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: April 21, 1998 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
- -------------------------
The Chase Manhattan Corporation ("Chase") reported on April 21, 1998 diluted
operating earnings per share of $2.35 in the first quarter of 1998 compared with
$2.02 in the 1997 first quarter. Operating earnings increased to $1.053 billion
from $949 million in the first quarter of 1997.
Net income was $725 million compared to $927 million in the 1997 first quarter,
reflecting a previously-announced, one time charge of $320 million after tax in
connection with initiatives to streamline support functions and realign
certain business functions. It is anticipated that annual savings from these
actions will amount to approximately $460 million, which will be reinvested in
Chase's high-growth businesses.
A copy of the Chase's earnings press release is attached as an exhibit hereto.
This current report on Form 8-K and the attached press release 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 Chase's actual results may differ materially from those set
forth in such forward-looking statements. Factors that would affect the
prospects of Chase's business are discussed in its Annual Report to Stockholders
on Form 10-K for the year ended December 31, 1997.
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 First 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 April 21, 1998 by /s/JOSEPH L. SCLAFANI
- -------------------- --------------------------
Joseph L. Sclafani
Controller
[Principal Accounting Officer]
4
EXHIBIT INDEX
Exhibit Number Description Page at Which Located
99.1 Press Release - 1998 First
Quarter Earnings 6
5
1
The Chase Manhattan Corporation
270 Park Avenue
New York, NY 10017-2070
[CHASE LETTERHEAD]
----------------------------
Chase's 1998 First Quarter Operating EPS Rises by 16 Percent
----------------------------
New York, April 21, 1998 -- The Chase Manhattan Corporation (NYSE:CMB) today
reported diluted operating earnings per share of $2.35 in the first quarter of
1998 compared with $2.02 in the 1997 first quarter. Operating earnings increased
to $1.053 billion from $949 million in the first quarter of 1997. Total managed
revenues rose to $4.909 billion in the 1998 first quarter from $4.320 billion.
Net income was $725 million compared to $927 million in the 1997 first quarter,
reflecting a previously-announced, one time charge of $320 million after tax
taken in connection with initiatives to streamline support functions and realign
certain business functions. It is anticipated that annual savings from these
actions will amount to approximately $460 million, which will be reinvested in
Chase's high-growth businesses.
First Quarter 1998 Financial Highlights
- Operating earnings per share rose 16 percent.
- Total managed revenues increased 14 percent to $4.9 billion.
- Return on common stockholders' equity rose to 20.3 percent from 19.6 percent.
"It was another strong quarter for Chase, led by growing trading, investment
banking, equity-related and global services revenues, as well as solid
performance across the national consumer platform," said Walter V. Shipley,
chairman and chief executive officer. "These results demonstrate the fundamental
strength of the Chase franchise which, combined with management's commitment to
financial discipline, is creating exceptional long-term value for shareholders."
----------------------------
Investor contact: John Borden 212-270-7318
Press contact: Kathleen Baum 212-270-5089
John Meyers 212-270-7454
2
Shareholder Value Added
As of January 1, 1998, Chase has adopted Shareholder Value Added (SVA) as its
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. The
methodology for the allocation of capital to businesses has also changed. The
new method has resulted in an attribution of capital to the lines of business in
excess of Chase's actual amount of common equity, as compared with an
under-attribution of capital using the previous method. Business unit results in
this press release and in the tables that follow it have been restated to
reflect the new capital allocation methodology.
- ------------------------------------------------ ---------------------------------- ---------------------
THE CHASE MANHATTAN CORP. First Quarter Percent Change
- ------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------ ---------------- ----------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------ ---------------- ----------------- ---------------------
Managed Revenues $4,909 $4,320 14%
Cash Operating Earnings 1,091 976 12%
Shareholder Value Added 404 329 23%
Cash Return on Common Equity 21.1% 20.2%
- ------------------------------------------------ ---------------- ----------------- ---------------------
Managed revenues rose 14 percent in the first quarter of 1998, with cash
operating earnings up 12 percent from the prior-year quarter. Shareholder value
added increased 23 percent to $404 million.
