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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 Report: July 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 July 21, 1998 diluted operating earnings per share of $1.21 in the second quarter of 1998 compared with $1.06 in the 1997 second quarter. For the first six months of 1998, diluted operating earnings per share rose to $2.38 from $2.06 in the first six months of 1997. Operating earnings increased to $1.079 billion from $969 million in the second quarter of 1997, and to $2.132 billion for the first six months of 1998 from $1.918 billion in 1997. Net income in the 1998 second quarter was $1.074 billion compared with $925 million in the 1997 second quarter; net income for the first half of 1998 was $1.799 billion compared with $1.852 billion in 1997. Operating results (revenues and earnings) exclude the impact of credit card securitizations, restructuring costs and special items. All per share results reflect a two-for-one stock split that became effective June 15, 1998. A copy of Chase's earnings press release is attached as an exhibit hereto. 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 Second 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 July 24, 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 Second Quarter Earnings 6 5
The Chase Manhattan Corporation
270 Park Avenue
New York, NY 10017-2070
[CHASE LETTERHEAD]
----------------------------
Chase's 1998 Second Quarter Operating EPS Rises 14 Percent
Operating Earnings Exceed $1 Billion on
Revenue Growth of 14 Percent
---------------------------
New York, July 21, 1998 -- The Chase Manhattan Corporation (NYSE:CMB) today
reported diluted operating earnings per share of $1.21 in the second quarter of
1998, compared with $1.06 in the same 1997 period. For the first six months of
1998, diluted operating earnings per share rose to $2.38 from $2.06 in the first
six months of 1997.
Operating earnings in the 1998 second quarter were $1.079 billion compared with
$969 million in the same 1997 quarter. Total operating revenues were $5.051
billion, which compared with $4.420 billion in the second quarter of 1997. For
the first six months of 1998, operating earnings and operating revenues rose to
$2.132 billion and $9.966 billion, respectively.
Net income in the 1998 second quarter was $1.074 billion compared with $925
million in the 1997 second quarter; net income for the first half of 1998 was
$1.799 billion.
Second Quarter 1998 Financial Highlights
- Total operating revenues increased 14 percent
- Operating earnings rose 11 percent
- Return on common stockholders' equity was 20 percent
- Shareholder Value Added increased by 20 percent to $441 million
"These record results continue to demonstrate the revenue growth potential of
Chase," said Walter V. Shipley, chairman and chief executive officer. "Our
Global Banking, Global Services and Consumer businesses all posted double-digit
increases in revenues and earnings, benefiting from their exceptional
competitive positions and a corporate-wide focus on financial discipline."
--------------------------
Investor contact: John Borden 212-270-7318
Press contact: Kathleen Baum 212-270-5089
Fiancial Performance
Shareholder Value Added (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 have been made to
the methodology for the allocation of capital to businesses during the second
quarter. Prior periods have been restated to reflect these changes.
- ------------------------------------------------ ---------------------------------- ---------------------
THE CHASE MANHATTAN CORP. Second Quarter Percent Change
- ------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------ ---------------- ----------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------ ---------------- ----------------- ---------------------
Operating Revenues $5,051 $4,420 14%
Operating Earnings 1,079 969 11%
Cash Operating Earnings 1,143 1,010 13%
Shareholder Value Added 441 369 20%
Cash Return on Common Equity 21.4% 21.1%
- ------------------------------------------------ ---------------- ----------------- ---------------------
Operating revenues rose 14 percent in the second quarter of 1998, with cash
operating earnings 13 percent higher than in the prior-year quarter. Shareholder
value added increased 20 percent to $441 million.
Line-Of-Business Results
- ------------------------------------------------ ---------------------------------- ---------------------
GLOBAL BANKING Second Quarter Percent Change
- ------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------ ---------------- ----------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------ ---------------- ----------------- ---------------------
Operating Revenues $2,531 $2,204 15%
Cash Operating Earnings 785 707 11%
Shareholder Value Added 315 247 28%
Cash Return on Common Equity 22.0% 20.5%
- ------------------------------------------------ ---------------- ----------------- ---------------------
Global Banking operating revenues rose 15 percent in the second quarter of 1998,
with cash operating earnings up 11 percent. Shareholder value added rose 28
percent to $315 million.
Investment banking fees totaled $438 million in the 1998 second quarter, a
quarterly record and 55 percent higher than in the prior year. Results
reflect the favorable market environment and growth in all business lines,
including high yield and investment grade bond underwriting, loan
syndications and mergers and acquisition advisory activity.
Total trading revenues were $517 million, a decline from second quarter
1997 levels, as strong growth in client-driven business and foreign
exchange trading was offset by lower fixed income results, primarily
related to emerging markets.
Equity-related investment revenues rose 93 percent to $370 million,
reflecting the accelerated pace of Chase Capital Partners' investment
activities over the last several years, as well as robust market conditions
in 1998.
Revenues from global asset management and private banking rose 19 percent,
benefiting from increased fee income, particularly related to personal
trust, and the accelerating growth of Chase's asset management and mutual
fund businesses.
Chase Bank of Texas revenues increased by 19 percent, reflecting increased
overall business volume and record corporate finance fees in the quarter.
