<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-5945
THE CHASE MANHATTAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2633613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 Chase Manhattan Plaza, New York, New York 10081
(Address of principal executive offices) (Zip Code)
(2l2) 552-2222
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
------ ----
The number of shares outstanding of the registrant's common stock was
184,797,798 at March 31, 1994.
Exhibit Index Located on Page 38
<PAGE> 2
The Chase Manhattan Corporation
March 31, 1994 Form 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Chase Manhattan Corporation and Subsidiaries:
Consolidated Statement of Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statement of Changes in Stockholders' Equity . . . . . . . . . . . . . . . 6
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Financial Information:
Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Stockholder Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Chase Manhattan Bank, N.A. and Subsidiaries Consolidated
Statement of Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Average Balances, Interest and Average Rates - Taxable Equivalent . . . . . . . . . . 27
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Average Loan Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Analysis of Credit Loss Experience . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Consolidated Statement of Income (Five Quarters) . . . . . . . . . . . . . . . . . . . 35
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Item 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
2.
<PAGE> 3
PART I. -- FINANCIAL INFORMATION
Item 1. Financial Statements
The Consolidated Statement of Condition of The Chase Manhattan Corporation (the
Company) and its subsidiaries (the Corporation or Chase) at March 31, 1994,
December 31, 1993 and March 31, 1993, the Consolidated Statement of Income for
the quarters ended March 31, 1994 and 1993, the Consolidated Statement of
Changes in Stockholders' Equity for the quarters ended March 31, 1994 and 1993
and the Consolidated Statement of Cash Flows for the quarters ended March 31,
1994 and 1993 are set forth on the following pages.
The interim consolidated financial statements are unaudited. However,
in the opinion of Management, all adjustments, consisting only of normal
recurring accruals, necessary for the fair presentation of the financial
position, results of operations and cash flows for such periods, have been
made. For further information, refer to the consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1993 (the 1993 Annual Report). Prior periods' financial
statements have been reclassified to conform with the current financial
statement presentations.
Throughout this report, the term Corporation refers to The Chase Manhattan
Corporation and its direct and indirect subsidiaries, including the following
mentioned in this report: The Chase Manhattan Bank, N.A. (the Bank), The
Chase Manhattan Bank (USA) (Chase USA) and The Chase Manhattan Bank of Maryland
(Chase Maryland). The term banking subsidiaries, as used in this report,
includes any of the following commercial banks: the Bank, Chase USA, The Chase
Manhattan Bank of Connecticut, N.A., Chase Maryland, The Chase Manhattan Bank of
Florida, N.A. and Chase Bank of Arizona (Chase Arizona). The term Bank, as used
in this report, refers to The Chase Manhattan Bank, N. A. and its subsidiaries,
including Chase Manhattan Overseas Banking Corporation, which holds investments
in overseas commercial banking and financial services subsidiaries. The term
nonbanking subsidiaries, as used in this report, refers to subsidiaries of the
Company not chartered as commercial banks that are engaged in investment
banking, mortgage banking, commercial and consumer financing and other financial
services.
3.
<PAGE> 4
Consolidated Statement of Condition
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1994 1993 1993
------------ -------------- -----------
<S> <C> <C> <C>
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,483 $ 6,068 $ 4,825
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . . 5,054 5,309 5,512
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . . 6,556 6,586 5,221
Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,247 6,933 3,754
Investment Securities:
Held to Maturity (Market Value of $1,354, $1,417 and $1,485,
Respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,345 1,384 1,446
Available for Sale Carried at Fair Value . . . . . . . . . . . . . . . . . . 6,415 7,690 --
At Lower of Cost or Market (Market Value of $5,305) . . . . . . . . . . . . . -- -- 4,925
------- ------- -------
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . 7,760 9,074 6,371
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,635 60,493 59,474
Less: Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . . 1,429 1,425 1,912
------- ------- -------
Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,206 59,068 57,562
Assets Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . 121 222 1,024
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . . . 705 689 763
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 917 871 891
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,791 1,782 1,897
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,752 5,501 6,251
------- ------- -------
Total Assets $112,592 $102,103 $94,071
------- ------- -------
Liabilities, Redeemable Preferred Stock and Stockholders' Equity
Deposits:
Domestic Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,429 $ 14,217 $11,111
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,288 27,648 27,935
Overseas Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,882 2,473 2,022
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,027 27,171 23,685
------- ------- -------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,626 71,509 64,753
Federal Funds Purchased and Securities Sold Under Repurchase
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,345 7,890 5,736
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,499 1,465 1,333
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 2,892 1,813 2,151
Trading Account Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 11,263 -- --
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715 696 768
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 416 562
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . . 5,148 4,551 5,239
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . 5,509 5,641 6,689
------- ------- -------
Total Liabilities 104,438 93,981 87,231
------- ------- -------
Redeemable Preferred Stock (Without Par Value, None and
530,369 Shares Outstanding, Respectively) . . . . . . . . . . . . . . . . . . -- -- 53
------- ------- -------
Stockholders' Equity:
Nonredeemable Preferred Stock (Without Par Value, 51,439,738, . . . . . . . .
51,439,738 and 56,439,738 Shares Outstanding, Respectively) . . . . . . . . 1,399 1,399 1,649
Common Stock ($2.00 Par Value):
3/31/94 12/31/93 3/31/93
----------- ----------- -----------
Number of Shares:
Authorized 500,000,000 500,000,000 500,000,000
Outstanding 184,797,798 184,290,491 157,535,548 370 369 315
Surplus 3,935 3,922 3,205
Net Unrealized Gains on Investment Securities--Available for Sale 10 264 --
Retained Earnings 2,440 2,168 1,618
------- ------- -------
Total Stockholders' Equity 8,154 8,122 6,787
------- ------- -------
Total Liabilities, Redeemable Preferred Stock and Stockholders' Equity $112,592 $102,103 $94,071
------- ------- -------
<FN>
The accompanying notes on pages 8 and 9 are an integral part of the financial statements.
</TABLE>
4.
<PAGE> 5
Consolidated Statement of Income
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended March 31,
-------------------------------
($ in millions, except per common share data) 1994 1993
------ ------
<S> <C> <C>
Interest Revenue
Interest and Fees on Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,301 $1,528
Interest on Deposits Placed with Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 148
Interest and Dividends on Investment Securities:
Held to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 42
Available for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 --
At Lower of Cost or Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 133
Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . . . . 326 258
Interest on Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 52
----- -----
Total Interest Revenue 2,082 2,161
----- -----
Interest Expense
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 539
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . . . . . . . . . 124 138
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 10
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 275
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 151
----- -----
Total Interest Expense 1,131 1,113
----- -----
Net Interest Revenue 951 1,048
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 360
Provision for Loans Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . . -- 566
----- -----
Net Interest Revenue After Provisions for Possible Credit Losses
and Loans Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . . . . . . 791 122
----- -----
Other Operating Revenue
Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 367
Foreign Exchange Trading Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 103
Trading Account Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 72
Investment Securities Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 6
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 110
----- -----
Total Other Operating Revenue 853 658
----- -----
Other Operating Expenses
Salaries and Employee Benefits:
Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415 377
Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 125
----- -----
544 502
Net Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 106
Equipment Rentals, Depreciation and Maintenance . . . . . . . . . . . . . . . . . . . . . . . . 71 71
Provision for Other Real Estate Held for Accelerated Disposition . . . . . . . . . . . . . . . -- 318
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 304
----- -----
Total Other Operating Expenses 1,057 1,301
----- -----
Income (Loss) Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587 (521)
Applicable Income Taxes (Benefits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 (174)
----- -----
Income (Loss) Before Cumulative Effect of Change in Accounting Principle 364 (347)
Cumulative Effect of Change in Accounting Principle--Adoption of SFAS 109 . . . . . . . . . . . -- 500
----- -----
Net Income $ 364 $ 153
----- -----
Net Income Applicable to Common Stock $ 333 $ 117
----- -----
Average Common and Common Equivalent Shares Outstanding (in millions) . . . . . . . . . . . . . 185.4 157.6
Primary Earnings (Loss) Per Common Share, Before Cumulative Effect of Change in
Accounting Principle, Based on Average Shares Outstanding . . . . . . . . . . . . . . . . . $ 1.80 $(2.43)
Cumulative Effect of Change in Accounting Principle--Adoption of SFAS 109 . . . . . . . . . . . -- 3.17
----- -----
Primary Earnings Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.80 $ 0.74
----- -----
Cash Dividends Declared Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.33 $ 0.30
----- -----
<FN>
The accompanying notes on pages 8 and 9 are an integral part of the financial statements.
</TABLE>
5.
<PAGE> 6
Consolidated Statement of Changes in Stockholders' Equity
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended March 31,
-------------------------------
($ in millions) 1994 1993
------ ------
<S> <C> <C>
Nonredeemable Preferred Stock
Balance at Beginning of Year (51,439,738 and 49,539,738 Shares, Respectively) . . . . . . . . $1,399 $1,477
Issuance of Preferred Stock Series M (6,900,000 Shares) . . . . . . . . . . . . . . . . . . -- 172
----- -----
Balance at End of Period (51,439,738 and 56,439,738 Shares, Respectively) 1,399 1,649
----- -----
Common Stock
Balance at Beginning of Year (184,290,491 and 156,096,382 Shares, Respectively) . . . . . . . 369 312
Shares Issued Pursuant to Dividend Reinvestment and Stock Purchase Plan
(214,761 and 1,100,746 Shares, Respectively) . . . . . . . . . . . . . . . . . . . . . . . -- 2
Shares Issued Pursuant to Stock Option and Incentive Plans (292,229 and 338,420 Shares,
Respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1
Shares Issued Pursuant to Stock Warrants (317 Shares and No Shares, Respectively) . . . . . -- --
----- -----
Balance at End of Period (184,797,798 and 157,535,548 Shares, Respectively) 370 315
----- -----
Surplus
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,922 3,174
Shares Issued Pursuant to Dividend Reinvestment and Stock Purchase Plan . . . . . . . . . . 7 31
Shares Issued Pursuant to Stock Option and Incentive Plans . . . . . . . . . . . . . . . . . 6 6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (6)
----- -----
Balance at End of Period 3,935 3,205
----- -----
Net Unrealized Gains on Investment Securities--Available for Sale
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264 --
Net Unrealized Losses on Investment Securities--Available for Sale (Net of Deferred Tax
Benefits of $175) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (254) --
----- -----
Balance at End of Period 10 --
----- -----
Retained Earnings
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,168 1,548
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 153
Cash Dividends:
Redeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (1)
Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31) (35)
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61) (47)
----- -----
Balance at End of Period (Includes Foreign Exchange Translation Adjustments of $12 and $13,
Respectively) 2,440 1,618
----- -----
Total Stockholders' Equity $8,154 $6,787
----- -----
<FN>
The accompanying notes on pages 8 and 9 are an integral part of the financial statements.
</TABLE>
6.
<PAGE> 7
Consolidated Statement of Cash Flows
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended March 31,
-------------------------------
($ in millions) 1994 1993
------- -------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 364 $ 153
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Cumulative Effect of Change in Accounting Principle--Adoption of SFAS 109 . . . . . . . . . -- (500)
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 360
Provision for Loans Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . -- 566
Provision for Other Real Estate Held for Accelerated Disposition . . . . . . . . . . . . . . -- 318
Depreciation and Amortization of Premises and Equipment . . . . . . . . . . . . . . . . . . 67 63
Accretion and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 40
Other Real Estate Valuation Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 31
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47) (348)
Net Gains on Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (220) (116)
Net (Increase) Decrease in Operating Assets:
Trading Account Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . (29) 1,047
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (46) 84
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (724) 429
Net Increase (Decrease) in Operating Liabilities:
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 (15)
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . . . . . . . . 439 803
Other--Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (112) 48
----- -----
Net Cash Provided by Operating Activities (48) 2,963
----- -----
Cash Flows from Investing Activities:
Net Decrease in Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . . 315 249
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased Under Resale Agreements 30 (1,031)
Investment Securities--Held to Maturity:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (158) (172)
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . . . . . . . . . . 203 147
Investment Securities--Available for Sale Carried at Fair Value:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,845) --
Proceeds from Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,383 --
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . . . . . . . . . . 451 --
Investment Securities--At Lower of Cost or Market:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (1,986)
Proceeds from Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,055
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . . . . . . . . . . -- 758
Loans:
Net Increase in Loans Made to Customers . . . . . . . . . . . . . . . . . . . . . . . . . . (5,190) (1,073)
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (679) (69)
Proceeds from Sales and Securitizations . . . . . . . . . . . . . . . . . . . . . . . . . . 4,662 2,324
Proceeds from Sales and Repayments of Assets Held for Accelerated Disposition . . . . . . . . . 153 --
Net Purchases of Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . (76) (102)
----- -----
Net Cash Provided by Investing Activities 249 100
----- -----
Cash Flows from Financing Activities:
Net Decrease in Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,149) (2,509)
Net Increase (Decrease) in Federal Funds Purchased and Securities Sold Under Resale Agreements 455 (1,216)
Net Increase in Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 188
Net Increase in Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 1,054 392
Intermediate- and Long-Term Debt:
Proceeds from Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 267
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (273) (488)
Stockholders' Equity:
Cash Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (92) (83)
Proceeds from Issuance of Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . -- 166
Proceeds from Issuance of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 39
----- -----
Net Cash Used by Financing Activities (1,807) (3,244)
----- -----
Effect of Exchange Rate Changes on Cash 21 (2)
----- -----
Net Decrease in Cash and Due from Banks (1,585) (183)
Cash and Due from Banks at Beginning of Year 6,068 5,008
----- -----
Cash and Due from Banks at End of Period $ 4,483 $ 4,825
----- -----
Cash Paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,106 $ 1,129
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 18
Noncash Investing and Financing Activities:
Net Loan Transfers to Other Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18 $ 273
----- -----
<FN>
The accompanying notes on pages 8 and 9 are an integral part of the financial statements.
</TABLE>
7.
<PAGE> 8
Notes To Consolidated Financial Statements
The Chase Manhattan Corporation and Subsidiaries
NOTE 1. REGULATORY LIMITATIONS
The Company's ability to pay dividends on its preferred and common stock is
derived from several sources, including, among other sources, dividends from
the Bank, Chase USA, Chase Maryland and the Company's nonbanking subsidiaries.