Line-Of-Business Results
- ------------------------------------------------ ---------------------------------- ---------------------
GLOBAL BANKING First Quarter Percent Change
- ------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------ ---------------- ----------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------ ---------------- ----------------- ---------------------
Managed Revenues $2,464 $2,129 16%
Cash Operating Earnings 770 654 18%
Shareholder Value Added 317 223 42%
Cash Return on Common Equity 22.5% 20.4%
- ------------------------------------------------ ---------------- ----------------- ---------------------
Global Banking revenues rose 16 percent in the first quarter, with cash
operating earnings rising 18 percent. Shareholder value added increased by 42
percent to $317 million.
Total trading revenues were $713 million, a quarterly record, rebounding
from fourth quarter levels and 23 percent higher than the prior-year
period. Improved conditions in capital markets worldwide enabled Chase to
take advantage of an attractive foreign exchange environment, as well as
fixed income opportunities, particularly within non-Asian emerging markets.
Investment banking activity produced $361 million in corporate finance and
loan syndication fees, more than double the fees earned in the prior-year
period. Results reflect significant activity in loan syndications, as well
as the growing contribution of newer businesses such as high yield and
investment grade underwriting and mergers and acquisitions. During the
first quarter, Chase moved into the top ten in worldwide mergers and
acquisitions advisory. Corporate lending revenues were lower in the
quarter.
3
Equity-related investment revenues rose to a record $287 million, 75
percent higher than in the 1997 first quarter, marking a continuation of
favorable private and public equity markets and Chase Capital Partner's
accelerated pace of investment activities over the last several years.
Revenues from global asset management and private banking rose nine
percent, with fees from personal trust rising 11 percent from the
prior-year level.
Chase Bank of Texas revenues increased by 14 percent in the 1998 first
quarter, with fee-based activities continuing to grow.
Middle market banking revenues declined slightly.
- ------------------------------------------------------ ---------------------------------- ---------------------
CHASE TECHNOLOGY SOLUTIONS First Quarter Percent Change
- ------------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------------ ----------------- ---------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------------ ----------------- ---------------- ---------------------
Global Services Revenues $635 $560 13%
Cash Operating Earnings 119 97 23%
Shareholder Value Added 73 48 52%
Cash Return on Common Equity 34.5% 26.6%
- ------------------------------------------------------ ----------------- ---------------- ---------------------
Revenues for Global Services within Chase Technology Solutions rose 13 percent
in the first quarter. Cash operating earnings increased by 23 percent.
Shareholder value added rose by 52 percent.
Revenue growth continued across the three business lines -- Chase Treasury
Solutions, global investor services and global trust -- reflecting
increased assets under trust and custody, as well as higher balance levels.
Cash operating earnings for Global Services benefited from both higher
revenues and ongoing productivity initiatives.
- ------------------------------------------------------ ---------------------------------- ---------------------
NATIONAL CONSUMER SERVICES First Quarter Percent Change
- ------------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------------ ----------------- ---------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------------ ----------------- ---------------- ---------------------
Managed Revenues $1,941 $1,786 9%
Cash Operating Earnings 287 270 6%
Shareholder Value Added 54 81 (33%)
Cash Return on Common Equity 16.1% 19.1%
- ------------------------------------------------------ ----------------- ---------------- ---------------------
National Consumer Services revenues grew by nine percent in the 1998 first
quarter. Cash operating earnings rose to $287 million. Shareholder value added
declined to $54 million from $81 million in the first quarter of 1997,
reflecting increased capital allocation within National Consumer Services as a
result of recent acquisitions.
4
Credit card revenues rose 17 percent to $931 million in the first quarter,
driven by 20 percent revenue growth in the domestic portfolio, which
benefited from acquisitions and increased co-branded activities. These
results were partially offset by the effect of the economic environment in
Asia on Chase's international consumer businesses. Cash operating earnings
increased 39 percent from prior-year levels.
Regional consumer banking revenues rose two percent in the quarter. Cash
operating earnings fell nine percent reflecting higher expenses related to
systems integration and enhancements, particularly within Chase Bank of
Texas' retail businesses.
Home finance revenues in the quarter increased slightly from 1997 levels,
excluding the impact of discontinued operations, as continued growth in
mortgage originations was offset by the impact of greater refinancing
activity. Cash operating earnings, on the same basis, rose by 14 percent.
Revenues from diversified consumer services rose 11 percent in the first
quarter. Cash operating earnings declined seven percent, reflecting higher
expenses and provisioning associated with increased business volume.
