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 Report: January 19, 1999 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 19, 1999, The Chase Manhattan Corporation ("Chase") reported fourth quarter 1998 diluted operating earnings per share of $1.31, compared with $.94 per share in the same 1997 quarter. Operating earnings and reported net income in the fourth quarter of 1998 were $1.15 billion. Operating earnings and reported net income were $850 million and $874 million, respectively, in the 1997 quarter. A copy of Chase's earnings press release is attached as an exhibit hereto. Operating results (revenues and earnings) exclude the impact of credit card securitizations, restructuring costs and special items. 2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits The following exhibit is filed with this report: Exhibit Number Description 99.1 Press Release - 1998 Fourth Quarter Earnings. 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 22, 1999 by /s/JOSEPH L. SCLAFANI ----------------- ------------------------ Joseph L. Sclafani Executive Vice President and Controller [Principal Accounting Officer] 4
EXHIBIT INDEX Exhibit Number Description Page at Which Located 99.1 Press Release - 1998 Fourth Quarter Earnings 6 5
The Chase Manhattan Corporation 270 Park Avenue New York, NY 10017-2070 [CHASE LETTERHEAD] News Release Chase Reports Record Fourth Quarter and Full Year 1998 Results New York, January 19, 1999 -- The Chase Manhattan Corporation (NYSE:CMB) today reported fourth quarter 1998 diluted operating earnings per share of $1.31, a 39 percent increase from $.94 per share in the same 1997 quarter. Operating earnings and reported net income in the fourth quarter of 1998 were $1.15 billion. Operating earnings and reported net income were $850 million and $874 million, respectively, in the 1997 quarter. Diluted operating earnings per share for the full year 1998 increased to $4.51 from $4.17 in 1997. Operating earnings rose to $4.02 billion from $3.85 billion in 1997. Reported net income for the full year was $3.78 billion, compared with $3.71 billion in 1997. Fourth Quarter 1998 Financial Highlights - - Operating revenues increased 25 percent from the same 1997 quarter, and 19 percent from the 1998 third quarter, driven by a sharp recovery in global banking and strong growth in Chase's consumer and global services businesses. - - Chase's return on common equity rose to 20.1 percent from 16.5 percent in the fourth quarter of 1997. - - Shareholder value added (SVA) was $470 million. Full Year Financial Highlights - - Operating revenues rose 12 percent with all three franchises producing double-digit growth. - - Chase's Tier 1 capital ratio rose to 8.3 percent from 7.9 percent last year. - - Shareholder value added was $1.4 billion. "In one of the most challenging periods that the financial services industry has faced in recent years, Chase's record performance demonstrates how strong and differentiated a competitor it has become," said Walter V. Shipley, chairman and chief executive officer. "Looking ahead, our focus remains unchanged: to realize the full growth potential of Chase's business franchises by maintaining a disciplined approach to risk, capital and expense management." -------------------------- Investor contact: John Borden 212-270-7318 Press contact: Kathleen Baum 212-270-5089
Financial Performance - ------------------------------------------------------------------------------ -------------------------- THE CHASE MANHATTAN CORP Fourth Quarter Full Year 1998 - ------------------------------------------------ -------------- -------------- -------------------------- Dollars, in millions 1998 O(U) 4Q97 O(U) 3Q98 1998 O(U) 97 % Operating Revenues $5,350 $1,055 $842 $19,824 12% Cash Operating Earnings 1,219 320 418 4,277 6% Shareholder Value Added 470 247 402 1,406 1% Cash Return on Common Equity 21.4% -- -- 19.6% -- - ------------------------------------------------ -------------- -------------- -------- ----------------- Line-Of-Business Results - ------------------------------------------------------------------------------ --------------------------- GLOBAL BANK Fourth Quarter Full Year 1998 - ----------------------------------------------- -------------- --------------- --------------------------- Dollars, in millions 1998 O(U) 4Q97 O(U) 3Q98 1998 O(U) 97 % Operating Revenues $2,495 $675 $653 $9,298 10% Cash Operating Earnings 819 360 365 2,855 11% Shareholder Value Added 335 333 345 985 28% Cash Return on Common Equity 22.2% -- -- 20.1% -- - ----------------------------------------------- -------------- --------------- --------------------------- Chase's Global Bank had a very strong fourth quarter, with operating revenues up 37 percent from fourth quarter 1997 levels, and 35 percent from this year's third quarter; both prior periods were negatively affected by global market turmoil. For the year, operating revenues and cash operating earnings rose 10 and 11 percent, respectively, from 1997 levels. Trading revenues and related net interest income rose to $692 million in the fourth quarter, matching the record set in the first quarter of this year, and benefiting from strong performance across traditional products, including foreign exchange, and newer businesses, such as credit and equity derivatives, and high grade securities. Securities gains realized in the quarter were $167 million, higher than in the year-ago quarter but below gains in the third quarter of 1998. For the year, trading revenues and related net interest income totaled $2.16 billion, a 12 percent increase from 1997. Investment banking fees in the 1998 fourth quarter increased to $381 million from $369 million in the fourth quarter of 1997. Investment banking fees for the year rose 32 percent to $1.50 billion, benefiting from growth in loan syndications, mergers and acquisitions advisory and high grade and high yield underwriting fees. Fourth quarter private equity-related investment gains were $244 million. These results were eight percent higher than in the year-ago quarter and four times above the level of gains recognized in the third quarter 1998, reflecting improved equity markets and increased levels of activity. Private equity-related investment gains rose 16 percent to $967 million in 1998.