As discussed below, the ability of the Company's banking subsidiaries to pay
dividends is subject to certain restrictions. On April 19, 1994, the Board of
Directors of the Company declared a quarterly dividend of $.33 per common
share, payable on May 16, 1994.
As more fully explained on page 71 of the 1993 Annual Report, national
banks are subject to various legal limitations on the amount of dividends that
may be paid to their stockholders. Under these limitations, a national bank
may not pay a dividend in an amount greater than its net profits then on hand
after deducting therefrom its losses and bad debts. For this purpose, "bad
debts" is defined to include generally the principal amount of matured loans
which are in arrears with respect to payment of interest for six months or more
and "net profits" has been construed by the Comptroller of the Currency to mean
retained earnings plus that portion of a bank's capital surplus which was
transferred from retained earnings. Generally, a debt is considered "matured"
when all or a part of the principal is due and payable as a result of demand,
arrival of a stated maturity date, or acceleration by contract or operation of
law. The approval of the Comptroller of the Currency is required if the total
of all dividends declared by a national bank in any calendar year exceeds such
bank's net profits for that year, combined with its retained net profits for
the preceding two calendar years, less any required transfers to surplus. The
payment of dividends by bank holding companies and their banking subsidiaries
may also be limited by other factors, including applicable regulatory capital
guidelines and leverage limitations.
At March 31, 1994, under the more restrictive of these limitations, the
Bank could declare dividends during the remainder of 1994 of approximately $1
billion, combined with an additional amount equal to its retained net profits
from March 31, 1994 up to the date of any dividend declaration. Under
applicable state and federal laws, Chase USA and Chase Maryland could declare
dividends during the remainder of 1994 of approximately $910 million and $1
million, respectively, combined with an additional amount equal to their
respective retained net profits from March 31, 1994 up to the date of any
dividend declaration.
Various rules and regulations have been promulgated by the federal
banking agencies pursuant to the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA). Chase expects that these rules and
regulations will result in increased costs to the Company, the Bank and their
affiliates; however, based upon its assessment of the overall impact of these
rules and regulations, Chase does not expect any of them to have a material
effect on its operations. At March 31, 1994, the capital ratios of all of the
Company's banking subsidiaries exceeded the minimum capital ratios required of
a "well capitalized" institution as defined in the prompt corrective action
rule under FDICIA.
Further rules proposed or to be proposed under FDICIA, governing such
matters as operational and managerial standards and capital requirements, are
expected to be finalized and become effective in 1994. Until the various
regulations are adopted in final form, however, it is difficult to assess how
they will impact Chase's financial condition or operations.
NOTE 2. TRADING ACCOUNT--ADOPTION OF FASB INTERPRETATION 39
Chase adopted Financial Accounting Standards Board (FASB) Interpretation No.
39, "Offsetting of Amounts Related to Certain Contracts" (FIN 39), on January
1, 1994. FIN 39 requires the fair value of certain financial contracts used in
trading activities to be presented on a gross basis in the Statement of
Condition, except for contracts executed with the same counterparty under
legally enforceable master netting agreements, which can continue to be
presented on a net basis. The adoption resulted in an increase in total
Trading Account Assets and Trading Account Liabilities of approximately $10
billion. FIN 39 does not affect Chase's risk-based capital ratios but did
result in decreases at March 31, 1994, in the common stockholders' equity ratio
of 59 basis points to 6.00%, the total stockholders' equity ratio of 71 basis
points to 7.24% and the Tier I leverage ratio of 72 basis points to 7.28%. In
connection with the adoption of FIN 39, obligations to deliver securities sold
but not yet purchased, previously reported as Accounts Payable, Accrued
Expenses and Other Liabilities, are now reported as Trading Account
Liabilities.
The criteria for legally enforceable master netting agreements are
currently under review by the FASB, the outcome of which may impact the amount
of contracts that may be presented on a net basis.
NOTE 3. SUBSEQUENT EVENTS
On April 15, 1994, pursuant to the Brazilian restructuring, Chase exchanged its
eligible Brazilian loans for Brazilian Brady bonds. The exchange is expected
to have a positive impact on Chase's financial condition, beginning in the
second quarter of 1994.
On April 29, 1994, the Company completed the sale of Chase Arizona and
its subsidiary, Chase Trust Company of Arizona, to First Interstate Bank of
Arizona, N.A. for an amount in excess of its carrying value.
On May 9, 1994, the Company issued 9,100,000 shares of Series N
Adjustable Rate Preferred Stock with a stated value of $25 per share for a
total outstanding amount of $227,500,000. Dividends on the shares, at a
floating rate, are payable quarterly and are cumulative. The shares are not
redeemable prior to June 30, 1999. On or after such date, the shares are
redeemable, as a whole or in part, at the option of the Company at $25 per
share, plus accrued and unpaid dividends to the redemption date. The Company
intends to use the net proceeds from the sale of these shares for general
corporate purposes, which may include the redemption of certain of the
Company's outstanding preferred stock, repayment of outstanding indebtedness of
the Company and advances to, or investments in, banking and nonbanking
subsidiaries of the Company.
8.
<PAGE> 9
On May 10, 1994, the Company announced its intention to redeem all
4,539,738 shares of its Series F Floating Rate Preferred Stock with a stated
value of $50 per share for a total outstanding amount of approximately
$227,000,000. The redemption price is $50 per share plus accrued dividends
from June 1, 1994 to the redemption date of July 15, 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
<TABLE>
<CAPTION>
INDEX
<S> <C>
Earnings Analysis
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Net Interest Revenue - Taxable Equivalent Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Other Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Credit Risk Management
Loan Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Domestic Commercial Real Estate Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consumer Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net Loan Charge-offs and Annualized Credit Loss Experience Ratios . . . . . . . . . . . . . . . . . . . . 14
Nonaccrual, Restructured and Past Due Outstandings and Domestic Other Real Estate Acquired . . . . . . . . 15
Asset/Liability Management
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Liquidity Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interest Rate Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Trading Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Fair Value Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
EARNINGS ANALYSIS
EARNINGS SUMMARY AND SELECTED FINANCIAL RATIOS
<TABLE>
<CAPTION>
First Quarter
--------------------------
($ in millions, except per share data) 1994 1993
------ ------
<S> <C> <C>
Net Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 951 $1,048
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . 160 360
Provision for Loans Held for Accelerated Disposition . . . . . . . . . . . . . -- 566
Other Operating Revenue:
Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 367
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407 291
Other Operating Expenses:
Provision for Other Real Estate Held for Accelerated Disposition . . . . . . -- 318
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,057 983
----- -----
Income (Loss) Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 587 (521)
Applicable Income Taxes (Benefits) . . . . . . . . . . . . . . . . . . . . . . 223 (174)
----- -----
Income (Loss) Before Cumulative Effect of Change in
Accounting Principle 364 (347)
Cumulative Effect of Change in Accounting Principle --
Adoption of SFAS 109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 500
----- -----
Net Income $ 364 $ 153
----- -----
Selected Financial Ratios
Net Income Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.80 $ .74
Return on Average Common Stockholders' Equity . . . . . . . . . . . . . . . . 20.2% 9.3%
Return on Average Total Assets . . . . . . . . . . . . . . . . . . . . . . . 1.28% .62%
Book Value (Period End)
Common Stockholders' Equity per Common Share . . . . . . . . . . . . . . . . $36.55 $32.61
----- -----
</TABLE>
9.
<PAGE> 10
OVERVIEW
The Corporation reported first quarter 1994 net income of $364 million ($1.80
per share), up 138% from the $153 million ($.74 per share) reported for the
first quarter of 1993.
First quarter results included:
o return on assets and return on common equity of 1.28% and 20.2%,
respectively;
o a net interest margin of 4.17%;
o growth in fees and commissions: up 22% over the same period last year,
with increases in all categories;
o trading revenue of $179 million;
o equity gains realized in Chase's merchant banking activities; and
o provision for possible credit losses of $160 million.
NET INTEREST REVENUE -- TAXABLE EQUIVALENT BASIS
Net interest revenue, on a taxable equivalent basis, was $958 million for the
first quarter of 1994, compared with $1,056 million for the first quarter of
1993. Excluding first quarter 1993 interest revenue of $142 million from the
sale of Brazilian past due interest (PDI) bonds, net interest revenue for the
first quarter of 1994 increased by $44 million, or 5%, from the same period
last year. Net interest margin was 4.17%, compared with 4.94% (4.28% excluding
Brazilian PDI bonds) reported for the first quarter of 1993. Average
interest-earning assets were $93.1 billion, compared with $86.7 billion for the
same period last year. Average loans decreased to $61.3 billion for the
current quarter from the $62.1 billion level reported for the first quarter of
1993, primarily due to the reductions in commercial real estate and refinancing
countries loans, which were partially offset by increases in consumer loans.
NET INTEREST REVENUE AND INTEREST RATE SPREADS--TAXABLE EQUIVALENT BASIS*
<TABLE>
<CAPTION>
First Quarter
---------------------------------------------------------------
1994 1993
---------------------------------------------------------------
($ in millions) Amount Rate Amount Rate
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Earned . . . . . . . . . . . . . . . . . . . . $2,089 9.10% $2,169 10.15%
Interest Paid . . . . . . . . . . . . . . . . . . . . . 1,131 5.86 1,113 6.11
----- ---- ----- -----
Net Interest Revenue $ 958 3.24% $1,056 4.04%
- - --as a % of Average Gross Interest-Earning Assets ** 4.17% 4.94%
----- ---- ----- -----
<FN>
* Net interest revenue is the amount by which interest revenue from
interest-earning assets exceeds the interest expense appplicable to
interest-bearing liabilities. Taxable equivalency adjusts interest revenue
which is fully or partially exempt from income taxes to an amount
equivalent to an amount of interest revenue which would be fully taxable.
Net interest revenue on a taxable equivalent basis as a percentage of
average gross interest-earning assets, yields a ratio described as the net
interest margin. Net interest revenue, on a taxable equivalent basis, was
higher by $7 million and $8 million for the first quarter of 1994 and
1993, respectively, than comparable net interest revenue amounts reported
on a financial statement basis. Taxable equivalent amounts have been
adjusted (by applying a combined U.S. federal, state and local income tax
rate of approximately 41%) to recognize the differential between interest
revenue that is fully or partially exempt from income taxes and interest
revenue that is fully taxable.
** See pages 27 and 29 for components of Average Gross Interest-Earning
Assets.
</TABLE>
PROVISION FOR POSSIBLE CREDIT LOSSES
The provision for possible credit losses was $160 million, or $35 million lower
than the fourth quarter of 1993 and $200 million lower than the first quarter
of 1993, excluding domestic commercial real estate assets held for accelerated
disposition. See Credit Risk Management section starting on page 12 for a
discussion of the Reserve for Possible Credit Losses and asset quality.
10.
<PAGE> 11
OTHER OPERATING REVENUE
<TABLE>
<CAPTION>
First Quarter
----------------------------
($ in millions) 1994 1993
------ ------
<S> <C> <C>
Fees and Commissions:
Consumer Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $144 $117
Trust and Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 107
Investment Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 38
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 105
--- ---
Total Fees and Commissions 446 367
--- ---
All Other Operating Revenue:
Foreign Exchange Trading . . . . . . . . . . . . . . . . . . . . . . . . . 85 103
Trading Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 72
Investment Securities Gains . . . . . . . . . . . . . . . . . . . . . . . 79 6
Corporate Finance-Related Equity Investment Gains . . . . . . . . . . . . 84 76
Accelerated Disposition Portfolio Gains . . . . . . . . . . . . . . . . . 53 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 34
--- ---
Total Other Operating Revenue $853 $658
--- ---
</TABLE>
Total other operating revenue for the first quarter of 1994 was up $195
million, or 30%, from the same period of 1993, primarily due to higher levels of
fee revenue, accelerated disposition portfolio gains and investment securities
gains.
Fees and commissions were $446 million for the first quarter of 1994, up
22%, reflecting increases in all categories of fee revenue compared to the
same period last year. Total consumer banking fees, including credit card
and mortgage banking fees, increased 23% over the same period last year.
During the first quarter of 1994, mortgage interest rates continued to
increase, resulting in a significant decline in refinancing activity compared
with the high level experienced in 1993. As a result, there were no
accelerated writedowns of mortgage servicing assets for the first quarter of
1994 compared with $34 million in the first quarter of 1993.
Fee revenue from trust and fiduciary activities increased 33% due to
increased transaction volume and continued growth in trust and custody assets
in both the Transaction and Information Services and Global Private Banking
units. Investment banking fee revenue from global corporate finance
activities increased 24% over the same period last year due to improved
transaction volume.
During the first quarter of 1994, corporate finance-related equity gains
resulted from several significant merchant banking transactions, continuing
the strong pace of last year. While Chase expects to continue to realize
gains from these sources, such gains for the remainder of 1994 may not
continue at these levels. Further liquidation of real estate assets held for
accelerated disposition and sales of Brady bonds in the Investment Securities
Available for Sale portfolio yielded gains of $53 million and $71 million,
respectively.
Total trading revenue was $179 million, slightly higher than the revenue
reported for the same period last year. Chase experienced generally good
customer demand for derivative products and foreign exchange transactions.
In addition, substantial revenue was realized in the earlier part of the
quarter from reducing emerging markets trading positions, partially offset by
the effects of the decline in market values during the latter part of the
quarter. For more information, see the Trading Activities section on page 23.
OTHER OPERATING EXPENSES
<TABLE>
<CAPTION>
First Quarter
----------------------------
($ in millions) 1994 1993
------ ------
<S> <C> <C>
Salaries and Employee Benefits . . . . . . . . . . . . . . . . $ 544 $ 502
Net Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . 100 106
Equipment Rentals, Depreciation and Maintenance . . . . . . . . 71 71
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 304
----- -----
Subtotal 1,057 983
----- -----
Provision For Other Real Estate Held For Accelerated Disposition -- 318
----- -----
Total Other Operating Expenses $1,057 $1,301
----- -----
</TABLE>
Total operating expenses were $1,057 million for the first quarter of 1994
and $1,301 million for the first quarter of 1993, which included a $318
million provision for other real estate (ORE) held for accelerated
disposition. Operating expenses for the first quarter of 1994 included $8
million applicable to the second quarter 1993 acquisition of Troy & Nichols,
Inc. and $37 million of ORE expenses, including valuation losses, compared to
$38 million for the first quarter of 1993. In addition, first quarter 1994
other operating expenses reflected the cost of funding business growth
opportunities, particularly in Chase's global trading and capital markets
activities, global securities servicing and national consumer products.