Additional Financial Information
The provision for credit losses was $344 million, compared with $220
million in the first quarter of 1997.
Nonperforming assets at March 31, 1998 were $1.335 billion, compared with
$1.018 billion on December 31, 1997 and $ 1.126 billion on March 31, 1997.
Total nonperforming assets in Asia, including derivatives, increased by
$161 million from year-end levels to $243 million at March 31, 1998. Asian
commercial net charge-offs for the quarter were $92 million. Total exposure
to Indonesia, Korea and Thailand was reduced by 26 percent to $7.5 billion
at March 31, 1998 from $10.1 billion at December 31, 1997.
Total managed consumer net charge-offs were $536 million in the 1998 first
quarter, with $256 million related to assets retained on the balance sheet,
compared with $420 million in the prior-year quarter, with $212 million
related to assets retained on the balance sheet. First quarter 1998 figures
reflect the effects of recent credit card portfolio acquisitions.
5
Managed domestic credit card net charge-offs were 5.77 percent of average
managed receivables, compared with 5.66 percent in the same 1997 period.
Total commercial net charge-offs were $88 million, compared with net charge
offs of $8 million in the first quarter of 1997.
Total noninterest operating expenses were $2.610 billion in the 1998 first
quarter, a ten percent increase from the prior-year quarter reflecting
increased incentives related to higher Global Banking revenues.
Chase's news releases and quarterly financial results are available on the
Internet at www.Chase.com.
THE CHASE MANHATTAN CORPORATION and Subsidiaries
SUMMARY OF SELECTED FINANCIAL HIGHLIGHTS
(in millions, except per share and ratio data)
Over/(Under)
As of or for the period ended 1QTR98 1QTR97 1QTR97 - %
MANAGED OPERATING BASIS (a)
Managed Operating Revenue $4,909 $4,320 14%
Operating Noninterest Expenses 2,610 2,364 10%
Credit Costs (b) 628 437 44%
Operating Net Income $1,053 $ 949 11%
Cash Operating Earnings $1,091 $ 976 12%
Shareholder Value Added (SVA) 404 329 23%
Cash Return on Common Equity 21.1% 20.2%
Operating Net Income Per Common Share:(c)
Basic $ 2.41 $ 2.08 16%
Diluted 2.35 2.02 16%
Performance Ratios -(d)
Return on Average Common Equity 20.3% 19.6%
Common Dividend Payout Ratio 30 30
Efficiency Ratio 53 55
Selected Balance Sheet Items
Loans- Managed $186,067 $170,060 9%
Total Assets - Managed 383,838 354,516 8%
AS REPORTED BASIS
Revenues $4,629 $4,150 12%
Noninterest Expense (Excluding Restructuring Costs) 2,614 2,417 8%
Restructuring Costs 521 30 NM
Provision for Credit Losses 344 220 56%
Net Income $ 725 $ 927 (22%)
Net Income Per Common Share: (c)
Basic $ 1.64 $2.02 (19%)
Diluted 1.59 1.97 (19%)
Cash Dividends Declared 0.72 0.62 16%
Book Value at Period End 48.55 42.59 14%
Market Value at Period End 134.88 93.88 44%
Basic Average Common Shares 422.4 430.4
Average Common Shares Assuming Dilution 433.7 442.0
Common Shares at Period End 425.8 428.3
Selected Balance Sheet Items
Loans $167,944 $155,882 8%
Total Assets 365,715 340,338 7%
Deposits 196,096 176,030 11%
Total Stockholders' Equity 22,041 20,742 6%
Capital Ratios - (e)
Tier I Risk- Based Capital Ratio 8.0%(f) 8.4%
Total Risk-Based Capital Ratio 11.8 (f) 12.0
Tier I Leverage 6.0 6.9
Full-Time Equivalent Employees 70,259 67,877
(a) Excludes the impact of credit card securitizations, restructuring costs and
special items.
(b)Includes provision for credit losses, foreclosed property expenses and
charge-offs related to the securitized credit card portfolio.
(c) Effective December 31, 1997, Chase adopted SFAS 128 relating to the
computation of earnings per share ("EPS"), which replaced primary EPS with
basic EPS and fully-diluted EPS with diluted EPS. Prior period amounts have
been restated.
(d) Performance ratios are based on annualized amounts.
