<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: SEPTEMBER 30, 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)
(212) 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
181,289,886 at September 30, 1994.
Exhibit Index Located on Page 38
<PAGE> 2
The Chase Manhattan Corporation
September 30, 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
Note to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Financial Information:
Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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 September 30, 1994,
December 31, 1993 and September 30, 1993, the Consolidated Statement of Income
for the quarters and nine months ended September 30, 1994 and 1993, the
Consolidated Statement of Changes in Stockholders' Equity for the nine months
ended September 30, 1994 and 1993 and the Consolidated Statement of Cash Flows
for the nine months ended September 30, 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, and The Chase
Manhattan Bank of Florida, N.A. (Chase Florida). 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, commercial and consumer financing and other financial services.
3
<PAGE> 4
Consolidated Statement of Condition
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
September 30, December 31, September 30,
($ in millions) 1994 1993 1993
------------- ------------ -------------
<S> <C> <C> <C>
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,559 $ 6,068 $ 4,927
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . . 7,055 5,309 5,281
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . . 7,712 6,586 5,714
Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,302 6,933 5,141
Investment Securities:
Held to Maturity (Market Value of $2,005, $1,417 and $1,504, Respectively). . 2,018 1,384 1,462
Available for Sale Carried at Fair Value . . . . . . . . . . . . . . . . . . 5,813 7,690 --
At Lower of Cost or Market (Market Value of $6,758) . . . . . . . . . . . . -- -- 6,304
------- ------- -------
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . . 7,831 9,074 7,766
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,405 60,493 62,638
Less: Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . 1,416 1,425 1,916
------- ------- -------
Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,989 59,068 60,722
Assets Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . 25 222 722
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . . . 599 689 762
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 1,033 871 935
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,871 1,782 1,977
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,089 5,501 6,648
------- ------- -------
Total Assets $117,065 $102,103 $100,595
------- ------- -------
Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . . . . . .
Deposits:
Domestic Offices: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,131 $ 14,217 $ 11,677
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,205 27,648 28,220
Overseas Offices: . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,533 2,473 2,785
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,053 27,171 27,547
------- ------- -------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,922 71,509 70,229
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . 11,959 7,890 6,518
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,459 1,465 1,018
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 3,508 1,813 1,781
Trading Account Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 11,841 -- --
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 696 774
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 568 416 518
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . 4,734 4,551 5,908
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . 5,031 5,641 6,230
------- ------- -------
Total Liabilities 108,625 93,981 92,976
------- ------- -------
Stockholders' Equity:
Nonredeemable Preferred Stock (Without Par Value, 56,000,000
51,439,738 and 51,439,738 Shares Outstanding, Respectively) . . . . . . . . 1,400 1,399 1,399
Common Stock ($2.00 Par Value):
<CAPTION>
9/30/94 12/31/93 9/30/93
----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Number of Shares:
Authorized 500,000,000 500,000,000 500,000,000
Issued 185,289,886 184,290,491 183,608,157
Outstanding 181,289,886 184,290,491 183,608,157 371 369 367
<CAPTION>
<S> <C> <C> <C>
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,939 3,922 3,911
Net Unrealized Gains on Investment Securities-Available
for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 264 --
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,853 2,168 1,942
------- ------- -------
Total 8,586 8,122 7,619
Less: Treasury Stock at Cost (4,000,000 Shares) 146 -- --
------- ------- -------
Total Stockholders' Equity 8,440 8,122 7,619
------- ------- -------
Total Liabilities and Stockholders' Equity $117,065 $102,103 $100,595
------- ------- -------
<FN>
The accompanying note on page 8 is an integral part of the financial statements.
</TABLE>
4
<PAGE> 5
Consolidated Statement of Income
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
($ in millions, except per common share data) 1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest Revenue
Interest and Fees on Loans . . . . . . . . . . . . . . . . . $1,252 $1,405 $3,929 $4,316
Interest on Deposits Placed with Banks . . . . . . . . . . . 108 214 365 553
Interest and Dividends on Investment Securities:
Held to Maturity . . . . . . . . . . . . . . . . . . . . . 29 42 112 126
Available for Sale . . . . . . . . . . . . . . . . . . . . 90 -- 433 --
At Lower of Cost or Market . . . . . . . . . . . . . . . . -- 121 -- 385
Interest on Federal Funds Sold and Securities Purchased Under
Resale Agreements . . . . . . . . . . . . . . . . . . . . . 233 261 1,048 784
Interest on Trading Account Assets . . . . . . . . . . . . . 89 51 300 150
----- ----- ----- -----
Total Interest Revenue 1,801 2,094 6,187 6,314
----- ----- ----- -----
Interest Expense
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 538 513 1,717 1,545
Federal Funds Purchased and Securities Sold Under
Repurchase Agreements . . . . . . . . . . . . . . . . . . . 203 150 503 443
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . 16 13 45 35
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . 52 405 908 1,024
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . 76 94 229 406
----- ----- ----- -----
Total Interest Expense 885 1,175 3,402 3,453
----- ----- ----- -----
Net Interest Revenue 916 919 2,785 2,861
Provision for Possible Credit Losses . . . . . . . . . . . . 100 215 410 800
Provision for Loans Held for Accelerated Disposition . . . . -- -- -- 566
----- ----- ----- -----
Net Interest Revenue After Provisions for Possible
Credit Losses and Loans Held for Accelerated
Disposition . . . . . . . . . . . . . . . . . . . . . . . . 816 704 2,375 1,495
----- ----- ----- -----
Other Operating Revenue
Fees and Commissions . . . . . . . . . . . . . . . . . . . . 458 406 1,384 1,160
Foreign Exchange Trading Revenue . . . . . . . . . . . . . . 50 93 213 281
Trading Account Revenue . . . . . . . . . . . . . . . . . . . 138 93 306 268
Investment Securities Gains . . . . . . . . . . . . . . . . . 15 15 95 35
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . 66 113 383 328
----- ----- ----- -----
Total Other Operating Revenue 727 720 2,381 2,072
----- ----- ----- -----
Other Operating Expenses
Salaries and Employee Benefits:
Salaries . . . . . . . . . . . . . . . . . . . . . . . . 464 409 1,298 1,170
Employee Benefits . . . . . . . . . . . . . . . . . . . . 122 117 369 357
----- ----- ----- -----
586 526 1,667 1,527
Net Occupancy . . . . . . . . . . . . . . . . . . . . . . . . 98 93 296 291
Equipment Rentals, Depreciation and Maintenance . . . . . . . 77 73 222 214
Provision for Other Real Estate Held for
Accelerated Disposition . . . . . . . . . . . . . . . . . . -- -- -- 318
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . 306 333 1,012 971
----- ----- ----- -----
Total Other Operating Expenses 1,067 1,025 3,197 3,321
----- ----- ----- -----
Income Before Taxes . . . . . . . . . . . . . . . . . . . . 476 399 1,559 246
Applicable Income Taxes . . . . . . . . . . . . . . . . . . . 171 132 583 93
----- ----- ----- -----
Income Before Cumulative Effect of Change in
Accounting Principle . . . . . . . . . . . . . . . . . . . 305 267 976 153
Cumulative Effect of Change in Accounting Principle-
Adoption of SFAS 109 . . . . . . . . . . . . . . . . . . . -- -- -- 500
----- ----- ----- -----
Net Income $ 305 $ 267 $ 976 $ 653
----- ----- ----- -----
Net Income Applicable to Common Stock $ 274 $ 231 $ 880 $ 544
----- ----- ----- -----
Average Common and Common Equivalent Shares Outstanding
(in millions) . . . . . . . . . . . . . . . . . . . . . . 184.4 184.3 185.0 168.2
Primary Earnings Per Common Share, Before Cumulative
Effect of Change in Accounting Principle, Based on
Average Shares Outstanding . . . . . . . . . . . . . . . $ 1.49 $ 1.25 $ 4.76 $ 0.26
Cumulative Effect of Change in Accounting
Principle-Adoption of SFAS 109 . . . . . . . . . . . . . -- -- -- 2.97
----- ----- ----- -----
Primary Earnings Per Common Share . . . . . . . . . . . . . $ 1.49 $ 1.25 $ 4.76 $ 3.23
----- ----- ----- -----
Cash Dividends Declared Per Common Share . . . . . . . . . $ 0.40 $ 0.30 $ 1.06 $ 0.90
----- ----- ----- -----
<FN>
The accompanying note on page 8 is 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>
Nine Months Ended
September 30,
-----------------------
($ 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
Issuance of Preferred Stock Series N (9,100,000 Shares) . . . . . . . . . . 228 --
Redemption of Preferred Stock Series E (5,000,000 Shares) . . . . . . . . . -- (250)
Redemption of Preferred Stock Series F (4,539,738 Shares) . . . . . . . . (227) --
----- -----
Balance at End of Period (56,000,000 and 51,439,738 Shares, Respectively) 1,400 1,399
----- -----
Common Stock
Balance at Beginning of Year (184,290,491 and 156,096,382 Shares, Respectively) 369 312
Shares Issued Pursuant to Common Stock Offering (25,300,000 Shares) . . . . -- 51
Shares Issued Pursuant to Dividend Reinvestment and Stock
Purchase Plan (420,209 and 1,489,180 Shares, Respectively) . . . . . . . 1 3
Shares Issued Pursuant to Stock Option and Incentive Plans
(577,247 and 721,408 Shares, Respectively) . . . . . . . . . . . . . . . 1 1
Shares Issued Pursuant to Stock Warrants (1,939 Shares and
1,187 Shares, Respectively) . . . . . . . . . . . . . . . . . . . . . . . -- --
----- -----
Balance at End of Period (185,289,886 and 183,608,157 Shares, Respectively) 371 367
----- -----
Surplus
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . 3,922 3,174
Shares Issued Pursuant to Common Stock Offering . . . . . . . . . . . . . . -- 695
Shares Issued Pursuant to Dividend Reinvestment and Stock Purchase Plan . . 13 42
Shares Issued Pursuant to Stock Option and Incentive Plans . . . . . . . . 12 14
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8) (14)
----- -----
Balance at End of Period 3,939 3,911
----- -----
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 $167) . . . . . . . . . . . . . . . . . . . . (241) --
----- -----
Balance at End of Period 23 --
----- -----
Retained Earnings
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . 2,168 1,548
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 976 653
Cash Dividends:
Redeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . -- (3)
Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . (96) (106)
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (196) (150)
Aggregate Foreign Exchange Translation Gain . . . . . . . . . . . . . . . . 1 --
----- -----
Balance at End of Period (Includes Exchange Translation Adjustments of
$12 and $12, Respectively) 2,853 1,942
----- -----
Treasury Stock:
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . -- --
Purchases (4,000,000 Shares) . . . . . . . . . . . . . . . . . . . . . . . (146) --
----- -----
Balance at End of Period (4,000,000 Shares) (146) --
----- -----
Total Stockholders' Equity $8,440 $7,619
----- -----
<FN>
The accompanying note on page 8 is an integral part of the financial
statements.
</TABLE>
6
<PAGE> 7
Consolidated Statement of Cash Flows
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
($ in millions) 1994 1993
------- -------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 976 $ 653
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 . . . . . . . . . . . . . . . . . . . 410 800
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 . . . . . . . . . . 204 193
Accretion and Amortization . . . . . . . . . . . . . . . . . . . . . . . . 95 127
Other Real Estate Valuation Losses . . . . . . . . . . . . . . . . . . . . 104 99
Accelerated Disposition Portfolio Valuation Losses . . . . . . . . . . . . -- 23
Deferred Income Taxes (Benefits) . . . . . . . . . . . . . . . . . . . . . 76 (40)
Net Gain on Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . (478) (363)
Net (Increase) Decrease in Operating Assets:
Trading Account Assets and Liabilities . . . . . . . . . . . . . . . . . . (467) (335)
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . (162) 41
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385 (110)
Net Increase (Decrease) in Operating Liabilities:
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . 152 (60)
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . (121) 1,654
Other-Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484 140
----- -----
Net Cash Provided by Operating Activities 1,658 3,206
----- -----
Cash Flows from Investing Activities:
Net (Increase) Decrease in Interest-Bearing Deposits Placed with Banks . . . (1,531) 511
Net Increase in Federal Funds Sold and Securities Purchased Under
Resale Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,127) (1,522)
Investment Securities-Held to Maturity:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . (1,169) (511)
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . 553 460
Investment Securities-Available for Sale Carried at Fair Value:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . (4,331) --
Proceeds from Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,512 --
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . 1,110 --
Investment Securities at Lower of Cost or Market:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . -- (9,017)
Proceeds from Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 4,970
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . -- 2,407
Loans:
Net Increase in Loans Made to Customers . . . . . . . . . . . . . . . . . . (8,792) (10,127)
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . (3,690) (1,160)
Proceeds from Sales and Securitizations . . . . . . . . . . . . . . . . . . 11,777 8,520
Proceeds from Sales and Repayments of Assets Held for Accelerated Disposition 279 378
Net Purchases of Premises and Equipment . . . . . . . . . . . . . . . . . . . (270) (310)
Acquisition of Mortgage Subsidiaries . . . . . . . . . . . . . . . . . . . . (348) (202)
Proceeds from the Sale of Other Assets and Premises . . . . . . . . . . . . . 102 122
----- -----
Net Cash Used by Investing Activities (2,925) (5,481)
----- -----
Cash Flows from Financing Activities:
Net Increase (Decrease) in Deposits . . . . . . . . . . . . . . . . . . . . . (3,484) 2,965
Net Increase (Decrease) in Federal Funds Purchased and Securities Sold
Under Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . 4,059 (437)
Net Decrease in Commercial Paper . . . . . . . . . . . . . . . . . . . . . . (6) (127)
Net Increase in Other Short-Term Borrowings . . . . . . . . . . . . . . . . . 1,201 --
Intermediate- and Long-Term Debt:
Proceeds from Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . 545 1,003
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,171) (1,611)
Stockholders' Equity:
Cash Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (292) (259)
Redemption of Redeemable Preferred Stock . . . . . . . . . . . . . . . . . -- (53)
Proceeds from Issuance of Nonredeemable Preferred Stock . . . . . . . . . . 221 167
Redemption of Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . (227) (250)
Proceeds from Issuance of Common Stock . . . . . . . . . . . . . . . . . . 27 781
Purchase of Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . (146) --
----- -----
Net Cash Provided by Financing Activities 727 2,179
----- -----
Effect of Exchange Rate Changes on Cash 31 15
----- -----
Net Decrease in Cash and Due from Banks (509) (81)
Cash and Due from Banks at Beginning of Year 6,068 5,008
----- -----
Cash and Due from Banks at End of Period $5,559 $4,927
----- -----
Cash Paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,251 $3,513
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 134
Noncash Investing and Financing Activities:
Net Loan Transfers to Other Real Estate . . . . . . . . . . . . . . . . . . $ 190 $ 669
----- -----
<FN>
The accompanying note on page 8 is an integral part of the financial
statements.