- ------------------------------------------------------ ---------------------------------- ---------------------
CHASE TECHNOLOGY SOLUTIONS Second Quarter Percent Change
- ------------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------------ ----------------- ---------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------------ ----------------- ---------------- ---------------------
Global Services Operating Revenues $642 $565 14%
Cash Operating Earnings 116 100 16%
Shareholder Value Added 59 42 40%
Cash Return on Common Equity 26.6% 23.0%
- ------------------------------------------------------ ----------------- ---------------- ---------------------
Operating revenues for Global Services within Chase Technology Solutions
rose 14 percent in the second quarter of 1998. Cash operating earnings were 16
percent higher. Shareholder value added rose 40 percent.
Revenue growth continued across the three business lines -- Chase Treasury
Solutions, Global Investor Services and Global Trust -- reflecting
increased balances, new business initiatives and market appreciation, as
well as higher fees resulting from an acquisition in the fourth quarter of
1997.
Cash net income for Global Services benefited from higher revenues and
continued productivity gains, tempered by technology investments related to
preparations for Year 2000 and European Monetary Union.
- ------------------------------------------------------ ---------------------------------- ---------------------
NATIONAL CONSUMER SERVICES Second Quarter Percent Change
- ------------------------------------------------------ ---------------------------------- ---------------------
- ------------------------------------------------------ ----------------- ---------------- ---------------------
In millions of dollars 1998 1997
- ------------------------------------------------------ ----------------- ---------------- ---------------------
Operating Revenues $2,003 $1,790 12%
Cash Operating Earnings 298 254 17%
Shareholder Value Added 78 77 1%
Cash Return on Common Equity 17.7% 19.0%
- ------------------------------------------------------ ----------------- ---------------- ---------------------
National Consumer Services operating revenues rose 12 percent in the second
quarter of 1998, with cash operating earnings up 17 percent. Shareholder value
added was $78 million, as revenue growth was offset by increased capital
allocation as a result of recent acquisitions.
Revenues from cardmember services grew 24 percent to $976 million. Chase's
domestic portfolio continued to benefit from acquisitions and increased
co-branding activities, producing a 27 percent revenue rise. Cash operating
earnings increased, driven by the quarter's strong revenues and increased
efficiencies.
Regional consumer banking revenues rose slightly, reflecting higher
fee income and deposit growth in the quarter. Cash operating earnings
declined due to increased technology-related expenses, primarily within
Chase Bank of Texas' retail businesses.
Home finance revenues were flat versus the same 1997 quarter, which
included revenues from certain divested businesses. Revenues in the 1998
second quarter reflect strong mortgage banking activity offset by the
impact of lower interest rates and prepayments on Chase's mortgage and home
equity portfolios.
Revenues from diversified consumer services rose 13 percent in the second
quarter, with continued strong growth in Chase's auto finance and
investment businesses.
Additional Financial Information
The provision for credit losses was $338 million, compared with $189
million in the second quarter of 1997.
Nonperforming assets at June 30, 1998 were $1.365 billion, compared with
$1.335 billion on March 31, 1998 and $1.106 billion on June 30, 1997.
Total nonperforming assets in Asia, including derivatives, increased by $43
million from March 31, 1998 levels to $286 million at June 30, 1998. Asian
commercial net charge-offs for the quarter were $122 million. Total
exposure to Indonesia, Korea and Thailand was reduced by 17 percent to $6.2
billion at June 30, 1998 from $7.5 billion at March 31, 1998. Total
exposure to these countries has been reduced by 39 percent since December
31, 1997.
Total commercial net charge-offs were $82 million, compared with net
recoveries of $4 million in the second quarter of 1997.
Total managed consumer net charge-offs were $542 million in the 1998 second
quarter, with $256 million related to assets retained on the balance sheet,
compared with $460 million in the prior-year quarter, with $193 million
related to assets retained on the balance sheet. Second quarter 1998
figures reflect the effects of recent credit card portfolio acquisitions.
Managed credit card net charge-offs worldwide were 5.94 percent of average
managed receivables, compared with 5.92 percent in the same 1997 period, as
anticipated higher levels of charge-offs within newly acquired portfolios
offset lower charge-offs in the core portfolio.
Total noninterest operating expenses were $2.712 billion in the 1998 second
quarter, a 12 percent increase from the prior-year quarter reflecting
increased incentives related to higher Global Banking revenues.
# # #
Operating results (revenues and earnings) exclude the impact of credit
card securitizations, restructuring costs and special items.