Salaries and employee benefits also increased as a result of increased
compensation accruals related to higher earnings.
11.
<PAGE> 12
PROVISION FOR INCOME TAXES
The provision for income taxes for the first quarter of 1994 was $223 million,
representing an effective tax rate of 38%. For the first quarter of 1993,
Chase recorded a net income tax benefit of $174 million. Excluding the tax
benefits applicable to the special provisions for the accelerated disposition
portfolio, Chase's first quarter 1993 tax provision would have been
approximately $137 million. As previously reported on page 77 of the 1993
Annual Report, Chase adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," in the first quarter of 1993, which
resulted in a $500 million net benefit reflected as a cumulative effect of a
change in accounting principle.
CREDIT RISK MANAGEMENT
As further discussed on pages 38 and 39 of the 1993 Annual Report, Chase has
established and implemented policies and procedures to actively manage credit
risk, both on- and off-balance sheet. In comparison with March 31, 1993, the
March 31, 1994 loan portfolio balances reflected growth in domestic consumer
loans, which consists of loans secured by 1-4 family residential properties,
home equity loans, credit card receivables, auto loans and other forms of
installment loans. During the same period, domestic commercial real estate
loans within the wholesale portfolio declined 38% to $2.8 billion and loans in
overseas offices were reduced by $606 million to $17.4 billion, through sales,
charge-offs, and the transfers to the investment securities available for sale
portfolio and the trading account of approximately $1 billion of cross-border
extensions of credit and Mexican Brady bonds and $418 million of cross-border
extensions of credit, respectively, partially offset by new lending.
All tables in this section exclude the accelerated disposition portfolio,
unless otherwise noted.
LOAN COMPOSITION
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1994 1993 1993
--------- ------------ ---------
<S> <C> <C> <C>
Domestic Offices:
Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . $15,877 $15,599 $18,191
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,542 28,561 23,585
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . 185 188 309
------ ------ ------
Total Domestic Offices 44,234 43,972 41,467
------ ------ ------
Overseas Offices:
Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . 14,971 14,279 15,640
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,477 2,283 2,409
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . 47 41 42
------ ------ ------
Total Overseas Offices 17,401 16,521 18,007
------ ------ ------
Total Loans $61,635 $60,493 $59,474
------ ------ ------
</TABLE>
DOMESTIC COMMERCIAL REAL ESTATE LOANS BY GEOGRAPHIC REGION AND PROPERTY TYPE
<TABLE>
<CAPTION>
March 31, 1994 December 31,
----------------------------------------------------------------------------
Office Other 1993
($ in millions) Buildings Commercial* Residential Land Other** Total Total
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
New York City . . . . . . . . . . . . . $149 $ 129 $229 $ 20 $ 61 $ 588 $ 663
New York (Excluding New York City). . . 269 440 195 25 112 1,041 1,097
--- ----- --- --- --- ----- -----
Total New York . . . . . . . . . . . 418 569 424 45 173 1,629 1,760
Other Northeast . . . . . . . . . . . . 159 215 21 40 92 527 575
Southeast . . . . . . . . . . . . . . . 23 42 9 9 15 98 138
Midwest . . . . . . . . . . . . . . . . 29 62 12 1 13 117 136
Southwest/West. . . . . . . . . . . . . 148 229 30 57 6 470 490
--- ----- --- --- --- ----- -----
Total at March 31, 1994 $777 $1,117 $496 $152 $299 $2,841 --
--- ----- --- --- --- ----- -----
Total at December 31, 1993 $823 $1,246 $525 $187 $318 -- $3,099
--- ----- --- --- --- ----- -----
<FN>
* Includes shopping centers and other commercial and industrial properties.
** Includes mixed use properties and working capital loans.
</TABLE>
Chase's domestic commercial real estate loan portfolio decreased to $2.8
billion from $3.1 billion and $4.6 billion at December 31, 1993 and March 31,
1993, respectively. The first quarter of 1994 reduction was the result of
charge-offs of $64 million, transfers to ORE of $16 million and net repayments
of outstanding loans of $178 million.
12.
<PAGE> 13
CONSUMER LOANS
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1994 1993 1993
--------- ------------ ---------
<S> <C> <C> <C>
Domestic Offices:
Secured by 1-4 Family Residential Properties . . . . . . . . . . $14,086 $14,126 $10,343
Credit Card . . . . . . . . . . . . . . . . . . . . . . . . . . 6,174 6,426 5,815
Other Consumer . . . . . . . . . . . . . . . . . . . . . . . . . 8,282 8,009 7,427
------ ------ ------
Total Domestic Offices . . . . . . . . . . . . . . . . . . . . . . 28,542 28,561 23,585
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . 2,477 2,283 2,409
------ ------ ------
Total Consumer Loans $31,019 $30,844 $25,994
------ ------ ------
</TABLE>
Chase's domestic consumer loan portfolio at March 31, 1994 included
approximately $356 million of loans secured by 1-4 family residential
properties made by Troy & Nichols, Inc., which was acquired by Chase in the
second quarter of 1993. Chase securitized $4.8 billion of residential
mortgage loans from March 31, 1993 to March 31, 1994, of which $1.2 billion
occurred in the first quarter of 1994. Such loans were held for sale and
carried at the lower of cost or market. Included in the $28.5 billion of
total domestic consumer loans at March 31, 1994 were approximately $1.9
billion of residential mortgage and other consumer loans that were held for
sale. The net increase in domestic consumer loans from March 31, 1993 to
March 31, 1994 was primarily due to increased demand for 1-4 family loans
experienced during the second half of 1993 and the increased origination
volume of automotive financings.
As illustrated in the following table, the portfolio of domestic loans
secured by 1-4 family residential properties is diversified by market, with
the states of New York and California having the largest concentration of
outstandings.
DOMESTIC LOANS SECURED BY 1-4 FAMILY RESIDENTIAL PROPERTIES BY GEOGRAPHIC
REGION
<TABLE>
<CAPTION>
March 31, December 31,
($ in millions) 1994 1993
--------- ------------
<S> <C> <C>
New York City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 874 $ 902
New York (Excluding New York City) . . . . . . . . . . . . . . . . . . . 2,220 2,256
------ ------
Total New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,094 3,158
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,853 3,534
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297 312
Connecticut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 810 810
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 814
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 139
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 572
Massachusetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 695 475
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 772 757
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 108
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437 444
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607 688
Washington, D.C./Metro . . . . . . . . . . . . . . . . . . . . . . . . . 1,140 1,124
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 961 1,191
------ ------
Total $14,086 $14,126
------ ------
</TABLE>
13.
<PAGE> 14
RESERVE FOR POSSIBLE CREDIT LOSSES
RECONCILIATION OF RESERVE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
First Quarter Fourth Quarter First Quarter
($ in millions) 1994 1993 1993
------------- -------------- -------------
<S> <C> <C> <C>
Balance at Beginning of Period. . . . . . . . . . . . . . . . . $1,425 $1,916 $1,913
Additions:
Provision for Possible Credit Losses Charged to Expense . . . 160 195 360
Provision for Loans Held for Accelerated Disposition. . . . . -- -- 566
Deductions:
Charge-Offs . . . . . . . . . . . . . . . . . . . . . . . . . 203 714 263
Recoveries. . . . . . . . . . . . . . . . . . . . . . . . . . (47) (35) (43)
----- ----- -----
Net Loan Charge-Offs . . . . . . . . . . . . . . . . . . . . 156 679 220
Writedown of Loans Transferred to the Accelerated
Disposition Portfolio . . . . . . . . . . . . . . . . . . . . -- -- (701)
Reserves of Disposed Subsidiaries and Other Adjustments . . . . -- (7) (6)
----- ----- -----
Balance at End of Period $1,429 $1,425 $1,912
----- ----- -----
</TABLE>
RESERVE FOR POSSIBLE CREDIT LOSSES RATIOS
<TABLE>
<CAPTION>
($ in millions) March 31, 1994 December 31, 1993 March 31, 1993
-------------- ----------------- --------------
<S> <C> <C> <C>
Reserve for Possible Credit Losses . . . . . . . . . . . . . . $1,429 $1,425 $1,912
- - --As a % of Total Loans . . . . . . . . . . . . . . . . . . . 2.32% 2.36% 3.21%
- - --As a % of Nonaccrual Outstandings . . . . . . . . . . . . . . 134% 135% 67%
----- ----- -----
</TABLE>
NET LOAN CHARGE-OFFS AND ANNUALIZED CREDIT LOSS EXPERIENCE RATIOS
<TABLE>
<CAPTION>
First Quarter
----------------------------------
($ in millions) 1994 1993
---- ----
<S> <C> <C>
Net Loan Charge-offs:
Domestic:
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94 $103
Commercial Real Estate . . . . . . . . . . . . . . . . . . . 51 91
Commercial and Other . . . . . . . . . . . . . . . . . . . . 11 28
--- ---
Total Domestic 156 222
--- ---
Total International -- (2)
--- ---
Total $156 $220
--- ---
Net Loan Charge-offs as a Percentage of Average Loans:
Domestic:
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . 1.34% 1.74%
Commercial Real Estate . . . . . . . . . . . . . . . . . . . 6.72 5.72
Commercial and Other . . . . . . . . . . . . . . . . . . . . .37 .86
---- ----
Total Domestic Credit Loss Ratio 1.45 2.05
---- ----
Total International Credit Loss Ratio -- (.05)
---- ----
Total Credit Loss Ratio 1.03% 1.44%
---- ----
</TABLE>
Net loan charge-offs for the first quarter of 1994 were $156 million, down $64
million from the first quarter of 1993. Domestic commercial real estate net
loan charge-offs declined $40 million. For further details on the reserve for
possible credit losses and net loan charge-offs, see Analysis of Credit Loss
Experience on page 33.
In May 1993, the FASB issued SFAS 114, "Accounting by Creditors for
Impairment of a Loan," which is effective January 1, 1995, with early adoption
permitted. In March 1994, the FASB issued a proposed amendment of SFAS 114,
"Accounting by Creditors for Impairment of a Loan-Income Recognition," that
would permit a creditor to use existing methods for recognizing interest income
on impaired loans. Chase is studying the impact of adopting SFAS 114, including
the proposed amendment, but does not expect it to have a material effect based
on the loan portfolio and market conditions as of March 31, 1994.
14.
<PAGE> 15
NONACCRUAL, RESTRUCTURED AND PAST DUE OUTSTANDINGS AND DOMESTIC ORE ACQUIRED
NONACCRUAL AND RESTRUCTURED OUTSTANDINGS AND DOMESTIC ORE
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1994 1993 1993
--------- ------------ ---------
<S> <C> <C> <C>
Domestic Outstandings:
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . $ 469 $ 475 $1,061
Commercial and Industrial . . . . . . . . . . . . . . . . . . . 195 226 425
Financial Institutions . . . . . . . . . . . . . . . . . . . . . 19 37 46
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 144 175
----- ----- -----
Total Domestic Outstandings 868 882 1,707
----- ----- -----
International Outstandings:
Restructured Refinancing Countries . . . . . . . . . . . . . . . 69 74 996
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . 11 14 22
Commercial and Industrial . . . . . . . . . . . . . . . . . . . 45 22 53
Financial Institutions . . . . . . . . . . . . . . . . . . . . . 51 41 48
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 21 30
----- ----- -----
Total International Outstandings 200 172 1,149
----- ----- -----
Total Nonaccrual and Restructured Outstandings $1,068 $1,054 $2,856
----- ----- -----
Domestic ORE $ 810 $ 895 $ 738
----- ----- -----
As a % of Total Gross Assets:
Nonaccrual and Restructured Outstandings .94% 1.02% 2.98%
Nonaccrual and Restructured Outstandings and Domestic ORE 1.65 1.88 3.74
----- ----- -----
</TABLE>
The substantial decrease in nonaccrual and restructured outstandings at March
31, 1994, as compared with March 31, 1993 was due to repayments, charge-offs,
transfers to accrual status, and the transfer at December 31, 1993 of certain
refinancing countries outstandings to the trading account.
Nonaccrual loans that have been restructured but remain in nonaccrual
status amounted to $92 million, $107 million and $381 million at March 31,
1994, December 31, 1993 and March 31, 1993, respectively, and continue to be
included in the preceding table.
RECONCILIATION OF NONACCRUAL AND RESTRUCTURED OUTSTANDINGS
<TABLE>
<CAPTION>
($ in millions)
<S> <C>
Balance at December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,054
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
Deductions:
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Interest Applied to Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Transfers to ORE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Transfers to Accrual Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----
Balance at March 31, 1994 $1,068
-----
</TABLE>
15.
<PAGE> 16
The increase in the negative impact on interest revenue for the first quarter
of 1994, as shown in the following table, resulted primarily from the
realization of $142 million due to the sale of Brazilian PDI bonds in the first
quarter of 1993.
NEGATIVE (POSITIVE) IMPACT OF NONACCRUAL AND RESTRUCTURED OUTSTANDINGS*
<TABLE>
<CAPTION>
First Quarter
----------------------------
($ in millions) 1994 1993**
------ ------
<S> <C> <C>
Interest Revenue That Would Have Been
Recorded Under Original Terms . . . . . . . . . . . . . . . . . . . . . . . $18 $ 51
Interest Revenue Actually Realized . . . . . . . . . . . . . . . . . . . . . . 4 171
-- ---
Negative (Positive) Impact on Interest Revenue $14 $(120)
-- ---
<FN>
* Excludes the positive impact on interest revenue of accruing bonds that have
been restructured pursuant to The Brady Proposals.
** Includes loans transferred to the accelerated disposition portfolio since
they were transferred on March 31, 1993.