</TABLE>
7
<PAGE> 8
Note 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 October 18, 1994, the Board
of Directors of the Company declared a quarterly dividend of $.40 per common
share, payable on November 15, 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 as recently
amended, a national bank may not pay a dividend in an amount greater than its
undivided profits. 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 income for that year, combined with its retained net
income for the preceding two calendar years, less any required transfers to
surplus.
At September 30, 1994, under the more restrictive of these limitations,
the Bank could declare dividends during the remainder of 1994 of approximately
$1.3 billion, combined with an additional amount equal to its net income from
September 30, 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 $1 billion and $6
million, respectively, combined with an additional amount equal to their
respective retained net profits from September 30, 1994 up to the date of any
dividend declaration. 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.
Various rules and regulations have been promulgated by the federal banking
agencies pursuant to the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA). These rules and regulations have resulted in increased costs
to the Company, the Bank and their affiliates; however, they have not had a
material effect on Chase's operations. At September 30, 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 have been proposed under FDICIA, governing such matters as
accounting and capital requirements. 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.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
INDEX
<TABLE>
<S> <C>
Earnings Analysis
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Net Interest Revenue-Taxable Equivalent Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Provision for Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Credit Risk Management
Loan Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consumer Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Wholesale 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 (ORE) Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Asset/Liability Management
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Liquidity Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Interest Rate Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Trading Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Fair Value Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
EARNINGS ANALYSIS
EARNINGS SUMMARY AND SELECTED FINANCIAL RATIOS
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------- ------------------
($ in millions, except per share data) 1994 1993 1994 1993
------- ------- ------ ------
<S> <C> <C> <C> <C>
Net Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 916 $ 919 $2,785 $2,861
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . 100 215 410 800
Provision for Loans Held for Accelerated Disposition . . . . . . . . . . . . . . -- -- -- 566
Other Operating Revenue:
Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458 406 1,384 1,160
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269 314 997 912
Other Operating Expenses:
Provision for Other Real Estate Held for Accelerated Disposition . . . . . . . -- -- -- 318
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067 1,025 3,197 3,003
----- ----- ----- -----
Income Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 476 399 1,559 246
Applicable Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 132 583 93
----- ----- ----- -----
Income Before Cumulative Effect of Change in
Accounting Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 267 976 153
Cumulative Effect of Change in Accounting Principle - . . . . . . . . . . . . .
Adoption of SFAS 109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- 500
----- ----- ----- -----
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 305 $ 267 $ 976 $ 653
----- ----- ----- -----
Selected Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.49 $ 1.25 $ 4.76 $ 3.23
Return on Average Common Stockholders' Equity . . . . . . . . . . . . . . . . . 15.8% 15.1% 17.3% 13.3%
Return on Average Total Assets . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 1.01% 1.11% .86%
Book Value (Period End) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Stockholders' Equity per Common Share . . . . . . . . . . . . . . . . . $38.83 $33.87
----- -----
</TABLE>
9
<PAGE> 10
OVERVIEW
The Corporation reported third quarter net income of $305 million ($1.49 per
share), up 14% from the $267 million ($1.25 per share) reported for the third
quarter of 1993.
Third Quarter results (compared with the same period last year)
included:
- return on common equity of 15.8% versus 15.1%;
- growth of 13% in fees and commissions, including
consumer banking - up 40% and trust and fiduciary -
up 16%;
- trading revenue of $188 million compared with $186
million in 1993;
- a lower provision for possible credit losses of $100
million, down $115 million;
- a decline of nonperforming assets to $1.2 billion
compared to $3.0 billion in 1993; and
- net interest revenue of $916 million down from $919
million.
For the first nine months of 1994, Chase reported consolidated net
income of $976 million ($4.76 per share), up 49% from the $653 million ($3.23
per share) reported for the same period of 1993.
NET INTEREST REVENUE -- TAXABLE EQUIVALENT BASIS
Net interest revenue, on a taxable equivalent basis, was $922 million for the
third quarter of 1994, compared with $926 million for the third quarter of
1993. Net interest margin was 3.81%, compared with 3.99% reported for the
third quarter of 1993. Average interest-earning assets increased to $95.9
billion from the $92.1 billion level reported for the third quarter of last
year. Average loans were $60.0 billion for the current quarter, compared with
$61.7 billion for the third quarter of 1993.
For the first nine months of 1994, net interest revenue, on a taxable
equivalent basis, was $2,803 million, compared with $2,884 million for the same
period last year, which included $142 million of interest revenue from Brazil
PDI (Past Due Interest) bonds. The net interest margin was 3.97% for the first
nine months of 1994, compared with 4.33% (4.12% excluding Brazil PDI bonds) for
the same period last year. Average interest-earning assets for the first nine
months of 1994 were $94.5 billion, compared with $89.0 billion for the first
nine months of 1993. For the first nine months of 1994, average loans were
$60.6 billion, compared with $61.2 billion reported for the same period last
year. The increase in average interest-earning assets reflected the growth in
securities and other liquid assets to support trading businesses. The growth
in lower-spread liquid assets has also caused a reduction in the overall net
yield on average interest-earning assets.
NET INTEREST REVENUE AND INTEREST RATE SPREADS-TAXABLE EQUIVALENT BASIS*
<TABLE>
<CAPTION>
Third Quarter Nine Months
--------------------------------------------- ----------------------------------------------
1994 1993 1994 1993
--------------------------------------------- ----------------------------------------------
($ in millions) Amount Rate Amount Rate Amount Rate Amount Rate
---------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Earned . . . . . . . . $1,807 7.47% $2,101 9.06% $6,205 8.78% $6,337 9.52%
Interest Paid . . . . . . . . . 885 4.34 1,175 5.99 3,402 5.70 3,453 6.11
----- ---- ----- ---- ----- ---- ----- ----
Net Interest Revenue $ 922 3.13% $ 926 3.07% $2,803 3.08% $2,884 3.41%
- --as a % of Average Gross
Interest-Earning Assets ** 3.81% 3.99% 3.97% 4.33%
---- ---- ---- ----
<FN>
* Net interest revenue is the amount by which interest revenue from interest-earning assets exceeds the interest expense
applicable 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 $6 million and $7
million for the third quarter of 1994 and 1993, respectively, and $18 million and $23 million for the first nine months 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>
10
<PAGE> 11
PROVISION FOR POSSIBLE CREDIT LOSSES
The provision for possible credit losses was $100 million, or $50 million lower
than the second quarter of 1994 and $115 million lower than the third quarter
of last year.
The provision for possible credit losses for the first nine months of
1994 was $410 million, compared with $800 million (excluding the accelerated
disposition portfolio) for the same period last year.
OTHER OPERATING REVENUE
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------------ ---------------------------
($ in millions) 1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Fees and Commissions:
Consumer Banking . . . . . . . . . . . . . . . . . $162 $116 $ 470 $ 347
Trust and Fiduciary . . . . . . . . . . . . . . . . 141 122 423 340
Investment Banking . . . . . . . . . . . . . . . . 46 54 162 141
Other . . . . . . . . . . . . . . . . . . . . . . . 109 114 329 332
--- --- ----- -----
Total Fees and Commissions 458 406 1,384 1,160
--- --- ----- -----
All Other Operating Revenue:
Foreign Exchange Trading . . . . . . . . . . . . . 50 93 213 281
Trading Account . . . . . . . . . . . . . . . . . . 138 93 306 268
Investment Securities Gains . . . . . . . . . . . . 15 15 95 35
Corporate Finance-Related Equity Investment Gains . 26 52 165 149
Accelerated Disposition Portfolio Gains . . . . . . 15 48 83 76
Other . . . . . . . . . . . . . . . . . . . . . . . 25 13 135 103
--- --- ----- -----
Total Other Operating Revenue $727 $720 $2,381 $2,072
--- --- ----- -----
</TABLE>
Fees and commissions were $458 million for the third quarter of 1994, up 13%
over the third quarter of 1993. For the first nine months of 1994, fees and
commissions were $1,384 million, up 19%, reflecting increases in all major
categories of fee revenue.
Total consumer banking fees, including credit card and mortgage
banking fees, increased 40% over the third quarter of 1993 and 35% over the
first nine months of last year. Mortgage banking fees improved substantially
over the same periods of 1993 primarily due to the absence of accelerated
writedowns of mortgage servicing assets in 1994.
Trust and fiduciary fee revenue increased 16% and 24% over the third
quarter and first nine months of 1993, respectively, primarily due to increased
customer transaction volumes in the Global Securities Services business.
While investment banking fee revenue declined $8 million from the
third quarter of 1993, such fees for the first nine months of 1994 increased
15% over the same period last year.
Total trading revenue was $188 million, essentially unchanged from the
third quarter of last year, as strong results from emerging markets trading
activities more than offset the decline in foreign exchange and derivative
trading revenue. Foreign exchange trading revenue declined $43 million from
the third quarter of 1993 reflecting unsettled market conditions. For the
first nine months of 1994, total trading revenue was $519 million, compared
with $549 million for the same period last year. See the Trading Activities
section starting on page 22 for a further discussion.
Other revenue for the third quarter of 1994 totaled $81 million,
compared with $128 million for the same period in 1993, due to a reduction in
gains from the accelerated disposition portfolio and corporate finance-related
equity transactions. Other revenue for the first nine months of 1994 totaled
$478 million, up $115 million, or 32%, from $363 million for the first nine
months of 1993.
OTHER OPERATING EXPENSES
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------------ ---------------------------
($ in millions) 1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Salaries and Employee Benefits . . . . . . . . . . . . $ 586 $ 526 $1,667 $1,527
Net Occupancy . . . . . . . . . . . . . . . . . . . . . 98 93 296 291
Equipment Rentals, Depreciation and Maintenance . . . . 77 73 222 214
Other Expenses . . . . . . . . . . . . . . . . . . . . 306 333 1,012 971
----- ----- ----- -----
Subtotal 1,067 1,025 3,197 3,003
----- ----- ----- -----
Provision For Other Real Estate Held For
Accelerated Disposition -- -- -- 318
----- ----- ----- -----
Total Other Operating Expenses $1,067 $1,025 $3,197 $3,321
----- ----- ----- -----
</TABLE>
Total operating expenses were $1,067 million for the third quarter of 1994 and
$1,025 million for the third quarter of 1993. Compared with the same period
last year, operating expenses for the third quarter of 1994 reflected higher
performance related compensation as well as increased payroll and other costs
related to the expansion of Chase's businesses. In addition, operating
expenses for the third quarter of 1994
11
<PAGE> 12
included $6 million from the third quarter acquisition of American Residential
Holding Corporation (American Residential), a mortgage origination and
servicing business.
For the third quarter of 1994, operating expenses were favorably
impacted by $24 million in net ORE revenue, compared with $31 million of net
ORE expenses for the same period last year. The expense to revenue ratio was
65% (66% excluding ORE) for the current quarter.
For the first nine months of 1994, other operating expenses were
$3,197 million, compared with $3,003 million (excluding first quarter 1993
provision for ORE held for accelerated disposition) for the same period of
1993.
Management is undertaking several initiatives to control expenses.
Such initiatives include the Voluntary Retirement Program described below, the
possible disposition of certain non-strategic business activities and
infrastructure consolidation efforts.
In October, Chase announced a Voluntary Retirement Program that will
be offered during the fourth quarter of 1994 to approximately 2,600 eligible
employees. Based on assumptions concerning the anticipated levels of
participation by employees, Management estimates that the annual savings in
salary and related benefits would be approximately $55 million per year,
beginning in 1995. Based on these assumptions, the cost of the program to
Chase is estimated at $100 million (pre-tax) that will be reflected in the
fourth quarter of 1994 when actual employee acceptance is known. Together with
other anticipated fourth quarter items, such as the gain from the previously
announced sale of the retail deposit business of Chase Florida, the impact on
earnings is not expected to be material.
PROVISION FOR INCOME TAXES
The third quarter of 1994 provision for income taxes was $171 million, compared
with a tax provision of $132 million for the third quarter of 1993.
For the first nine months of 1994, the provision for income taxes was
$583 million, compared with $93 million for the same period last year.
Excluding the tax benefits applicable to the special provision for the
accelerated disposition portfolio, Chase's tax provision for the first nine
months of 1993 would have been approximately $403 million. In addition, Chase
adopted SFAS 109 in the first quarter of 1993 resulting in a $500 million net
benefit reflected as a cumulative effect of a change in accounting principle.
The effective tax rates were 36% and 37% for the third quarter and
first nine months of 1994, respectively.