- ----------------------------------------------------------------------- -------------------------- GLOBAL SERVICES Fourth Quarter Full Year 1998 - ----------------------------------------------------------------------- -------------------------- Dollars, in millions 1998 O(U) 4Q97 O(U) 3Q98 1998 O(U) 97 % Operating Revenues $724 $106 $55 $2,667 14% Cash Operating Earnings 138 24 18 496 17% Shareholder Value Added 60 5 (1) 243 29% Cash Return on Common Equity 23.3% -- -- 26.0% -- - --------------------------------------------- -------------- ---------- -------------------------- In the fourth quarter, Global Services' operating revenues and cash operating earnings rose 17 and 21 percent, respectively, driven by continuing growth across all three businesses, as well as higher operating volumes related to the acquisitions of large global custody and fiduciary services businesses. Expenses reflect ongoing investment spending and costs related to Year 2000 and the launch of the Euro on January 1, 1999. For the full year, Global Services' operating revenues increased 14 percent and cash operating earnings were 17 percent higher than in 1997. - ----------------------------------------------------------------------- --------------------------- NATIONAL CONSUMER SERVICES Fourth Quarter Full Year 1998 - --------------------------------------------- -------------- ---------- --------------------------- Dollars, in millions 1998 O(U) 4Q97 O(U) 3Q98 1998 O(U) 97 % Operating Revenues $2,217 $282 $161 $8,203 12% Cash Operating Earnings 374 72 71 1,265 12% Shareholder Value Added 161 51 75 409 2% Cash Return on Common Equity 23.1% -- -- 19.4% -- - --------------------------------------------- -------------- ---------- -------------------------- National Consumer Services' operating revenues increased 15 percent in the 1998 fourth quarter; cash operating earnings increased 24 percent. Cash return on common equity and SVA rose to record levels, reversing the trend earlier in the year, and leading to an overall increase in SVA for 1998. Operating revenues and cash operating earnings for National Consumer Services for the year were 12 percent higher than in 1997. Operating revenues from cardmember services increased 14 percent in the fourth quarter of 1998, with growth driven by recently acquired portfolios, pricing initiatives and higher levels of consumer card usage. For the year, revenues rose 17 percent to $3.91 billion; cash operating earnings were up by 21 percent to $461 million. Charge-offs for the year increased, primarily reflecting the impact of acquired portfolios. Home finance revenues increased 29 percent in the fourth quarter, benefiting from the continued favorable environment for mortgage originations, and higher mortgage sales activities. Home finance revenues were 11 percent higher than in the prior year; cash operating earnings increased by 16 percent. Regional consumer banking revenues rose six percent in the fourth quarter of 1998, reflecting growth in deposits, increased small business lending and rising fee income, offset in part by the cost of technology-related investments. Revenues and cash operating earnings for the full year increased by three and four percent, respectively, over 1997. Revenues from diversified consumer services increased 31 percent in the fourth quarter, driven by continued strong growth in Chase's auto finance, investment and insurance businesses. Auto finance originations of $3.5 billion in the fourth quarter represent an all-time high. Revenues from diversified consumer services were up 17 percent in 1998 from 1997 levels; cash operating earnings increased 21 percent.
Additional Financial Information - - Total operating noninterest expenses were $10.81 billion in 1998, and $2.87 billion in the fourth quarter, reflecting higher incentives related to revenue increases as well as investment spending and costs related to Year 2000 and EMU conversion. - - On a managed basis, the provision for credit losses was $2.70 billion for full year 1998 compared with $1.80 billion in 1997, and $701 million in the 1998 fourth quarter, compared with $753 million in the previous quarter and $468 million in the 1997 fourth quarter. The provision for losses related to risk management instruments has been reclassified to the noninterest revenue section of the income statement for all periods presented. Nonperforming assets at December 31, 1998 were $1.61 billion compared with $1.53 billion at September 30, 1998, and $1.02 billion at December 31, 1997. Net commercial charge-offs in the fourth quarter of 1998 were $122 million, compared to $200 million in the third quarter of 1998 and a net recovery of $12 million in the 1997 fourth quarter. Net commercial charge-offs for the full year were $492 million compared with a net recovery of $17 million in 1997. - - Chase's exposure to emerging markets in Latin America and Asia, excluding Japan, Australia and New Zealand, declined 34 percent in 1998, as detailed in the attached tables. In addition, at December 31, 1998, Chase had approximately $190 million in lending, trading-related and resale agreement exposure to Russia, a decline of $460 million from September 30, 1998. - - Total assets at December 31, 1998 were $366 billion, unchanged from a year ago. With equity capital increasing by 10 percent from year-end 1997 levels, Chase's Tier 1 capital ratio rose to 8.3 percent from 7.9 percent on December 31, 1997. In the fourth quarter of 1998, Chase announced a new common stock repurchase authorization, effective January 4, 1999, of up to $3 billion of Chase's common stock. - - Operating results (revenues, expenses and earnings) for 1998 exclude the impact of credit card securitizations, restructuring costs and special items. Special items, all after-tax, include a charge of $320 million, taken in the first quarter, in connection with initiatives to streamline support functions and realign certain business units; a $24 million charge for the accelerated vesting of stock-based awards, taken in the third quarter, and a credit of $123 million, related to interest on prior years' tax refunds, also taken in the third quarter of 1998. All per share results reflect a two-for-one stock split that became effective June 15, 1998. Chase's news releases and quarterly financial results are available on the Internet at www.chase.com.