</TABLE>
ACCRUING LOANS PAST DUE 90 DAYS OR MORE
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1994 1993 1993
--------- ------------ ---------
<S> <C> <C> <C>
Domestic Loans:
Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . $169 $186 $179
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . 10 42 13
Commercial and Other . . . . . . . . . . . . . . . . . . . . . . 17 21 37
--- --- ---
Total Domestic Loans . . . . . . . . . . . . . . . . . . . . . . . 196 249 229
--- --- ---
International Loans . . . . . . . . . . . . . . . . . . . . . . . . 6 12 33
--- --- ---
Total Accruing Loans Past Due 90 Days or More $202 $261 $262
--- --- ---
</TABLE>
Accruing loans that are contractually past due 90 days or more are loans that
are both well secured or guaranteed by financially responsible third parties
and are in the process of collection. Past due consumer loans, with the
exception of 1-4 family residential property loans, are generally charged off
according to internally established delinquency schedules which do not permit
delinquencies to exceed 180 days. Such 1-4 family residential property loans
are placed in nonaccrual status if reasonable doubt exists as to timely
collectibility or if payment of principal or interest is contractually past due
90 days or more and the loan is not well secured or guaranteed by financially
responsible third parties and in the process of collection.
DOMESTIC COMMERCIAL REAL ESTATE NONACCRUAL LOANS BY GEOGRAPHIC REGION AND
PROPERTY TYPE
<TABLE>
<CAPTION>
March 31, 1994 December 31,
----------------------------------------------------------------------------
Office Other 1993
($ in millions) Buildings Commercial* Residential Land Other** Total Total
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
New York City . . . . . . . . . . . . $ 54 $ 6 $12 $-- $ 3 $ 75 $ 68
New York (Excluding New York City) . . 14 89 11 9 9 132 127
--- --- -- -- -- --- ---
Total New York . . . . . . . . . . . 68 95 23 9 12 207 195
Other Northeast . . . . . . . . . . . . 25 68 2 22 18 135 156
Southeast . . . . . . . . . . . . . . . -- --- -- 2 1 3 24
Midwest . . . . . . . . . . . . . . . . -- 13 -- 1 -- 14 9
Southwest/West . . . . . . . . . . . . 39 38 19 13 1 110 91
--- --- -- -- -- --- ---
Total at March 31, 1994 $132 $214 $44 $47 $32 $469 --
--- --- -- -- -- --- ---
Total at December 31, 1993 $117 $206 $31 $81 $40 -- $475
--- --- -- -- -- --- ---
<FN>
* Includes shopping centers and other commercial and industrial properties.
** Includes mixed use properties and working capital loans.
</TABLE>
16.
<PAGE> 17
RECONCILIATION OF DOMESTIC COMMERCIAL REAL ESTATE NONACCRUAL LOANS
<TABLE>
<CAPTION>
($ in millions)
<S> <C>
Balance at December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $475
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Deductions:
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Interest Applied to Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Transfers to ORE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Transfers to Accrual Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---
Balance at March 31, 1994* $469
---
<FN>
* At March 31, 1994, carrying value was approximately 65% of contractual
value, primarily as a result of $206 million and $52 million of cumulative
charge-offs and cash interest payments applied to principal, respectively.
</TABLE>
DOMESTIC REAL ESTATE ACQUIRED IN SATISFACTION OF LOANS BY GEOGRAPHIC REGION
AND PROPERTY TYPE
<TABLE>
<CAPTION>
March 31, 1994
---------------------------------------------------------------------------- December 31,
Office Other 1993
($ in millions) Buildings Commercial* Residential Land Other** Total Total
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
New York City . . . . . . . . . . . . . $ 27 $ 5 $ 13 $ 36 $24 $105 $114
New York (Excluding New York City) . . . 7 63 61 2 3 136 155
--- --- --- --- -- --- ---
Total New York . . . . . . . . . . . . 34 68 74 38 27 241 269
Other Northeast . . . . . . . . . . . . 81 116 30 44 6 277 327
Southeast . . . . . . . . . . . . . . . 7 8 4 7 2 28 31
Midwest . . . . . . . . . . . . . . . . -- 74 20 4 1 99 100
Southwest/West . . . . . . . . . . . . . 73 33 12 11 36 165 168
--- --- --- --- -- --- ---
Total at March 31, 1994 $195 $299 $140 $104 $72 $810 --
--- --- --- --- -- --- ---
Total at December 31, 1993 $236 $319 $148 $120 $72 -- $895
--- --- --- --- -- --- ---
<FN>
* Includes shopping centers and other commercial and industrial properties.
** Includes mixed use properties and working capital loans.
</TABLE>
RECONCILIATION OF DOMESTIC REAL ESTATE ACQUIRED IN SATISFACTION OF LOANS
<TABLE>
<CAPTION>
($ in millions)
<S> <C>
Balance at December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $895
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Deductions:
Repayments/Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Valuation Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
---
Balance at March 31, 1994* $810
---
<FN>
* Includes in-substance foreclosure amounts of $687 million. ORE at March
31, 1994 was carried at approximately 44% of original outstandings,
primarily as a result of $1,041 million of cumulative charge-offs, interest
applied to principal and valuation losses.
</TABLE>
As previously reported, Chase established an accelerated disposition
portfolio of selected lower quality domestic commercial real estate assets at
March 31, 1993. These assets had a net carrying value at that date of $1,024
million. Through March 31, 1994, the net carrying value of the assets in
this portfolio was reduced by $903 million, or 88%, to $121 million.
Chase has entered into an agreement to sell several portfolios of its ORE
assets and of its accelerated disposition portfolio with aggregate carrying
values of approximately $100 million and $60 million, respectively. This
transaction is expected to close during the second quarter of 1994 and will
result in a gain.
17.
<PAGE> 18
ASSET/LIABILITY MANAGEMENT
Asset/ liability management (ALM) is an important ongoing process, which
requires the management of both liquidity risk and interest rate risk
particularly as financial products become increasingly more complex. The
policies and guidelines for management of Chase's liquidity and interest rate
risks are discussed further on pages 48 and 77 of Chase's 1993 Annual Report.
INVESTMENT SECURITIES
Information regarding Chase's investment securities portfolio and related
accounting policies is contained on pages 48, 49, 63, 66 and 67 of the 1993
Annual Report. On December 31, 1993, Chase adopted SFAS 115, "Accounting for
Certain Investments in Debt and Equity Securities," which requires investment
securities to be classified as either Held to Maturity or Available for Sale.
SFAS 115 changed the accounting for investment securities available for sale
from the lower of cost or market to fair value. In addition, certain
securities previously classified as Loans were reclassified to Investment
Securities Available for Sale on December 31, 1993 as a result of the adoption
of SFAS 115.
At March 31, 1994, net unrealized gains in the investment securities held to
maturity portfolio were $9 million, compared with net unrealized gains of $33
million and $39 million at December 31, 1993 and March 31, 1993, respectively.
With respect to those investment securities that are available for sale and
carried at fair value, the net unrealized gains, reflected in stockholders'
equity, net of taxes, were $10 million at March 31, 1994 compared with $264
million at December 31, 1993. This change resulted from various factors,
including gains of approximately $79 million from sales, rising interest rates
and changes in the value of Brady bonds, included in this portfolio, due to
declines in emerging markets securities. It is possible that Chase will
continue to experience volatility in stockholders' equity from changes in the
fair values of its investment securities available for sale portfolio.
For further information on the investment securities portfolios, see pages 31
and 32.
LIQUIDITY RISK MANAGEMENT
As discussed on pages 48 to 50 of the 1993 Annual Report, Chase manages its
liquidity to achieve two principal objectives. One is to ensure that the
Company and its subsidiaries have sufficient liquid assets to meet the normal
transaction requirements of their customers and to provide a cushion against
unforeseen liquidity needs. The second is to maintain a stable,
cost-effective, relationship-based source of financing that is diversified over
geographic locations and customer segments. Chase's financing is built on a
strong base of customer deposits from its strategic businesses.
The Company also finances itself with a mixture of common and preferred
stock, intermediate- and long-term senior and subordinated debt and commercial
paper. Chase's primary liquidity sources include a large portfolio of assets,
including cash and due from banks, interest-bearing deposits placed with banks,
federal funds sold and securities purchased under resale agreements, trading
account assets and investment securities available for sale. At March 31, 1994,
these assets totaled $40.8 billion (or approximately $30.8 billion before
adoption of FIN 39) compared with $32.6 billion at December 31, 1993. In
addition to maintaining this portfolio of liquid assets, Chase also has core
consumer assets, such as 1-4 family residential loans, credit card receivables
and automobile loans, that can be sold or securitized.
The Company maintains a $750 million revolving credit agreement that
expires on October 28, 1994; no borrowings have ever been made under this credit
facility.
In managing liquidity, Chase takes into account the various legal
limitations, including the extent to which banks may pay dividends to their
parent companies or finance or otherwise supply funds to certain of their
affiliates, as discussed in Note 1, Regulatory Limitations, in Notes to
Consolidated Financial Statements on page 8.
18.
<PAGE> 19
INTEREST RATE RISK MANAGEMENT
As discussed on pages 50 and 51 of the 1993 Annual Report, Chase's net
interest revenue can be affected by fluctuations in market interest rates as
a result of timing differences in the repricing of its assets and
liabilities. These repricing differences are quantified in specific time
intervals and are referred to as interest rate sensitivity gaps. Chase
manages the earnings sensitivity that arises from interest rate risk to a
level that is consistent with Chase's mix of businesses and products and
seeks to limit such risk exposure to a percentage of earnings and capital.
The objective in managing interest rate risk is to support the achievement of
business strategies, while protecting earnings and liquidity.
At March 31, 1994, Chase's interest rate risk exposure was similar to that
at year-end 1993. As such, as shown in the chart below, Chase's near-term
interest rate risk exposure is to a rising rate environment, that is,
assuming no Management action, net interest revenue would be expected to be
adversely affected by a rise in interest rates. Conversely, interest rate
risk exposure beyond the near term is to a declining rate scenario,
principally due to Chase's high level of core wholesale and consumer
deposits, which exceed the level of fixed-rate assets.
In managing interest rate risk, Chase uses both cash and derivative
products, including interest rate swaps, futures, forwards and option-
related products. Derivative products used for asset/liability management
purposes are linked to assets, liabilities or groups of similar assets and
liabilities and are specifically related to balance sheet management
strategies. Correlation and hedge effectiveness tests between the derivative
product and the linked balance sheet position are also performed.
The following chart provides a quantification of Chase's interest rate
sensitivity gap as of March 31, 1994, based upon the known repricing dates of
certain assets and liabilities and the assumed repricing dates of others.
This chart illustrates the impact of including and excluding the related
derivative products on these gaps. This chart also displays only a static
view of Chase's interest rate sensitivity gap and does not capture the
dynamics of balance sheet, rate and spread movements, nor Management's
actions that may be taken to manage this position.
[GRAPH - SEE EDGAR APPENDIX]
Notes to chart:
(1) Cumulative interest rate gaps are defined as the average cumulative fixed
rate positions (assets less liabilities) for a given calendar period. The
gaps measure the time weighted dollar equivalent volume of positions fixed
for a particular calendar period. The gap positions reflect a stock concept,
rather than the traditional flow concept as measured by runoff. For example,
a $100 million certificate of deposit made on April 1 and maturing on May 29
would have a gap impact of $65 million ($100 million x 59 days/91 days) in
the 1 to 3 month repricing time frame.
(2) Variable rate balances are reported based on their repricing dates.
Fixed rate balances are reported based on their scheduled contractual
maturity dates, except for certain investment securities and loans secured by
1-4 family residential properties that are based on anticipated prepayments.
Given the indeterminate date of any sales, investment securities that may be
sold prior to maturity are similarly reported, depending on their variable or
fixed rate terms.
(3) Prime-priced loans are considered as 1 to 3 month assets, fixed-rate
credit card receivables are classified as 2-year maturities, while
stockholders' equity is assigned a 5-year maturity.
(4) Trading Account Assets are considered overnight assets.
(5) Core demand deposits, noninterest-bearing time deposits, savings accounts
and money market accounts are classified as 7-year maturities. The balance,
or noncore portions of these deposits, are tranched from overnight to 1-year
maturities. The interest rate sensitivity assumptions presented for these
deposits are based on historical and current experiences regarding product
portfolio retention and interest rate repricing behavior.
As discussed on page 51 of the 1993 Annual Report, Chase uses off-balance
sheet derivative products as part of its ALM activities to manage the timing
differences in repricing characteristics arising from its customer-related
assets and liabilities. At March 31, 1994, Chase had approximately $53
billion and $18 billion of notional swap principal and other ALM contracts
outstanding, respectively, related to such activities, compared with $37
billion and $14 billion, respectively, at December 31, 1993. During the
first quarter of 1994, when a highly volatile interest rate environment
existed, Chase's risk management activities, which are specifically linked to
assets and liabilities, increased in part, due to the higher level of customer
activities.
The following table summarizes certain of Chase's on-balance sheet assets
and liabilities at March 31, 1994, the corresponding interest revenue earned
on such assets or interest expense incurred on such liabilities during the
first quarter of 1994, as well as the notional or
19.
<PAGE> 20
contract amounts of related derivative products used for ALM purposes. Also
disclosed is the approximate percentage impact these derivative products had on
the related interest amounts reflected in Chase's Consolidated Statement of
Income. The percentage impact represents the increase (reduction) in interest
revenue or (increase) reduction in interest expense on the related balance
sheet items from the use of such derivative products. These impacts must be
viewed in conjunction with Chase's overall long-term ALM strategies and may be
mitigated by corresponding changes in interest revenue or interest expense
associated with the related assets and liabilities.
DERIVATIVE PRODUCTS AND RELATED BALANCE SHEET POSITIONS AND INTEREST REVENUE
(EXPENSE)
<TABLE>
<CAPTION>
Contract/ First Quarter 1994
Notional Amount Income Statement
------------------------- -------------------------
Balance Interest Other Interest
Sheet Rate ALM Revenue Percentage
($ in millions) Amount Swaps Contracts (Expense) Impact*
------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
March 31, 1994
Interest-Bearing Deposits
Placed with Banks . . . . . . . . . . . . . . . $ 5,054 $ 600 $ 400 $ 130 (2)%
Investment Securities . . . . . . . . . . . . . . 7,760 1,100 700 206 (4)
Loans . . . . . . . . . . . . . . . . . . . . . . 61,635 16,500 400 1,301 --
Deposits . . . . . . . . . . . . . . . . . . . . 68,626 31,900 15,800 (525) 16
Intermediate- and Long-Term Debt . . . . . . . . 5,509 2,600 400 (76) 23
------ ------
$52,700 $17,700
<FN>
* Represents the approximate percentage impact of the interest revenue or
interest expense arising from ALM derivative products on the related
interest revenue or interest expense amount prior to the impact of the
derivative products.