CREDIT RISK MANAGEMENT
As further discussed on pages 38 and 39 of the 1993 Annual Report, Chase has
established and implemented policies and procedures to actively manage credit
risk, both on- and off-balance sheet. All tables in this section exclude the
accelerated disposition portfolio, unless otherwise noted.
LOAN COMPOSITION
<TABLE>
<CAPTION>
September 30, December 31, September 30,
($ in millions) 1994 1993 1993
------------ ----------- ------------
<S> <C> <C> <C>
Domestic Offices:
Consumer . . . . . . . . . . . . . . . . . . . . . $30,578 $28,561 $26,084
Wholesale . . . . . . . . . . . . . . . . . . . . . 14,514 15,599 17,144
Less: Unearned Discount and Fee Revenue . . . . . . 167 188 241
------ ------ ------
Total Domestic Offices 44,925 43,972 42,987
------ ------ ------
Overseas Offices:
Consumer . . . . . . . . . . . . . . . . . . . . . 2,627 2,283 2,222
Wholesale . . . . . . . . . . . . . . . . . . . . . 13,903 14,279 17,472
Less: Unearned Discount and Fee Revenue . . . . . . 50 41 43
------ ------ ------
Total Overseas Offices 16,480 16,521 19,651
------ ------ ------
Total Loans $61,405 $60,493 $62,638
------ ------ ------
</TABLE>
Key data on the worldwide consumer loan portfolio are summarized below.
CONSUMER LOANS
<TABLE>
<CAPTION>
September 30, December 31, September 30,
($ in millions) 1994 1993 1993
------------- ------------ -------------
<S> <C> <C> <C>
Domestic Offices:
Secured by 1-4 Family Residential Properties . . . $14,839 $14,126 $12,724
Credit Card . . . . . . . . . . . . . . . . . . . . 6,666 6,426 5,767
Other Consumer . . . . . . . . . . . . . . . . . . 9,073 8,009 7,593
------ ------ ------
Total Domestic Offices . . . . . . . . . . . . . . . . 30,578 28,561 26,084
Overseas Offices . . . . . . . . . . . . . . . . . . . 2,627 2,283 2,222
------ ------ ------
Total Consumer Loans $33,205 $30,844 $28,306
------ ------ ------
</TABLE>
12
<PAGE> 13
The increase in domestic consumer loans from September 30, 1993 to September
30, 1994 was due to increased demand for 1-4 family loans experienced during
the last quarter of 1993 and increased credit card and auto finance
outstandings throughout the period. Chase securitized or sold $2.6 billion of
residential mortgage loans from December 31, 1993 to September 30, 1994,
approximately $2.2 billion of which had been held for sale and carried at lower
of cost or market. Chase securitized or sold $4.2 billion of residential
mortgage loans from September 30, 1993 to September 30, 1994, approximately
$3.8 billion of which had been held for sale and carried at lower of cost or
market. Included in the $30.6 billion of total domestic consumer loans at
September 30, 1994 were approximately $1.4 billion of residential mortgage and
other consumer loans that were held for sale.
Key data on the worldwide wholesale loan portfolio are summarized
below.
WHOLESALE LOANS
<TABLE>
<CAPTION>
September 30, December 31, September 30,
($ in millions) 1994 1993 1993
------------ ----------- ------------
<S> <C> <C> <C>
Domestic Offices:
Commercial Real Estate . . . . . . . . . . . . . . $ 2,194 $ 3,099 $ 3,710
Commercial and Industrial . . . . . . . . . . . . . 8,670 8,032 8,517
Other Wholesale . . . . . . . . . . . . . . . . . . 3,650 4,468 4,917
------ ------ ------
Total Domestic Offices . . . . . . . . . . . . . . . . 14,514 15,599 17,144
------ ------ ------
Overseas Offices:
Commercial and Industrial . . . . . . . . . . . . . 9,250 10,002 10,185
Other Wholesale . . . . . . . . . . . . . . . . . . . . 4,653 4,277 7,287
------ ------ ------
Overseas Offices . . . . . . . . . . . . . . . . . . . 13,903 14,279 17,472
------ ------ ------
Total Wholesale Loans $28,417 $29,878 $34,616
------ ------ ------
</TABLE>
Wholesale loans in overseas offices decreased from $17.5 billion at September
30, 1993 to $13.9 billion at September 30, 1994 primarily through sales,
charge-offs and the transfers at December 31, 1993 of cross-border extensions
of credit and Mexican Brady bonds to the investment securities available for
sale portfolio and of cross-border extensions of credit to the trading account,
partially offset by new lending.
Chase's domestic commercial real estate loan portfolio decreased to
$2.2 billion at September 30, 1994 from $3.1 billion and $3.7 billion at
December 31, 1993 and September 30, 1993, respectively. The reduction in the
first nine months of 1994 was the result of gross loan charge-offs of $164
million, transfers to ORE of $188 million and net repayments of outstanding
loans of $553 million.
At September 30, 1994, approximately $1.5 billion of the total $2.2
billion of domestic commercial real estate loans have been identified as being
consistent with Chase's ongoing core real estate portfolio activities. The
remaining noncore real estate loans of approximately $658 million consist of
approximately $387 million of performing loans and approximately $271 million
of nonaccrual loans. The carrying value of these nonaccrual loans at September
30, 1994 was approximately 68% of their contractual amount. Chase generally
allocates a portion of its total reserve for possible credit losses to its real
estate portfolio. At September 30, 1994, the reserve for possible credit
losses for this noncore real estate portfolio segment was $229 million and
Management expects this reserve to cover any potential future losses related to
these loans. Giving effect to this allocation, the net carrying value of the
noncore domestic commercial real estate portfolio is 54% of the original
contractual amount.
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 September 30, 1994, the net carrying value of assets in this
portfolio was reduced by $999 million, or 98%, to $25 million. Proceeds from
collections and dispositions of assets in this portfolio through September 30,
1994 resulted in approximately 53% of the original contractual amounts being
recovered.
13
<PAGE> 14
RESERVE FOR POSSIBLE CREDIT LOSSES
RECONCILIATION OF RESERVE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
Third Quarter Second Quarter Third Quarter
($ in millions) 1994 1994 1993
------------ ------------- ------------
<S> <C> <C> <C>
Balance at Beginning of Period . . . . . . . . . . . . $1,435 $1,429 $1,918
Additions:
Provision for Possible Credit Losses
Charged to Expense . . . . . . . . . . . . . . . 100 150 215
Deductions:
Charge-Offs . . . . . . . . . . . . . . . . . . . . 155 193 281
Recoveries . . . . . . . . . . . . . . . . . . . . (36) (47) (65)
----- ----- -----
Net Loan Charge-Offs . . . . . . . . . . . . . . . 119 146 216
Reserves of Disposed Subsidiaries and Other
Adjustments . . . . . . . . . . . . . . . . . . . . . -- 2 (1)
Balance at End of Period . . . . . . . . . . . . . . . $1,416 $1,435 $1,916
----- ----- -----
- --As a % of Total Loans . . . . . . . . . . . . . . . . 2.31% 2.37% 3.06%
- --As a % of Nonaccrual and Restructured Outstandings . 202% 166% 96%
----- ----- -----
</TABLE>
Of the $1.4 billion reserve for possible credit losses at September 30, 1994,
$229 million was allocated to cover the remaining losses on performing and
nonaccrual loans in the noncore domestic commercial real estate portfolio. The
ratios of the reserve for possible credit losses to nonaccrual loans in both
the core loan portfolio and the noncore domestic commercial real estate
portfolio are as follows:
RESERVE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
Noncore
Domestic
Commercial
September 30, 1994 Core Real Estate
($ in millions) Total Loan Portfolio Portfolio
----- -------------- -----------
<S> <C> <C> <C>
Nonaccrual and Restructured Outstandings . . . . . . . $ 701 $ 430 $271
Reserve Balance at End of Period . . . . . . . . . . . 1,416 1,187 229
- --As a % of Nonaccrual and Restructured Outstandings . 202% 276% 85%
----- ----- ---
</TABLE>
NET LOAN CHARGE-OFFS AND ANNUALIZED CREDIT LOSS EXPERIENCE RATIOS
<TABLE>
<CAPTION>
Third Quarter Nine Months
-------------------------- -------------------------
($ in millions) 1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Loan Charge-offs:
Domestic:
Consumer . . . . . . . . . . . . . . . . . . . $ 90 $ 97 $ 274 $ 295
Commercial Real Estate . . . . . . . . . . . . 21 58 123 223
Commercial and Other . . . . . . . . . . . . . 6 47 22 130
---- ---- ---- ----
Total Domestic 117 202 419 648
---- ---- ---- ----
Total International 2 14 3 10
---- ---- ---- ----
Total $ 119 $ 216 $ 422 $ 658
---- ---- ---- ----
Net Loan Charge-offs as a Percentage of Average Loans:
Domestic:
Consumer . . . . . . . . . . . . . . . . . . . 1.22% 1.52% 1.28% 1.61%
Commercial Real Estate . . . . . . . . . . . . 3.76 5.57 6.01 5.91
Commercial and Other . . . . . . . . . . . . . .21 1.42 .24 1.31
---- ---- ---- ----
Total Domestic Credit Loss Ratio . . . . . . . . . . . 1.08 1.88 1.30 2.03
---- ---- ---- ----
Total International Credit Loss Ratio . . . . . . . . . .06 .29 .02 .07
---- ---- ---- ----
Total Credit Loss Ratio .79% 1.39% .93% 1.44%
---- ---- ---- ----
</TABLE>
Net loan charge-offs for the third quarter of 1994 were $119 million, down $97
million from the third quarter of 1993. Domestic commercial real estate net
loan charge-offs were $21 million for the third quarter of 1994 and were
covered by the existing reserve allocated to the noncore domestic commercial
real estate portfolio.
Net loan charge-offs for the first nine months of 1994 were $422
million, down $236 million from the first nine months of 1993. For further
details on the reserve for possible credit losses and net loan charge-offs, see
Analysis of Credit Loss Experience on page 33.
14
<PAGE> 15
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 114, "Accounting by
Creditors for Impairment of a Loan," which is effective January 1, 1995, with
early adoption permitted. In October 1994, the FASB issued SFAS 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosure," which amends SFAS 114 to permit a creditor to use existing methods
for recognizing interest income on impaired loans. SFAS 118 is effective
concurrent with the effective date of SFAS 114. Chase is studying the impact
of adopting SFAS 114 and SFAS 118, but does not expect it to have a material
effect based on the loan portfolio and market conditions as of September 30,
1994.
NONACCRUAL, RESTRUCTURED AND PAST DUE OUTSTANDINGS AND DOMESTIC ORE ACQUIRED
NONACCRUAL AND RESTRUCTURED OUTSTANDINGS AND DOMESTIC ORE
<TABLE>
<CAPTION>
September 30, June 30, December 31, September 30,
($ in millions) 1994 1994 1993 1993
------------ --------- ----------- ------------
<S> <C> <C> <C> <C>
Domestic Outstandings:
Commercial Real Estate . . . . . . . . . . . . $ 271 $ 330 $ 475 $ 705
Commercial and Industrial . . . . . . . . . . . 147 173 226 279
Financial Institutions . . . . . . . . . . . . 10 11 37 50
Other . . . . . . . . . . . . . . . . . . . . . 124 185 144 174
---- ---- ----- -----
Total Domestic Outstandings 552 699 882 1,208
---- ---- ----- -----
International Outstandings:
Restructured Refinancing Countries . . . . . . 55 60 74 668
Commercial Real Estate . . . . . . . . . . . . 9 10 14 16
Commercial and Industrial . . . . . . . . . . . 42 38 22 18
Financial Institutions . . . . . . . . . . . . 22 36 41 67
Other . . . . . . . . . . . . . . . . . . . . . 21 20 21 28
---- ---- ----- -----
Total International Outstandings 149 164 172 797
---- ---- ----- -----
Total Nonaccrual and Restructured Outstandings $ 701 $ 863 $1,054 $2,005
---- ---- ----- -----
Domestic ORE $ 502 $ 589 $ 895 $ 953
---- ---- ----- -----
As a % of Total Gross Assets:
Nonaccrual and Restructured Outstandings .59% .74% 1.02% 1.96%
Nonaccrual and Restructured Outstandings
and Domestic ORE 1.02 1.25 1.88 2.89
---- ---- ----- -----
</TABLE>
The substantial decrease in nonaccrual and restructured outstandings at
September 30, 1994, as compared with September 30, 1993, was due to repayments,
charge-offs, transfers to accrual status and ORE, 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 $49 million, $107 million and $180 million at September 30,
1994, December 31, 1993 and September 30, 1993, respectively, and continue to
be included in the preceding table.
RECONCILIATION OF NONACCRUAL AND RESTRUCTURED OUTSTANDINGS
<TABLE>
<CAPTION>
($ in millions)
<S> <C>
Balance at December 31, 1993 . . . . . . . . . . . . . . . . . . . $1,054
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616
Deductions:
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . 388
Interest Applied to Principal . . . . . . . . . . . . . . . . . 27
Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . 251
Transfers to ORE . . . . . . . . . . . . . . . . . . . . . . . 190
Transfers to Accrual Status . . . . . . . . . . . . . . . . . . 113
-----
Balance at September 30, 1994 $ 701
-----
</TABLE>
15
<PAGE> 16
The increase in the negative impact of nonaccrual and restructured outstandings
on interest revenue for the first nine months of 1994, as shown in the
following table, resulted primarily from the realization of $142 million due to
the sale of Brazilian PDI bonds in the first quarter of 1993.