THE CHASE MANHATTAN CORPORATION SUMMARY OF SELECTED FINANCIAL HIGHLIGHTS (in millions, except per share and ratio data) % % As of or for the period ended Fourth Quarter Over/(Under) For The Year Over/(Under) -------------------------------------- -------------------- ------------------- 1998 1997 4QTR 97 1998 1997 1997 -------- --------- ------- -------- -------- ------- OPERATING BASIS (a) Operating Revenue $ 5,350 $ 4,295 25% $ 19,824 $17,699 12% Operating Noninterest Expense 2,870 2,473 16% 10,812 9,755 11% Credit Costs (b) 704 471 49% 2,707 1,809 50% Operating Net Income $ 1,146 $ 850 35% $ 4,016 $ 3,849 4% Cash Operating Earnings $ 1,219 $ 899 36% $ 4,277 $ 4,021 6% Shareholder Value Added (SVA) 470 223 111% 1,406 1,393 1% Operating Net Income Per Common Share: Basic $ 1.34 $ 0.97 38% $ 4.63 $ 4.32 7% Diluted 1.31 0.94 39% 4.51 4.17 8% Performance Ratios: Return on Average Total Assets (c) 1.20% 0.90% 1.08% 1.08% Return on Average Common Equity (c) 20.1 16.5 18.4 19.5 Common Dividend Payout Ratio 27 32 31 29 Cash Efficiency Ratio (d) 52 56 53 54 Selected Balance Sheet Items: (e) Loans $ 190,787 $ 185,306 3% Total Assets 383,908 382,373 -- -------------------------------------------------------------------------------------------------------- AS REPORTED BASIS -------------------------------------- Revenue $ 5,060 $ 4,090 24% $18,656 $16,808 11% Noninterest Expense Before Restructuring Costs 2,873 2,476 16% 10,854 9,902 10% Restructuring Costs -- 20 NM 529 192 176% Provision for Loan Losses 411 205 100% 1,343 804 67% Net Income $1,146 $ 874 31% $ 3,782 $ 3,708 2% Per Common Share: Net Income: Basic $ 1.34 $ 1.00 34% $ 4.35 $ 4.15 5% Diluted 1.31 0.97 35% 4.24 4.01 6% Cash Dividends Declared 0.36 0.31 16% 1.44 1.24 16% Book Value at Year End 26.90 23.76 13% 26.90 23.76 13% Market Value at Year End 71.00 54.75 30% 71.00 54.75 30% Common Shares Outstanding: Average Common Shares: Basic 842.3 842.6 846.1 849.2 Diluted 863.0 864.4 869.3 878.4 Common Shares at Period End 848.0 841.9 848.0 841.9 Performance Ratios: Return on Average Total Assets (c) 1.20% 0.92% 1.01% 1.04% Return on Average Common Equity (c) 20.1 17.0 17.3 18.7 Selected Balance Sheet Items: Loans $172,754 $168,454 3% Total Assets 365,875 365,521 -- Deposits 212,437 193,688 10% Total Stockholders' Equity 23,838 21,742 10% Capital Ratios: Tier I Risk-Based Capital Ratio 8.3%(f) 7.9% Total Risk-Based Capital Ratio 12.0 (f) 11.6 Tier I Leverage 6.4 (f) 6.0 Full-Time Equivalent Employees 72,683 69,033 Note: Share-related data for all periods have been restated to reflect a 2 for 1 common stock split, effective June 15, 1998. (a) Excludes the impact of credit card securitizations, restructuring costs and special items. For a reconciliation of Reported Results as shown on the Consolidated Statement of Income to results on an Operating Basis see pages 10 and 11. (b) Includes provision for loan losses, provision for risk management instrument losses, foreclosed property expense and charge-offs related to the securitized credit card portfolio. (c) Ratios for the fourth quarter of 1998 and 1997 are based on annualized amounts. (d) Noninterest expense as a percentage of the total of net interest income and noninterest revenue (excluding restructuring costs, foreclosed property expense, provision for risk management instrument losses, amortization of goodwill and certain intangibles, special items and costs associated with the REIT). (e) Excludes the impact of credit card securitizations. (f) Estimated NM Not meaningful Unaudited
THE CHASE MANHATTAN CORPORATION Lines of Business Results (in millions, except ratios) - ------------------------------------------------------------------------------------------------------------------------------------ National Consumer Global Banking (a) Services (a) Global Services (a) Total (b) -------------------------- ------------------------- ------------------------ -------------------------- Over/(Under)1997 Over/(Under)1997 Over/(Under)1997 Over/(Under)1997 Three Months Ended ---------------- --------------- --------------- ---------------- December 31, 1998 $ % or bp 1998 $ % or bp 1998 $ % or bp 1998 $ % or bp --------------------- -------- ------- ------- -------- ------ ------- -------- ------- -------- -------- ------ ------- Operating Revenues $ 2,495 $ 675 37% $ 2,217 $ 282 15% $ 724 $ 106 17% $ 5,350 $1,055 25% Cash Operating Earnings 819 360 78% 374 72 24% 138 24 21% 1,219 320 36% Average Common Equity 14,428 1,135 9% 6,326 765 14% 2,328 618 36% 22,302 2,746 14% Average Assets (c) 266,291 (7,282) (3%) 108,915 8,096 8% 13,902 3,631 35% 396,554 4,176 1% Shareholder Value Added (SVA) 335 333 NM 161 51 46% 60 5 9% 470 247 111% Cash Return on Common Equity 22.2% 920bp 23.1% 230bp 23.3% (270)bp 21.4% 390bp Cash Efficiency Ratio (Operating) 45% (800)bp 47% (400)bp 70% (100)bp 52% (400)bp - ------------------------------------------------------------------------------------------------------------------------------------ GLOBAL BANKING KEY FINANCIAL MEASURES Operating Revenue Cash Operating Earnings ---------------------------- -------------------------- Efficiency Ratio Over/(Under) 1997 Over/(Under)1997 ----------------- Three Months Ended ----------------- ---------------- Over/(Under) December 31, 1998 $ % 1998 $ % 1998 1997 - ----------------------------- -------- ------- -------- ------- -------- ------- ------ ------------ Global Markets $ 1,051 $ 633 151% $ 428 $ 350 449% 37% (2700)bp Global Investment Banking 308 (31) (9%) 100 (10) (9%) 46 100bp Corporate Lending 391 65 20% 146 36 33% 25 (600)bp Chase Capital Partners 237 27 13% 132 14 12% 9 (200)bp Global Private Bank 169 5 3% 30 (3) (9%) 69 400bp Middle Markets 202 - - 45 (1) (2%) 55 300bp Chase Bank of Texas N.A. (Consolidated) 393 52 15% 107 23 27% 54 (500)bp - ------------------------------------------------------------------------------------------------------------------------------------ NATIONAL CONSUMER SERVICES KEY FINANCIAL MEASURES Operating Revenue Cash Operating Earnings ---------------------------- -------------------------- Efficiency Ratio Over/(Under)1997 Over/(Under)1997 ----------------- Three Months Ended ----------------- ---------------- Over/(Under) December 31, 1998 $ % 1998 $ % 1998 1997 - ----------------------------- -------- ------- -------- ------- -------- ------- -------- ----------- Cardmember Services $ 1,046 $ 126 14% $ 128 $ 5 4% 35% (100)bp Regional Consumer Banking (a) 610 35 6% 114 24 27% 66 (500)bp Chase Home Finance 281 64 29% 76 29 62% 50 (700)bp Diversified Consumer Services (d) 259 61 31% 57 22 63% 47 (500)bp - ------------------------------------------------------------------------------------------------------------------------------------ Note: SVA is Chase's primary measure of business unit performance. SVA represents operating earnings excluding the amortization of goodwill and certain intangibles (i.e., cash operating earnings), less an explicit charge for allocated capital. Additional refinements were made to the methodology for the allocation of capital to businesses. Prior periods have been restated to reflect these changes. (a)Only the global banking portion of Chase Bank of Texas, N.A. is reported in the total Global Banking line of business results. The consumer- and global services-related results for Chase Texas are reported as part of NCS and Global Services lines of business results, respectively. (b)Total column includes Corporate results. (c)Excludes the impact of credit card securitizations. (d)Insurance products are managed within Diversified Consumer Services, but included for reporting purposes in Cardmember Services, Chase Home Finance and Regional Consumer Banking. NM - Not meaningful bp - basis points Unaudited