</TABLE>
The following table summarizes the outstanding ALM swap notional values at March
31, 1994 by yearly intervals. The decrease in notional value from one period to
the next period represents maturities of the underlying contracts. At March 31,
1994, the weighted average duration of fixed receive swaps and fixed pay swaps
was approximately 2.4 years and 1.3 years, respectively, compared to 2.4 years
and 1.8 years, respectively, at December 31, 1993. The weighted average
interest rates to be received and paid on such swaps are presented for each
yearly interval. The variable rates, which are generally based on London
Interbank Offered Rate (LIBOR), are presented using the forward yield curve at
March 31, 1994. However, actual repricings are generally based on the 3 month
or 6 month LIBOR rates in effect at the actual repricing dates, not the forward
yield curve. To the extent that the current 3 month and 6 month LIBOR rates
change, the variable rates of interest received or paid will change. Future
interest rate changes are not known, but could materially impact the variable
rates presented below. However, Chase expects the impact of these changes to be
mitigated by corresponding changes in the interest rates associated with the
linked assets and liabilities. In addition, net interest revenue will be
affected by the amortization of net deferred realized gains and premiums paid on
open ALM option products, as reflected in the tables on page 21.
OUTSTANDING ALM SWAP NOTIONAL VALUES BY YEARLY INTERVALS
<TABLE>
<CAPTION>
March 31,
-----------------------------------------------------------------------------------
($ in millions) 1994 1995 1996 1997 1998 Thereafter
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receive Fixed Swaps:
Notional Amount . . . $31,900 $20,100 $8,700 $6,500 $5,400 $4,800
Weighted Average:
Receive Rate . . . . 5.46% 6.16% 6.33% 6.10% 6.06% 5.97%
Pay Rate . . . . . . 4.60% 6.33% 6.91% 7.36% 7.63% 8.01%
Pay Fixed Swaps:
Notional Amount . . . $20,800 $16,800 $2,300 $1,200 $ 800 $ 500
Weighted Average:
Receive Rate . . . . 4.75% 6.26% 6.93% 7.44% 7.68% 7.95%
Pay Rate . . . . . . 5.36% 5.92% 6.62% 6.56% 6.95% 7.87%
------ ------ ----- ----- ----- -----
</TABLE>
20.
<PAGE> 21
Approximately 75% of the other ALM contracts, such as futures, forwards,
option, cap and floor contracts, mature in one year or less.
The fair value of Chase's open derivative contracts used for ALM purposes
at March 31, 1994 reflected a net unrealized loss of $231 million compared
with a net unrealized gain of $140 million at December 31, 1993. This change
in value resulted from the rise in interest rates during the first quarter of
1994 and was generally offset by the effect of changes in economic values of
the linked assets and liabilities. Chase's Consolidated Statement of
Condition included net deferred realized gains related to closed ALM
derivative contracts and open futures contracts of $248 million and $359
million at March 31, 1994 and December 31, 1993, respectively. The net
deferred realized gains at March 31, 1994 are expected to be amortized over the
periods indicated below.
AMORTIZATION OF NET DEFERRED REALIZED GAINS RELATED TO ALM DERIVATIVE CONTRACTS
<TABLE>
<CAPTION>
($ in millions) 1994 1995 1996 1997 1998 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Realized Gains Amortization $90 $83 $44 $18 $11 $2 $248
</TABLE>
In addition, Chase's Consolidated Statement of Condition included unamortized
premiums on open ALM option products purchased amounting to $60 million and
$23 million at March 31, 1994 and December 31, 1993, respectively. The
premiums at March 31, 1994 will be amortized over the periods indicated
below.
AMORTIZATION OF PREMIUMS ON OPEN ALM OPTION PRODUCTS PURCHASED
<TABLE>
<CAPTION>
($ in millions) 1994 1995 1996 1997 1998 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Premiums Amortization $6 $9 $6 $6 $4 $29 $60
</TABLE>
CAPITAL MANAGEMENT
Capital management is an ongoing process that consists of providing equity
and long-term debt for both current and future financial positioning. Chase
manages its capital to execute its strategic business plans and to support
its growth and investments, including acquisition strategies, in its core
businesses. Chase and its banking subsidiaries are subject to the capital
adequacy requirements of various federal banking agencies, such as the
Federal Reserve Board and the Office of the Comptroller of the Currency. At
March 31, 1994, the capital ratios of all of the Company's banking
subsidiaries exceeded the minimum ratios required of a well capitalized
institution under FDICIA and are expected to be in excess of the minimum
ratios required of a well capitalized institution in the future.
Chase's total stockholders' equity at March 31, 1994 was $8,154 million, or
7.24%, of total assets, compared with $8,122 million, or 7.95%, and $6,787
million, or 7.21%, at December 31, 1993 and March 31, 1993, respectively.
During the first quarter of 1994, the Company's Board of Directors increased
the quarterly common stock dividend from 30 cents to 33 cents per share. A
discussion regarding Chase's recent capital position is set forth below and
on pages 51 and 52 of the 1993 Annual Report.
21.
<PAGE> 22
TIER I AND TIER II CAPITAL
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1994 1993 1993
---------------------------------------------------
<S> <C> <C> <C>
Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,636 $ 7,528 $ 6,320
Tier II Capital . . . . . . . . . . . . . . . . . . . . . . . . . 4,087 4,259 4,029
------ ------ ------
Total Capital $11,723 $11,787 $10,349
------ ------ ------
</TABLE>
Chase's Tier I risk-based capital ratio was 8.43% at March 31, 1994 as compared
with 8.44% at December 31, 1993 and 7.10% at March 31, 1993. During the first
quarter of 1994, the increase in Tier I capital from retained earnings was
offset by an additional investment in Chase Securities, Inc. (CSI), the
Company's U.S. securities underwriting and dealing subsidiary. The Tier I
capital ratio was also impacted by higher net risk-weighted assets of $90.6
billion at March 31, 1994, compared with $89.2 billion at December 31, 1993.
During the first quarter of 1994, Tier II capital decreased due to the discount
applicable to subordinated debt with remaining maturities of five years or less
and the increase in the investment in CSI, partially offset by the issuance
of $150 million of subordinated notes.
The bank regulatory agencies are currently evaluating proposed amendments to
their regulatory capital guidelines that could include in Tier I Capital net
unrealized gains and losses on investment securities available for sale. Net
unrealized gains on such securities continue to be excluded from Tier I and
Total Capital until such amendments are finalized.
The Company issued in the first quarter of 1994, $150 million of subordinated
notes due 2009. The net proceeds from this issuance were used for general
corporate purposes, including advances to or investments in banking and
nonbanking subsidiaries of the Company and the repayment of commercial paper or
other indebtedness of the Company.
In May 1994, the Company issued $227,500,000 of Series N Adjustable Rate
Preferred Stock. The proceeds, which qualify as Tier I capital, are not
reflected in the capital ratios at March 31, 1994. On May 10, 1994, the
Company announced its intention to redeem all of its Series F Floating Rate
Preferred Stock of approximately $227,000,000.
CAPITAL RATIOS*
<TABLE>
<CAPTION>
Minimum
March 31, December 31, March 31, Regulatory
1994 1993 1993 Guidelines
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Tier I Leverage Ratio (a) . . . . . . . . . . . . . . . . . . . . 7.28%** 7.81% 6.90% 3.00-5.00%
Risk-Based Capital Ratios: (b)
Tier I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.43 8.44 7.10 4.00
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . 12.94 13.22 11.60 8.00
----- ----- ----- ---------
<FN>
* Based on Federal Reserve Board definitions. Risk-based capital and
leverage ratios exclude the assets and off-balance sheet financial
instruments of CSI. For capital calculations, one-half of the investment,
including any commitment to invest, in CSI is deducted from both Tier I and
Tier II Capital.
** The Tier I leverage ratio decreased 72 basis points from the adoption of
FIN 39 at January 1, 1994. Chase's Trading Account Assets and Liabilities
increased approximately $10 billion as a result of such adoption.
(a) Tier I Capital divided by adjusted average assets. Adjusted average
assets are defined as total quarterly average assets less the assets of CSI
and other adjustments.
(b) Tier I Capital or Total Capital divided by net risk-weighted assets. Net
risk-weighted assets include assets and off-balance sheet positions,
weighted by the type of instrument and the risk weight of the counterparty,
collateral or guarantor.
</TABLE>
22.
<PAGE> 23
TRADING ACTIVITIES
As discussed on pages 53 to 55 of the 1993 Annual Report, Chase conducts its
trading activities predominantly in two business sectors: Global Risk
Management (GRM) and Global Capital Markets (GCM). GRM designs and markets a
broad range of risk management products that provide customers with the
ability to manage currency, interest rate and other financial exposures. The
net portfolio exposures created as a result of providing this service to
customers are managed by GRM as part of Chase's trading portfolio. As a
secondary business objective, GRM creates proprietary positions in its
trading portfolio to take advantage of market opportunities that are not
associated with customer activities. GRM's trading activity is concentrated
in major currencies and products, including foreign currency, precious
metals, and interest rate, commodity and equity derivative products.
GCM functions as an intermediary between customers (both issuers and
investors) and the capital markets worldwide. Issuer needs are met through
primary market activities, including underwriting, private placement and
syndication. In order to meet investor needs, as well as to provide
secondary market support to primary market activity, GCM sells and trades a
variety of instruments in the U.S. and international capital markets,
including Brady bonds and restructured loans of emerging market countries,
U.S. government and government agency securities, money market instruments,
and investment grade and noninvestment grade fixed income securities.
Trading and trading-related revenues (including revenue classified as net
interest revenue for financial statement purposes) for GRM and GCM are set
forth below:
TOTAL TRADING AND TRADING-RELATED REVENUES*
<TABLE>
<CAPTION>
First Quarter
($ in millions) 1994 1993
-----------------
<S> <C> <C>
Business Diversification:
Foreign Exchange and Precious Metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 95 $109
Derivative Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 51
Global Capital Markets Trading and Underwriting . . . . . . . . . . . . . . . . . . . . . . . 59 35
--- ---
Total $200 $195
Geographic Distribution: --- ---
The Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120 $ 85
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 66
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 44
--- ---
Total $200 $195
--- ---
<FN>
* Net interest revenue attributable to trading activities of approximately
$20 million and $21 million in the first quarter of 1994 and 1993,
respectively, includes accruals on interest-earning and interest-bearing
trading-related positions, as well as allocated amounts reflecting the
cost or benefit, based on short-term interest rates, associated with net
trading-related positions.
</TABLE>
TRADING ACCOUNT ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
($ in millions) 1994 1993
---------------------------
<S> <C> <C>
Securities and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,217 $6,171
Other, Principally Derivative and Foreign Exchange Contracts . . . . . . . . . . . . . . . . 11,030* 762
------ -----
Total $18,247 $6,933
------ -----
<FN>
* Includes approximately $10 billion resulting from the adoption of FIN 39
at January 1, 1994.
</TABLE>
23.
<PAGE> 24
TRADING ACCOUNT CONTRACTS
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993
-------------------------------------------------------------------------------
Contract/Notional Credit Risk Contract/Notional Credit Risk
($ in millions) Amount* Amount** Amount* Amount**
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Rate Contracts:
Interest Rate Swaps . . . . . . . . . . $200,700 $4,500 $178,700 $ 5,600
Currency Exchange Agreements . . . . . . 15,100 1,000 13,900 700
Forwards and Futures . . . . . . . . . . 170,600 100 123,200 70
Options, Caps and Floors Purchased . . . 73,800 800 61,400 900
Options, Caps and Floors Written . . . . 69,700 *** 57,500 ***
Foreign Exchange Contracts:
Spot, Forwards and Futures . . . . . . . 475,700 7,400 418,300 5,400
Options Purchased . . . . . . . . . . . 37,600 700 29,600 600
Options Written . . . . . . . . . . . . 42,900 *** 33,200 ***
Commodity Contracts . . . . . . . . . . . . 3,100 400 3,200 500
<FN>
* Contract or notional amounts of these instruments, which are not included in
the Consolidated Statement of Condition, are indicators of the level of
Chase's activities in particular classes of financial instruments. Contract
or notional amounts related to ALM activities are shown on page 20.
** Credit risk (defined by SFAS 105, "Disclosure of Information about
Financial Instruments with Off-Balance Sheet Risk and Financial Instruments
with Concentrations of Credit Risk," as the accounting loss that may occur
from counterparty failure) exists when derivative and foreign exchange
contracts have positive market values. These amounts do not consider the
value of any collateral or the effect of any possible reduction due to master
netting agreements.
*** Options, caps and floors written have no credit risk.
</TABLE>
FAIR VALUE DISCLOSURES
Chase monitors the estimated fair values of its on- and off- balance sheet
financial instruments as discussed on pages 80 and 81 of the 1993 Annual
Report. Based upon market and other conditions existing at March 31, 1994, as
compared with year-end 1993, with the exception of derivative instruments as
discussed on page 21, the estimated fair values of Chase's on- and
off- balance sheet financial instruments were not adversely impacted in the
first quarter of 1994.
24.