NEGATIVE (POSITIVE) IMPACT OF NONACCRUAL AND RESTRUCTURED OUTSTANDINGS*
<TABLE>
<CAPTION>
Third Quarter Nine Months
------------------------ -------------------------
($ in millions) 1994 1993 1994 1993**
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Revenue That Would Have Been
Recorded Under Original Terms . . . . . . . . . . . $15 $32 $39 $ 87
Interest Revenue Actually Realized . . . . . . . . . . 2 15 6 195
-- -- -- ----
Negative (Positive) Impact on Interest Revenue $13 $17 $33 $(108)
<FN>
* Excludes the positive impact on interest revenue of accruing bonds that have been restructured pursuant to The Brady
Proposals.
** Includes during the first quarter of 1993 loans transferred to the accelerated disposition portfolio since they were
transferred as of March 31, 1993.
</TABLE>
ACCRUING LOANS PAST DUE 90 DAYS OR MORE
<TABLE>
<CAPTION>
September 30, December 31, September 30,
($ in millions) 1994 1993 1993
----------- ---------- ------------
<S> <C> <C> <C>
Domestic Loans:
Consumer . . . . . . . . . . . . . . . . . . . . . $175 $186 $194
Commercial Real Estate . . . . . . . . . . . . . . 5 42 18
Commercial and Other . . . . . . . . . . . . . . . 24 21 11
--- --- ---
Total Domestic Loans . . . . . . . . . . . . . . . . . 204 249 223
--- --- ---
International Loans . . . . . . . . . . . . . . . . . . 13 12 11
--- --- ---
Total Accruing Loans Past Due 90 Days or More $217 $261 $234
--- --- ---
</TABLE>
Accruing loans that are contractually past due 90 days or more are loans that
are both well secured or guaranteed by financially responsible third parties
and are in the process of collection. Past due consumer loans, with the
exception of 1-4 family residential property loans, are generally charged off
according to internally established delinquency schedules which do not permit
delinquencies to exceed 180 days. Such 1-4 family residential property loans
are placed in nonaccrual status if reasonable doubt exists as to timely
collectibility or if payment of principal or interest is contractually past due
90 days or more and the loan is not well secured or guaranteed by financially
responsible third parties and in the process of collection.
RECONCILIATION OF DOMESTIC REAL ESTATE ACQUIRED IN SATISFACTION OF LOANS
<TABLE>
<CAPTION>
($ in millions)
<S> <C>
Balance at December 31, 1993 . . . . . . . . . . . . . . . . . . . $895
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
Deductions:
Repayments/Sales . . . . . . . . . . . . . . . . . . . . . . . 477
Valuation Losses . . . . . . . . . . . . . . . . . . . . . . . 104
---
Balance at September 30, 1994* $502
---
<FN>
* Includes in-substance foreclosure amounts of $414 million. ORE at September 30, 1994 was carried at approximately 39% of
original outstandings, primarily as a result of $775 million of cumulative charge-offs, interest applied to principal and
valuation losses.
</TABLE>
16
<PAGE> 17
ASSET/LIABILITY MANAGEMENT
Asset/ liability management (ALM) is an important ongoing process, which
requires the management of both liquidity risk and interest rate risk. 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, approximately $1
billion of Mexican Brady bonds and cross-border refinancing countries
securities previously classified as Loans were reclassified to Investment
Securities Available for Sale at December 31, 1993 as a result of the adoption
of SFAS 115.
At September 30, 1994, net unrealized losses in the investment
securities held to maturity portfolio were $13 million, compared with net
unrealized gains of $33 million and $42 million at December 31, 1993 and
September 30, 1993, respectively. This decline in value was primarily
attributable to the rise in domestic interest rates during 1994. 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 $23 million at September 30, 1994 compared with $264 million at
December 31, 1993. This change resulted from various factors, including gains
of approximately $94 million from sales, declines in bond values due to rising
domestic interest rates and, in the case of Brady bonds, other political and
economic factors which negatively impacted the value of such 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 September 30,
1994, these assets totaled $45.4 billion, or approximately $34.7 billion before
the effect of adoption of FASB Interpretation 39, "Offsetting of Amounts
Related to Certain Contracts" (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.
On October 28, 1994, the Company entered into a new $750 million
revolving credit agreement that expires on October 27, 1995. This agreement
replaced a previous $750 million facility. No borrowings have ever been made
under any of these credit facilities.
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 Note to
Consolidated Financial Statements on page 8.
17
<PAGE> 18
INTEREST RATE RISK MANAGEMENT
As discussed on pages 50 and 51 of the 1993 Annual Report, Chase's net interest
revenue is 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 interest rate
risk of current and future earnings to a level that is consistent with Chase's
mix of businesses and seeks to limit such risk exposure to a percentage of
earnings. During the first nine months of 1994, the quarterly exposures in the
tactical time horizon averaged 1.9% of quarterly core net income compared with
2.0% for 1993. The objective in managing interest rate risk is to support the
achievement of business strategies, while protecting earnings and liquidity.
At September 30, 1994, as shown in the chart below, Chase's near-term
interest rate risk 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 on-balance sheet
products and derivatives, 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 September 30, 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.
[GRAPHIC 1]
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 October 1 and maturing on November 28
would have a gap impact of $64 million ($100 million x 59 days/92 days) in the
fourth quarter 1994 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 reported based on a declining schedule over a five-year
period, 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.
At September 30, 1994, Chase had approximately $46 billion and $15
billion, respectively, of notional swap principal and other ALM contracts
outstanding related to such activities, compared with $37 billion and $14
billion, respectively, at December 31, 1993. The following table summarizes
certain of Chase's assets and liabilities at September 30, 1994, the
corresponding interest revenue earned on such assets or interest expense
incurred on such liabilities for the nine months ended September 30, 1994, as
well as the notional or contract amounts of related derivative products used
for ALM purposes. Also disclosed is the favorable or unfavorable percentage
impact these derivative products had on the related interest amounts reflected
in Chase's Consolidated Statement of Income. As shown, Chase's use of
18
<PAGE> 19
derivative products reduced interest expense on deposits and long-term debt and
interest revenue on placings and investment securities by the percentages
indicated.
DERIVATIVE PRODUCTS AND RELATED BALANCE SHEET POSITIONS AND INTEREST REVENUE
(EXPENSE)
<TABLE>
<CAPTION>
Nine Months Ended
Contract/ September 30, 1994
Notional Amount Income Statement
----------------------- ------------------------
Published Published Favorable
Balance Interest Other Interest (Unfavorable)
Sheet Rate ALM Revenue Percentage
($ in millions) Amount Swaps Contracts (Expense) Impact*
--------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
September 30, 1994
Interest-Bearing Deposits
Placed with Banks . . . . . . . $ 7,055 $ -- $ 200 $ 365 (2)%
Investment Securities . . . . . . . 7,831 1,100 2,500 545 (3)
Loans . . . . . . . . . . . . . . . 61,405 12,600 1,200 3,929 --
Deposits . . . . . . . . . . . . . 68,922 29,300 10,100 (1,717) 10
Intermediate- and Long-Term Debt . 5,031 3,000 700 (229) 19
------ ------
$46,000 $14,700
------ ------
<FN>
* Represents the favorable (unfavorable) percentage impact of ALM
derivative products on the related interest revenue or interest
expense amount prior to the impact of derivative products.
</TABLE>
The following table summarizes the outstanding ALM contract/notional amounts of
interest rate swaps and other ALM contracts at September 30 by yearly
intervals. The decrease in notional amounts from one period to the next period
represents maturities of the underlying contracts. At September 30, 1994, the
weighted average duration of receive fixed swaps and pay fixed swaps was
approximately 2.1 years and 1.3 years, respectively, compared with 2.4 years
and 1.8 years, respectively, at December 31, 1993. The weighted average
interest rates to be received and paid on such swaps are presented for each
yearly interval. The variable rates, which are generally based on London
Interbank Offered Rate (LIBOR), are presented using the forward yield curve at
September 30, 1994. However, actual repricings are generally based on the 3
month or 6 month LIBOR rates in effect at the actual repricing dates, not the
forward yield curve. To the extent that the current 3 month and 6 month LIBOR
rates change, the variable rates of interest received or paid will change.
Future interest rate changes are not known, but could materially impact the
variable rates presented below. However, Chase expects the impact of these
changes to be mitigated by corresponding changes in the interest rates and
values associated with the linked assets and liabilities. In addition, net
interest revenue will be affected by the amortization of net deferred
gains/(losses) on closed derivative contracts and premiums paid on open ALM
option products purchased, as reflected in the tables on pages 20 and 21.
OUTSTANDING ALM CONTRACT/NOTIONAL AMOUNTS BY YEARLY INTERVALS
<TABLE>
<CAPTION>
September 30,
-----------------------------------------------------------------------------------
($ in millions) 1994 1995 1996 1997 1998 Thereafter
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receive Fixed Swaps:
Contract/Notional
Amount . . . . . . . . . . . $29,100 $16,800 $10,400 $5,900 $2,600 $1,800
Weighted Average:
Receive Rate . . . . . . . . 5.97% 6.45% 6.43% 6.72% 6.90% 6.70%
Pay Rate . . . . . . . . . . 6.18% 7.48% 7.81% 8.07% 8.30% 8.69%
Pay Fixed Swaps:
Contract/Notional
Amount . . . . . . . . . . . $16,900 $ 7,700 $ 2,100 $1,800 $ 300 $ 200
Weighted Average:
Receive Rate . . . . . . . . 6.18% 7.47% 7.83% 8.06% 8.34% 8.32%
Pay Rate . . . . . . . . . . 5.31% 6.35% 6.96% 6.93% 8.68% 8.49%
Other ALM Contracts . . . . . . . . $14,700 $ 8,000 $ 7,200 $7,100 $6,400 $5,500
------ ------ ------ ----- ----- -----
</TABLE>
As discussed on page 51 of the 1993 Annual Report, Chase uses derivative
products as part of its ALM activities to manage the earnings risk arising
from timing differences in repricing characteristics principally arising from
its customer-related assets and liabilities. Consistent with Chase's overall
ALM objectives to reduce its longer-term exposure to a decline in interest
rates, fixed-rate liabilities are hedged using derivative products. Given the
volatile interest rate environment prevailing during 1994, an ALM strategy was
initiated in the second quarter of 1994 to replace certain receive fixed-rate
swap contracts by the purchase of long-term option (floor) contracts. This
action was taken to
19
<PAGE> 20
mitigate a possible decline in value of such swaps which occurs in a period of
rising interest rates. By utilizing option contracts, the possible loss in
value is limited to the amount of the option premium paid.
The rise in interest rates during the first nine months of 1994
resulted in a decline in the value of Chase's ALM derivative positions. This
decline in ALM derivative values was more than offset by an increase in value
to Chase of the related linked balance sheet positions during the first nine
months of 1994. This net increase in balance sheet value reflected the
substantially higher economic value of Chase's core deposit funding base. The
benefits of this low cost funding are currently being recognized in income as a
lower level of interest expense. As interest rates rise, core deposits
increase in value as they provide a less costly funding source versus other
funding alternatives. During the first nine months of 1994, the value of such
deposits increased by approximately $1,545 million as compared with a decrease
of $662 million in the value of the related ALM derivatives linked to such core
deposits. The difference between the change in value of the linked balance
sheet positions and the related ALM derivatives resulted primarily from Chase's
strategy to hedge less than 100% of its balance sheet positions as shown in the
Derivative Products and Related Balance Sheet Positions and Interest Revenue
(Expense) table on page 19. Of the remaining linked balance sheet positions,
the only other significant change in value related to intermediate- and
long-term debt of the Company. Most of this debt was issued at a fixed rate of
interest and, therefore, improves in value as interest rates rise. The value
of the derivative products related to such debt correspondingly declines. This
activity is consistent with Chase's overall ALM strategy of providing floating
rate funding to match Chase's predominant base of floating rate assets.
Significant changes in value to Chase's ALM derivative products and related
linked balance sheet positions for the first nine months of 1994 are presented
below.
CHANGE IN VALUE OF CERTAIN ALM DERIVATIVE PRODUCTS AND LINKED BALANCE SHEET
POSITIONS
<TABLE>
<CAPTION>
For Nine Months Ended
September 30, 1994
----------------------------------------
Change in Value Change in
of Linked Value of
Balance Sheet Related ALM
($ in millions) Positions Derivatives
---------------- --------------
<S> <C> <C>
Balance Sheet Assets/Liabilities:
Deposits* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,545 $(662)
Company's Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . 330 (267)
----- ----
<FN>
* Core deposits are valued by a model that forecasts future core deposit
costs versus alternative source of funds using simulation techniques.
Key assumptions include alternative cost of funds of 3 month LIBOR,
core deposit operating costs, reserve requirement of 10%, inflation of
3% per annum, and an interest elasticity of demand for balances of
(0.4). This valuation is performed on a "going concern" basis, which
assumes new business will replace any runoff. This valuation
methodology differs from that used for SFAS 107, "Disclosures About
Fair Value of Financial Instruments", which considers only the
existing portfolio.
</TABLE>
The change in value of Chase's ALM derivative products from December 31, 1993
to September 30, 1994 was as follows:
CHANGE IN VALUE OF ALM DERIVATIVE PRODUCTS
<TABLE>
<CAPTION>
September 30, December 31, Change in
($ in millions) 1994 1993 Value
------------------------------------------
<S> <C> <C> <C>
ALM Derivative Contracts:
Net Deferred Gains (Losses) . . . . . . . . . . . . . . . . . . . . . . . . $(138) $359 $(497)
Net Unrealized Gains (Losses)* . . . . . . . . . . . . . . . . . . . . . . (307) 117 (424)
---- --- ----
Net ALM Derivative Gains/(Losses) . . . . . . . . . . . . . . . . . . . $(445) $476 $(921)
---- --- ----
<FN>
* Includes $144 million and $23 million of premiums on open ALM option
products purchased at September 30, 1994 and December 31, 1993,
respectively, and variation margin on open futures contracts.