(e) In the third quarter of 1997, Chase adopted the Federal Reserve Board's new
guidelines for calculating market risk-adjusted capital. Prior period ratios
have not been restated.
(f) Estimated
NM - Not meaningful
Unaudited
6
THE CHASE MANHATTAN CORPORATION and Subsidiaries
Lines of Business Results
(in millions, except ratios)
National Consumer Global Services
Three Months Ended Global Banking (a) Services (a) (Within CTS) (a) Total (b)
March 31, 1998 1997 1998 1997 1998 1997 1998 1997
Managed Revenues $2,464 $2,129 $1,941 $1,786 $ 635 $ 560 $4,909 $4,320
Cash Operating Earnings 770 654 287 270 119 97 1,091 976
Average Common Equity 13,486 12,332 6,969 5,415 1,369 1,421 20,349 18,494
Average Assets (Managed) 278,140 249,581 104,928 91,009 9,526 9,123 394,302 352,382
Shareholder Value Added(SVA) 317 223 54 81 73 48 404 329
Cash Return on Common Equity(ROCE) 22.5% 20.4% 16.1% 19.1% 34.5% 26.6% 21.1% 20.2%
Efficiency Ratio (Managed) 46% 47% 50% 53% 71% 73% 53% 55%
GLOBAL BANKING
KEY FINANCIAL MEASURES
Three Months Ended
March 31, 1998 1997
----------------------------------------- ------------------------------------------
Cash Cash
Managed Operating Efficiency Managed Operating Efficiency
Revenue Earnings Ratio Revenue Earnings Ratio
Corporate Finance $ 349 $ 97 53% $ 155 $ 11 88%
Corporate Lending 365 120 29 379 135 27
---- ---- ---- ----
Total (c) $ 714 $ 217 40 $ 534 $ 146 45
Global Markets 955 325 46 901 325 43
Chase Capital Partners 269 149 11 137 72 16
Global Asset Management
and Private Banking 191 34 69 176 33 69
Middle Market 199 46 53 209 56 45
Chase Bank of Texas N.A. (Consolidated) 376 94 59 330 77 62
NATIONAL CONSUMER SERVICES
KEY FINANCIAL MEASURES
Three Months Ended
March 31, 1998 1997
-------------------------------------- -------------------------------------
Cash Cash
Managed Operating Efficiency Managed Operating Efficiency
Revenue Earnings Ratio Revenue Earnings Ratio
Cardmember Services $ 931 $ 111 35% $ 796 $ 80 41%
Regional Consumer Banking(a) 567 84 72 558 92 71
Chase Home Finance 246 66 52 250 62 52
Diversified Consumer Services (d) 183 25 57 165 27 55
Notes: As of January 1, 1998, Chase has adopted Shareholder Value Added
(SVA) as its 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. The methodology for the allocation of capital to businesses
has also changed. The new method has resulted in an attribution of capital to
the lines of business in excess of Chase's actual amount of common equity, as
compared with an under- attribution of capital using the previous method. Prior
periods have been restated to reflect the new capital allocation methodology.
(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 CTS
lines of business results, respectively.
(b)Total column includes Corporate results.
(c)Represents Total Global Investment Banking and Corporate Lending.
(d)Insurance products managed within Diversified Consumer Services, but included
for reporting purposes in Cardmember Services, Regional Consumer Banking, and
Chase Home Finance, generated revenues of $29 million and $24 million in 1998
and 1997, respectively.