<PAGE> 25
FINANCIAL RATIOS
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION> 1993
1994 --------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings Ratios
Net Income as a Percentage of Average:
Total Assets . . . . . . . . . . . . . . . . . . . . . . 1.28% 1.18% 1.01% 0.93% 0.62%
Common Stockholders' Equity* . . . . . . . . . . . . . . 20.15 17.90 15.14 14.95 9.34
Total Stockholders' Equity . . . . . . . . . . . . . . . 18.21 16.22 13.74 13.46 9.26
----- ----- ----- ----- -----
Leverage Ratios--Averages
Common Stockholders' Equity as a % of Total Assets . . . . 5.80% 5.92% 5.79% 5.21% 5.09%
Total Stockholders' Equity as a % of Total Assets . . . . 7.00 7.25 7.33 6.85 6.69
----- ---- ----- ----- -----
Common Stockholders' Equity Per Common Share . . . . . . . $36.55 $36.48 $33.87 $32.86 $32.61
----- ----- ----- ----- -----
Capital Ratios at Quarter End**
Common Stockholders' Equity as a % of Total Assets . . . . 6.00%*** 6.58% 6.18% 6.08% 5.46%
Total Stockholders' Equity as a % of Total Assets . . . . 7.24*** 7.95 7.57 7.51 7.21
Tier I Leverage . . . . . . . . . . . . . . . . . . . . . . 7.28*** 7.81 7.48 7.67 6.90
Tier I Capital as a % of Net Risk-Weighted Assets . . . . . 8.43 8.44 7.94 7.74 7.10
Total Capital as a % of Net Risk-Weighted Assets . . . . . 12.94 13.22 12.63 12.10 11.60
----- ----- ----- ----- -----
<FN>
* Based on Net Income, adjusted as applicable.
** Based on Federal Reserve Board definition.
*** The common and total equity ratios and the Tier I leverage ratio
decreased 59 basis points (bp), 71 bp and 72 bp, respectively,
from the adoption of FIN 39 at January 1, 1994. Chase's Trading
Account Assets and Liabilities increased approximately $10 billion
as a result of such adoption.
</TABLE>
<TABLE>
The Chase Manhattan Bank, N.A. and Subsidiaries
Capital Ratios at Quarter End*
<S> <C> <C> <C> <C> <C>
Tier I Leverage . . . . . . . . . . . . . . . . . . . . . . 6.51%** 6.98% 6.71% 6.85% 6.42%
Tier I Capital as a % of Net Risk-Weighted Assets . . . . . 7.74 7.63 7.28 7.05 6.86
Total Capital as a % of Net Risk-Weighted Assets . . . . . 11.66 11.74 11.36 11.15 11.15
----- ----- ----- ----- -----
<FN>
* Based on Office of the Comptroller of the Currency definition.
** The Tier I leverage ratio decreased 73 bp from the adoption of FIN 39
at January 1, 1994.
</TABLE>
STOCKHOLDER DATA
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION> 1993
1994 ------------------------------------------------
($ in millions, except per share data) 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Quarterly Cash Dividends:
Common Stock:
Per Share . . . . . . . . . . . . . . . . . . . . . . . . $ .33 $ .30 $ .30 $ .30 $ .30
Aggregate . . . . . . . . . . . . . . . . . . . . . . . . $60.9 $55.1 $55.0 $47.3 $46.9
Preferred Stock:
6 3/4% Series B . . . . . . . . . . . . . . . . . . . . . -- -- .3 .4 .4
7.60% Series C . . . . . . . . . . . . . . . . . . . . . -- -- .4 .5 .5
Floating Rate Series E . . . . . . . . . . . . . . . . . -- -- 4.2 4.9 5.2
Floating Rate Series F . . . . . . . . . . . . . . . . . 3.4 3.6 3.9 4.1 4.3
10 1/2% Series G . . . . . . . . . . . . . . . . . . . . 3.7 3.7 3.7 3.7 3.7
9.76% Series H . . . . . . . . . . . . . . . . . . . . . 2.5 2.5 2.5 2.5 2.5
10.84% Series I . . . . . . . . . . . . . . . . . . . . . 5.4 5.4 5.4 5.4 5.4
9.08% Series J . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 3.4 3.4 3.4
8 1/2% Series K . . . . . . . . . . . . . . . . . . . . . 3.6 3.6 3.6 3.6 3.6
8.32% Series L . . . . . . . . . . . . . . . . . . . . . 5.0 5.0 5.0 5.0 5.0
8.40% Series M . . . . . . . . . . . . . . . . . . . . . 3.6 3.6 3.6 3.6 2.4
----- ----- ----- ----- -----
Total Preferred Stock 30.6 30.8 36.0 37.1 36.4
----- ----- ----- ----- -----
Total Cash Dividends $91.5 $85.9 $91.0 $84.4 $83.3
----- ----- ----- ----- -----
Cash Dividends Paid on Common Stock as Percentage of Net
Income Applicable to Common Stock 18.3% 19.5% 23.8% 24.2% 40.1%
Total Cash Dividends Paid as a Percentage of Net Income 25.1 27.4 34.1 36.2 54.4
----- ----- ----- ----- -----
</TABLE>
25.
<PAGE> 26
Consolidated Statement of Condition
The Chase Manhattan Bank, N.A. and Subsidiaries
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1994 1993 1993
--------- ------------- ---------
<S> <C> <C> <C>
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,236 $ 5,772 $ 4,501
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . . 5,173 5,431 5,673
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . . 3,999 4,439 3,778
Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,524 6,309 2,936
Investment Securities:
Held to Maturity (Market Value of $719, $684 and $726, Respectively) . . . . 706 657 696
Available for Sale Carried at Fair Value . . . . . . . . . . . . . . . . . . 5,707 6,766 --
At Lower of Cost or Market (Market Value of $4,280) . . . . . . . . . . . . . -- -- 4,144
------ ------ ------
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . . 6,413 7,423 4,840
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,083 48,109 46,962
Less: Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . . 1,099 1,085 1,547
------ ------ ------
Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,984 47,024 45,415
Assets Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . 120 219 867
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . . . 705 689 763
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 603 566 566
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,626 1,617 1,723
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,770 4,514 4,387
------ ------ ------
Total Assets $93,153 $84,003 $75,449
------ ------ ------
Liabilities and Stockholder's Equity
Deposits:
Domestic Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,005 $13,740 $10,433
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,065 21,276 21,141
Overseas Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,882 2,473 2,022
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,494 28,120 24,191
------ ------ ------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,446 65,609 57,787
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . 2,519 3,534 2,014
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,156 1,253 1,496
Trading Account Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,215 -- --
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715 696 768
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374 347 470
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . . 4,267 3,088 3,542
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . 3,038 3,032 3,677
------ ------ ------
Total Liabilities 86,730 77,559 69,754
------ ------ ------
Stockholder's Equity:
Capital Stock ($15 Par Value):
3/31/94 12/31/93 3/31/93
---------- ---------- ------------
Number of Shares Authorized 81,744,445 81,744,445 81,744,445
Number of Shares Outstanding 60,794,266 60,699,597 60,355,949 . . . 912 910 905
Surplus 4,391 4,383 4,290
Net Unrealized Gains (Losses) on Investment Securities - Available for Sale . (27) 187 --
Undivided Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,147 964 500
------ ------ ------
Total Stockholder's Equity 6,423 6,444 5,695
------ ------ ------
Total Liabilities and Stockholder's Equity $93,153 $84,003 $75,449
------ ------ ------
<FN>
The accompanying notes on pages 8 and 9 are an integral part of the financial
statements.
Member Federal Deposit Insurance Corporation
</TABLE>
26.
<PAGE> 27
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1994
------------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
------- -------- -------
<S> <C> <C> <C>
Assets
Interest-Earning Assets:
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . $ 6,207 $ 130 8.50%
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . 10,789 326 12.25
Trading Account Assets-Interest-Earning* . . . . . . . . . . . . . . . . 5,902 119 8.15
Investment Securities:
Held to Maturity:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955 34 14.41
Tax-Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 11 11.72
------- ----- -----
Total Held to Maturity 1,351 45 13.62
Available for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 7,464 165 9.36**
------- ----- -----
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . 8,815 210 9.66
Loans:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,153 891 8.19
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,116 410 9.70***
------- ----- -----
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,269 1,301 8.61
Less: Reserve for Possible Credit Losses**** . . . . . . . . . . . . . 1,441 -- --
------- ----- -----
Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,828 1,301 8.61
------- ----- -----
Accelerated Disposition Portfolio-Interest-Earning . . . . . . . . . . . . 101 3 13.31
------- ----- -----
Total Interest-Earning Assets****, Net 91,642 2,089 9.10
------- ----- -----
Summary--Gross Interest-Earning Assets:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,592 1,075 6.96
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,491 1,014 13.48
------- ----- -----
Total Gross Interest-Earning Assets 93,083 $2,089 9.10%
------- ----- -----
Noninterest-Earning Assets: . . . . . . . . . . . . . . . . . . . . . . .
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . 6,174
Trading Account Assets-Noninterest-Earning***** . . . . . . . . . . . . . 9,400
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . 706
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 1,790
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . 823
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,328
-------
Total Noninterest-Earning Assets 24,221
-------
Total Assets $115,863
<FN> -------
* Includes only trading securities.
** Average rate based on average amortized cost.
*** Reflects the extraordinarily high level of local interest rates
prevailing in certain Latin American countries with highly inflationary
economies.
**** Reserve for Possible Credit Losses excluded from calculations of
average balances and average rates, as appropriate.
***** Includes derivatives; and foreign exchange, equity index linked,
commodity and bullion contracts.
NOTE: Loan and other asset amounts include nonaccrual and restructured loans
and ORE, as applicable.
</TABLE>
27.
<PAGE> 28
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1994
----------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
------- -------- -------
<S> <C> <C> <C>
Liabilities, Redeemable Preferred Stock and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Domestic Offices:
Savings and Negotiable Order of Withdrawal Deposits . . . . . . . . . . $ 5,612 $ 24 1.73%
Money Market Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 11,515 34 1.19
Negotiable Certificates of Deposit . . . . . . . . . . . . . . . . . . 1,519 26 7.08
Other Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 8,635 36 1.68
------- ------- -------
Total Domestic Offices 27,281 120 1.79
Overseas Offices 28,646 405 5.73
------- ------- -------
Total Interest-Bearing Deposits . . . . . . . . . . . . . . . . . . . . . 55,927 525 3.80
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . 12,764 124 3.94
Other Short-Term Borrowings:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,830 79 11.36
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,196 327 110.76*
------- ------- -------
Total Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . 4,026 406 40.88
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . 5,563 76 5.58
------- ------- -------
Total Interest-Bearing Liabilities 78,280 1,131 5.86
------- ------- -------
Summary--Interest-Bearing Liabilities:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,340 338 2.73
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,940 793 11.50
------- ------- -------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . 14,085
Deposits in Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . 2,476
Trading Account Liabilities** . . . . . . . . . . . . . . . . . . . . . . . 8,702
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 714
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . 3,491
-------
Total Noninterest-Bearing Liabilities 29,468
-------
Total Liabilities 107,748
-------
Stockholders' Equity:
Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . 1,399
Common Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . 6,716
-------
Total Stockholders' Equity 8,115
-------
Total Liabilities, Redeemable Preferred Stock and Stockholders' $115,863
Equity -------
Taxable Equivalent Net Interest Revenue and Average Interest Rate Spread $ 958 3.24%
------- -------
Net Interest Revenue as a Percentage of Gross Interest-Earning Assets 4.17%
-------
<FN>
* Reflects the extraordinarily high level of local interest rates prevailing in certain Latin American countries with highly
inflationary economies.
** Includes noninterest-bearing derivatives; short sales; and foreign exchange, equity index linked, commodity and bullion
contracts.
</TABLE>
28.
<PAGE> 29
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1993
---------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
------- -------- -------
<S> <C> <C> <C>
Assets
Interest-Earning Assets:
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . $ 6,337 $ 148 9.48%
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . 9,012 258 11.60
Trading Account Assets* . . . . . . . . . . . . . . . . . . . . . . . . . 3,300 52 6.35
Investment Securities:
Held to Maturity
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,010 33 13.34
Tax-Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474 14 11.67
------- ------- -----
Total Held to Maturity . . . . . . . . . . . . . . . . . . . . . . 1,484 47 12.81
Available for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 4,428 133 12.20
------- ------- -----
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . 5,912 180 12.35
Loans:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,111 945 8.69
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,036 586 13.19**
------- ------- -----
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,147 1,531 10.00
Less: Reserve for Possible Credit Losses*** . . . . . . . . . . . . . 1,979 - -
------- ------- -----
Loans, Net 60,168 1,531 10.00
------- ------- -----
Total Interest-Earning Assets***, Net 84,729 2,169 10.15
------- ------- -----
Summary--Gross Interest-Earning Assets:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,305 1,102 7.67
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,403 1,067 15.24
------- ------- -----
Total Gross Interest-Earning Assets . . . . . . . . . . . . . . . . . 86,708 $2,169 10.15%
------- ------- -----
Noninterest-Earning Assets:
Cash and Due from Banks. . . . . . . . . . . . . . . . . . . . . . . . . . 6,285
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . 736
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 1,878
Accrued Interest Receivables . . . . . . . . . . . . . . . . . . . . . . 781
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,279
-------
Total Noninterest-Earning Assets 14,959
-------
Total Assets $99,688
-------
<FN>
* Prior to October 31, 1993, included trading securities and derivatives only. Foreign exchange, equity index linked, commodity
and bullion contracts were reported in Other Assets while short sales were reported as Other Liabilities.
** Reflects the extraordinarily high level of local interest rates prevailing in certain Latin American countries with highly
inflationary economies.
*** Reserve for Possible Credit Losses excluded from calculations of average balances and average rates, as appropriate.
NOTE: Loan and other asset amounts include nonaccrual and restructured loans and ORE, as applicable, including loans and ORE
transferred to the accelerated disposition portfolio since they were transferred on March 31, 1993.
</TABLE>
29.
<PAGE> 30
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1993
------------------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
------- -------- -------
<S> <C> <C> <C>
Liabilities, Redeemable Preferred Stock and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Domestic Offices:
Savings and Negotiable Order of Withdrawal Deposits . . . . . . . . . . $ 5,390 $ 30 2.26%
Money Market Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 10,585 66 2.55
Negotiable Certificates of Deposit . . . . . . . . . . . . . . . . . . 2,357 46 7.86
Other Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 9,967 54 2.18
-------- ----- ------
Total Domestic Offices 28,299 196 2.81
Overseas Offices 25,086 343 5.54
-------- ----- ------
Total Interest-Bearing Deposits . . . . . . . . . . . . . . . . . . . . 53,385 539 4.09
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . 10,634 138 5.26
Other Short-Term Borrowings:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,290 35 6.17
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946 250 107.45*
-------- ----- -------
Total Other Short-Term Borrowings. . . . . . . . . . . . . . . . . . . . . 3,236 285 35.78
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . 6,670 151 9.21
-------- ----- ------
Total Interest-Bearing Liabilities 73,925 1,113 6.11
-------- ----- ------
Summary--Interest-Bearing Liabilities:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,323 383 3.43
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,602 730 10.36
-------- ----- ------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . 12,973
Deposits in Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . 1,817
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 758
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . 3,490
--------
Total Noninterest-Bearing Liabilities 19,038
--------
Total Liabilities 92,963
--------
Redeemable Preferred Stock 53
--------
Stockholders' Equity:
Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . 1,598
Common Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . 5,074
--------
Total Stockholders' Equity 6,672
--------
Total Liabilities, Redeemable Preferred Stock
and Stockholders' Equity $ 99,688
--------
Taxable Equivalent Net Interest Revenue and Average Interest Rate Spread $1,056 4.04%
----- ------
Net Interest Revenue as a Percentage of Gross Interest-Earning Assets 4.94%
------
<FN>
* Reflects the extraordinarily high level of local interest rates prevailing in certain Latin American countries with highly
inflationary economies.