THE CHASE MANHATTAN CORPORATION Lines of Business Results (in millions, except ratios) - ------------------------------------------------------------------------------------------------------------------------------------ National Consumer Global Banking (a) Services (a) Global Services (a) Total (b) ----------------------- -------------------------- ----------------------- ------------------- Over/(Under)1997 Over/(Under)1997 Over/(Under)1997 Over/(Under)1997 For The Year Ended ----------------- ---------------- ---------------- ------------------ December 31, 1998 $ % or bp 1998 $ % or bp 1998 $ % or bp 1998 $ % or bp ------------------------ ------- ------- ------- ------ ------- ------- ------- ------ ------- ------- ------ ------- Operating Revenues $ 9,298 $ 826 10% $ 8,203 $ 862 12% $2,667 $ 326 14% $ 19,824 $ 2,125 12% Cash Operating Earnings 2,855 283 11% 1,265 137 12% 496 73 17% 4,277 256 6% Average Common Equity 13,924 935 7% 6,381 1,121 21% 1,879 192 11% 21,328 2,500 13% Average Assets (c) 267,227 6,418 2% 106,703 11,439 12% 10,386 983 10% 391,222 20,323 5% Shareholder Value Added (SVA) 985 215 28% 409 9 2% 243 55 29% 1,406 13 1% Cash Return on Common Equity 20.1% 110bp 19.4% (120)bp 26.0% 180bp 19.6% (80)bp Cash Efficiency Ratio (Operating) 47% - 49% (200)bp 70% (100)bp 53% (100)bp ----------------------------------------------------------------------------------------------------------------------------------- GLOBAL BANKING KEY FINANCIAL MEASURES Operating Revenue Cash Operating Earnings --------------------------- -------------------------- Over/(Under)1997 Over/(Under)1997 Efficiency Ratio ---------------- --------------- ----------------- For The Year Ended Over/(Under) December 31, 1998 $ % 1998 $ % 1998 1997 - ----------------------------- ------- ------ -------- ------- ------- ------ ------ ---------- Global Markets $ 3,621 $496 16% $ 1,231 $ 212 21% 47% (100)bp Global Investment Banking 1,258 247 24% 321 51 19% 57 200bp Corporate Lending 1,421 74 5% 503 25 5% 26 - Chase Capital Partners 826 75 10% 449 38 9% 13 - Global Private Bank 673 39 6% 143 5 4% 63 - Middle Markets 785 (32) (4%) 174 (27) (13%) 55 500bp Chase Bank of Texas N.A. (Consolidated) 1,577 215 16% 433 86 25% 54 (400)bp ----------------------------------------------------------------------------------------------------------------------------------- NATIONAL CONSUMER SERVICES KEY FINANCIAL MEASURES Operating Revenue Cash Operating Earnings --------------------------- -------------------------- Efficiency Ratio Over/(Under)1997 Over/(Under)1997 ----------------- For The Year Ended ---------------- --------------- Over/(Under) December 31, 1998 $ % 1998 $ % 1998 1997 - ----------------------------- ------- ------ -------- ------- ------- ------ -------- ------- Cardmember Services $ 3,913 $ 580 17% $ 461 $ 80 21% 34% (300)bp Regional Consumer Banking(a) 2,337 77 3% 382 16 4% 70 - Chase Home Finance 1,029 103 11% 264 36 16% 52 - Diversified Consumer Services(d) 846 125 17% 144 25 21% 53 - - ------------------------------------------------------------------------------------------------------------------------------------ Note: SVA is Chase's primary measure of business unit performance. SVA represents operating earnings excluding the amortization of goodwill and certain intangibles (i.e., cash operating earnings), less an explicit charge for allocated capital. Additional refinements were made to the methodology for the allocation of capital to businesses. Prior periods have been restated to reflect these changes. (a)Only the global banking portion of Chase Bank of Texas, N.A. is reported in the total Global Banking line of business results. The consumer- and global services-related results for Chase Texas are reported as part of NCS and Global Services lines of business results, respectively. (b)Total column includes Corporate results. (c)Excludes the impact of credit card securitizations. (d)Insurance products are managed within Diversified Consumer Services, but included for reporting purposes in Cardmember Services, Chase Home Finance and Regional Consumer Banking. bp - basis points Unaudited
THE CHASE MANHATTAN CORPORATION CONSOLIDATED STATEMENT OF INCOME (in millions, except per share data) Fourth Quarter % For The Year % ----------------------- Over/(Under) ------------------------- Over/(Under) 1998 1997 4QTR 97 1998 1997 1997 ---------- ---------- -------- ----------- ---------- -------- INTEREST INCOME Loans $ 3,381 $ 3,392 -- $ 13,389 $ 12,921 4% Securities 964 851 13% 3,616 3,028 19% Trading Assets 435 707 (38%) 2,431 2,770 (12%) Federal Funds Sold and Securities Purchased Under Resale Agreements 469 728 (36%) 2,211 2,607 (15%) Deposits with Banks 192 156 23% 642 525 22% ---------- ---------- ----------- ---------- Total Interest Income 5,441 5,834 (7%) 22,289 21,851 2% ---------- ---------- ----------- ---------- INTEREST EXPENSE Deposits 1,717 1,764 (3%) 6,840 6,561 4% Short-Term and Other Borrowings 1,247 1,640 (24%) 5,612 5,903 (5%) Long-Term Debt 317 320 (1%) 1,271 1,134 12% ---------- ---------- ----------- ---------- Total Interest Expense 3,281 3,724 (12%) 13,723 13,598 1% ---------- ---------- ----------- ---------- NET INTEREST INCOME 2,160 2,110 2% 8,566 8,253 4% Provision for Loan Losses 411 205 100% 1,343 804 67% ---------- ---------- ----------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,749 1,905 (8%) 7,223 7,449 (3%) ---------- ---------- ----------- ---------- NONINTEREST REVENUE Investment Banking Fees 381 369 3% 1,502 1,136 32% Trust, Custody and Investment Management Fees 414 338 22% 1,543 1,307 18% Credit Card Revenue 428 322 33% 1,474 1,088 35% Fees for Other Financial Services 552 517 7% 2,093 1,983 6% Trading Revenue 522 (78) NM 1,449 1,323 10% Provision for Risk Management Instrument Losses (6) -- NM (211) -- NM Securities Gains 167 123 36% 609 312 95% Private Equity Gains 244 226 8% 967 831 16% Other Revenue 198 163 21% 664 575 15% ---------- ---------- ----------- ---------- Total Noninterest Revenue 2,900 1,980 46% 10,090 8,555 18% ---------- ---------- ----------- ---------- NONINTEREST EXPENSE Salaries 1,296 1,072 21% 5,025 4,598 9% Employee