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 and Subsidiaries
SUMMARY OF SELECTED FINANCIAL HIGHLIGHTS
(in millions, except per share and ratio data)
Over/(Under) Six Months Over/(Under)
As of or for the period ended 2QTR 98 2QTR 97 2QTR 97 - % 1998 1997 YTD 97 - %
OPERATING BASIS (a)
Operating Revenue $ 5,051 $ 4,420 14% $ 9,966 $ 8,740 14%
Operating Noninterest Expense 2,712 2,413 12% 5,328 4,777 12%
Credit Costs (b) 626 456 37% 1,254 893 40%
Operating Net Income $ 1,079 $ 969 11% $ 2,132 $ 1,918 11%
Cash Operating Earnings $ 1,143 $ 1,010 13% $ 2,257 $ 2,000 13%
Shareholder Value Added (SVA) 441 369 20% 868 712 22%
Operating Net Income Per Common Share:
Basic $ 1.24 $ 1.08 15% $ 2.45 $ 2.12 16%
Diluted 1.21 1.06 14% 2.38 2.06 16%
Performance Ratios:
Return on Average Total Assets (annualized) 1.16% 1.11% 1.14% 1.12%
Return on Average Common Equity (annualized) 20.2 20.2 20.3 19.9
Cash Return on Average Common Equity (annualized) 21.4 21.1 21.5 20.8
Common Dividend Payout Ratio 29 29 30 29
Efficiency Ratio (Excluding REIT Minority Interest) 53 54 53 54
Selected Balance Sheet Items: (c)
Loans $186,924 $173,948 7%
Total Assets 385,214 366,024 5%
AS REPORTED BASIS
Revenue $ 4,765 $ 4,153 15% $ 9,400 $ 8,303 13%
Noninterest Expense (Excluding Restructuring Costs) 2,714 2,413 12% 5,334 4,830 10%
Restructuring Costs 8 71 (89%) 529 101 424%
Provision for Credit Losses 338 189 79% 682 409 67%
Net Income $ 1,074 $ 925 16% $ 1,799 $ 1,852 (3%)
Per Common Share:
Net Income:
Basic $ 1.24 $ 1.03 20% $ 2.06 $ 2.04 1%
Diluted 1.20 1.00 20% 2.00 1.99 1%
Cash Dividends Declared 0.36 0.31 16% 0.72 0.62 16%
Book Value at Period End 25.14 22.22 13% 25.14 22.22 13%
Market Value at Period End 75.50 48.53 56% 75.50 48.53 56%
Common Shares:
Average Common Shares:
Basic 848.8 848.6 846.8 854.8
Diluted 875.5 868.8 871.5 879.5
Common Shares at Period End 852.9 846.5 852.9 846.5
Performance Ratios:
Return on Average Total Assets (annualized) 1.15% 1.06% 0.97% 1.09%
Return on Average Common Equity (annualized) 20.1 19.2 17.0 19.2
Selected Balance Sheet Items:
Loans $168,705 $159,957 5%
Total Assets 366,995 352,033 4%
Deposits 207,091 183,744 13%
Total Stockholders' Equity 22,610 20,793 9%
Capital Ratios: (d)
Tier I Risk-Based Capital Ratio 8.2%(e) 7.8%
Total Risk-Based Capital Ratio 11.9 (e) 11.4
Tier I Leverage 6.3 6.6
Full-Time Equivalent Employees 70,693 68,132
Note: On May 19, 1998, stockholders of Chase approved a 2 for 1 common
stock split, effective June 15, 1998. Share-related data for all periods
have been restated.
(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) Excludes the impact of credit card securitizations.
(d) 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.
(e) Estimated
Unaudited
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)
June 30, 1998 1997 1998 1997 1998 1997 1998 1997
- ------------------ -------------------- ------------------ ----------------- ----------------
Operating Revenues $ 2,531 $ 2,204 $ 2,003 $ 1,790 $ 642 $ 565 $ 5,051 $ 4,420
Cash Operating Earnings 785 707 298 254 116 100 1,143 1,010
Average Common Equity 14,034 13,158 6,578 5,094 1,726 1,679 20,954 18,227
Average Assets (c) 269,679 261,557 106,375 92,846 9,834 8,257 392,274 362,974
Shareholder Value Added (SVA) 315 247 78 77 59 42 441 369
Cash Return on Common Equity 22.0% 20.5% 17.7% 19.0% 26.6% 23.0% 21.4% 21.1%
Efficiency Ratio (Operating) 46% 46% 52% 53% 73% 72% 53% 54%
GLOBAL BANKING
KEY FINANCIAL MEASURES
Three Months Ended
June 30, 1998 1997
Cash Cash
Operating Operating Efficiency Operating Operating Efficiency
Revenue Earnings Ratio Revenue Earnings Ratio
---------------------------------- -----------------------------------
Global Investment Banking $ 392 $ 94 59% $ 254 $ 79 48%
Corporate Lending 388 122 32 367 112 33
Global Markets 820 246 50 866 301 47
Chase Capital Partners 344 201 8 181 99 13
Global Asset Management
and Private Banking 211 45 64 178 33 68
Middle Market 193 43 55 211 53 49
Chase Bank of Texas N.A. (Consolidated) 399 112 55 335 86 60
NATIONAL CONSUMER SERVICES
KEY FINANCIAL MEASURES
Three Months Ended
June 30, 1998 1997
Cash Cash
Operating Operating Efficiency Operating Operating Efficiency
Revenue Earnings Ratio Revenue Earnings Ratio
---------------------------------- ------------------------------------
Cardmember Services $ 976 $ 123 37% $ 788 $ 70 40%
Regional Consumer Banking (a) 576 89 72 573 93 71
Chase Home Finance 247 61 55 246 66 50
Diversified Consumer Services (d) 192 23 59 170 22 56
Note: Shareholder Value Added (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 have been made to
the methodology for the allocation of capital to businesses during the second
quarter.
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 CTS lines of business results, respectively.
(b) Total column includes Corporate results.