</TABLE>
30.
<PAGE> 31
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
SECURITIES--HELD TO MATURITY
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993 March 31, 1993
-------------------------------------- ----------------------------- -------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair Amortized Fair
($ in millions) Cost Gains Losses Value* Cost Value* Cost Value*
--------- ---------- ---------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities . . . $ 26 $ 1 $-- $ 27 $ 31 $ 33 $ 44 $ 46
Federal Agency Securities** . . 394 -- -- 394 662 666 644 653
State and Political Subdivision
Securities . . . . . . . . . 374 14 1 387 419 446 466 496
Other Bonds, Notes and
Debentures:
Securities Issued by OECD
Central Governments
and their Agencies*** . 5 -- -- 5 16 16 19 20
Securities Issued by Other
Foreign Central
Governments and
their Agencies . . . 10 -- -- 10 10 10 9 9
Privately-Issued Mortgage-
Backed Securities . . . 218 1 6 213 35 35 44 41
Corporate and Other Debt
Securities 139 -- -- 139 35 35 53 53
----- -- -- ----- ----- ----- ----- -----
Total Other Bonds, Notes
and Debentures 372 1 6 367 96 96 125 123
----- -- -- ----- ----- ----- ----- -----
Federal Reserve Bank and
Other Stock Investments . . . 179 -- -- 179 176 176 167 167
----- -- -- ----- ----- ----- ----- -----
Total $1,345 $16 $ 7 $1,354 $1,384 $1,417 $1,446 $1,485
----- -- -- ----- ----- ----- ----- -----
<FN>
* The fair values of securities are estimated utilizing independent pricing
services and are based on available market data, which often reflect
transactions of relatively small size and are not necessarily indicative of
the prices at which large amounts of particular issues could be sold.
** Primarily Mortgage-Backed Federal Agency Securities.
*** OECD includes all countries that are members of the Organization for Economic
Cooperation and Development, excluding the United States.
Note: Interest and dividends on investment securities at historical cost in
terms of taxable interest income, nontaxable interest income, and
dividends for the first quarter of 1994 were: $31 million, $7 million and
$3 million, respectively; and for the first quarter of 1993 were: $31
million, $9 million and $2 million, respectively.
</TABLE>
31.
<PAGE> 32
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
SECURITIES--AT
LOWER OF
SECURITIES--AVAILABLE FOR SALE AT FAIR VALUE COST OR MARKET
---------------------------------------------------------------------- ---------------------
March 31, 1994 December 31, 1993 March 31, 1993
------------------------------------- ----------------------------- --------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair Amortized Fair
($ in millions) Cost Gains Losses Value* Cost Value* Cost Value*
--------- ---------- ---------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities . . . . . $2,304 $ 4 $ -- $2,308 $2,273 $2,307 $1,568 $1,627
Federal Agency Securities** . . . . 1,118 1 4 1,115 1,202 1,213 671 693
State and Political Subdivision
Securities . . . . . . . . . . . 8 -- -- 8 -- -- -- --
Other Bonds, Notes and
Debentures:
Securities Issued by OECD
Central Governments
and their Agencies*** . . 960 2 27 935 1,535 1,564 1,322 1,322
Securities Issued by Other
Foreign Central
Governments and
their Agencies . . . . . 1,171 2 136 1,037 1,476 1,618 387 384
Privately-Issued Mortgage-
Backed Securities . . . . . 88 2 -- 90 136 139 232 237
Corporate and Other Debt
Securities . . . . . . . . . 420 28 5 443 318 338 474 479
----- --- --- ----- ----- ----- ----- -----
Total Other Bonds, Notes
and Debentures 2,639 34 168 2,505 3,465 3,659 2,415 2,422
----- --- --- ----- ----- ----- ----- -----
Federal Reserve Bank and
Other Stock Investments . . . . 338 141 -- 479 312 511 271 563
----- --- --- ----- ----- ----- ----- -----
Total $6,407 $180 $172 $6,415 $7,252 $7,690 $4,925 $5,305
----- --- --- ----- ----- ----- ----- -----
<FN>
* The fair/market values of securities are estimated utilizing independent
pricing services and are based on available market data, which often reflect
transactions of relatively small size and are not necessarily indicative of
the prices at which large amounts of particular issues could be sold.
** Primarily Mortgage-Backed Federal Agency Securities.
*** OECD includes all countries that are members of the Organization for Economic
Cooperation and Development, excluding the United States.
Note: Interest and dividends on investment securities available for sale in
terms of taxable interest income and dividends for the first quarter of 1994
were: $163 million and $2 million, respectively; and for the first quarter of
1993 were: $132 million and $1 million, respectively.
</TABLE>
32.
<PAGE> 33
Average Loan Balances
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter
------------------------
($ in millions, based on daily averages) 1994 1993
--------- ---------
<S> <C> <C>
Domestic Offices:
Wholesale
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,076 $ 6,433*
Commercial and Industrial . . . . . . . . . . . . . . . . . . . . . . . . . 8,370 8,912
Financial Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,204 1,751
Lease Financings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,484 1,665
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,683 1,549
Consumer:
Secured by 1-4 Family Residential Properties . . . . . . . . . . . . . . . . 13,937 10,383
Credit Card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,245 6,018
Other Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,328 7,724
------ ------
Total Domestic Offices, Gross . . . . . . . . . . . . . . . . . . . . . . . . . . 44,327 44,435
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . . . . . . . . . . . 174 324
------ ------
Total Domestic Offices 44,153 44,111
------ ------
Overseas Offices, Gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,159 18,078
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . . . . . . . . . . . 43 42
------ ------
Total Overseas Offices 17,116 18,036
------ ------
Total Average Loans $61,269 $62,147
------ ------
<FN>
* Includes the loans transferred to the accelerated disposition portfolio since they were transferred on March 31, 1993.
</TABLE>
Analysis of Credit Loss Experience
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1994 1993
----------------------------------------------------------------------------
($ in millions) 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Reserve for Possible Credit Losses at
Beginning of Period $1,425 $1,916 $1,918 $1,912 $1,913
Net Loan Charge-Offs:
Domestic Loans:
Commercial Real Estate . . . . . . . . . . 51 54 58 74 91
Commercial and Industrial . . . . . . . . (2) 16 40 50 18
Financial Institutions . . . . . . . . . . 12 11 5 2 9
Lease Financings . . . . . . . . . . . . . 1 8 2 3 1
Consumer . . . . . . . . . . . . . . . . 94 100 97 95 103
------ ------- -------- -------- ---------
Total Domestic Net Loan Charge-Offs 156 189 202 224 222
------ ------- -------- -------- ---------
International Loans:
Commercial Real Estate . . . . . . . . . . -- -- 1 -- --
Commercial and Industrial . . . . . . . . 11 35 11 (2) 4
Financial Institutions . . . . . . . . . . (1) 1 (4) (1) (1)
Consumer . . . . . . . . . . . . . . . . . -- 1 1 1 --
Foreign Governments and Official (10) 453 5 -- (5)
Institutions . . . . . . . . . . . . . . .
------ ------- -------- -------- ---------
Total International Net Loan Charge-Offs* -- 490 14 (2) (2)
------ ------- -------- -------- ---------
Total Net Loan Charge-Offs 156 679 216 222 220
------ ------- -------- -------- ---------
Provision for Credit Losses Charged to
Expenses. . . . . . . . . . . . . . . . . . . 160 195 215 225 360
Provision for Loans Held for
Accelerated Disposition . . . . . . . . . . -- -- -- -- 566
Writedown of Loans Transferred to
Accelerated Disposition Portfolio . . . . . . -- -- -- -- (701)
Reserves of Disposed Subsidiaries and Other
Adjustments . . . . . . . . . . . . . . . . -- (7) (1) 4 (6)
Foreign Exchange Translation Adjustments -- -- -- (1) --
------ ------- -------- -------- ---------
Reserve For Possible Credit Losses at End
of Period $1,429 $1,425 $1,916 $1,918 $1,912
------ ------- -------- -------- ---------
<FN>
* Includes net loan charge-offs (recoveries) applicable to refinancing
countries of $(2) million, $484 million, $1 million, $(2) million and $(7)
million, respectively.
</TABLE>
33.
<PAGE> 34
INTERMEDIATE- AND LONG-TERM DEBT
The Chase Manhattan Corporation and Subsidiaries
Intermediate- and Long-Term Debt consists of obligations having an original
maturity at issuance of more than one year. A summary of Intermediate- and
Long-Term Debt, net of unamortized original issue discount, outstanding at
March 31, 1994 and December 31, 1993 and certain applicable terms is presented
below. The distribution of maturities is based on contractual maturity or the
earliest date which the debt can be redeemed at the option of the holder.
<TABLE>
<CAPTION>
Amount Outstanding
Maturity Interest March 31, December 31, Other
($ in millions) Date Rate* 1994 1993 Data**
-------- -------- -------- ------------ ------
<S> <C> <C> <C> <C> <C>
COMPANY:
Medium-Term Notes. . . . . . . . . . . . . . . 1994--1997 5.52--9.61% $ 453 $ 530
Floating Rate Medium-Term Notes. . . . . . . . 1994--1995 3.35--4.88 377 409
Floating Rate Oil-Linked Notes . . . . . . . . 1994 4.56 10 10
Notes. . . . . . . . . . . . . . . . . . . . . 1994 7.38 -- 158 T
Notes. . . . . . . . . . . . . . . . . . . . . 1996 8.50 250 250 T
Notes. . . . . . . . . . . . . . . . . . . . . 1997 7.88 227 227 T
Floating Rate Subordinated Notes . . . . . . . 1997 3.75 175 175 S,T
Subordinated Notes . . . . . . . . . . . . . . 1997 7.50 200 200 S,T
Non-U.S. Currency Borrowings . . . . . . . . . 1998 5.30 49 45
Floating Rate Notes. . . . . . . . . . . . . . 1999 4.10 11 11 R
Subordinated Medium-Term Notes . . . . . . . . 1999 7.58--9.00 175 175 S,T
Subordinated Notes . . . . . . . . . . . . . . 1999 10.00 275 275 S,T
Subordinated Notes . . . . . . . . . . . . . . 1999 8.00 200 200 S,T
Subordinated Notes . . . . . . . . . . . . . . 1999 7.75 200 200 S,T
Floating Rate Subordinated Notes . . . . . . . 2000 5.00 250 250 S,R,T
Subordinated Notes . . . . . . . . . . . . . . 2001 9.38 200 200 S,T
Subordinated Notes . . . . . . . . . . . . . . 2001 9.75 150 150 S,T
Subordinated Notes . . . . . . . . . . . . . . 2003 7.50 200 200 S,T
Floating Rate Subordinated Notes
(Three Issues) . . . . . . . . . . . . . . . 2003 4.35--5.50 342 341 S,T
Subordinated Notes . . . . . . . . . . . . . . 2005 6.50 198 198 S,T
Subordinated Notes . . . . . . . . . . . . . . 2008 6.75 199 199 S,T
Subordinated Notes . . . . . . . . . . . . . . 2008 6.13 99 99 S,T
Fixed Rate Subordinated Note . . . . . . . . . 2009 6.50 149 -- S,T
Floating Rate Subordinated Notes . . . . . . . 2009 5.25 321 321 S,R,T
Other Borrowings . . . . . . . . . . . . . . . 1994--1996 *** 9 13
---------- --------- ----- ----- -----
Total 4,719 4,836
----- ----- -----
BANK:
Student Loan Marketing Association
Borrowings . . . . . . . . . . . . . . . . . 1994 3.48--4.26 500 500
Floating Rate Subordinated Note. . . . . . . . 1996 8.50 400 400 S,C
Subordinated Note Issued with Equity
Contract . . . . . . . . . . . . . . . . . . 1999 9.25 150 150 S,C
Subordinated Note. . . . . . . . . . . . . . . 1999 6.25 260 260 S,C
Fixed Rate Subordinated Notes
(Three Issues). . . . . . . . . . . . . . . . 2010 9.00 1,100 1,100 S,C
Subordinated Notes (Two Issues). . . . . . . . 2012 9.00 450 450 S,C
Other Borrowings . . . . . . . . . . . . . . . 1994--2013 *** 178 172
---------- -------- ----- ----- -----
Total 3,038 3,032
----- ----- -----
OTHER SUBSIDIARIES
Subordinated Note. . . . . . . . . . . . . . . 1997 5.63 200 -- S,C
Subordinated Note. . . . . . . . . . . . . . . 2012 9.00 250 250 S,C
Other Borrowings . . . . . . . . . . . . . . . 1994-1997 *** 112 133
----------- --------- ----- ----- ------
Total 562 383
----- -----
Less: Investment by the Company in a Subordinated Note
Issued with Equity Contract of the Bank and other 2,810 2,610 S,C
Subordinated Debentures . . . . . . . . . . ----- ----- ------
Total Intermediate-and Long-Term Debt $5,509 $5,641
----- ----- ------
<FN>
* The interest rates shown for floating rate issues are those in effect at March 31, 1994, or in the case of those issues
redeemed in 1994 at the date of redemption. Such floating interest rates are determined by formulas, subject to certain
minimum rates.
** Issues indicated by:
"S"--Subordinated in right of payment to claims of depositors and certain other creditors, as applicable.
"C"--Held by the Company.