Unaudited
7
THE CHASE MANHATTAN CORPORATION and Subsidiaries
MANAGED OPERATING INCOME RECONCILIATION
(in millions, except per share data)
FIRST QUARTER 1998
CREDIT MANAGED
REPORTED CARD SPECIAL OPERATING
EARNINGS RESULTS SECURITIZATIONS ITEMS BASIS
Total Revenue $4,629 $ 280 $ - $4,909
Noninterest Expense 2,610 - - 2,610
----- ------ ----- ------
Operating Margin 2,019 280 - 2,299
Credit Costs 348 280 - 628
----- ----- ----- ------
Income Before Restructuring Costs 1,671 - - 1,671
Restructuring Costs 521 - (521) -
----- ----- ----- ------
Income Before Taxes 1,150 - 521 1,671
Tax Expense 425 - 193 618
----- ----- ---- ------
Net Income $ 725 $ - $ 328 $1,053
===== ===== ==== =======
NET INCOME PER COMMON SHARE
Basic $ 1.64 $ 2.41
Diluted $ 1.59 $ 2.35
FIRST QUARTER 1997
CREDIT MANAGED
REPORTED CARD SPECIAL OPERATING
RESULTS SECURITIZATIONS ITEMS BASIS
EARNINGS
Total Revenue $4,150 $ 214 $ (44) $4,320
Noninterest Expense 2,414 - (50) 2,364
----- ----- ----- -----
Operating Margin 1,736 214 6 1,956
Credit Costs 223 214 - 437
----- ----- ----- -----
Income Before Restructuring Costs 1,513 - 6 1,519
Restructuring Costs 30 - (30) -
----- ----- ----- -----
Income Before Taxes 1,483 - 36 1,519
Tax Expense 556 - 14 570
----- ----- ----- -----
Net Income $ 927 $ - $ 22 $ 949
===== ===== ===== =====
NET INCOME PER COMMON SHARE
Basic $2.02 $2.08
Diluted $1.97 $2.02
NOTES:
Reported results represent Chases's financial statements, except restructuring
costs have been separately displayed and foreclosed property expense is included
in credit costs.
Credit Card Securitizations column excludes the impact of credit card
securitizations.
1998 special items include the $510 million pre-tax charge ($320 million
after-tax) taken in connection with initiatives to streamline support functions
and realign certain business functions, and residual costs of $11 million
pre-tax; ($8 million after-tax) related to the merger restructuring charge.
1997 special items include a $44 million pre-tax gain from the sale of a
partially-owned foreign investment and $50 million pre-tax charge for the
accelerated vesting of stock-based awards.
Unaudited
8
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Over/(Under)
1Qtr98 1Qtr97 QTR97 - %
INTEREST INCOME
Loans $3,405 $3,129 9%
Securities 889 722 23%
Trading Assets 676 626 8%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 671 559 20%
Deposits with Banks 152 106 43%
----- -----
Total Interest Income 5,793 5,142 13%
----- -----
INTEREST EXPENSE
Deposits 1,815 1,515 20%
Short-Term and Other Borrowings 1,509 1,302 16%
Long-Term Debt 305 257 19%
----- -----
Total Interest Expense 3,629 3,074 18%
----- -----
NET INTEREST INCOME 2,164 2,068 5%
Provision for Credit Losses 344 220 56%
----- -----
NET INTEREST INCOME
AFTER PROVISION FOR CREDIT LOSSES 1,820 1,848 (2%)
----- -----
NONINTEREST REVENUE
Investment Banking Fees 361 176 105%
Trust, Custody and Investment Management Fees 348 310 12%
Credit Card Revenue 300 261 15%
Service Charges on Deposit Accounts 91 91 --
Fees for Other Financial Services 419 383 9%
Trading Revenue 480 405 19%
Securities Gains 83 101 (18%)
Revenue from Equity-Related Investments 287 164 75%
Other Revenue 96 191 (50%)
----- -----
Total Noninterest Revenue 2,465 2,082 18%
----- -----
NONINTEREST EXPENSE
Salaries 1,254 1,124 12%
Employee Benefits 224 222 1%
Occupancy Expense 189 187 1%
Equipment Expense 209 190 10%
Other Expense 738 694 6%
----- -----
Total Noninterest Expense Before Restructuring Costs 2,614 2,417 8%
----- -----
Restructuring Costs 521 30 NM
----- -----
Total Noninterest Expense 3,135 2,447 28%
----- -----
INCOME BEFORE INCOME TAX EXPENSE 1,150 1,483 (22%)
Income Tax Expense 425 556 (24%)
----- -----
NET INCOME $ 725 $ 927 (22%)
----- -----
NET INCOME APPLICABLE TO COMMON STOCK $ 691 $ 872 (21%)
----- -----
NET INCOME PER COMMON SHARE:
Basic $ 1.64 $ 2.02 (19%)
Diluted $ 1.59 $ 1.97 (19%)
NM - Not meaningful
Certain amounts have been reclassified to conform to current presentation.