(c) Excludes the impact of credit card securitizations.
(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 $26
million in 1998 and 1997, respectively.
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
Lines of Business Results
(in millions, except ratios)
National Consumer Global Services
Six Months Ended Global Banking (a) Services (a) (Within CTS) (a) Total (b)
June 30, 1998 1997 1998 1997 1998 1997 1998 1997
- ---------------- --------------------- ------------------ ---------------- ----------------
Operating Revenues $ 5,012 $ 4,344 $ 3,935 $ 3,561 $ 1,272 $ 1,123 $ 9,966 $ 8,740
Cash Operating Earnings 1,562 1,352 593 525 235 197 2,257 2,000
Average Common Equity 14,020 13,035 6,522 5,113 1,731 1,682 20,652 18,359
Average Assets (c) 272,581 255,827 105,654 92,104 9,491 8,541 393,560 357,872
Shareholder Value Added (SVA) 622 444 156 170 119 80 868 712
Cash Return on Common Equity 22.0% 19.9% 17.8% 19.7% 26.9% 22.6% 21.5% 20.8%
Efficiency Ratio (Operating) 46% 47% 51% 53% 72% 72% 53% 54%
GLOBAL BANKING
KEY FINANCIAL MEASURES
Six Months Ended
June 30, 1998 1997
Cash Cash
Operating Operating Efficiency Operating Operating Efficiency
Revenue Earnings Ratio Revenue Earnings Ratio
---------------------------------- ------------------------------------
Global Investment Banking $ 738 $ 203 53% $ 391 $ 85 63%
Corporate Lending 753 236 32 768 251 31
Global Markets 1,792 585 48 1,775 628 45
Chase Capital Partners 614 350 10 317 170 15
Global Asset Management
and Private Banking 412 80 67 354 66 69
Middle Market 388 86 54 416 106 48
Chase Bank of Texas N.A. (Consolidated) 776 210 57 666 167 61
NATIONAL CONSUMER SERVICES
KEY FINANCIAL MEASURES
Six Months Ended
June 30, 1998 1997
Cash Cash
Operating Operating Efficiency Operating Operating Efficiency
Revenue Earnings Ratio Revenue Earnings Ratio
----------------------------------- -----------------------------------
Cardmember Services $ 1,907 $ 244 36% $1,587 $ 157 40%
Regional Consumer Banking (a) 1,136 171 72 1,123 182 71
Chase Home Finance 489 125 54 486 124 52
Diversified Consumer Services (d) 378 48 58 337 50 55
Note: Shareholder Value Added (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 have been made to
the methodology for the allocation of capital to businesses during the second
quarter.
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 CTS lines of business results, respectively.
(b)Total column includes Corporate results.
(c) Excludes the impact of credit card securitizations.
(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 $58 million and $51
million in 1998 and 1997, respectively.
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Over/(Under) Six Months Over/(Under)
2QTR 98 2QTR 97 2QTR 97 - % 1998 1997 YTD 97 - %
INTEREST INCOME
Loans $ 3,316 $ 3,106 7% $ 6,721 $ 6,235 8%
Securities 889 735 21% 1,778 1,457 22%
Trading Assets 716 705 2% 1,392 1,331 5%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 554 697 (21%) 1,225 1,256 (2%)
Deposits with Banks 148 114 30% 300 220 36%
------ ------ ------ ------
Total Interest Income 5,623 5,357 5% 11,416 10,499 9%
------ ------ ------ ------
INTEREST EXPENSE
Deposits 1,784 1,568 14% 3,599 3,083 17%
Short-Term and Other Borrowings 1,478 1,510 (2%) 2,987 2,812 6%
Long-Term Debt 325 273 19% 630 530 19%
------ ------ ------ ------
Total Interest Expense 3,587 3,351 7% 7,216 6,425 12%
------ ------ ------ ------
NET INTEREST INCOME 2,036 2,006 1% 4,200 4,074 3%
Provision for Credit Losses 338 189 79% 682 409 67%
NET INTEREST INCOME ------ ------ ------ ------
AFTER PROVISION FOR CREDIT LOSSES 1,698 1,817 (7%) 3,518 3,665 (4%)
------ ------ ------ ------
NONINTEREST REVENUE
Investment Banking Fees 438 283 55% 799 459 74%
Trust, Custody and Investment Management Fees 383 321 19% 731 631 16%
Credit Card Revenue 365 224 63% 665 485 37%
Fees for Other Financial Services 509 487 5% 1,019 961 6%
Trading Revenue 333 491 (32%) 813 896 (9%)
Securities Gains 98 30 227% 181 131 38%
Revenue from Equity-Related Investments 370 192 93% 663 356 86%
Other Revenue 233 119 96% 329 310 6%
------ ------ ------ ------
Total Noninterest Revenue 2,729 2,147 27% 5,200 4,229 23%
NONINTEREST EXPENSE ------ ------ ------ ------
Salaries 1,270 1,110 14% 2,524 2,234 13%
Employee Benefits 215 219 (2%) 439 441 --
Occupancy Expense 191 193 (1%) 380 380 --
Equipment Expense 212 193 10% 421 383 10%
Other Expense 826 698 18% 1,570 1,392 13%
Total Noninterest Expense Before ------ ------ ------ ------
Restructuring Costs 2,714 2,413 12% 5,334 4,830 10%
------ ------ ------ ------
Restructuring Costs 8 71 (89%) 529 101 424%
------ ------ ------ ------
Total Noninterest Expense 2,722 2,484 10% 5,863 4,931 19%
------ ------ ------ ------
INCOME BEFORE INCOME TAX EXPENSE 1,705 1,480 15% 2,855 2,963 (4%)
Income Tax Expense 631 555 14% 1,056 1,111 (5%)
------ ------ ------- -------
NET INCOME $ 1,074 $ 925 16% $ 1,799 $ 1,852 (3%)
------- ------ ------- -------
NET INCOME APPLICABLE TO COMMON STOCK $ 1,050 $ 874 20% $ 1,741 $ 1,746 --
------- ------ ------- -------
NET INCOME PER COMMON SHARE:
Basic $ 1.24 $ 1.03 20% $ 2.06 $ 2.04 1%
Diluted $ 1.20 $ 1.00 20% $ 2.00 $ 1.99 1%
Certain amounts have been reclassified to conform to the current presentation.