</TABLE>
The net deferred losses at September 30, 1994 are expected to be
amortized over the periods indicated below. The amortization of deferred gains
and losses are recognized as yield adjustments to the interest income or
expense associated with the linked assets or liabilities.
AMORTIZATION OF NET DEFERRED GAINS/(LOSSES) RELATED TO CLOSED ALM DERIVATIVE
CONTRACTS
<TABLE>
<CAPTION>
($ in millions) 1994 1995 1996 1997 1998 1999 Thereafter Total
---- ---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Gains/(Losses)
Amortization $1 $42 $6 $(29) $(59) $(58) $(41) $(138)
</TABLE>
20
<PAGE> 21
In addition, Chase's Consolidated Statement of Condition included unamortized
premiums on open ALM option products purchased amounting to $144 million and
$23 million at September 30, 1994 and December 31, 1993, respectively. The
premiums at September 30, 1994 will be amortized over the periods indicated
below.
AMORTIZATION OF PREMIUMS ON OPEN ALM OPTION PRODUCTS PURCHASED
<TABLE>
<CAPTION>
($ in millions) 1994 1995 1996 1997 1998 1999 Thereafter Total
---- ---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premium Amortization $5 $18 $17 $17 $16 $14 $57 $144
</TABLE>
CAPITAL MANAGEMENT
As discussed on pages 51 and 52 of the Annual Report, 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 September 30, 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 September 30, 1994 was $8,440
million or 7.21% of total assets, compared with $8,122 million, or 7.95% at
December 31, 1993, and $7,619 million or 7.57% at September 30, 1993. As a
result of the adoption of FIN 39 on January 1, 1994, Chase's Trading Account
Assets and Liabilities increased approximately $11 billion at September 30,
1994. This had the effect of decreasing the total equity ratio at September
30, 1994.
In June 1994, Chase announced a stock repurchase program, under which
up to 8.5 million shares of its common stock may be purchased over the next 12
to 18 months. The shares will be utilized to help offset the effects on total
outstanding shares of approximately 3.3 million shares of common stock issuable
upon the exercise of outstanding warrants that expire in June 1996 and shares
issuable upon exercise of various outstanding employee stock option and
incentive plans. Through September 30, 1994, 4.0 million shares had been
repurchased. On July 20, 1994, the Company's Board of Directors increased the
quarterly common stock dividend from 33 cents to 40 cents per share.
TIER I AND TIER II CAPITAL
<TABLE>
<CAPTION>
September 30, December 31, September 30,
($ in millions) 1994 1993 1993*
----------------------------------------------
<S> <C> <C> <C>
Tier I Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,738 $ 7,528 $ 7,237
Tier II Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,278 4,259 4,272
------ ------ ------
Total Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,016 $11,787 $11,509
------ ------ ------
<FN>
* In October 1993, the Company redeemed $350 million of its outstanding
Floating Rate Subordinated Notes Due 1995, the net effect of which was
included in Chase's Tier II capital and Total capital ratio at
September 30, 1993.
</TABLE>
Chase's Tier I risk-based capital ratio was 8.51% at September 30, 1994 as
compared with 8.44% at December 31, 1993 and 7.94% at September 30, 1993. The
improvement in the Tier I capital ratio since December 31, 1993 reflects the
increase in Tier I capital primarily from retained earnings, offset by
investments and commitments to invest during the first quarter of 1994 in the
Company's U.S. securities underwriting and dealing subsidiary - Chase
Securities, Inc. (CSI), the repurchase of 4.0 million shares of the Company's
common stock and the goodwill resulting from the recent acquisition of American
Residential. The Tier I capital ratio was also impacted by higher net
risk-weighted assets of $90.9 billion at September 30, 1994, compared with
$89.2 billion at December 31, 1993. During the first nine months of 1994, Tier
II capital increased primarily due to the issuance of $450 million of
subordinated debt, primarily offset by the discount applicable to subordinated
debt with remaining maturities of five years or less and the increase in the
investment in CSI.
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.
On August 10, 1994, the Company issued $150 million of 7 7/8%
subordinated notes. The notes mature on August 1, 2004 and may not be redeemed
prior to August 1, 1999; the notes will be redeemable on such date and
thereafter at the option of the Company, in whole or in part, at their
principal amount plus accrued interest. The net proceeds from this issuance
will be 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. This
issuance qualifies as Tier II capital.
21
<PAGE> 22
CAPITAL RATIOS*
<TABLE>
<CAPTION>
Minimum
September 30, December 31, September 30, Regulatory
1994 1993 1993 Guidelines
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier I Leverage Ratio (a) . . . . . . . . . . . . 7.31% 7.81% 7.48% 3.00-5.00%
Risk-Based Capital Ratios: (b)
Tier I . . . . . . . . . . . . . . . . . . . 8.51 8.44 7.94 4.00
Total Capital . . . . . . . . . . . . . . . . 13.22 13.22 12.63** 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 ratio reflects the redemption discussed in the note to the
preceding table.
(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>
TRADING ACTIVITIES
To better serve issuer and investor clients and to capitalize on synergies
across markets, Chase has consolidated its Global Risk Management and Global
Capital Markets business sectors into a single business sector, Global Markets
(GM). GM functions as an intermediary between customers (both issuers and
investors) and the foreign exchange and capital markets worldwide.
Issuer needs in the capital markets are met through primary market
activities, including underwriting, private placement and loan syndication. In
order to meet investor needs in the capital markets, as well as to provide
support to primary market activity, GM sells and trades a variety of
instruments in the U.S. and international markets, including Euromarket fixed
income instruments, 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. Through serving a strong corporate and institutional franchise, GM
is a leading provider in foreign exchange. In addition, in order to provide
issuers and investors the ability to manage currency, interest rate and other
financial exposures, GM designs and markets a broad range of risk management
products, including interest rate, foreign currency, precious metals and
commodity and equity derivatives.
The net market risk exposures created as a result of providing these
services to customers are managed by GM as part of Chase's trading activities.
As a secondary business objective, GM creates proprietary positions to take
advantage of market opportunities that are not directly associated with
customer activities.
Trading and trading-related revenues (including revenue classified as
net interest revenue for financial statement purposes) for GM are set forth
below:
TOTAL TRADING AND TRADING-RELATED REVENUES
<TABLE>
<CAPTION>
Nine Months Ended September 30,
($ in millions) 1994 1993
-------------------------------
<S> <C> <C>
Income Statement Classification:
Foreign Exchange Trading Revenue . . . . . . . . . . . . . . . . . . . $213 $281
Trading Account Revenue . . . . . . . . . . . . . . . . . . . . . . . . 306 268
Net Interest Revenue* . . . . . . . . . . . . . . . . . . . . . . . . . 92 59
--- ---
Total $611 $608
--- ---
Business Diversification:
Foreign Exchange and Precious Metals . . . . . . . . . . . . . . . . . $228 $315
Interest Rate and Commodity Derivatives . . . . . . . . . . . . . . . . 98 150
Securities Trading and Underwriting . . . . . . . . . . . . . . . . . . . . 285 143
--- ---
Total $611 $608
--- ---
Geographic Distribution:
The Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $416 $355
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 166
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 87
--- ---
Total $611 $608
--- ---
<FN>
* Includes accruals on interest-earning and interest-bearing
trading-related positions, as well as allocated amounts reflecting the
cost or benefit, based on short-term interest rates, associated with
net trading-related positions.
</TABLE>
As shown above, total trading and trading-related revenues for the nine months
ended September 30, 1994 were only slightly higher than the comparable period
of last year. Nine month 1994 foreign exchange and derivative revenues were
below those for the 1993 comparable period reflecting unsettled conditions in
those markets and higher domestic interest rates. The securities trading and
underwriting business realized substantial revenue from the sale of emerging
markets trading positions earlier in the year, as well as the recognition of
market valuation gains that arose when certain Brazilian loans were exchanged
for securities pursuant to the Brazilian debt restructuring in the second
quarter. Third quarter 1994 results were favorably affected by the beginning
of a return of investor confidence to the emerging markets, as well as improved
political environments in certain countries, particularly Brazil.
22
<PAGE> 23
TRADING ACCOUNT ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
($ in millions) 1994 1993
-----------------------------
<S> <C> <C>
Securities and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,245 $6,171
Other, Principally Derivative Contracts* . . . . . . . . . . . . . . . . . 11,057** 762
------ -----
Total $19,302 $6,933
------ -----
<FN>
* Includes foreign exchange, interest rate and commodity contracts.
** Includes approximately $11 billion resulting from the adoption of FIN
39 at January 1, 1994.
</TABLE>
TRADING ACCOUNT LIABILITIES
<TABLE>
<CAPTION>
September 30, December 31,
($ in millions) 1994 1993
-----------------------------
<S> <C> <C>
Securities Sold, Not Yet Purchased . . . . . . . . . . . . . . . . . . . . $ 1,183 $736*
Derivative Contracts** . . . . . . . . . . . . . . . . . . . . . . . . . . 10,658*** --
------ ---
Total $11,841 $736
------ ---
<FN>
* Classified as Accounts Payable, Accrued Expenses and Other Liabilities
prior to the adoption of FIN 39.
** Includes foreign exchange, interest rate and commodity contracts.
*** Results from the adoption of FIN 39 at January 1, 1994.
</TABLE>
MATURITY OF TRADING ACCOUNT DERIVATIVE CONTRACTS*
<TABLE>
<CAPTION>
At September 30, 1994 Interest Foreign
Rate Exchange
Contracts Contracts
-------------------------
<S> <C> <C>
Less than 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20% 64%
3 to 6 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 21
6 to 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 14
1 to 3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 1
3 to 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 --
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 --
--- ---
Total 100% 100%
--- ---
<FN>
* Approximate percentages based upon remaining life of notional
principal amounts.
</TABLE>
TRADING ACCOUNT DERIVATIVE CONTRACTS
<TABLE>
<CAPTION>
September 30, 1994 December 31, 1993
--------------------------------------------------------------------
Contract/Notional Credit Risk Contract/Notional Credit Risk
($ in millions) Amount* Amount** Amount* Amount**
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Rate Contracts:
Interest Rate Swaps . . . . . . . . . . . . . $253,700 $ 4,100 $178,700 $ 5,600
Currency Exchange Agreements . . . . . . . . 18,600 1,200 13,900 700
Forwards and Futures . . . . . . . . . . . . 302,200 200 123,200 70
Options, Caps and Floors Purchased . . . . . . 64,200 900 61,400 900
Options, Caps and Floors Written . . . . . . . 68,300 *** 57,500 ***
Foreign Exchange Contracts: . . . . . . . . . .
Spot, Forwards and Futures . . . . . . . . . 578,100 9,700 418,300 5,400
Options Purchased . . . . . . . . . . . . . . 40,200 800 29,600 600
Options Written . . . . . . . . . . . . . . . 48,500 *** 33,200 ***
Commodity Contracts**** . . . . . . . . . . . . . 15,000 500 9,600 800
-------- ------ ------- ------
Total Gross Amount . . . . . . . . . . . . . $17,400 $14,070
Less: Master Netting Agreements . . . . 6,800 3,100
------ ------
Trading Account Derivative Assets $10,600 $10,970*****
------ ------
<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 19.
** 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
contracts have positive market values. These amounts do not consider
the value of any collateral. The impact of master netting agreements
is reflected on an aggregated basis as a reduction to the credit risk
amount.
*** Options, caps and floors written have no credit risk.
**** Commodity contracts for purposes of this presentation include
contracts that contain the right or obligation to exchange a financial
instrument for a physical asset. Contract or notional amounts include
options written of $2.7 billion and $1.5 billion for September 30,
1994 and December 31,1993, respectively. Such options written have no
credit risk.
***** Trading Account Derivative Assets for December 31, 1993 are shown on a
proforma basis, as prior to the adoption of FIN 39, trading account
contracts were reported in the Consolidated Statement of Condition on
a net basis.
</TABLE>
23
<PAGE> 24
The credit risk amount of interest rate swap contracts was lower at September
30, 1994 than at December 31, 1993 due to an increase in domestic interest
rates. The change in the credit risk amount of foreign exchange contracts
reflected a higher volume of contracts outstanding at September 30, 1994 and
the relatively higher volatility of foreign exchange rates in the third
quarter.
Chase's actual credit losses arising from derivative contracts have
not been material during the first nine months of 1994 and for 1993.
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 September 30, 1994,
as compared with year-end 1993, with the exception of derivative instruments as
discussed on page 20, the estimated fair values of Chase's on- and
off-balance-sheet financial instruments in the aggregate were not adversely
impacted in the third quarter of 1994.
FINANCIAL RATIOS
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
1994 September 30,
---------------------- 1993 -------------------------
3rd Qtr. 2nd Qtr. 3rd Qtr. 1994 1993
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings Ratios
Net Income as a Percentage of Average:
Total Assets . . . . . . . . . . . . . . . . . . . 1.00% 1.05% 1.01% 1.11% 0.86%
Common Stockholders' Equity* . . . . . . . . . . . 15.83 16.11 15.14 17.34 13.31
Total Stockholders' Equity . . . . . . . . . . . . 14.57 14.80 13.74 15.83 12.28
----- ----- ----- ----- -----
Leverage Ratios--Averages
Common Stockholders' Equity as a % of Total Assets . . 5.68% 5.80% 5.79% 5.76% 5.37%
Total Stockholders' Equity as a % of Total Assets . . . 6.87 7.11 7.33 6.99 6.97
----- ----- ----- ----- -----
Common Stockholders' Equity Per Common Share . . . . . $38.83 $37.64 $33.87
----- ----- -----
Capital Ratios at Quarter End**
Common Stockholders' Equity as a % of Total Assets . . 6.01% 6.08% 6.18%
Total Stockholders' Equity as a % of Total Assets . . . 7.21 7.32 7.57
Tier I Leverage . . . . . . . . . . . . . . . . . . . . 7.31 7.47 7.48
Tier I Capital as a % of Net Risk-Weighted Assets . . . 8.51 8.71 7.94
Total Capital as a % of Net Risk-Weighted Assets . . . 13.22 13.32 12.63***
----- ----- -----
<FN>
* Based on Net Income, adjusted as applicable.