Unaudited
9
THE CHASE MANHATTAN CORPORATION and Subsidiaries
NONINTEREST REVENUE AND NONINTEREST EXPENSE DETAIL
(in millions)
Over(Under)
1QTR98 1QTR97 1QTR97 - %
NONINTEREST REVENUE
Fees for Other Financial Services:
Fees in Lieu of Compensating Balances $ 80 $ 81 (1%)
Commissions on Letters of Credit and Acceptances 74 72 3%
Mortgage Servicing Fees 57 56 2%
Loan Commitment Fees 38 27 41%
Other Fees 170 147 16%
----- -----
Total $ 419 $ 383 9%
----- -----
Trading-Related Revenue: (a)
Interest Rate Contracts $ 146 $ 183 (20%)
Foreign Exchange Revenue 288 169 70%
Debt Instruments and Other 279 226 23%
----- -----
Total $ 713 $ 578 23%
----- -----
Other Revenue:
Residential Mortgage Origination/Sales Activities $ 52 $ 31 68%
Gains on Sale of Partially-Owned Investments - 44 NM
All Other Revenue 44 116 (62%)
----- -----
Total $ 96 $ 191 (50%)
----- -----
NONINTEREST EXPENSE
Other Expense:
Professional Services $ 142 $ 133 7%
Marketing Expense 90 103 (13%)
Telecommunications 77 75 3%
Travel and Entertainment 52 51 2%
Amortization of Intangibles 61 41 49%
Minority Interest (b) 12 19 (37%)
Foreclosed Property Expense 4 3 33%
All Other 300 269 12%
----- -----
Total $ 738 $ 694 6%
----- -----
(a)Includes net interest income attributable to trading activities.
(b)Includes minority interest related to the REIT of $11 million in each
quarter.
NM - Not meaningful
Certain amounts have been reclassified to conform to current presentation.
Unaudited
10
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
Over(Under)
March 31, March 31, March 31,
1998 1997 1997 - %
ASSETS
Cash and Due from Banks $ 14,906 $ 14,349 4%
Deposits with Banks 3,465 3,298 5%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 23,739 34,554 (31%)
Trading Assets:
Debt and Equity Instruments 36,658 34,753 5%
Risk Management Instruments 34,587 32,725 6%
Securities:
Available-for-Sale 57,108 40,372 41%
Held-to-Maturity 2,711 3,603 (25%)
Loans 167,944 155,882 8%
Allowance for Credit Losses (3,622) (3,550) 2%
------- -------
Net Loans 164,322 152,332 8%
Premises and Equipment 3,841 3,640 6%
Due from Customers on Acceptances 1,398 2,280 (39%)
Accrued Interest Receivable 2,873 3,215 (11%)
Other Assets 20,107 15,217 32%
--------- --------
TOTAL ASSETS $ 365,715 $340,338 7%
--------- --------
LIABILITIES
Deposits:
Domestic:
Noninterest-Bearing $ 45,091 $ 39,932 13%
Interest-Bearing 77,373 66,685 16%
Foreign:
Noninterest-Bearing 3,289 4,066 (19%)
Interest-Bearing 70,343 65,347 8%
------- -------
Total Deposits 196,096 176,030 11%
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 55,715 55,939 --
Commercial Paper 5,125 3,780 36%
Other Borrowed Funds 6,503 7,819 (17%)
Acceptances Outstanding 1,398 2,280 (39%)
Trading Liabilities 48,411 46,147 5%
Accounts Payable, Accrued Expenses and Other Liabilities 13,581 13,242 3%
Long-Term Debt 14,355 12,419 16%
Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Deferrable Interest Debentures 1,940 1,390 40%
------- -------
TOTAL LIABILITIES 343,124 319,046 8%
------- -------
PREFERRED STOCK OF SUBSIDIARY 550 550 --
STOCKHOLDERS' EQUITY
Preferred Stock 1,368 2,500 (45%)
Common Stock 441 441 --
Capital Surplus 10,141 10,299 (2%)
Retained Earnings 11,471 9,217 24%
Accumulated Other Comprehensive Income 134 (541) NM
Treasury Stock, at Cost (1,514) (1,174) 29%
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 22,041 20,742 6%
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY --------- ---------
AND STOCKHOLDERS' EQUITY $ 365,715 $ 340,338 7%
--------- ---------
NM - Not meaningful
Certain amounts have been reclassified to conform to current presentation. See
Statement of Changes in Stockholders' Equity on the following page.
