241
Securities 685 720 616
Trading Assets 406 429 343
Federal Funds Sold and Securities Purchased Under Resale Agreements 514 501 482
Deposits with Banks 156 172 218
-------- ---------- --------
Total Interest Income 4,789 5,063 4,900
-------- ---------- --------
INTEREST EXPENSE
Deposits 1,458 1,644 1,596
Short-Term and Other Borrowings 1,087 1,026 1,038
Long-Term Debt 221 227 238
-------- ---------- --------
Total Interest Expense 2,766 2,897 2,872
-------- ---------- --------
NET INTEREST INCOME 2,023 2,166 2,028
Provision for Losses 250 245 195
-------- ---------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES 1,773 1,921 1,833
-------- ---------- --------
NONINTEREST REVENUE
Corporate Finance and Syndication Fees 258 224 197
Trust and Investment Management Fees 302 285 243
Credit Card Revenue 233 233 196
Service Charges on Deposit Accounts 100 99 107
Fees for Other Financial Services 381 378 353
Trading Revenue 379 339 301
Securities Gains 24 52 72
Other Revenue 254 259 257
-------- ---------- --------
Total Noninterest Revenue 1,931 1,869 1,726
-------- ---------- --------
NONINTEREST EXPENSE
Salaries 1,046 1,076 1,007
Employee Benefits 225 305 246
Occupancy Expense 207 221 218
Equipment Expense 181 184 193
Foreclosed Property Expense (8) (9) (28)
Other Expense 651 660 708
-------- ---------- --------
Total Noninterest Expense Before Restructuring Charge 2,302 2,437 2,344
Restructuring Charge and Expenses 22 1,656 15
-------- ---------- --------
Total Noninterest Expense 2,324 4,093 2,359
-------- ---------- --------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) 1,380 (303) 1,200
Income Tax Expense (Benefit) 524 (214) 471
-------- ---------- --------
NET INCOME (LOSS) $ 856 $ (89) $ 729
======== ========== ========
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ 801 $ (143) $ 673
======== ========== ========
NET INCOME (LOSS) PER COMMON SHARE:
Primary $ 1.80 $ (0.32) $ 1.54
======== ========== ========
Assuming Full Dilution $ 1.79 $ (0.32) $ 1.52
======== ========== ========
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Six Months Ended
June 30,
-------------------------
1996 1995
------ ------
INTEREST INCOME
Loans $ 6,269 $ 6,310
Securities 1,405 1,234
Trading Assets 835 702
Federal Funds Sold and Securities Purchased Under Resale Agreements 1,015 950
Deposits with Banks 328 443
-------- --------
Total Interest Income 9,852 9,639
-------- --------
INTEREST EXPENSE
Deposits 3,102 3,096
Short-Term and Other Borrowings 2,113 2,016
Long-Term Debt 448 472
-------- --------
Total Interest Expense 5,663 5,584
-------- --------
NET INTEREST INCOME 4,189 4,055
Provision for Losses 495 380
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES 3,694 3,675
-------- --------
NONINTEREST REVENUE
Corporate Finance and Syndication Fees 482 366
Trust and Investment Management Fees 587 483
Credit Card Revenue 466 378
Service Charges on Deposit Accounts 199 211
Fees for Other Financial Services 759 720
Trading Revenue 718 400
Securities Gains 76 54
Other Revenue 513 671
-------- --------
Total Noninterest Revenue 3,800 3,283
-------- --------
NONINTEREST EXPENSE
Salaries 2,122 2,004
Employee Benefits 530 480
Occupancy Expense 428 446
Equipment Expense 365 391
Foreclosed Property Expense (17) (53)