** Based on Federal Reserve Board definition.
*** In October 1993, the Company redeemed $350 million of its outstanding
Floating Rate Subordinated Notes Due 1995, the effect of which is
included in Chase's Total capital ratio at September 30, 1993.
Note: As discussed on page 21, the Tier I and Total capital ratios for 1994
exclude the Net Unrealized Gains on Investment Securities-Available
for Sale component of stockholders' equity. All other ratios include
such impact that arose from the adoption of SFAS 115.
</TABLE>
The Chase Manhattan Bank, N.A. and Subsidiaries
Capital Ratios at Quarter End*
<TABLE>
<S> <C> <C> <C>
Tier I Leverage . . . . . . . . . . . . . . . . . . 6.90% 6.93% 6.71%
Tier I Capital as a % of Net Risk-Weighted Assets . 8.25 8.24 7.28
Total Capital as a % of Net Risk-Weighted Assets . 12.06 12.08 11.36
----- ----- -----
<FN>
* Based on Office of the Comptroller of the Currency definition.
Note: As discussed on page 21, the Tier I and Total capital ratios for 1994
exclude the Net Unrealized Gains on Investment Securities-Available
for Sale component of stockholders' equity. All other ratios include
such impact that arose from the adoption of SFAS 115.
</TABLE>
24
<PAGE> 25
Stockholder Data
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
1994 September 30,
----------------------- 1993 ------------------
($ in millions, except per share data) 3rd Qtr. 2nd Qtr 3rd Qtr. 1994 1993
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Quarterly Cash Dividends:
Common Stock:
Per Share . . . . . . . . . . . . . . . . . . . . . $ .40 $ .33 $ .30 $ 1.06 $ .90
Aggregate . . . . . . . . . . . . . . . . . . . . . $ 73.8 $61.0 $55.0 $195.7 $149.2
Preferred Stock:
6 3/4% Series B . . . . . . . . . . . . . . . . . . -- -- .3 -- 1.1
7.60% Series C . . . . . . . . . . . . . . . . . . -- -- .4 -- 1.4
Floating Rate Series E . . . . . . . . . . . . . . -- -- 4.2 -- 14.3
Floating Rate Series F . . . . . . . . . . . . . . -- 5.2 3.9 8.6 12.3
10 1/2% Series G . . . . . . . . . . . . . . . . . 3.7 3.7 3.7 11.1 11.1
9.76% Series H . . . . . . . . . . . . . . . . . . 2.5 2.5 2.5 7.5 7.5
10.84% Series I . . . . . . . . . . . . . . . . . . 5.4 5.4 5.4 16.2 16.2
9.08% Series J . . . . . . . . . . . . . . . . . . 3.4 3.4 3.4 10.2 10.2
8-1/2% Series K . . . . . . . . . . . . . . . . . . 3.6 3.6 3.6 10.8 10.8
8.32% Series L . . . . . . . . . . . . . . . . . . 5.0 5.0 5.0 15.0 15.0
8.40% Series M . . . . . . . . . . . . . . . . . . 3.6 3.6 3.6 10.8 9.6
Floating Rate Series N . . . . . . . . . . . . . . 3.5 2.0 -- 5.5 --
Total Preferred Stock 30.7 34.4 36.0 95.7 109.5
----- ---- ---- ----- -----
Total Cash Dividends $104.5 $95.4 $91.0 $291.4 $258.7
----- ---- ---- ----- -----
Cash Dividends Paid on Common Stock as Percentage of Net
Income Applicable to Common Stock 26.9% 22.4% 23.8% 22.2% 27.4%
Total Cash Dividends Paid as a Percentage of Net Income 34.2 31.1 34.1 29.8 39.6
----- ---- ---- ----- -----
</TABLE>
25
<PAGE> 26
Consolidated Statement of Condition
The Chase Manhattan Bank, N.A. and Subsidiaries
<TABLE>
<CAPTION>
September 30, December 31, September 30,
($ in millions) 1994 1993 1993
------------- ------------ -------------
<S> <C> <C> <C>
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,330 $ 5,772 $ 4,629
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . 7,247 5,431 5,375
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . 3,392 4,439 4,185
Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,617 6,309 4,275
Investment Securities:
Held to Maturity (Market Value of $1,480, $684 and $716, Respectively) . . . 1,482 657 685
Available for Sale Carried at Fair Value . . . . . . . . . . . . . . . . . 5,123 6,766 --
At Lower of Cost or Market (Market Value of $5,686) . . . . . . . . . . . . -- -- 5,557
------ ------ ------
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . 6,605 7,423 6,242
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,486 48,109 50,613
Less: Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . 1,089 1,085 1,568
------ ------ ------
Loans, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,397 47,024 49,045
Assets Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . 24 219 625
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . . . 599 689 762
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 707 566 606
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,729 1,617 1,807
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,866 4,514 5,542
------ ------ ------
Total Assets $94,513 $84,003 $83,093
------ ------ ------
Liabilities and Stockholder's Equity
Deposits:
Domestic Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . $10,788 $13,740 $11,193
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,096 21,276 21,513
Overseas Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . 2,533 2,473 2,785
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,140 28,120 28,407
------ ------ ------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,557 65,609 63,898
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . 3,003 3,534 3,279
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 2,904 1,253 1,268
Trading Account Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 10,707 -- --
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 696 774
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 490 347 439
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . 3,627 3,088 4,288
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . 2,627 3,032 3,059
------ ------ ------
Total Liabilities 87,518 77,559 77,005
------ ------ ------
<CAPTION>
Stockholder's Equity:
Capital Stock ($15 Par Value): 9/30/94 12/31/93 9/30/93
---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Number of Shares:
Authorized 81,744,445 81,744,445 81,744,445
Outstanding 60,955,569 60,699,597 60,588,329 914 910 909
<CAPTION>
<S> <C> <C> <C>
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,625 4,383 4,351
Net Unrealized Gains (Losses) on Investment Securities - Available for Sale (8) 187 --
Undivided Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,464 964 828
------ ------ ------
Total Stockholder's Equity 6,995 6,444 6,088
------ ------ ------
Total Liabilities and Stockholder's Equity $94,513 $84,003 $83,093
------ ------ ------
<FN>
The accompanying note on page 8 is an integral part of the financial
statements.
Member Federal Deposit Insurance Corporation
</TABLE>
26
<PAGE> 27
Average Balances, Interest and Average Rates -- Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter
-------------------------------------------------------------------------
1994 1993
---------------------------------- ------------------------------------
Average Average Average Average
($ in millions, based on daily averages) Balance Interest Rate Balance Interest Rate
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-Earning Assets:
Interest-Bearing Deposits Placed with Banks . . $ 7,464 $ 108 5.75% $ 7,778 $ 214 10.94%
Federal Funds Sold and Securities Purchased
Under Resale Agreements . . . . . . . . . . . 14,778 233 6.25 10,461 261 9.91
Trading Account Assets--Interest-Earning* . . . 6,372 89 5.53 4,475 51 4.55
Investment Securities:
Held to Maturity
Taxable . . . . . . . . . . . . . . . . 1,480 23 6.15 1,032 33 12.86
Tax-Exempt . . . . . . . . . . . . . . 359 10 10.91 440 13 11.33
------- ----- ----- ------- ----- -----
Total Held to Maturity 1,839 33 7.08 1,472 46 12.40
Available for Sale . . . . . . . . . . . . 5,409 90 6.63** 5,610 121 8.58**
------- ----- ----- ------- ----- -----
Total Investment Securities . . . . . . . . 7,248 123 6.75 7,082 167 9.37
Loans:
Domestic Offices . . . . . . . . . . . . . 43,492 945 8.62 42,618 888 8.26
Overseas Offices . . . . . . . . . . . . . 16,519 307 7.37 19,088 500 10.39
------- ----- ----- ------- ----- -----
Total Loans . . . . . . . . . . . . . . . . 60,011 1,252 8.28 61,706 1,388 8.92
Less: Reserve for Possible
Credit Losses*** . . . . . . . . . . . 1,426 - - 1,941 - -
Loans, Net . . . . . . . . . . . . . . 58,585 1,252 8.28 59,765 1,388 8.92
------- ----- ----- ------- ----- -----
Accelerated Disposition Portfolio--
Interest-Earning . . . . . . . . . . . . . . 25 2 27.58 552 20 14.43
------- ----- ----- ------- ----- -----
Total Interest-Earning Assets***, Net 94,472 1,807 7.47 90,113 2,101 9.06
------- ----- ----- ------- ----- -----
Summary--Gross Interest-Earning Assets:
Domestic Offices . . . . . . . . . . . . . . . 65,241 1,225 7.44 59,745 1,081 7.18
Overseas Offices . . . . . . . . . . . . . . . 30,657 582 7.53 32,309 1,020 12.53
------- ----- ----- ------- ----- -----
Total Gross Interest-Earning Assets 95,898 $1,807 7.47% 92,054 $2,101 9.06%
------- ----- ----- ------- ----- -----
Noninterest-Earning Assets:
Cash and Due from Banks . . . . . . . . . . . . 6,229 6,129
Trading Account Assets--
Noninterest-Earning**** . . . . . . . . . . 12,263 -
Customers' Liability on Acceptances . . . . . . 652 712
Premises and Equipment . . . . . . . . . . . . 1,822 1,964
Accrued Interest Receivable . . . . . . . . . . 835 740
Other Assets . . . . . . . . . . . . . . . . . 4,791 4,982
------- -------
Total Noninterest-Earning Assets 26,592 14,527
------- -------
Total Assets $121,064 $104,640
------- -------
<FN>
* Includes only trading securities.
** Average rate based on average amortized cost.
*** Reserve for Possible Credit Losses excluded from calculations of
average balances and average rates, as appropriate.
**** Includes foreign exchange, interest rate, and commodity derivative
contracts.
Note: Loan and other asset amounts include nonaccrual and restructured loans
and ORE, as applicable, but exclude assets held in the accelerated
disposition portfolio. Accruing, nonaccruing and restructured loans
in the accelerated disposition portfolio were treated as
interest-earning in the above table, while ORE in the accelerated
disposition portfolio was treated as noninterest-earning.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation during the third quarter of 1994.
</TABLE>
27
<PAGE> 28
Average Balances, Interest and Average Rates -- Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Third Quarter
------------------------------------------------------------------------
1994 1993
--------------------------------- -----------------------------------
Average Average Average Average
($ in millions, based on daily averages) Balance Interest Rate Balance Interest Rate
--------------------------------- -----------------------------------
<S> <C> <C> <C> <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 . . . . . . . . . $ 5,491 $ 26 1.87% $ 5,391 $ 26 1.91%
Money Market Deposits . . . . . . . . . 10,394 63 2.39 11,907 36 1.22
Negotiable Certificates of Deposit . . 1,203 24 7.83 1,790 32 7.11
Other Time Deposits . . . . . . . . . . 7,703 90 4.66 9,648 52 2.20
------- --- ---- ------- ----- ------
Total Domestic Offices . . . . . . . . . . 24,791 203 3.27 28,736 146 2.05
Overseas Offices 30,833 335 4.31 28,167 367 5.17
------- --- ---- ------- ----- ------
Total Interest-Bearing Deposits . . . . . . 55,624 538 3.84 56,903 513 3.58
Federal Funds Purchased and Securities Sold
Under Repurchase Agreements . . . . . . . . . 16,174 203 4.98 11,138 150 5.35
Other Short-Term Borrowings:
Domestic Offices . . . . . . . . . . . . . 3,083 58 7.37 2,392 34 5.71
Overseas Offices . . . . . . . . . . . . . 1,058 10 3.93 1,094 384 138.95
------- --- ---- ------- ----- ------
Total Other Short-Term Borrowings . . . . . 4,141 68 6.49 3,486 418 47.53
Intermediate- and Long-Term Debt . . . . . . . 4,906 76 6.14 6,394 94 5.86
------- --- ---- ------- ----- ------
Total Interest-Bearing Liabilities 80,845 885 4.34 77,921 1,175 5.99
------- --- ---- ------- ----- ------
Summary--Interest-Bearing Liabilities:
Domestic Offices . . . . . . . . . . . . . . . 52,058 565 4.31 47,942 350 2.90
Overseas Offices . . . . . . . . . . . . . . . 28,787 320 4.41 29,979 825 10.92
------- --- ---- ------- ----- ------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices . . . . . . . . . 13,093 13,482
Deposits in Overseas Offices . . . . . . . . . 2,335 2,054
Trading Account Liabilities* . . . . . . . . . 12,159 -
Acceptances Outstanding . . . . . . . . . . . . 657 721
Accounts Payable, Accrued Expenses and
Other Liabilities . . . . . . . . . . . . . . 3,663 2,745
------- -------
Total Noninterest-Bearing Liabilities 31,907 19,002
------- -------
Total Liabilities 112,752 96,923
------- -------
Redeemable Preferred Stock -- 48
------- -------
Stockholders' Equity:
Nonredeemable Preferred Stock . . . . . . . . . 1,432 1,611
Common Stockholders' Equity . . . . . . . . . . 6,880 6,058
------- -------
Total Stockholders' Equity 8,312 7,669
------- -------
Total Liabilities, Redeemable Preferred
Stock and Stockholders' Equity $121,064 $104,640
------- -------
Taxable Equivalent Net Interest Revenue and
Average Interest Rate Spread $922 3.13% $ 926 3.07%
--- ---- ----- ----
Net Interest Revenue as a Percentage of
Gross Interest-Earning Assets 3.81% 3.99%
---- ----
<FN>
* Includes short sales, and foreign exchange, interest rate, and
commodity derivative contracts.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation during the third quarter of 1994.