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
NONINTEREST REVENUE AND NONINTEREST EXPENSE DETAIL
(in millions)
Over/(Under) Six Months Over/(Under)
2QTR 98 2QTR 97 2QTR 97 - % 1998 1997 YTD 97 - %
NONINTEREST REVENUE
Fees for Other Financial Services:
Service Charges on Deposit Accounts $ 92 $ 95 (3%) $ 183 $ 186 (2%)
Fees in Lieu of Compensating Balances 91 74 23% 171 155 10%
Commissions on Letters of Credit and Acceptances 72 74 (3%) 146 146 --
Mortgage Servicing Fees 49 62 (21%) 106 118 (10%)
Loan Commitment Fees 32 29 10% 70 56 25%
Other Fees 173 153 13% 343 300 14%
------ ----- ------ ------
Total $ 509 $ 487 5% $1,019 $ 961 6%
------ ----- ------ ------
Trading-Related Revenue: (a)
Interest Rate Contracts $ 95 $ 217 (56%) $ 236 $ 382 (38%)
Foreign Exchange Revenue 270 171 58% 556 336 65%
Debt Instruments and Other 152 243 (37%) 417 475 (12%)
------ ----- ------ ------
Total $ 517 $ 631 (18%) $1,209 $1,193 1%
------ ----- ------ ------
Other Revenue:
Residential Mortgage Origination/Sales Activities $ 84 $ 30 180% $ 136 $ 61 123%
Gains on Sale of Partially-Owned Investments -- -- -- -- 44 NM
All Other Revenue 149 89 67% 193 205 (6%)
------ ----- ------ ------
Total $ 233 $ 119 96% $ 329 $ 310 6%
------ ----- ------ ------
NONINTEREST EXPENSE
Other Expense:
Professional Services $ 161 $ 136 18% $ 303 $ 269 13%
Marketing Expense 108 107 1% 198 210 (6%)
Telecommunications 91 73 25% 168 148 14%
Travel and Entertainment 67 61 10% 119 112 6%
Amortization of Intangibles 64 41 56% 125 82 52%
Minority Interest (b) 12 20 (40%) 24 39 (38%)
Foreclosed Property Expense 2 -- NM 6 3 100%
All Other 321 260 23% 627 529 19%
----- ----- ------- ------
Total $ 826 $ 698 18% $ 1,570 $1,392 13%
----- ----- ------- ------
(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 the current
presentation.
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
OPERATING INCOME RECONCILIATION
(in millions, except per share data)
SECOND QUARTER 1998
CREDIT
REPORTED CARD SPECIAL OPERATING
RESULTS SECURITIZATIONS ITEMS BASIS
EARNINGS
Total Revenue $ 4,765 $ 286 $ - $ 5,051
Noninterest Expense 2,712 - - 2,712
------- ------- ------ -------
Operating Margin 2,053 286 - 2,339
Credit Costs 340 286 - 626
------- ------- ------ -------
Income Before Restructuring Costs 1,713 - - 1,713
Restructuring Costs 8 - (8) -
------- ------- ------ -------
Income Before Taxes 1,705 - 8 1,713
Tax Expense 631 - 3 634
------- ------- ------ -------
Net Income $ 1,074 $ - $ 5 $ 1,079
======= ======= ====== =======
NET INCOME PER COMMON SHARE
Basic $ 1.24 $ 1.24
Diluted $ 1.20 $ 1.21
SECOND QUARTER 1997
CREDIT
REPORTED CARD SPECIAL OPERATING
RESULTS SECURITIZATIONS ITEMS BASIS
EARNINGS
Total Revenue $ 4,153 $ 267 $ - $ 4,420
Noninterest Expense 2,413 - - 2,413
------- ------- ------ -------
Operating Margin 1,740 267 - 2,007
Credit Costs 189 267 - 456
------- ------- ------ -------
Income Before Restructuring Costs 1,551 - - 1,551
Restructuring Costs 71 - (71) -
------- ------- ------ -------
Income Before Taxes 1,480 - 71 1,551
Tax Expense 555 - 27 582
------- ------- ------ -------
Net Income $ 925 $ - $ 44 $ 969
======= ======= ====== =======
NET INCOME PER COMMON SHARE
Basic $ 1.03 $ 1.08
Diluted $ 1.00 $ 1.06
NOTES:
Reported results represent Chase'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 and 1997 special items reflect merger-related restructuring costs.