Other Expense 1,311 1,411
-------- -------
Total Noninterest Expense Before Restructuring Charge 4,739 4,679
Restructuring Charge and Expenses 1,678 15
-------- --------
Total Noninterest Expense 6,417 4,694
-------- --------
INCOME BEFORE INCOME TAX EXPENSE
AND EFFECT OF ACCOUNTING CHANGE 1,077 2,264
Income Tax Expense 310 885
-------- --------
INCOME BEFORE EFFECT OF ACCOUNTING CHANGE 767 1,379
Effect of Change in Accounting Principle -- (11)
-------- --------
NET INCOME $ 767 $ 1,368
======== ========
NET INCOME APPLICABLE TO COMMON STOCK $ 658 $ 1,251
======== ========
INCOME PER COMMON SHARE:
Primary:
Income Before Effect of Accounting Change $ 1.48 $ 2.91
Effect of Change in Accounting Principle -- (0.02)
-------- --------
Net Income $ 1.48 $ 2.89
======== ========
Assuming Full Dilution:
Income Before Effect of Accounting Change $ 1.46 $ 2.85
Effect of Change in Accounting Principle -- (0.02)
-------- --------
Net Income $ 1.46 $ 2.83
======== ========
THE CHASE MANHATTAN CORPORATION and Subsidiaries
NONINTEREST REVENUE DETAIL
(in millions)
Three Months Ended Six Months Ended
---------------------------- -----------------
June 30, March 31, June 30, June 30, June 30,
1996 1996 1995 1996 1995
-------- --------- -------- -------- --------
Fees for Other Financial Services:
Commissions on Letters of Credit and Acceptances $ 82 $ 89 $ 83 $ 171 $ 174
Fees in Lieu of Compensating Balances 74 74 71 148 140
Mortgage Servicing Fees 54 50 53 104 107
Loan Commitment Fees 30 30 32 60 65
Other Fees 141 135 114 276 234
----- ------- ------ ------ -----
Total $ 381 $ 378 $ 353 $ 759 $ 720
===== ======= ======= ====== =====
Trading Revenue:
Interest Rate Contracts $ 158 $ 111 $ 90 $ 269 $ 144
Foreign Exchange Revenue 95 123 126 218 293
Debt Instruments and Other 126 105 85 231 (37)
----- ------- ------- ------ -----
Total $ 379 $ 339 $ 301 $ 718 $ 400
===== ======= ======= ====== =====
Other Revenue:
Revenue from Equity-Related Investments $ 219 $ 223 $ 208 $ 442 $ 389
Net Losses on Emerging Markets Securities Sales (30) (35) (50) (65) (26)
Gain on Sale of Investment in Far East Bank and Trust Co. -- -- -- -- 85
Residential Mortgage Origination/Sales Activities (2) 28 54 26 95
Loss on Sale of a Building in Japan -- (60) -- 60) --
All Other Revenue 67 103 45 170 128
----- ------- ------ ------ -----
Total $ 254 $ 259 $ 257 $ 513 $ 671
===== ======= ====== ====== =====
----------------------------------------------------------------------------------------------------------------------
THE CHASE MANHATTAN CORPORATION and Subsidiaries
NONINTEREST EXPENSE DETAIL
(in millions)
Three Months Ended Six Months Ended
-------------------------- ----------------
June 30, March 31, June 30, June 30, June 30,
1996 1996 1995 1996 1995
-------- --------- -------- -------- -------
Other Expense:
Professional Services $ 141 $ 129 $ 142 $ 270 $ 277
Marketing Expense 73 90 104 163 185
FDIC Assessments 1(a) 1(a) 55 2(a) 112
Telecommunications 82 85 84 167 165
Amortization of Intangibles 42 43 47 85 94
All Other 312 312 276 624 578
------- ------ ------ ------ ------
Total $ 651 $ 660 $ 708 $ 1,311 $1,411
======= ======== ======= ======= ======
(a) Reflects the impact of a reduction in the FDIC assessment
rate.