</TABLE>
28
<PAGE> 29
Average Balances, Interest and Average Rates -- Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------------------------------------------------
September 30, 1994 September 30, 1993
--------------------------------- ------------------------------------
Average Average Average Average
($ in millions, based on daily averages) Balance Interest Rate Balance Interest Rate
-------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-Earning Assets:
Interest-Bearing Deposits Placed with Banks . . $ 6,872 $ 365 7.11% $ 7,136 $ 553 10.37%
Federal Funds Sold and Securities Purchased
Under Resale Agreements . . . . . . . . . . . 13,068 1,048 10.72 9,956 784 10.53
Trading Account Assets--Interest-Earning* . . . 6,143 300 6.51 3,748 150 5.36
Investment Securities:
Held to Maturity
Taxable . . . . . . . . . . . . . . . . 1,188 92 10.34 1,021 101 13.16
Tax-Exempt . . . . . . . . . . . . . . 375 32 11.38 457 39 11.49
------- ----- ----- ------- ----- -----
Total Held to Maturity . . . . . . . 1,563 124 10.59 1,478 140 12.64
Available for Sale . . . . . . . . . . . . 6,169 433 9.39** 5,050 385 10.18**
------- ----- ----- ------- ----- -----
Total Investment Securities . . . . . . . . 7,732 557 9.63 6,528 525 10.74
Loans:
Domestic Offices . . . . . . . . . . . . . 43,698 2,752 8.42 42,766 2,714 8.49
Overseas Offices . . . . . . . . . . . . . 16,919 1,177 9.30 18,442 1,571 11.39
------- ----- ----- ------- ----- -----
Total Loans . . . . . . . . . . . . . . . . 60,617 3,929 8.67 61,208 4,285 9.36
Less: Reserve for Possible
Credit Losses*** . . . . . . . . . . 1,437 - - 1,941 - -
------- ----- ----- ------- ----- -----
Loans, Net 59,180 3,929 8.67 59,267 4,285 9.36
------- ----- ----- ------- ----- -----
Accelerated Disposition Portfolio--
Interest-Earning . . . . . . . . . . . . 56 6 16.09 416 40 12.79
------- ----- ----- ------- ----- -----
Total Interest-Earning Assets***, Net 93,051 6,205 8.78 87,051 6,337 9.52
------- ----- ----- ------- ----- -----
Summary--Gross Interest-Earning Assets:
Domestic Offices . . . . . . . . . . . . . . . 63,840 3,450 7.22 58,647 3,252 7.41
Overseas Offices . . . . . . . . . . . . . . . 30,648 2,755 12.02 30,345 3,085 13.59
------- ----- ----- ------- ----- -----
Total Gross Interest-Earning Assets 94,488 $6,205 8.78% 88,992 $6,337 9.52%
------- ----- ----- ------- ----- -----
Noninterest-Earning Assets:
Cash and Due from Banks . . . . . . . . . . . . 6,083 6,194
Trading Account Assets--Noninterest-Earning**** 10,348 --
Customers' Liability on Acceptances . . . . . . 684 752
Premises and Equipment . . . . . . . . . . . . 1,803 1,922
Accrued Interest Receivable . . . . . . . . . . 854 748
Other Assets . . . . . . . . . . . . . . . . . 5,146 5,021
------- -------
Total Noninterest-Earning Assets 24,918 14,637
------- -------
Total Assets $117,969 $101,688
------- -------
<FN>
* Includes only trading securities.
** Average rate based on average amortized cost.
*** Reserve for Possible Credit Losses excluded from calculations of
average balances and average rates, as appropriate.
**** Includes foreign exchange, interest rate, and commodity derivative
contracts.
Note: Loan and other asset amounts include nonaccrual and restructured loans
and ORE, as applicable, and amounts attributable during the first
quarter of 1993 to assets held in the accelerated disposition
portfolio since they were transferred as of March 31, 1993.
Subsequent to this date, accruing, nonaccruing and restructured loans
in the accelerated disposition portfolio were treated as
interest-earning in the above table, while ORE in the accelerated
disposition portfolio was treated as noninterest-earning.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation during the third quarter of 1994.
</TABLE>
29
<PAGE> 30
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended
----------------------------------------------------------------------
September 30, 1994 September 30, 1993
------------------------------- ---------------------------------
Average Average Average Average
($ in millions, based on daily averages) Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <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 . . . . . . . . . $ 5,566 $ 78 1.87% $ 5,377 $ 81 2.01%
Money Market Deposits . . . . . . . . . 10,938 143 1.75 11,198 142 1.69
Negotiable Certificates of Deposit . . 1,359 76 7.44 2,050 111 7.25
Other Time Deposits . . . . . . . . . . 8,225 249 4.06 9,696 156 2.15
------- ----- ----- ------- ----- ------
Total Domestic Offices 26,088 546 2.80 28,321 490 2.31
Overseas Offices 29,873 1,171 5.24 26,507 1,055 5.33
------- ----- ----- ------- ----- ------
Total Interest-Bearing Deposits . . . . . . 55,961 1,717 4.10 54,828 1,545 3.77
Federal Funds Purchased and Securities Sold
Under Repurchase Agreements . . . . . . . . . 14,431 503 4.66 10,870 443 5.44
Other Short-Term Borrowings:
Domestic Offices . . . . . . . . . . . . . 2,976 148 6.66 2,396 95 5.29
Overseas Offices . . . . . . . . . . . . . 1,178 805 91.40 950 964 135.67
------- ----- ----- ------- ----- ------
Total Other Short-Term Borrowings . . . . . 4,154 953 30.69 3,346 1,059 42.32
Intermediate- and Long-Term Debt . . . . . . . 5,274 229 5.81 6,535 406 8.30
------- ----- ----- ------- ----- ------
Total Interest-Bearing Liabilities 79,820 3,402 5.70 75,579 3,453 6.11
------- ----- ----- ------- ----- ------
Summary--Interest-Bearing Liabilities:
Domestic Offices . . . . . . . . . . . . . . . 51,203 1,427 3.73 46,480 1,075 3.09
Overseas Offices . . . . . . . . . . . . . . . 28,617 1,975 9.23 29,099 2,378 10.93
------- ----- ----- ------- ----- ------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices . . . . . . . . . 13,479 13,306
Deposits in Overseas Offices . . . . . . . . . 2,461 1,932
Trading Account Liabilities* . . . . . . . . . 9,920 --
Acceptances Outstanding . . . . . . . . . . . . 692 765
Accounts Payable, Accrued Expenses and
Other Liabilities . . . . . . . . . . . . . . 3,350 2,971
------- -------
Total Noninterest-Bearing Liabilities 29,902 18,974
------- -------
Total Liabilities 109,722 94,553
------- -------
Redeemable Preferred Stock -- 51
------- -------
Stockholders' Equity:
Nonredeemable Preferred Stock . . . . . . . . . 1,455 1,620
Common Stockholders' Equity . . . . . . . . . . 6,792 5,464
------- -------
Total Stockholders' Equity 8,247 7,084
------- -------
Total Liabilities, Redeemable
Preferred Stock and
Stockholders' Equity $117,969 $101,688
------- -------
Taxable Equivalent Net Interest Revenue and
Average Interest Rate Spread $2,803 3.08% $2,884 3.41%
----- ----- ----- -----
Net Interest Revenue as a Percentage of Gross
Interest-Earning Assets 3.97% 4.33%
----- -----
<FN>
* Includes short sales, and foreign exchange, interest rate, and
commodity derivative contracts.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation during the third quarter of 1994.
</TABLE>
30
<PAGE> 31
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
SECURITIES-HELD TO MATURITY
<TABLE>
<CAPTION>
September 30, 1994 December 31, 1993 September 30, 1993
--------------------------------------------- ---------------------- ----------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair Amortized Fair
($ in millions) Cost Gains Losses Value* Cost Value* Cost Value*
--------- ---------- ---------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities . . $ 120 $-- $-- $ 120 $ 31 $ 33 $ 44 $ 45
Federal Agency Securities** . 481 -- 14 467 662 666 641 650
State and Political
Subdivision Securities . . 352 8 1 359 419 446 435 467
Other Bonds, Notes and
Debentures:
Securities Issued by
OECD Central
Governments and
their Agencies*** . . 544 1 8 537 16 16 18 18
Securities Issued by
Other Foreign Central
Governments and
their Agencies . . . 74 -- -- 74 10 10 9 9
Privately-Issued
Mortgage-Backed
Securities . . . . . 29 1 -- 30 35 35 93 93
Corporate and Other Debt
Securities . . . . . . . 233 -- -- 233 35 35 45 45
----- -- -- ----- ----- ----- ----- -----
Total Other Bonds,
Notes and
Debentures . . . . . 880 2 8 874 96 96 165 165
----- -- -- ----- ----- ----- ----- -----
Federal Reserve Bank and
Other Stock Investments . 185 -- -- 185 176 176 177 177
Total $2,018 $10 $23 $2,005 $1,384 $1,417 $1,462 $1,504
----- -- -- ----- ----- ----- ----- -----
<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 held to maturity in
terms of taxable interest income, nontaxable interest income, and
dividends for the third quarter and the first nine months of 1994
were: $20 million, $6 million and $3 million; and $84 million, $20
million and $8 million, respectively; and for the third quarter and
first nine months of 1993, such amounts were: $31 million, $8 million
and $3 million; and $93 million, $26 million and $7 million,
respectively.
</TABLE>
31
<PAGE> 32
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
SECURITIES--AT
LOWER OF
SECURITIES--AVAILABLE FOR SALE AT FAIR VALUE COST OR MARKET
----------------------------------------------------------------- --------------------
September 30, 1994 December 31, 1993 September 30, 1993
------------------------------------------ --------------------- --------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair Amortized Fair
($ in millions) Cost Gains Losses Value* Cost Value* Cost Value*
--------- ---------- ---------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities . . . . . . $2,881 $ 28 $ 43 $2,866 $2,273 $2,307 $2,301 $2,347
Federal Agency Securities** . . . . . 656 -- 22 634 1,202 1,213 1,157 1,178
State and Political Subdivision
Securities . . . . . . . . . . . . 63 -- -- 63 -- -- -- --
Other Bonds, Notes and
Debentures:
Securities Issued by OECD
Central Governments
and their Agencies*** . . . . 687 -- 16 671 1,535 1,564 1,625 1,637
Securities Issued by Other
Foreign Central
Governments and
their Agencies . . . . . . 916 4 52 868 1,476 1,618 338 338
Privately-Issued Mortgage-
Backed Securities . . . . . . . 78 -- -- 78 136 139 208 210
Corporate and Other Debt
Securities 119 16 1 134 318 338 390 395
----- ----- ----- ----- ----- ----- ----- -----
Total Other Bonds, Notes
and Debentures 1,800 20 69 1,751 3,465 3,659 2,561 2,580
----- ----- ----- ----- ----- ----- ----- -----
Other Stock Investments . . . . . . . 383 117 1 499 312 511 285 653
----- ----- ----- ----- ----- ----- ----- -----
Total $5,783 $ 165 $135 $5,813 $7,252 $7,690 $6,304 $6,758
----- ----- ----- ----- ----- ----- ----- -----
<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 third quarter
and first nine months of 1994 were: $88 million and $2 million; and
$428 million and $5 million, respectively. Interest and dividends on
investment securities at lower of cost or market for the third
quarter and first nine months of 1993 were: $118 million and $3
million; and $375 million and $10 million, respectively.
</TABLE>
32
<PAGE> 33
Average Loan Balances
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1994 1993 Nine Months Ended Sept. 30,
-----------------------------------------------------------------------
($ in millions, based on daily averages) 3rd Quarter 2nd Quarter 3rd Quarter 1994 1993
----------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Domestic Offices:
Wholesale:
Commercial Real Estate . . . . . . . . . . . . . . . . . $ 2,214 $ 2,953 $ 4,166 $ 2,744 $ 5,051*
Commercial and Industrial . . . . . . . . . . . . . . . . 8,372 8,459 8,696 8,401 8,756
Financial Institutions . . . . . . . . . . . . . . . . . 1,053 1,049 1,444 1,101 1,591
Lease Financings . . . . . . . . . . . . . . . . . . . . 1,518 1,497 1,544 1,500 1,591
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 1,208 1,230 1,737 1,372 1,652
Consumer:
Secured by 1-4 Family Residential Properties . . . . . . . 14,006 13,891 12,196 13,945 11,149
Credit Card . . . . . . . . . . . . . . . . . . . . . . 6,503 6,283 5,732 6,345 5,837
Other Consumer . . . . . . . . . . . . . . . . . . . . 8,779 8,275 7,364 8,462 7,434
------ ------ ------ ------ ------
Total Domestic Offices, Gross . . . . . . . . . . . . . . . 43,653 43,637 42,879 43,870 43,061
Less: Unearned Discount and Fee Revenue . . . . . . . . . . 161 181 261 172 295
------ ------ ------ ------ ------
Total Domestic Offices 43,492 43,456 42,618 43,698 42,766
------ ------ ------ ------ ------
Overseas Offices, Gross . . . . . . . . . . . . . . . . . . 16,568 17,175 19,133 16,966 18,487
Less: Unearned Discount and Fee Revenue . . . . . . . . . . 49 47 45 47 45
------ ------ ------ ------ ------
Total Overseas Offices 16,519 17,128 19,088 16,919 18,442
------ ------ ------ ------ ------
Total Average Loans $60,011 $60,584 $61,706 $60,617 $61,208
------ ------ ------ ------ ------
<FN>
* Includes the loans transferred to the accelerated disposition
portfolio during the first quarter of 1993 since they were
transferred as of March 31, 1993.