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
OPERATING INCOME RECONCILIATION (YEAR-TO-DATE)
(in millions, except per share data)
SIX MONTHS 1998
CREDIT
REPORTED CARD SPECIAL OPERATING
RESULTS SECURITIZATIONS ITEMS BASIS
EARNINGS
Total Revenue $ 9,400 $ 566 $ - $ 9,966
Noninterest Expense 5,328 - - 5,328
------- ------- ------ -------
Operating Margin 4,072 566 - 4,638
Credit Costs 688 566 - 1,254
------- ------- ------ -------
Income Before Restructuring Costs 3,384 - - 3,384
Restructuring Costs 529 - (529) -
------- ------- ------ -------
Income Before Taxes 2,855 - 529 3,384
Tax Expense 1,056 - 196 1,252
------- ------- ------ -------
Net Income $ 1,799 $ - $ 333 $ 2,132
======= ======= ====== =======
NET INCOME PER COMMON SHARE
Basic $ 2.06 $ 2.45
Diluted $ 2.00 $ 2.38
SIX MONTHS 1997
CREDIT
REPORTED CARD SPECIAL OPERATING
RESULTS SECURITIZATIONS ITEMS BASIS
EARNINGS
Total Revenue $ 8,303 $ 481 $ (44) $ 8,740
Noninterest Expense 4,827 - (50) 4,777
------- ------- ------ -------
Operating Margin 3,476 481 6 3,963
Credit Costs 412 481 - 893
------- ------- ------ -------
Income Before Restructuring Costs 3,064 - 6 3,070
Restructuring Costs 101 - (101) -
------- ------- ------ -------
Income Before Taxes 2,963 - 107 3,070
Tax Expense 1,111 - 41 1,152
------- ------- ------ -------
Net Income $ 1,852 $ - $ 66 $ 1,918
======= ======= ====== =======
NET INCOME PER COMMON SHARE
Basic $ 2.04 $ 2.12
Diluted $ 1.99 $ 2.06
NOTES:
Reported results represent Chase'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) in the first quarter, taken in connection with
initiatives to streamline support functions and realign certain
business functions, and merger-related restructuring costs of $19
million pre-tax ($13 million after-tax).
1997 special items include a $44 million pre-tax gain from the sale
of a partially-owned foreign investment, $50 million pre-tax charge
for the accelerated vesting of stock-based awards and merger-related
restructuring costs.
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
Over/(Under)
June 30, June 30, June 30,
1998 1997 1997 - %
ASSETS
Cash and Due from Banks $ 15,691 $ 16,879 (7%)
Deposits with Banks 5,970 4,042 48%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 25,128 39,228 (36%)
Trading Assets:
Debt and Equity Instruments 33,651 37,567 (10%)
Risk Management Instruments 33,280 29,949 11%
Securities 54,928 42,926 28%
Loans 168,705 159,957 5%
Allowance for Credit Losses (3,629) (3,446) 5%
------- -------
Net Loans 165,076 156,511 5%
Other Assets 33,271 24,931 33%
---------- ----------
TOTAL ASSETS $ 366,995 $ 352,033 4%
---------- ----------
LIABILITIES
Deposits:
Domestic:
Noninterest-Bearing $ 47,966 $ 45,396 6%
Interest-Bearing 75,418 67,565 12%
Foreign:
Noninterest-Bearing 4,109 3,698 11%
Interest-Bearing 79,598 67,085 19%
-------- -------
Total Deposits 207,091 183,744 13%
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 45,672 58,262 (22%)
Commercial Paper 5,299 4,424 20%
Other Borrowed Funds 7,354 7,874 (7%)
Trading Liabilities 46,866 46,706 --
Accounts Payable, Accrued Expenses and Other Liabilities 15,162 15,155 --
Long-Term Debt 14,451 13,135 10%
Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Deferrable Interest Debentures 1,940 1,390 40%
------- -------
TOTAL LIABILITIES 343,835 330,690 4%
------- -------
PREFERRED STOCK OF SUBSIDIARY 550 550 --
STOCKHOLDERS' EQUITY
Preferred Stock 1,168 1,980 (41%)
Common Stock 882 441 100%
Capital Surplus 9,738 10,328 (6%)
Retained Earnings 12,211 9,828 24%
Accumulated Other Comprehensive Income 113 (137) NM
Treasury Stock, at Cost (1,502) (1,647) (9%)
-------- -------
TOTAL STOCKHOLDERS' EQUITY 22,610 20,793 9%
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY -------- -------
AND STOCKHOLDERS' EQUITY $ 366,995 $ 352,033 4%
--------- ----------
NM - Not Meaningful
Certain amounts have been reclassified to conform to the current
presentation. See Statement of Changes in Stockholders' Equity on the
following page.