Benefits 194 192 1% 854 839 2% Occupancy Expense 220 193 14% 798 767 4% Equipment Expense 250 217 15% 890 792 12% Other Expense 913 802 14% 3,287 2,906 13% ---------- ---------- ----------- ---------- Total Noninterest Expense Before Restructuring Costs 2,873 2,476 16% 10,854 9,902 10% Restructuring Costs -- 20 NM 529 192 176% ---------- ---------- ----------- ---------- Total Noninterest Expense 2,873 2,496 15% 11,383 10,094 13% ---------- ---------- ----------- ---------- INCOME BEFORE INCOME TAX EXPENSE 1,776 1,389 28% 5,930 5,910 -- Income Tax Expense 630 515 22% 2,148 2,202 (2%) ---------- ---------- ----------- ---------- NET INCOME $ 1,146 $ 874 31% $ 3,782 $ 3,708 2% ========== ========== =========== ========== NET INCOME APPLICABLE TO COMMON STOCK $ 1,128 $ 839 34% $ 3,684 $ 3,526 4% ========== ========== =========== ========== NET INCOME PER COMMON SHARE: Basic $ 1.34 $ 1.00 34% $ 4.35 $ 4.15 5% Diluted $ 1.31 $ 0.97 35% $ 4.24 $ 4.01 6% NM - Not meaningful Certain amounts have been reclassified to conform to the current presentation. Unaudited
THE CHASE MANHATTAN CORPORATION NONINTEREST REVENUE AND NONINTEREST EXPENSE DETAIL (in millions) % % Fourth Quarter Over/(Under) For The Year Over/(Under) ---------------------- ----------------------- NONINTEREST REVENUE 1998 1997 4QTR 97 1998 1997 1997 ------------------------------------------------- --------- --------- ---------- ---------- ---------- --------- Fees for Other Financial Services: Service Charges on Deposit Accounts $ 93 $ 96 (3%) $ 368 $ 376 (2%) Fees in Lieu of Compensating Balances 88 78 13% 344 314 10% Commissions on Letters of Credit and Acceptances 83 83 -- 301 307 (2%) Mortgage Servicing Fees 43 54 (20%) 192 231 (17%) Loan Commitment Fees 35 34 3% 136 120 13% Insurance Fees (a) 42 29 45% 145 91 59% Brokerage and Investment Services 40 35 14% 142 128 11% Other Fees 128 108 19% 465 416 12% Total --------- --------- ---------- ---------- $ 552 $ 517 7% $ 2,093 $ 1,983 6% ========= ========= ========== ========== Trading-Related Revenue: (b) Interest Rate Contracts $ 317 $ 165 92% $ 695 $ 704 (1%) Foreign Exchange Revenue 144 228 (37%) 963 790 22% Debt Instruments and Other 231 (297) NM 502 442 14% --------- --------- ---------- ---------- Total $ 692 $ 96 621% $ 2,160 $ 1,936 12% ========= ========= ========== ========== Other Revenue: Residential Mortgage Origination/Sales Activities $ 115 $ 32 259% $ 356 $ 130 174% Gains on Sales of Partially-Owned Investments -- 58 NM -- 102 NM All Other Revenue 83 73 14% 308 343 (10%) ========= ========= ========== ========== Total $ 198 $ 163 21% $ 664 $ 575 15% ========= ========= ========== ========== ------------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE ------------------------------------------------- Other Expense: Professional Services $ 185 $ 167 11% $ 668 $ 575 16% Marketing Expense 113 115 (2%) 419 415 1% Telecommunications 91 82 11% 349 307 14% Travel and Entertainment 66 59 12% 243 220 10% Amortization of Intangibles 73 49 49% 261 172 52% Minority Interest (c) 14 16 (13%) 50 74 (32%) Foreclosed Property Expense 3 3 -- 5 12 (58%) All Other 368 311 18% 1,292 1,131 14% ========= ========= ========== ========== Total $ 913 $ 802 14% $ 3,287 $ 2,906 13% ========= ========= ========== ========== (a) Excludes certain insurance fees related to credit cards and mortgage products, which are included in those revenue captions. (b) Includes net interest income attributable to trading activities. (c) Includes minority interest related to the REIT of $11 million in each quarter. NM - Not meaningful Certain amounts have been reclassified to conform to the current presentation. Unaudited
THE CHASE MANHATTAN CORPORATION OPERATING INCOME RECONCILIATION (in millions, except per share data) ------------------------------------------------------------------------------------------------------------------------------- FOURTH QUARTER 1998 ------------------------------------------------------------------------------------------------------------------------------- CREDIT REPORTED CREDIT CARD SPECIAL OPERATING RESULTS COSTS SECURITIZATIONS ITEMS BASIS EARNINGS Total Revenue $ 5,060 $ 6 $ 284 $ - $ 5,350 Noninterest Expense 2,873 (3) - - 2,870 ----------- ----------- ---------- ---------- ----------- Operating Margin 2,187 9 284 - 2,480 Credit Costs 411 9 284 - 704 ----------- ----------- ---------- ---------- ----------- Income Before Restructuring Costs 1,776 - - - 1,776 Restructuring Costs - - - - - ----------- ----------- ---------- ---------- ----------- Income Before Taxes 1,776 - - - 1,776 Tax Expense 630 - - - 630 ----------- ---------- ---------- ----------- ----------- Net Income $ 1,146 $ - $ - $ - $ 1,146 ----------- ----------- ---------- ---------- ----------- NET INCOME PER COMMON SHARE Basic $ 1.34 $ 1.34 Diluted $ 1.31 $ 1.31 ------------------------------------------------------------------------------------------------------------------------------ FOURTH QUARTER 1997 ------------------------------------------------------------------------------------------------------------------------------ CREDIT REPORTED CREDIT CARD SPECIAL OPERATING RESULTS COSTS SECURITIZATIONS ITEMS BASIS EARNINGS Total Revenue $ 4,090 $ - $ 263 $ (58) $ 4,295 Noninterest Expense 2,476 (3) - - 2,473 ----------- ----------- ---------- ---------- ----------- Operating Margin 1,614 3 263 (58) 1,822 Credit Costs 205 3 263 - 471 ----------- ----------- ---------- ---------- ----------- Income Before Restructuring Costs 1,409 - - (58) 1,351 Restructuring Costs 20 - - (20) - ----------- ----------- ---------- ---------- ----------- Income Before Taxes 1,389 - - (38) 1,351 Tax Expense 515 - - (14) 501 ----------- ----------- ---------- ---------- ----------- Net Income $ 874 $ - $ - $ (24) $ 850 ----------- ----------- ---------- ---------- ----------- NET INCOME PER COMMON SHARE Basic $ 1.00 $ 0.97 Diluted $ 0.97 $ 0.94 ------------------------------------------------------------------------------------------------------------------------------ NOTES: Reported results represent amounts shown in Chase's Consolidated Statement of Income, except restructuring costs have been separately displayed. Credit Costs reclasses - For purposes of Operating Basis presentation, the provision for risk management instrument losses is reclassified from noninterest revenue to credit costs and foreclosed property expense is reclassified from noninterest expense to credit costs. Credit Card Securitizations excludes the impact of credit card securitizations. 1998 special items - there were no special items in the fourth quarter of 1998. 1997 special items includes a $58 million pre-tax gain ($37 million after-tax) from the sale of Chase's remaining interest in CIT Group Holdings, Inc. ("CIT") and merger-related restructuring costs. Unaudited