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
June 30, June 30,
1996 1995
----------- ----------
ASSETS
Cash and Due from Banks $ 13,291 $ 12,065
Deposits with Banks 5,805 9,526
Federal Funds Sold and Securities
Purchased Under Resale Agreements 33,039 21,605
Trading Assets:
Debt and Equity Instruments 25,297 19,316
Risk Management Instruments 26,414 27,854
Securities:
Available-for-Sale 37,855 24,655
Held-to-Maturity 4,125 10,291
Loans (Net of Unearned Income) 151,274 149,503
Allowance for Credit Losses (3,692) (3,846)
Premises and Equipment 3,667 3,974
Due from Customers on Acceptances 2,438 2,116
Accrued Interest Receivable 2,534 2,392
Other Assets 19,714 17,732
------------ ----------
TOTAL ASSETS $ 321,761 $ 297,183
============ =========
LIABILITIES
Deposits:
Domestic:
Noninterest-Bearing $ 34,274 $ 32,680
Interest-Bearing 68,368 66,757
Foreign:
Noninterest-Bearing 3,599 3,024
Interest-Bearing 62,102 60,710
------------ -----------
Total Deposits 168,343 163,171
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 54,584 36,076
Other Borrowed Funds 13,881 12,910
Acceptances Outstanding 2,445 2,129
Trading Liabilities 36,186 39,070
Accounts Payable, Accrued Expenses and Other Liabilities 13,212 11,318
Long-Term Debt 12,770 12,770
------------ -----------
TOTAL LIABILITIES 301,421 277,444
------------ -----------
STOCKHOLDERS' EQUITY
Preferred Stock
2,650 2,650
Common Stock 438 449
Capital Surplus 10,432 10,638
Retained Earnings 7,534 6,925
Net Unrealized Loss on Securities Available-for-Sale, Net of Taxes (640) (223)
Treasury Stock, at Cost
(74) (700)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 20,340 19,739
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 321,761 $ 297,183
============ ==========
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(in millions)
Six Months Ended
June 30,
--------------------------------
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 -- 2
---------- ---------
Balance at End of Period $ 438 $ 439
--------- ---------
Capital Surplus:
Balance at Beginning of Year $ 11,075 $ 10,671
Retirement of Treasury Stock (433)(a) --
Issuance of Common Stock (226) (23)
Restricted Stock Granted, Net of Amortization 16 (10)
--------- ----
Balance at End of Period $ 10,432 $ 10,638
--------- ---------
Retained Earnings:
Balance at Beginning of Year $ 7,997 $ 6,045
Net Income 767 1,368
Retirement of Treasury Stock (557) --
Cash Dividends Declared:
Preferred Stock (109) (117)
Common Stock (572) (381)
Accumulated Translation Adjustment 8 10
---------- ---------
Balance at End of Period $ 7,534 $ 6,925
---------- ---------
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 (403) 250
---------- --------
Balance at End of Period $ (640) $ (223)
---------- -----------
Common Stock in Treasury, at Cost:
Balance at Beginning of Year $ (1,107) $ (667)
Retirement of Treasury Stock 1,010 --
Purchase of Treasury Stock (885) (376)
Reissuance of Treasury Stock 908 343
---------- ---------
Balance at End of Period $ (74) $ (700)
---------- ---------
Total Stockholders' Equity $ 20,340 $ 19,739
========== =========
(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.
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CREDIT RELATED INFORMATION
(in millions)
Loans Outstanding Nonperforming Assets
---------------------- -------------------------
June 30, June 30,
1996 1995 1996 1995
---------- ------- --------- ---------
Domestic Commercial:
Commercial Real Estate $ 6,556 $ 7,559 $ 439 $ 577
Other Commercial 38,170 37,258 514 541
--------- -------- -------- ---------
Total Commercial Loans 44,726 44,817 953 1,118
--------- -------- -------- ---------
Domestic Consumer:
Residential Mortgage 35,388 32,208 241 224
Credit Card 11,447 15,898 -- --
Other Consumer 21,936 19,256 39 34
--------- -------- -------- ---------
Total Consumer Loans 68,771 67,362 280 258
--------- -------- -------- ---------
Total Domestic Loans 113,497 112,179 1,233 1,376
Foreign 37,777 37,324 265 488
--------- -------- -------- ---------
Total Loans $ 151,274 $149,503 1,498 1,864
========= ========
Assets Acquired as Loan Satisfactions 141 147
-------- ---------
Total Nonperforming Assets $ 1,639 $ 2,011
======== =========
ASSETS HELD FOR ACCELERATED DISPOSITION $ 170 $ 240
======== =========
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- --------- ----------
Net Charge-Offs:
Domestic Commercial:
Commercial Real Estate $ 30 $ 15 $ 26 $ 14
Other Commercial
46 (1) 94 17
--------- ---------- -------- ---------
Total Commercial 76 14 120 17
--------- ---------- -------- ---------
Domestic Consumer:
Residential 7 19 15 31
Credit Card 145 173 310 331
Other Consumer 40 28 77 59
--------- ---------- -------- ---------
Total Consumer 192 220 402 421
--------- ---------- -------- ---------
Total Domestic Net Charge-offs 268 234 522 452
Foreign (18) (12) (27) (23)
--------- ---------- -------- ---------
Subtotal Net Charge-offs 250 222 495 429
Charge Related to Conforming Credit Card Charge-off Policies -- -- 102 --
--------- ---------- -------- ---------
Total Net Charge-offs 250 $ 222 $ 597 $ 429
========= ========== ======== =========
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 Six Months Ended
June 30, June 30,
------------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
MANAGED CREDIT CARD PORTFOLIO:
Average Managed Credit Card Receivables $ 23,348 $ 20,255 $ 23,296 $ 19,768
Past Due 90 Days & Over and Accruing $ 461 $ 390 $ 461 $ 390
As a Percentage of Average Credit Card Receivables 1.97% 1.93% 1.98% 1.97%
Net Charge-offs $ 279(a) $ 207 $ 549(a) $ 396
As a Percentage of Average Credit Card Receivables 4.78% 4.09% 4.71% 4.01%
(a) Excludes a charge related to conforming credit card charge-off policies.