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(in millions)
Six Months Ended June 30,
1998 1997
Preferred Stock:
Balance at Beginning of Year $ 1,740 $ 2,650
Issuance of Stock 200 -
Redemption of Stock (772) (670)
-------- --------
Balance at End of Period $ 1,168 $ 1,980
-------- --------
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 Period $ 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 (181) (131)
-------- --------
Balance at End of Period $ 9,738 $ 10,328
-------- --------
Retained Earnings:
Balance at Beginning of Year $ 11,086 $ 8,610
Net Income 1,799 1,852
Cash Dividends Declared:
Preferred Stock (58) (106)
Common Stock (616) (528)
-------- --------
Balance at End of Period $ 12,211 $ 9,828
-------- --------
Accumulated Other Comprehensive Income: (a)
Balance at Beginning of Year $ 112 $ (271)
Other Comprehensive Income 1 134
-------- --------
Balance at End of Period $ 113 $ (137)
-------- --------
Common Stock in Treasury, at Cost:
Balance at Beginning of Year $ (1,997) $ (895)
Purchase of Treasury Stock (268) (1,242)
Reissuance of Treasury Stock 763 490
-------- --------
Balance at End of Period $ (1,502) $ (1,647)
-------- --------
Total Stockholders' Equity $ 22,610 $ 20,793
-------- --------
Comprehensive Income: (a)
Net Income $ 1,799 $ 1,852
Other Comprehensive Income 1 134
-------- --------
Comprehensive Income $ 1,800 $ 1,986
(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 and Subsidiaries
CREDIT RELATED INFORMATION
(in millions)
June 30, June 30, Over/(Under)
1998 1997 June 30, 1997 - %
LOANS OUTSTANDING
CONSUMER
Domestic Consumer:
1-4 Family Residential Mortgages $ 41,218 $ 37,425 10%
Credit Card 13,034 12,597 3%
Other Consumer 21,435 20,886 3%
------ ------
Total Domestic Consumer 75,687 70,908 7%
Total Foreign Consumer 3,882 3,482 11%
------ ------
Total Consumer 79,569 74,390 7%
------ ------
COMMERCIAL
Domestic Commercial:
Commercial and Industrial 48,394 42,133 15%
Commercial Real Estate 4,552 5,679 (20%)
------ ------
Total Domestic Commercial 52,946 47,812 11%
Total Foreign Commercial 36,190 37,755 (4%)
------ ------
Total Commercial 89,136 85,567 4%
--------- ---------
Total Loans $ 168,705 $ 159,957 5%
--------- ---------
NONPERFORMING ASSETS
CONSUMER
Domestic Consumer:
1-4 Family Residential Mortgages $ 374 $ 292 28%
Credit Card -- -- --
Other Consumer 50 32 56%
------- -------
Total Domestic Consumer 424 324 31%
Total Foreign Consumer 20 19 5%
------- -------
Total Consumer 444 343 29%
------- -------
COMMERCIAL
Domestic Commercial:
Commercial and Industrial 342 345 (1%)
Commercial Real Estate 67 176 (62%)
------- -------
Total Domestic Commercial 409 521 (21%)
Total Foreign Commercial 369 105 251%
------- -------
Total Commercial 778 626 24%
------- -------
Total Nonperforming Loans 1,222 969 26%
------- -------
Derivative and Foreign Exchange Contracts 28 -- NM
Assets Acquired as Loan Satisfactions 115 137 (16%)
------- -------
Total Nonperforming Assets $ 1,365 $ 1,106 23%
------- -------
Over/(Under) Six Months Over/(Under)
NET CHARGE-OFFS 2QTR 98 2QTR 97 2QTR 97 - % 1998 1997 YTD 97 - %
CONSUMER
Domestic Consumer:
1-4 Family Residential Mortgages $ 6 $ 6 -- $ 16 $ 13 23%
Credit Card 184 121 52% 363 271 34%
Other Consumer 61 63 (3%) 125 115 9%
----- ----- ----- -----
Total Domestic Consumer 251 190 32% 504 399 26%
Total Foreign Consumer 5 3 67% 8 6 33%
----- ----- ----- -----
Total Consumer 256 193 33% 512 405 26%
----- ----- ----- -----
COMMERCIAL
Domestic Commercial:
Commercial and Industrial (27) 4 NM (18) 18 NM
Commercial Real Estate (3) (6) NM (6) (10) NM
----- ----- ----- -----
Total Domestic Commercial (30) (2) NM (24) 8 NM
Total Foreign Commercial 102 (2) NM 172 (4) NM
----- ----- ----- -----
Total Commercial 72 (4) NM 148 4 NM
----- ----- ----- -----
Derivative and Foreign Exchange Contracts 10 -- NM 22 -- NM
----- ----- ----- -----
Total Net Charge-offs $ 338 $ 189 79% $ 682 $ 409 67%
----- ----- ----- -----
NM - Not meaningful
Unaudited
THE CHASE MANHATTAN CORPORATION and Subsidiaries
CREDIT RELATED INFORMATION (Continued)
As of or For The As of or For The
CREDIT CARD PORTFOLIO (excluding Three Months Ended Six Months Ended
the impact of securitizations): * June 30, June 30,
(in millions, except ratios) 1998 1997 1998 1997
Average Credit Card Receivables $ 31,906 $ 26,064 $ 32,155 $ 25,943
Past Due 90 Days & Over and Accruing $ 658 $ 525 $ 658 $ 525
As a Percentage of Average Credit Card Receivables 2.06% 2.01% 2.05% 2.02%
Net Charge-offs $ 474 $ 386 $ 936 $ 746
As a Percentage of Average Credit Card Receivables 5.94% 5.92% 5.82% 5.75%
* Includes domestic and international credit card activity.