Unaudited
11
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(in millions)
1QTR98 1QTR97
Preferred Stock:
Balance at Beginning of Year $ 1,740 $ 2,650
Redemption of Stock (372) (150)
-------- ---------
Balance at End of Period $ 1,368 $ 2,500
-------- ---------
Common Stock:
-------- ---------
Balance at Beginning and End of Period $ 441 $ 441
-------- ---------
Capital Surplus:
Balance at Beginning of Year $ 10,360 $ 10,459
Shares Issued and Commitments to Issue Common Stock
for Employee Stock-Based Awards and Related Tax Effects (219) (160)
--------- ---------
Balance at End of Period $ 10,141 $ 10,299
--------- ---------
Retained Earnings:
Balance at Beginning of Year $11,086 $ 8,610
Net Income 725 927
Cash Dividends Declared:
Preferred Stock (34) (55)
Common Stock (306) (265)
-------- --------
Balance at End of Period $11,471 $ 9,217
-------- --------
Accumulated Other Comprehensive Income:(a)
Balance at Beginning of Year $ 112 $ (271)
Other Comprehensive Income 22 (270)
------- --------
Balance at End of Period $ 134 $ (541)
------- -------
Common Stock in Treasury, at Cost:
Balance at Beginning of Year $(1,997) $ (895)
Purchase of Treasury Stock (73) (609)
Reissuance of Treasury Stock 556 330
-------- --------
Balance at End of Period $(1,514) $(1,174)
-------- --------
Total Stockholders' Equity $22,041 $20,742
-------- --------
Comprehensive Income:(a)
Net Income $ 725 $ 927
Other Comprehensive Income 22 (270)
------- --------
Comprehensive Income $ 747 $ 657
------- --------
(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
12
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CREDIT RELATED INFORMATION
(in millions)
Over/(Under)
March 31, 1998 March 31, 1997 March 31, 1997 - %
LOANS OUTSTANDING
CONSUMER
Domestic Consumer:
1-4 Family Residential Mortgages $ 42,629 $ 36,586 17%
Credit Card 13,268 11,145 19%
Other Consumer 22,224 21,020 6%
------ ------
Total Domestic Consumer 78,121 68,751 14%
Total Foreign Consumer 4,017 3,286 22%
------ ------
Total Consumer 82,138 72,037 14%
------ ------
COMMERCIAL
Domestic Commercial:
Commercial and Industrial 43,600 42,484 3%
Commercial Real Estate 4,948 5,751 (14%)
------ ------
Total Domestic Commercial 48,548 48,235 1%
Total Foreign Commercial 37,258 35,610 5%
------ ------
Total Commercial 85,806 83,845 2%
-------- --------
Total Loans $167,944 $155,882 8%
-------- --------
NONPERFORMING ASSETS
CONSUMER
Domestic Consumer:
1-4 Family Residential Mortgages $ 376 $ 267 41%
Credit Card -- -- NM
Other Consumer 29 36 (19%)
------ -------
Total Domestic Consumer 405 303 34%
Total Foreign Consumer 22 18 22%
------ -------
Total Consumer 427 321 33%
------ -------
COMMERCIAL
Domestic Commercial:
Commercial and Industrial 368 368 --
Commercial Real Estate 66 206 (68%)
------ ------
Total Domestic Commercial 434 574 (24%)
Total Foreign Commercial 304 103 NM
------ ------
Total Commercial 738 677 9%
------ ------
Total Nonperforming Loans 1,165 998 17%
------ ------
Derivative and Foreign Exchange Contracts 40 -- NM
Assets Acquired as Loan Satisfactions 130 128 2%
------ ------
Total Nonperforming Assets $ 1,335 $ 1,126 19%
------ ------
NET CHARGE-OFFS
CONSUMER
Domestic Consumer:
1-4 Family Residential Mortgages $ 10 $ 7 43%
Credit Card 179 150 19%
Other Consumer 64 52 23%
------ ------
Total Domestic Consumer 253 209 21%
Total Foreign Consumer 3 3 --
------ ------
Total Consumer 256 212 21%
------ ------
COMMERCIAL
Domestic Commercial:
Commercial and Industrial 9 14 (36%)
Commercial Real Estate (3) (4) (25%)
------ ------
Total Domestic Commercial 6 10 (40%)
Total Foreign Commercial 82 (2) NM
------ ------
Total Commercial 88 8 NM
------ ------
Total Net Charge-offs $ 344 (a) $ 220 56%
------ ------
(a) Includes net charge-offs related to derivative and foreign exchange
contracts of $12 million.