Favorable (unfavorable) impact of credit card Three Months Ended Six Months Ended
securitizations on reported Consolidated June 30, June 30,
------------------- -----------------
Statement of Income line items: 1996 1995 1996 1995
------ ------ ------ ------
Net Interest Income $ (208) $ (77) $ (395) $ (134)
Provision for Losses 156 34 261 65
Credit Card Revenue 47 41 122 67
Other Revenue 8 10 11 17
------ ------ ------ ------
Pre-tax Income Impact of Securitizations $ 3 $ 8 $ (1) $ 15
====== ====== ====== ======
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
June 30, 1996 June 30, 1995
----------------------------------- --------------------------------
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
ASSETS
Liquid Interest-Earning Assets $ 63,954 $ 1,076 6.77% $ 59,400 $ 1,043 7.04%
Securities 42,540 691 6.53% 34,667 622 7.18%
Loans 150,612 3,034 8.09% 146,757 3,247 8.86%
-------- ------- ------ --------- ------- ------
Total Interest-Earning Assets 257,106 4,801 7.51% 240,824 4,912 8.17%
Total Noninterest-Earning Assets 60,473 67,522
-------- -------
Total Assets $317,579 $ 308,346
======== =========
LIABILITIES
Total Interest-Bearing Deposits $124,379 1,458 4.72% $ 132,335 1,596 4.82%
Total Short-Term and Other Borrowings 73,373 1,087 5.96% 61,206 1,038 6.79%
Long-Term Debt 12,916 221 6.86% 13,018 238 7.33%
-------- ----- ----- --------- ----- -----
Total Interest-Bearing Liabilities 210,668 2,766 5.28% 206,559 2,872 5.57%
Total Noninterest-Bearing Liabilities 87,009 82,466
-------- --------
Total Liabilities 297,677 289,025
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 2,650 2,773
Common Stockholders' Equity 17,252 16,548
-------- --------
Total Stockholders' Equity 19,902 19,321
-------- --------
Total Liabilities and Stockholders' Equity $ 317,579 $ 308,346
========= =========
INTEREST RATE SPREAD 2.23% 2.60%
===== =====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 2,035 3.18% $ 2,040 3.39%
======== ===== ======= =====
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
----------------------------------- --------------------------------
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
ASSETS
Liquid Interest-Earning Assets $ 63,138 $ 2,178 6.94% $ 60,731 $ 2,095 6.96%
Securities 42,623 1,416 6.68% 34,644 1,248 7.26%
Loans 150,123 6,275 8.41% 143,978 6,322 8.85%
-------- ------- --------- ------
Total Interest-Earning Assets 255,884 9,869 7.76% 239,353 9,665 8.14%
Total Noninterest-Earning Assets 59,368 64,494
------- -------
Total Assets $315,252 $ 303,847
======== =========
LIABILITIES
Total Interest-Bearing Deposits $ 129,626 3,102 4.81% $ 132,566 3,096 4.70%
Total Short-Term and Other Borrowings 70,057 2,113 6.07% 60,471 2,016 6.72%
Long-Term Debt 12,946 448 6.95% 13,036 472 7.30%
--------- ------ --------- -------
Total Interest-Bearing Liabilities 212,629 5,663 5.36% 206,073 5,584 5.46%
----- -----
Total Noninterest-Bearing Liabilities 82,253 78,682
-------- --------
Total Liabilities 294,882 284,755
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 2,650 2,812
Common Stockholders' Equity 17,720 16,280
------- -------
Total Stockholders' Equity 20,370 19,092
------- -------
Total Liabilities and Stockholders' Equity $315,252 $303,847
======== ========
INTEREST RATE SPREAD 2.40% 2.68%
===== =====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 4,206 3.31% $ 4,081 3.44%
======= ===== ======= =====