SELECTED ASIAN COUNTRY EXPOSURE
(in billions)
Total
Lending- Foreign Cross-
Related Exchange and Border
At June 30, 1998 (a) and Other (b) Derivatives (c) Exposure
Korea $ 2.6 $ 0.6 $ 3.2
Hong Kong 2.0 0.4 2.4
Indonesia 1.1 0.5 1.6
Thailand 1.2 0.2 1.4
Singapore 1.1 0.2 1.3
Philippines 0.7 - 0.7
Other (d) 2.2 0.3 2.5
------ ------ ------
Total Selected Countries $ 10.9 $ 2.2 $ 13.1
------ ------ ------
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 debt and equity instruments, 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 $0.7 billion at both June 30, 1998 and
December 31, 1997.
(d) Includes Malaysia, China, Taiwan and India.
Unaudited
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 30,1998 June 30, 1997
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
ASSETS
Liquid Interest-Earning Assets $ 74,462 $ 1,418 7.64% $ 83,258 $ 1,516 7.30%
Securities 57,033 895 6.29% 44,385 739 6.68%
Loans 167,807 3,319 7.93% 156,459 3,108 7.97%
------- ----- ------- -----
Total Interest-Earning Assets 299,302 5,632 7.55% 284,102 5,363 7.57%
Noninterest-Earning Assets 74,749 64,793
------- -------
Total Assets $ 374,051 $ 348,895
LIABILITIES ------- -------
Interest-Bearing Deposits $ 151,628 1,784 4.72% $ 134,707 1,568 4.67%
Short-Term and Long-Term Debt 104,505 1,803 6.92% 106,212 1,783 6.73%
------- ----- ------- -----
Total Interest-Bearing Liabilities 256,133 3,587 5.62% 240,919 3,351 5.58%
Noninterest-Bearing Deposits 45,757 ----- 41,064 -----
Other Noninterest-Bearing Liabilities 49,402 45,641
------- -------
Total Liabilities 351,292 327,624
------- -------
PREFERRED STOCK OF SUBSIDIARY 550 550
STOCKHOLDERS' EQUITY ------- -------
Preferred Stock 1,255 2,494
Common Stockholders' Equity 20,954 18,227
------- --------
Total Stockholders' Equity 22,209 $ 20,721
Total Liabilities, Preferred Stock of ------- --------
Subsidiary and Stockholders' Equity $ 374,051 $348,895
------- --------
INTEREST RATE SPREAD 1.93% 1.99%
NET INTEREST INCOME AND NET YIELD ----- -----
ON INTEREST-EARNING ASSETS $ 2,045 2.74% $ 2,012 2.84%
NET INTEREST INCOME AND NET YIELD ----- ----- ----- -----
ON INTEREST-EARNING ASSETS (a) $ 2,416 3.05% $ 2,308 3.10%
----- ----- ----- -----
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
ASSETS
Liquid Interest-Earning Assets $ 74,915 $ 2,917 7.85% $ 78,047 $ 2,807 7.25%
Securities 56,313 1,789 6.41% 43,968 1,465 6.72%
Loans 169,142 6,724 8.02% 154,754 6,239 8.13%
------- ----- ------- -----
Total Interest-Earning Assets 300,370 11,430 7.67% 276,769 10,511 7.66%
Total Noninterest-Earning Assets 75,442 67,339
------- -------
Total Assets $ 375,812 $ 344,108
LIABILITIES ------- -------
Total Interest-Bearing Deposits $ 151,469 3,599 4.79% $ 133,421 3,083 4.66%
Short-Term and Long-Term Debt 105,041 3,617 6.94% 100,467 3,342 6.71%
------- ----- ------- -----
Total Interest-Bearing Liabilities 256,510 7,216 5.67% 233,888 6,425 5.54%
Noninterest-Bearing Deposits 45,165 ----- 40,981 -----
Other Noninterest-Bearing Liabilities 51,468 47,759
------- -------
Total Liabilities 353,143 322,628
------- -------
PREFERRED STOCK OF SUBSIDIARY 550 550
STOCKHOLDERS' EQUITY ------- -------
Preferred Stock 1,467 2,571
Common Stockholders' Equity 20,652 18,359
------- -------
Total Stockholders' Equity 22,119 20,930
Total Liabilities, Preferred Stock of ------- -------
Subsidiary and Stockholders' Equity $ 375,812 $ 344,108
------- -------
INTEREST RATE SPREAD 2.00% 2.12%
NET INTEREST INCOME AND NET YIELD ----- -----
ON INTEREST-EARNING ASSETS $ 4,214 2.83% $ 4,086 2.98%
NET INTEREST INCOME AND NET YIELD ----- ----- ----- -----
ON INTEREST-EARNING ASSETS (a) $ 4,933 3.13% $ 4,680 3.25%
----- ----- ----- -----
(a) Excludes the impact of the credit card securitizations.
Unaudited