THE CHASE MANHATTAN CORPORATION OPERATING INCOME RECONCILIATION (FOR THE YEAR) (in millions, except per share data) ------------------------------------------------------------------------------------------------------------------------------- FOR THE YEAR 1998 ------------------------------------------------------------------------------------------------------------------------------- CREDIT REPORTED CREDIT CARD SPECIAL OPERATING RESULTS COSTS SECURITIZATIONS ITEMS BASIS EARNINGS Total Revenue $ 18,656 $ 211 $ 1,148 $ (191) $ 19,824 Noninterest Expense 10,854 (5) - (37) 10,812 ------------ ------------ ---------- --------- ------------ Operating Margin 7,802 216 1,148 (154) 9,012 Credit Costs 1,343 216 1,148 - 2,707 ------------ ------------ ---------- --------- ------------ Income Before Restructuring Costs 6,459 - - (154) 6,305 Restructuring Costs 529 - - (529) - ------------ ------------ ---------- --------- ------------ Income Before Taxes 5,930 - - 375 6,305 Tax Expense 2,148 - - 141 2,289 ------------ ------------ ---------- --------- ------------ Net Income $ 3,782 $ - $ - $ 234 $ 4,016 ------------ ------------ ---------- --------- ------------ NET INCOME PER COMMON SHARE Basic $ 4.35 $ 4.63 Diluted $ 4.24 $ 4.51 ------------------------------------------------------------------------------------------------------------------------------- FOR THE YEAR 1997 ------------------------------------------------------------------------------------------------------------------------------- CREDIT REPORTED CREDIT CARD SPECIAL OPERATING RESULTS COSTS SECURITIZATIONS ITEMS BASIS EARNINGS Total Revenue $ 16,808 $ - $ 993 $ (102) $ 17,699 Noninterest Expense 9,902 (12) - (135) 9,755 ------------ ------------ ---------- --------- ------------ Operating Margin 6,906 12 993 33 7,944 Credit Costs 804 12 993 - 1,809 ------------ ------------ ---------- --------- ------------ Income Before Restructuring Costs 6,102 - - 33 6,135 Restructuring Costs 192 - - (192) - ------------ ------------ ---------- --------- ------------ Income Before Taxes 5,910 - - 225 6,135 Tax Expense 2,202 - - 84 2,286 ------------ ------------ ---------- --------- ------------ Net Income $ 3,708 $ - $ - $ 141 $ 3,849 ------------ ------------ ---------- --------- ------------ NET INCOME PER COMMON SHARE Basic $ 4.15 $ 4.32 Diluted $ 4.01 $ 4.17 ------------------------------------------------------------------------------------------------------------------------------- NOTES: Reported results represent amounts shown in Chase's Consolidated Statement of Income, except restructuring costs have been separately displayed. Credit Costs reclasses - For purposes of Operating Basis presentation, the provision for risk management instrument losses is reclassified from noninterest revenue to credit costs and foreclosed property expense is reclassified from noninterest expense to credit costs. Credit Card Securitizations excludes the impact of credit card securitizations. 1998 special items include $191 million pre-tax income ($123 million after-tax) for prior years' tax refunds, a $37 million pre-tax charge ($24 million after-tax) for the accelerated vesting of stock-based awards, the $510 million pre-tax charge ($320 million after-tax) in the first quarter, taken in connection with initiatives to streamline support functions and realign certain business units, and merger-related restructuring costs of $19 million pre-tax ($13 million after-tax). 1997 special items include $58 million pre-tax gain ($37 million after-tax)from the sale of Chase's remaining interest in CIT, $44 million pre-tax gain ($28 million after-tax) from the sale of a partially-owned foreign investment, $135 million pre-tax charge ($85 million after-tax) for the accelerated vesting of stock-based awards, and merger-related restructuring costs. Unaudited
THE CHASE MANHATTAN CORPORATION CONSOLIDATED BALANCE SHEET (in millions) % Over/(Under) December 31, Dec. 31, ----------------------------------- 1998 1997 1997 --------------- --------------- --------------- ASSETS Cash and Due from Banks $ 17,068 $ 15,704 9% Deposits with Banks 7,212 2,886 150% Federal Funds Sold and Securities Purchased Under Resale Agreements 18,487 30,928 (40%) Trading Assets: Debt and Equity Instruments 24,844 34,641 (28%) Risk Management Instruments 32,848 37,752 (13%) Securities 64,490 52,738 22% Loans 172,754 168,454 3% Allowance for Credit Losses (3,552) (3,624) (2%) --------------- --------------- Net Loans 169,202 164,830 3% Other Assets 31,724 26,042 22% --------------- --------------- TOTAL ASSETS $ 365,875 $ 365,521 -- =============== =============== LIABILITIES Deposits: Domestic: Noninterest-Bearing $ 47,541 $ 46,603 2% Interest-Bearing 85,886 71,576 20% Foreign: Noninterest-Bearing 4,082 3,205 27% Interest-Bearing 74,928 72,304 4% --------------- --------------- Total Deposits 212,437 193,688 10% Federal Funds Purchased and Securities Sold Under Repurchase Agreements 41,632 56,126 (26%) Commercial Paper 7,788 4,744 64% Other Borrowed Funds 7,239 6,861 6% Trading Liabilities 38,502 52,438 (27%) Accounts Payable, Accrued Expenses and Other Liabilities 15,514 14,245 9% Long-Term Debt 16,187 13,387 21% Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated Deferrable Interest Debentures 26% 2,188 1,740 --------------- --------------- TOTAL LIABILITIES 341,487 343,229 (1%) --------------- --------------- PREFERRED STOCK OF SUBSIDIARY 550 550 -- --------------- --------------- STOCKHOLDERS' EQUITY Preferred Stock 1,028 1,740 (41%) Common Stock 882 441 100% Capital Surplus 9,836 10,360 (5%) Retained Earnings 13,544 11,086 22% Accumulated Other Comprehensive Income 392 112 250% Treasury Stock, at Cost (1,844) (1,997) (8%) --------------- --------------- TOTAL STOCKHOLDERS' EQUITY 23,838 21,742 10% --------------- --------------- TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS' EQUITY $ 365,875 $ 365,521 -- =============== =============== Certain amounts have been reclassified to conform to the current presentation. Unaudited