"R"--Redeemable in whole, or in part, at the option of Chase, prior to maturity.
"T"--Qualifies as Tier II capital under the Risk-based Capital guidelines.
*** Consists of numerous borrowings which bear interest at rates generally reflecting market conditions in the applicable
countries at the time of issuance or repricing.
</TABLE>
34.
<PAGE> 35
Consolidated Statement of Income (Five Quarters)
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1994 1993
----------------------------------------------------
($ in millions, except per share data) 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest Revenue
Interest and Fees On Loans. . . . . . . . . . . . . . $1,301 $1,479 $1,405 $1,383 $1,528
Interest On Deposits Placed With Banks. . . . . . . . 130 164 214 191 148
Interest and Dividends on Investment Securities:
Held to Maturity. . . . . . . . . . . . . . . . . . 41 42 42 42 42
Available for Sale . . . . . . . . . . . . . . . . 165 -- -- -- --
At Lower of Cost or Market . . . . . . . . . . . . -- 133 121 130 133
Interest On Federal Funds Sold and Securities
Purchased Under Resale Agreements . . . . . . . . . 326 245 261 265 258
Interest On Trading Account Assets. . . . . . . . . . 119 92 51 47 52
----------- ----------- ----------- ----------- -----------
Total Interest Revenue 2,082 2,155 2,094 2,058 2,161
----------- ----------- ----------- ----------- -----------
Interest Expense
Deposits. . . . . . . . . . . . . . . . . . . . . . . 525 469 513 493 539
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements. . . . . . . . . . 124 127 150 155 138
Commercial Paper. . . . . . . . . . . . . . . . . . . 13 11 13 12 10
Other Short-Term Borrowings . . . . . . . . . . . . . 393 460 405 344 275
Intermediate- and Long-Term Debt. . . . . . . . . . . 76 86 94 160 151
----------- ----------- ----------- ----------- -----------
Total Interest Expense 1,131 1,153 1,175 1,164 1,113
----------- ----------- ----------- ----------- -----------
Net Interest Revenue 951 1,002 919 894 1,048
Provision for Possible Credit Losses. . . . . . . . . . 160 195 215 225 360
Provision for Loans Held for Accelerated
Disposition . . . . . . . . . . . . . . . . . . . . . -- -- -- -- 566
----------- ----------- ----------- ----------- -----------
Net Interest Revenue After Provisions for Possible
Credit Losses and Loans Held for Accelerated
Disposition . . . . . . . . . . . . . . . . . . . . . 791 807 704 669 122
----------- ----------- ----------- ----------- -----------
Other Operating Revenue
Fees and Commissions. . . . . . . . . . . . . . . . . 446 401 406 388 367
Foreign Exchange Trading Revenue. . . . . . . . . . . 85 75 93 85 103
Trading Account Revenue . . . . . . . . . . . . . . . 94 93 93 102 72
Investment Securities Gains . . . . . . . . . . . . . 79 12 15 14 6
Other Revenue . . . . . . . . . . . . . . . . . . . . 149 297 113 104 110
----------- ----------- ----------- ----------- -----------
Total Other Operating Revenue 853 878 720 693 658
----------- ----------- ----------- ----------- -----------
Other Operating Expenses
Salaries and Employee Benefits:
Salaries. . . . . . . . . . . . . . . . . . . . . . 415 417 409 387 377
Employee Benefits . . . . . . . . . . . . . . . . . 129 130 117 115 125
----------- ----------- ----------- ----------- -----------
544 547 526 502 502
Net Occupancy . . . . . . . . . . . . . . . . . . . . 100 112 93 93 106
Equipment Rentals, Depreciation and
Maintenance . . . . . . . . . . . . . . . . . . . . 71 85 73 69 71
Provision for Other Real Estate Held for
Accelerated Disposition . . . . . . . . . . . . . . -- -- -- -- 318
Other Expenses. . . . . . . . . . . . . . . . . . . . 342 455 333 331 304
----------- ----------- ----------- ----------- -----------
Total Other Operating Expenses 1,057 1,199 1,025 995 1,301
----------- ----------- ----------- ----------- -----------
Income (Loss) Before Taxes. . . . . . . . . . . . . . 587 486 399 367 (521)
Applicable Income Taxes (Benefits). . . . . . . . . . 223 173 132 134 (174)
----------- ----------- ----------- ----------- -----------
Income (Loss) Before Cumulative Effect of Change in
Accounting Principle. . . . . . . . . . . . . . . . . 364 313 267 233 (347)
----------- ----------- ----------- ----------- -----------
Cumulative Effect of Change in Accounting Principle-
Adoption of SFAS 109 . . . . . . . . . . . . . . . . -- -- -- -- 500
----------- ----------- ----------- ----------- -----------
Net Income $ 364 $ 313 $ 267 $ 233 $ 153
----------- ----------- ----------- ----------- -----------
Net Income Applicable to Common Stock $ 333 $ 282 $ 231 $ 196 $ 117
----------- ----------- ----------- ----------- -----------
Average Common and Common Equivalent Shares
Outstanding (in millions) 185.4 184.8 184.3 162.4 157.6
Primary Earnings (Loss) Per Common Share, Before
Cumulative Effect of Change in Accounting
Principle Based on Average Shares $ 1.80 $ 1.53 $ 1.25 $ 1.20 $(2.43)
Outstanding
Cumulative Effect of Change in Accounting Principle-
Adoption of SFAS 109 -- -- -- -- 3.17
----------- ----------- ----------- ----------- -----------
Primary Earnings Per Common Share $ 1.80 $ 1.53 $ 1.25 $ 1.20 $ .74
----------- ----------- ----------- ----------- -----------
Cash Dividends Declared Per Common Share $ .33 $ .30 $ .30 $ .30 $ .30
----------- ----------- ----------- ----------- -----------
</TABLE>
35.
<PAGE> 36
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11
Statement re: Computation of Earnings Per Common Share
Exhibit 12
Statement re: Computation of Ratios of Earnings to Fixed Charges
(b) Report on Form 8-K
The registrant filed the following reports on Form 8-K during the
quarter ended March 31, 1994:
Date of
Report Items Reported
1/18/94 -- The items reported by the Registrant in this Current
Report on Form 8-K were Item 5 (Other Events) and Item 7
(Financial Statements, Pro forma Financial Information and
Exhibits). The following financial statements of
Registrant were filed therewith:
(i) Statement of Condition of The Chase Manhattan
Corporation at December 31, 1993 and 1992.
(ii) Statement of Income of The Chase Manhattan
Corporation for the quarters and years ended
December 31, 1993 and 1992.
(iii) Statement of Condition of The Chase Manhattan
Bank, N.A. at December 31, 1993 and 1992.
1/20/94 -- The items reported by the Registrant in this Current
Report on Form 8-K were Item 5 (Other Events) and Item 7
(Financial Statements, Pro forma Financial Information and
Exhibits) relating to the Registrant's issuance and sale
of $150,000,000 aggregate principal amount of 6.50%
Subordinated Notes Due 2009.
36.
<PAGE> 37
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 thereunto duly authorized.
THE CHASE MANHATTAN CORPORATION
(Registrant)
Date: May 16, 1994 By: LESTER J. STEPHENS, JR.
--------------------------
Lester J. Stephens, Jr.
(Senior Vice President and
Controller)
37.
<PAGE> 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DOCUMENT PAGE
<S> <C> <C>
11 Statement re: Computation of Earnings Per Common Share for the
quarters ended March 31, 1994 and 1993 39
12 Statement re: Computation of Ratios of Earnings to Fixed Charges for the
quarters ended March 31, 1994 and 1993 and for each of the five
years in the period ended December 31, 1993 40
</TABLE>
38.
<PAGE> 39
EDGAR Graphic Appendix
Pursuant to Regulation S-T Item 304, the following is a description of the
graphic image material identified in the foregoing Management's Discussion and
Analysis of Financial Condition and Results of Operations by the word [Graph]
followed by the number of the graphic or image.
<TABLE>
<CAPTION>
Graphic Number Page Description
- - -------------- ---- -----------
<S> <C> <C>
1. 19. Bar graph entitled "Cumulative
Interest Rate Gaps March 31,
1994 $ in millions" showing the
net assets or net liabilities,
in separate bars titled
including derivatives and
excluding derivatives,
respectively, for the following
periods: net assets of $5,758
and $439, respectively, for 1-3
months; net assets of $7,039
and net liabilities of $3,274,
respectively, for 3-9 months;
net liabilities of $1,141 and
$5,078, respectively, for 1995;
net liabilities of $3,990 and
$10,163, respectively, for
1996; net liabilities of $7,102
and $13,007, respectively, for
1997; net liabilities of $8,188
and $13,274, respectively, for
1998; net liabilities of $6,931
and $11,517, respectively, for
1999; and net liabilities of
$6,749 and $11,077,
respectively, for 2000.
</TABLE>
<PAGE> 1
Computation of Earnings Per Common Share Exhibit 11
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------
($ in millions, except per share amounts) 1994 1993
------ ------
<S> <C> <C>
Primary:
Net Income (Loss) Before Cumulative Effect of Change in Accounting Principle . . . . . . . . $ 364 $ (347)
Cumulative Effect of Change in Accounting Principle - Adoption of SFAS 109 . . . . . . . . . -- 500
---- -----
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364 153
Less: Preferred Stock Dividend Requirements . . . . . . . . . . . . . . . . . . . . . . . . 31 36
---- -----
Net Income Applicable to Common Stock $ 333 $ 117
---- -----
Average Common and Common Equivalent Shares Outstanding . . . . . . . . . . . . . . . . . . . 185,421,780 157,585,053
---- -----
Before Cumulative Effect of Change in Accounting Principle . . . . . . . . . . . . . . . . . $1.80 $(2.43)
Cumulative Effect of Change in Accounting Principle - Adoption of SFAS 109 . . . . . . . . . -- $ 3.17
---- -----
Primary Earnings Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.80 $ 0.74
---- -----
Assuming Full Dilution:
Net Income Applicable to Common Stock $ 333 $ 117
---- -----
Average Common and Common Equivalent Shares Outstanding . . . . . . . . . . . . . . . . . . . 185,421,780 157,585,053
Add: Shares Issuable Upon Exercise of Stock Options and Conversion of Restricted
Stock Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893,704 1,544,467
---- -----
Shares of Common and Common Equivalent Stock Outstanding -- As Adjusted 186,315,484 159,129,520
---- -----
Earnings Per Common Share Assuming Full Dilution $1.79 $ 0.73
---- -----
</TABLE>
39.
<PAGE> 1
Computation of Ratios of Earnings to Fixed Charges Exhibit 12
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended Year Ended
March 31, December 31,
---------------- ----------------------------------------------------
($ in millions) 1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net Income (Loss) . . . . . . . . . . . . . . $ 364 $ 153 $ 966 $ 639 $ 520 $ (334) $ (665)
Less: Cumulative Effect of Change in
Accounting Principle* . . . . . . . . . -- 500 500 -- -- -- --
----- ----- ----- ----- ----- ----- -----
Net Income (Loss) Before Cumulative Effect
of Change in Accounting Principle . . . . 364 (347) 466 639 520 (334) (665)
Less: Equity in Undistributed Income (Loss)
of Unconsolidated Subsidiaries and
Associated Companies . . . . . . . . . 1 5 36 11 (32) (40) (20)
Income Taxes (Benefits) . . . . . . . . . . . 223 (174) 265 186 124 203 196
Fixed Charges Excluding Interest On
Deposits. . . . . . . . . . . . . . . . . . 624 594 2,670 2,277 1,988 3,190 3,938
----- ----- ----- ----- ----- ----- -----
Total Earnings, Excluding Interest On
Deposits, As Adjusted . . . . . . . . . . 1,210 68 3,365 3,091 2,664 3,099 3,489
Interest On Deposits . . . . . . . . . . . . 525 539 2,014 2,935 4,374 5,273 5,080
----- ----- ----- ----- ----- ----- -----
Total Earnings, Including Interest On
Deposits, As Adjusted . . . . . . . . . . $1,735 $ 607 $5,379 $6,026 $7,038 $8,372 $8,569
----- ----- ----- ----- ----- ----- -----
Fixed Charges:
Interest Expense and Amortization of Debt
Discount and Issuance Costs,
Excluding Interest On Deposits . . . . $ 606 $ 575 $2,591 $2,205 $1,920 $3,115 $3,860
One-Third of Net Rental Expenses. . . . . . . 18 19 79 72 68 75 78
----- ----- ----- ----- ----- ----- -----
Total Fixed Charges For Ratio, Excluding
Interest On Deposits . . . . . . . . . . . 624 594 2,670 2,277 1,988 3,190 3,938
Interest On Deposits. . . . . . . . . . . . . 525 539 2,014 2,935 4,374 5,273 5,080
----- ----- ----- ----- ----- ----- -----
Total Fixed Charges For Ratio, Including
Interest On Deposits $1,149 $1,133 $4,684 $5,212 $6,362 $8,463 $9,018
----- ----- ----- ----- ----- ----- -----
Ratio Of Earnings To Fixed Charges:
Excluding Interest On Deposits . . . . . . . 1.9x ** 1.3x 1.4x 1.3x ** **
Including Interest On Deposits . . . . . . . 1.5x ** 1.1x 1.2x 1.1x ** **
----- ----- ----- ----- ----- ----- -----
<FN>
* Represents the cumulative effect of change in accounting principle relating to the adoption of SFAS 109 in the first quarter
of 1993.
** For the quarter ended March 31, 1993 and the years ended December 31, 1990 and 1989, earnings did not cover fixed charges by
$526 million, $91 million and $449 million, respectively, primarily as a result of large additions to the Reserve for Possible
Credit Losses and special charges.
</TABLE>
For purposes of computing the consolidated ratios, earnings represent net
income (loss) plus applicable income taxes and fixed charges, less cumulative
effect of change in accounting principle (for the quarter ended March 31, 1993
and the year ended December 31, 1993) and equity in undistributed earnings
(losses) of unconsolidated subsidiaries and associated companies. Fixed
charges represent interest expense (exclusive of interest on deposits in one
case and inclusive of such interest in the other), amortization of debt
discount and issuance costs and one-third (the amount deemed to represent an
interest factor) of net rental expense under all lease commitments.
40.