NM - Not meaningful
Unaudited
13
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CREDIT RELATED INFORMATION (Continued)
As of or For The
Three Months Ended
March 31,
MANAGED CREDIT CARD PORTFOLIO: 1998 1997
(in millions, except ratios)
Average Managed Credit Card Receivables $31,835 $25,318
Past Due 90 Days & Over and Accruing $ 649 $ 622
As a Percentage of Average Credit Card Receivables 2.04% 2.46%
Net Charge-offs $ 459 $ 358
As a Percentage of Average Credit Card Receivables 5.77% 5.66%
SELECTED ASIAN COUNTRY EXPOSURE
(in billions)
Total
Lending- Foreign Cross-
Related Exchange and Border
At March 31, 1998 (a) and Other (b) Derivatives (c) Exposure
Korea $ 2.9 $ 0.9 $ 3.8
Hong Kong 2.5 0.4 2.9
Indonesia 1.5 0.5 2.0
Thailand 1.3 0.4 1.7
Singapore 1.2 0.4 1.6
Philippines 1.1 - 1.1
Other (d) 2.3 0.3 2.6
----- ----- -----
Total Selected Countries $12.8 $ 2.9 $15.7
----- ----- -----
Total
Lending- Foreign Cross-
Related Exchange and Border
At December 31, 1997 and Other (b) Derivatives (c) Exposure
Korea $ 3.4 $ 2.0 $ 5.4
Hong Kong 3.1 0.5 3.6
Indonesia 1.8 0.8 2.6
Thailand 1.5 0.6 2.1
Singapore 1.2 0.6 1.8
Philippines 1.1 - 1.1
Other (d) 2.6 0.3 2.9
----- ----- -----
Total Selected Countries $14.7 $ 4.8 $19.5
----- ----- -----
(a) Estimated
(b)Includes loans and accrued interest, interest-bearing deposits with banks,
trading assets, acceptances, other monetary assets, issued letters of credit,
undrawn commitments to extend credit and local currency assets net of local
currency liabilities.
(c) 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 $0.9
billion.
(d) Includes Malaysia, China, Taiwan and India.
Unaudited
14
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
March 31, 1998 March 31, 1997
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
ASSETS
Liquid Interest-Earning Assets $75,372 $1,499 8.07% $ 72,778 $1,291 7.19%
Securities 55,587 894 6.52% 43,547 726 6.76%
Loans 170,491 3,405 8.10% 153,030 3,131 8.30%
------- ----- -------- -----
Total Interest-Earning Assets 301,450 5,798 7.80% 269,355 5,148 7.75%
Noninterest-Earning Assets 76,142 69,914
------- --------
Total Assets $377,592 $339,269
-------- --------
LIABILITIES
Interest-Bearing Deposits $151,310 1,815 4.86% $132,121 1,515 4.65%
Short-Term and Long-Term Debt 105,582 1,814 6.97% 94,658 1,559 6.68%
-------- ----- -------- -----
Total Interest-Bearing Liabilities 256,892 3,629 5.73% 226,779 3,074 5.50%
Noninterest-Bearing Deposits 44,566 40,897
Other Noninterest-Bearing Liabilities 53,555 49,901
------- -------
Total Liabilities 355,013 317,577
------- -------
PREFERRED STOCK OF SUBSIDIARY 550 550
STOCKHOLDERS' EQUITY ------- -------
Preferred Stock 1,680 2,648
Common Stockholders' Equity 20,349 18,494
------- -------
Total Stockholders' Equity 22,029 21,142
Total Liabilities, Preferred Stock of ------- -------
Subsidiary and Stockholders' Equity $377,592 $339,269
INTEREST RATE SPREAD -------- 2.07% -------- 2.25%
NET INTEREST INCOME AND NET YIELD ----- -----
ON INTEREST-EARNING ASSETS $2,169 2.92% $2,074 3.12%
NET INTEREST INCOME AND NET YIELD ------ ----- ------ -----
ON INTEREST-EARNING ASSETS-
MANAGED BASIS (a) $2,517 3.20% $2,372 3.40%
------ ----- ------ -----
(a) Excludes the impact of the credit card securitizations.
Unaudited
15