THE CHASE MANHATTAN CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (in millions) For The Year Ended December 31, -------------------------------- 1998 1997 ------------ ------------ Preferred Stock: Balance at Beginning of Year $ 1,740 $ 2,650 Issuance of Stock 200 -- Redemption of Stock (912) (910) ------------ ------------ Balance at End of Year $ 1,028 $ 1,740 ------------ ------------ Common Stock: Balance at Beginning of Year $ 441 $ 441 Issuance of Common Stock for a Two-for-One Stock Split 441 -- ------------ ------------ Balance at End of Year $ 882 $ 441 ------------ ------------ Capital Surplus: Balance at Beginning of Year $ 10,360 $ 10,459 Issuance of Common Stock for a Two-for-One Stock Split (441) -- Shares Issued and Commitments to Issue Common Stock for Employee Stock-Based Awards and Related Tax Effects (83) (99) ------------ ------------ Balance at End of Year $ 9,836 $ 10,360 ------------ ------------ Retained Earnings: Balance at Beginning of Year $ 11,086 $ 8,610 Net Income 3,782 3,708 Cash Dividends Declared: Preferred Stock (98) (182) Common Stock (1,226) (1,050) ------------ ------------ Balance at End of Year $ 13,544 $ 11,086 ------------ ------------ Accumulated Other Comprehensive Income: (a) Balance at Beginning of Year $ 112 $ (271) Other Comprehensive Income 280 383 ------------ ------------ Balance at End of Year $ 392 $ 112 ------------ ------------ Common Stock in Treasury, at Cost: Balance at Beginning of Year $ (1,997) $ (895) Purchase of Treasury Stock (1,091) (2,169) Reissuance of Treasury Stock 1,244 1,067 ------------ ------------ Balance at End of Year $ (1,844) $ (1,997) ------------ ------------ Total Stockholders' Equity $ 23,838 $ 21,742 ============ ============ --------------------------------------------------------------------------------------------------------- Comprehensive Income: (a) Net Income $ 3,782 $ 3,708 Other Comprehensive Income 280 383 ------------ ------------ Comprehensive Income $ 4,062 $ 4,091 ============ ============ (a) Effective with the first quarter 1998, Chase adopted SFAS 130, which defines and establishes the standards for reporting comprehensive income. Comprehensive income for Chase includes net income as well as the change in unrealized gains and losses on available-for-sale securities and foreign currency translation adjustments. Prior period amounts have been reclassified to conform to the current presentation. Unaudited
THE CHASE MANHATTAN CORPORATION CREDIT RELATED INFORMATION (in millions) % % Credit-Related Assets Over/(Under) Nonperforming Assets Over/(Under) --------------------------- --------------------------- December 31, 1998 1997 1997 1998 1997 1997 ------------------------------------ ------------ ------------ ---------- ------------ ------------ ---------- CONSUMER Domestic Consumer: 1-4 Family Residential Mortgages $ 41,831 $ 38,680 8% $ 313 $ 340 (8%) Credit Card 14,229 15,631 (9%) -- -- -- Other Consumer 24,831 21,786 14% 56 38 47% ----------- ------------ ------------ ------------ Total Domestic Consumer 80,891 76,097 6% 369 378 (2%) Total Foreign Consumer 3,807 3,976 (4%) 23 21 10% ----------- ------------ ------------ ------------ Total Consumer 84,698 80,073 6% 392 399 (2%) ----------- ------------ ------------ ------------ COMMERCIAL Domestic Commercial: Commercial and Industrial 49,706 44,583 11% 332 259 28% Commercial Real Estate 3,984 5,030 (21%) 41 75 (45%) ----------- ------------ ------------ ------------ Total Domestic Commercial 53,690 49,613 8% 373 334 12% Total Foreign Commercial 34,366 38,768 (11%) 675 175 286% ----------- ------------ ------------ ----------- Total Commercial 88,056 88,381 -- 1,048 509 106% ----------- ------------ ------------ ------------ Total Loans 172,754 168,454 3% 1,440 908 59% ----------- ------------ ------------ ------------ Derivative and Foreign Exchange Contracts 33,255 38,476 (14%) 50 -- NM =========== ============ ------------ ------------ Total Credit-Related Assets $206,009 $206,930 -- 1,490 908 64% =========== ============ ------------ ------------ Assets Acquired as Loan Satisfactions 116 110 5% ============ ============ Total Nonperforming Assets $ 1,606 $ 1,018 58% ============ ============ -------------------------------------------------------------------------------------------------------------------------------- % % Fourth Quarter Over/(Under) For The Year Over/(Under) -------------------------- --------------------------- NET CHARGE-OFFS 1998 1997 4QTR 97 1998 1997 1997 ---------------------------------------------------- ------------ ---------- ------------ ------------ ---------- CONSUMER Domestic Consumer: 1-4 Family Residential Mortgages $ 9 $ 11 (18%) $ 31 $ 32 (3%) Credit Card 212 140 51% 762 543 40% Other Consumer 63 61 3% 244 232 5% ----------- ------------ ------------ ------------ Total Domestic Consumer 284 212 34% 1,037 807 29% Total Foreign Consumer 11 5 120% 25 14 79% ----------- ------------ ------------ ------------ Total Consumer 295 217 36% 1,062 821 29% ----------- ------------ ------------ ------------ COMMERCIAL Domestic Commercial: Commercial and Industrial 9 (10) NM (68) 22 NM Commercial Real Estate (5) (14) NM (14) (37) NM ----------- ------------ ------------ ------------ Total Domestic Commercial 4 (24) NM (82) (15) NM Total Foreign Commercial 112 12 NM 438 (2) NM ----------- ------------ ------------ ------------ Total Commercial 116 (12) NM 356 (17) NM ----------- ------------ ------------ ------------ Derivative and Foreign Exchange Contracts 6 -- NM 136 -- NM ----------- ------------ ------------ ------------ Total Net Charge-offs $ 417 $ 205 103% $ 1,554 $ 804 93% =========== ============ ============ ============ NM - Not meaningful Unaudited
THE CHASE MANHATTAN CORPORATION CREDIT RELATED INFORMATION (Continued) As of or For The As of or For The Three Months Ended Year Ended CREDIT CARD PORTFOLIO (excluding December 31, December 31, the impact of securitizations): * -------------------------- ----------------------- (in millions, except ratios) 1998 1997 1998 1997 --------------------------------------------------- ----------- ---------- ---------- ---------- Average Credit Card Receivables $ 31,902 $ 29,958 $ 31,965 $ 27,390 Past Due 90 Days or More and Accruing $ 691 $ 639 $ 691 $ 639 As a Percentage of Average Credit Card Receivables 2.17% 2.13% 2.16% 2.33% Net Charge-offs $ 500 $ 402 $ 1,925 $ 1,527 As a Percentage of Average Credit Card Receivables 6.27% 5.37% 6.02% 5.58% * Includes domestic and international credit card activity. ------------------------------------------------------------------------------------------------------------------------------ SELECTED COUNTRY EXPOSURE (a) (in billions) At Sept At Dec. 30, 31, At December 31, 1998 1998 1997 ------------------------------------------------------------------------- ---------- ---------- Total Total Total Trading- Foreign Cross- Cross- Cross- Lending- Related Exchange and Resale Border Border Border LATIN AMERICA Related (b) and Other(c) Derivatives(d) Agreements(e) Exposure Exposure Exposure ----------------------- Brazil $ 1.5 $ 0.6 $ 0.1 $ 0.9 $ 3.1 $ 3.7 $ 4.7 Argentina 2.0 0.2 0.1 0.5 2.8 2.7 3.2 Mexico 1.3 0.2 0.3 0.4 2.2 2.5 2.9 Chile 0.8 0.1 - - 0.9 1.1 1.5 Colombia 0.8 - - - 0.8 0.9 0.8 Venezuela 0.3 0.1 - - 0.4 0.5 1.0 All Other Latin America (f) 0.9 - 0.1 - 1.0 1.0 0.8 ------------ ----------- ----------- ---------- ---------- ---------- ---------- Total Latin America $ 7.6 $ 1.2 $ 0.6 $ 1.8 $ 11.2 $ 12.4 $ 14.9 ------------ ----------- ----------- ---------- ---------- ---------- ---------- ASIA ----------------------- Korea $ 1.0 $ 1.0 $ 0.4 $ - $ 2.4 $ 2.5 $ 5.3 Indonesia 1.0 - 0.2 - 1.2 1.3 2.2 Thailand - 0.7 0.2 - 0.9 1.1 1.4 ------------ ----------- ----------- ---------- ---------- ---------- ---------- Total IMF Countries 2.0 1.7 0.8 - 4.5 4.9 8.9 Hong Kong 0.6 - 0.2 - 0.8 0.7 1.1 Singapore 0.7 - 0.1 - 0.8 1.1 1.6 Philippines 0.3 0.3 - - 0.6 0.5 0.9 Malaysia 0.1 0.4 0.1 - 0.6 0.5 0.9 China 0.5 - 0.1 - 0.6 0.7 0.7 All Other Asia 0.4 - 0.1 - 0.5 0.6 0.6 ------------ ----------- ----------- ---------- ---------- ---------- ---------- Total excluding Japan, Australia and New Zealand $ 4.6 $ 2.4 $ 1.4 $ - $ 8.4 $ 9.0 $ 14.7 ------------ ----------- ----------- ---------- ---------- ---------- ---------- Japan $ 2.6 $ 1.5 $ 1.1 $ 1.7 $ 6.9 $ 5.2 $ 8.8 Australia 0.4 0.7 0.8 - 1.9 1.6 2.8 New Zealand 0.6 - - - 0.6 0.3 0.3 ------------ ----------- ----------- ---------- ---------- ---------- ---------- Total Japan, Australia and New Zealand $ 3.6 $ 2.2 $ 1.9 $ 1.7 $ 9.4 $ 7.1 $ 11.9 ------------ ----------- ----------- ---------- ---------- ---------- ---------- (a) Estimated cross-border disclosure is based on the Federal Financial Institutions Examination Council ("FFIEC")guidelines governing the determination of cross-border risk. The most significant change from the prior methodology is the treatment of local country exposure. Prior period amounts have been reclassified to conform to the current presentation. (b) Includes loans and accrued interest, interest-bearing deposits with banks, acceptances, other monetary assets, issued letters of credit and undrawn commitments to extend credit. (c) Includes cross-border trading debt and equity instruments and local country assets, net of local country liabilities. (d) Foreign exchange largely represents the mark-to-market exposure of spot and forward contracts. Derivatives largely represent the mark-to- market exposure of risk management instruments. Mark-to-market exposure is a measure, at a point in time, of the value of a foreign exchange or derivative contract in the open market. The impact of legally enforceable master netting agreements on these foreign exchange and derivative contracts reduced exposure by $17.7 billion at December 31, 1998, $16.7 billion at September 30, 1998 and $12.7 billion at December 31, 1997. (e) Approximately $1.1 billion (or 60%) of the exposure to Latin America and $1.3 billion (or 75%) of the exposure to Japan represents resale agreements with investment grade counterparties from G-7 (Group of 7) countries. G-7 countries are the United States, United Kingdom, Germany, Japan, Italy, France, and Canada. (f) Excludes Bermuda and Cayman Islands. Unaudited
THE CHASE MANHATTAN CORPORATION Condensed Average Consolidated Balance Sheet, Interest and Rates (Taxable-Equivalent Interest and Rates; in millions) Three Months Ended Three Months Ended December 31, 1998 December 31, 1997 -------------------------------------- -------------------------------------- Average Rate Average Rate Balance Interest (Annualized) Balance Interest (Annualized) ASSETS Liquid Interest-Earning Assets $ 62,155 $ 1,096 7.00% $ 82,894 $ 1,592 7.62% Securities 64,340 967 5.96% 51,130 855 6.64% Loans 173,119 3,382 7.75% 168,804 3,394 7.98% --------- -------- --------- --------- Total Interest-Earning Assets 299,614 5,445 7.21% 302,828 5,841 7.65% Noninterest-Earning Assets 78,827 73,628 --------- --------- Total Assets $ 378,441 $ 376,456 ========= ========= LIABILITIES Interest-Bearing Deposits $ 160,386 1,717 4.25% $ 142,326 1,764 4.92% Short-Term and Long-Term Debt 92,633 1,564 6.70% 114,840 1,960 6.77% --------- -------- --------- --------- Total Interest-Bearing Liabilities 253,019 3,281 5.14% 257,166 3,724 5.74% Noninterest-Bearing Deposits 48,628 -------- 44,338 --------- Other Noninterest-Bearing Liabilities 52,914 53,106 --------- --------- Total Liabilities 354,561 354,610 --------- --------- PREFERRED STOCK OF SUBSIDIARY 550 550 --------- --------- STOCKHOLDERS' EQUITY Preferred Stock 1,028 1,740 Common Stockholders' Equity 22,302 19,556 --------- --------- Total Stockholders' Equity 23,330 21,296 --------- --------- Total Liabilities, Preferred Stock of Subsidiary and Stockholders' Equity $ 378,441 $376,456 ========= ========= INTEREST RATE SPREAD 2.07% 1.91% NET INTEREST INCOME AND NET YIELD ====== ===== ON INTEREST-EARNING ASSETS $ 2,164 2.87% $ 2,117 2.77% ========= ====== ========= ===== NET INTEREST INCOME AND NET YIELD ON INTEREST-EARNING ASSETS (a) $ 2,531 3.16% $ 2,457 3.06% ========= ====== ========= ===== ----------------------------------------------------------------------------------------------------------------------------- For The Year Ended For The Year Ended December 31, 1998 December 31, 1997 -------------------------------------- -------------------------------------- Average Average Balance Interest Rate Balance Interest Rate ASSETS Liquid Interest-Earning Assets $ 68,910 $ 5,284 7.67% $ 80,601 $ 5,903 7.32% Securities 58,484 3,635 6.22% 46,042 3,045 6.61% Loans 169,386 13,394 7.91% 159,932 12,929 8.08% --------- -------- --------- --------- Total Interest-Earning Assets 296,780 22,313 7.52% 286,575 21,877 7.63% Total Noninterest-Earning Assets 76,431 69,771 --------- --------- Total Assets $ 373,211 $ 356,346 ========= ========= LIABILITIES Total Interest-Bearing Deposits $ 153,545 6,840 (b) 4.45% (b) $ 137,095 6,561 4.79% Short-Term and Long-Term Debt 98,368 6,883 7.00% 106,050 7,037 6.64% --------- -------- --------- --------- Total Interest-Bearing Liabilities 251,913 13,723 5.45% 243,145 13,598 5.59% Noninterest-Bearing Deposits 46,169 42,067 Other Noninterest-Bearing Liabilities 51,971 49,544 --------- --------- Total Liabilities 350,053 334,756 --------- --------- PREFERRED STOCK OF SUBSIDIARY 550 550 --------- --------- STOCKHOLDERS' EQUITY Preferred Stock 1,280 2,212 Common Stockholders' Equity 21,328 18,828 --------- --------- Total Stockholders' Equity 22,608 21,040 --------- --------- Total Liabilities, Preferred Stock of Subsidiary and Stockholders' Equity $ 373,211 $ 356,346 ========= ========= INTEREST RATE SPREAD 2.07% 2.04% NET INTEREST INCOME AND NET YIELD ====== ===== ON INTEREST-EARNING ASSETS $ 8,590 2.89% $ 8,279 2.89% ========= ====== ========= ===== NET INTEREST INCOME AND NET YIELD ON INTEREST-EARNING ASSETS (a) $ 10,050 (b) 3.19% (b) $ 9,532 3.17% ========= ====== ========= ===== (a) Excludes the impact of the credit card securitizations. (b) Includes $191 million pre-tax income for prior years' tax refunds. Excluding this amount, the net yield on interest-earning assets would be 3.13%. Unaudited