</TABLE>
Analysis of Credit Loss Experience
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1994 1993 Nine Months Ended Sept. 30,
-----------------------------------------------------------------------
($ in millions) 3rd Quarter 2nd Quarter 3rd Quarter 1994 1993
----------- ----------- ----------- ------ ------
<S> <C> <C> <C> <C> <C>
Reserve for Possible Credit Losses at
Beginning of Period . . . . . . . . . . . . . . . . . . . $1,435 $1,429 $1,918 $1,425 $1,913
Net Loan Charge-Offs:
Domestic Loans:
Commercial Real Estate . . . . . . . . . . . . . . . . 21 51 58 123 223
Commercial and Industrial . . . . . . . . . . . . . . . 2 2 40 3 107
Financial Institutions . . . . . . . . . . . . . . . . -- -- 5 11 17
Lease Financings . . . . . . . . . . . . . . . . . . . 4 3 2 8 6
Consumer . . . . . . . . . . . . . . . . . . . . . . . 90 90 97 274 295
----- ----- ----- ----- -----
Total Domestic Net Loan Charge-Offs 117 146 202 419 648
----- ----- ----- ----- -----
International Loans:
Commercial and Industrial . . . . . . . . . . . . . . . (3) -- 11 8 13
Financial Institutions . . . . . . . . . . . . . . . . 6 -- (4) 5 (5)
Consumer . . . . . . . . . . . . . . . . . . . . . . . (1) -- 1 -- 2
Foreign Governments and Official Institutions . . . . . -- -- 5 (10) (1)
Commercial Real Estate Loans . . . . . . . . . . . . . -- -- 1 -- 1
----- ----- ----- ----- -----
Total International Net Loan Charge-Offs* 2 -- 14 3 10
----- ----- ----- ----- -----
Total Net Loan Charge-Offs 119 146 216 422 658
----- ----- ----- ----- -----
Provision for Credit Losses Charged to Expenses . . . . . . 100 150 215 410 800
Provision for Loans Held for
Accelerated Disposition . . . . . . . . . . . . . . . . . -- -- -- -- 566
Writedown of Loans Transferred to
Accelerated Disposition Portfolio . . . . . . . . . . . . -- -- -- -- (701)
Reserves of Disposed Subsidiaries and Other
Adjustments . . . . . . . . . . . . . . . . . . . . . . . (1) -- (1) (1) (3)
Foreign Exchange Translation Adjustments . . . . . . . . . 1 2 -- 4 (1)
----- ----- ----- ----- -----
Reserve For Possible Credit Losses at End of Period $1,416 $1,435 $1,916 $1,416 $1,916
----- ----- ----- ----- -----
<FN>
* Includes net loan charge-offs (recoveries) applicable to refinancing
countries of $(6) million, $(1) million, $1 million, $(9) million and
$(8) million, respectively.
</TABLE>
33
<PAGE> 34
INTERMEDIATE- AND LONG-TERM DEBT
The Chase Manhattan Corporation and Subsidiaries
Intermediate- and Long-Term Debt consists of obligations having an original
maturity at issuance of more than one year. A summary of Intermediate- and
Long-Term Debt, net of unamortized original issue discount, outstanding at
September 30, 1994 and December 31, 1993 and certain applicable terms is
presented below. The distribution of maturities is based on contractual
maturity or the earliest date which the debt can be redeemed at the option of
the holder.
<TABLE>
<CAPTION>
Amount Outstanding
Maturity Interest September 30, December 31, Other
($ in millions) Date Rate* 1994 1993 Data**
--------- ---------- ------------- ------------ ------
<S> <C> <C> <C> <C> <C>
COMPANY:
Medium-Term Notes . . . . . . . . . . . . . . . . . . . . 1994--1997 5.52--9.61% $ 328 $ 530
Floating Rate Medium-Term Notes . . . . . . . . . . . . . 1994--1995 4.91--6.06 146 409
Floating Rate Oil-Linked Notes . . . . . . . . . . . . . 1994 5.88 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 5.25 175 175 S,T
Subordinated Notes . . . . . . . . . . . . . . . . . . . 1997 7.50 200 200 S,T
Non-U.S. Currency Borrowings . . . . . . . . . . . . . . 1998 5.30 51 45
Floating Rate Notes . . . . . . . . . . . . . . . . . . . 1999 4.10 10 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 4.88--5.50 334 341 S,T
Subordinated Notes . . . . . . . . . . . . . . . . . . . 2004 8.00 149 -- S,R,T
Subordinated Notes . . . . . . . . . . . . . . . . . . . 2004 7.88 148 -- S,R,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
Subordinated Notes . . . . . . . . . . . . . . . . . . . 2009 6.50 149 -- S,T
Floating Rate Subordinated Notes . . . . . . . . . . . . 2009 5.25 316 321 S,R,T
Other Borrowings . . . . . . . . . . . . . . . . . . . . 1994--1996 *** 8 13
---------- ---------- ----- -----
Total 4,647 4,836
----- -----
BANK:
Student Loan Marketing Association Borrowings . . . . . . 1994 3.48--4.26 -- 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
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 *** 267 172
---------- ---------- ----- -----
Total 2,627 3,032
----- -----
OTHER SUBSIDIARIES:
Subordinated Notes (Two Issues) . . . . . . . . . . . . . 1997 5.63--7.25 235 -- S,C
Subordinated Notes . . . . . . . . . . . . . . . . . . . 2012 9.00 250 250 S,C
Other Borrowings . . . . . . . . . . . . . . . . . . . . 1994--1997 *** 117 133
---------- ----- -----
Total 602 383
----- -----
Less: Investment by the Company in a Subordinated Note
Issued with Equity Contract of the Bank and other
Subordinated Debentures . . . . . . . . . . . . . . . . . 2,845 2,610 S,C
----- -----
Total Intermediate-and Long-Term Debt $5,031 $5,641
----- -----
<FN>
* The interest rates shown for floating rate issues are those in effect
at September 30, 1994. Such floating interest rates are determined
by formulas, subject to certain minimum rates.
** Issues indicated by:
"S"--Subordinated in right of payment to claims of depositors and
certain other creditors, as applicable.
"C"--Held by the Company.
"R"--Redeemable in whole, or in part, at the option of Chase, prior
to maturity.
"T"--Qualifies as Tier II capital under the Risk-based Capital
guidelines.
*** Consists of numerous borrowings which bear interest at rates
generally reflecting market conditions in the applicable countries at
the time of issuance or repricing.
</TABLE>
34
<PAGE> 35
Consolidated Statement of Income (Five Quarters)
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1994 1993
---------------------------------------- --------------------------
($ in millions, except per share data) 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest Revenue
Interest and Fees On Loans . . . . . . . . . . . . . . . $1,252 $1,376 $1,301 $1,479 $1,405
Interest On Deposits Placed With Banks . . . . . . . . . 108 127 130 164 214
Interest and Dividends on Investment Securities:
Held to Maturity . . . . . . . . . . . . . . . . . . . 29 42 41 42 42
Available for Sale . . . . . . . . . . . . . . . . . . 90 178 165 -- --
At Lower of Cost or Market . . . . . . . . . . . . . . -- -- -- 133 121
Interest On Federal Funds Sold and Securities Purchased
Under Resale Agreements . . . . . . . . . . . . . . . . 233 490 326 245 261
Interest On Trading Account Assets . . . . . . . . . . . 89 92 119 92 51
----- ----- ----- ----- -----
Total Interest Revenue 1,801 2,305 2,082 2,155 2,094
----- ----- ----- ----- -----
Interest Expense
Deposits . . . . . . . . . . . . . . . . . . . . . . . . 538 654 525 469 513
Federal Funds Purchased and Securities Sold Under
Repurchase Agreements . . . . . . . . . . . . . . . . . 203 176 124 127 150
Commercial Paper . . . . . . . . . . . . . . . . . . . . 16 17 13 11 13
Other Short-Term Borrowings . . . . . . . . . . . . . . . 52 463 393 460 405
Intermediate- and Long-Term Debt . . . . . . . . . . . . 76 77 76 86 94
----- ----- ----- ----- -----
Total Interest Expense 885 1,387 1,131 1,153 1,175
----- ----- ----- ----- -----
Net Interest Revenue . . . . . . . . . . . . . . . . . . . 916 918 951 1,002 919
Provision for Possible Credit Losses . . . . . . . . . . . 100 150 160 195 215
----- ----- ----- ----- -----
Net Interest Revenue After Provision for Possible
Credit Losses . . . . . . . . . . . . . . . . . . . . . . 816 768 791 807 704
----- ----- ----- ----- -----
Other Operating Revenue
Fees and Commissions . . . . . . . . . . . . . . . . . . 458 480 446 401 406
Foreign Exchange Trading Revenue . . . . . . . . . . . . 50 78 85 75 93
Trading Account Revenue . . . . . . . . . . . . . . . . 138 73 94 93 93
Investment Securities Gains . . . . . . . . . . . . . . 15 1 79 12 15
Other Revenue . . . . . . . . . . . . . . . . . . . . . . 66 168 149 297 113
----- ----- ----- ----- -----
Total Other Operating Revenue 727 800 853 878 720
----- ----- ----- ----- -----
Other Operating Expenses
Salaries and Employee Benefits:
Salaries . . . . . . . . . . . . . . . . . . . . . . . 464 418 415 417 409
Employee Benefits . . . . . . . . . . . . . . . . . . . 122 118 129 130 117
----- ----- ----- ----- -----
586 536 544 547 526
Net Occupancy . . . . . . . . . . . . . . . . . . . . . . 98 98 100 112 93
Equipment Rentals, Depreciation and Maintenance . . . . . 77 74 71 85 73
Other Expenses . . . . . . . . . . . . . . . . . . . . . 306 365 342 455 333
----- ----- ----- ----- -----
Total Other Operating Expenses 1,067 1,073 1,057 1,199 1,025
----- ----- ----- ----- -----
Income Before Taxes . . . . . . . . . . . . . . . . . . . 476 495 587 486 399
Applicable Income Taxes . . . . . . . . . . . . . . . . . 171 188 223 173 132
----- ----- ----- ----- -----
Net Income $ 305 $ 307 $ 364 $ 313 $ 267
----- ----- ----- ----- -----
Net Income Applicable to Common Stock $ 274 $ 272 $ 333 $ 282 $ 231
----- ----- ----- ----- -----
Average Common and Common Equivalent Shares Outstanding
(in millions) 184.4 186.2 185.4 184.8 184.3
----- ----- ----- ----- -----
Primary Earnings Per Common Share $ 1.49 $ 1.46 $ 1.80 $ 1.53 $ 1.25
----- ----- ----- ----- -----
Cash Dividends Declared Per Common Share $ .40 $ .33 $ .33 $ .30 $ .30
----- ----- ----- ----- -----
</TABLE>
35
<PAGE> 36
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT 10-K
Amended list of Executive Officers who have entered into termination
agreements with the Company
Exhibit 11
Statement re: Computation of Earnings Per Common Share
Exhibit 12
Statement re: Computation of Ratios of Earnings to Fixed Charges
Exhibit 27
Financial Data Schedule for the nine months ended September 30, 1994
(b) Report on Form 8-K
The registrant filed the following reports on Form 8-K during the
quarter ended September 30, 1994:
Date of
Report Items Reported
7/18/94 - 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) Consolidated Statement of Condition of The Chase
Manhattan Corporation at June 30, 1994 and 1993.
(ii) Consolidated Statement of Income of The Chase
Manhattan Corporation for the quarters and six
months ended June 30, 1994 and 1993.
(iii) Summary of Changes in Stockholders' Equity of The
Chase Manhattan Corporation for the six months
ended June 30, 1994 and 1993.
(iv) Consolidated Statement of Condition of The Chase
Manhattan Bank, N.A. at June 30, 1994 and 1993.
8/3/94 -- 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 7 7/8%
Subordinated Notes Due 2004.
8/3/94 -- 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 Bank entering into a definitive
merger agreement dated August 3, 1994 with American
Residential Holding Corporation (American Residential)
pursuant to which a subsidiary of the Bank will seek to
acquire through a tender offer all of the outstanding
common stock of American Residential for a total of
approximately $348 million.
8/11/94 -- 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 entering into a
distribution agreement covering the issuance and placement
of up to $200,000,000 aggregate principal amount of
Senior/Subordinated Medium-Term Notes, Series C.
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: November 14, 1994 By: /s/ 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>
10-K Amended list of Executive Officers who have entered into termination agreements
with the Company 39
11 Statement re: Computation of Earnings Per Common Share for the
quarters and nine months ended September 30, 1994 and 1993 40
12 Statement re: Computation of Ratios of Earnings to Fixed Charges for the
nine months ended September 30, 1994 and 1993 and for each of the five years in
the period ended December 31, 1993 41
27 Financial Data Schedule for the nine months ended September 30, 1994 42
</TABLE>
38
<PAGE> 39
EDGAR Graphics 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. 18. Bar graph entitled "Cumulative Interest Rate Gaps September 30, 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 $6,285 and
$525, respectively, for 4th Quarter 1994; net assets of $6,001 and net liabilities of
$2,062, respectively, for 1995; net assets of $1,247 and net liabilities of $6,085,
respectively, for 1996; net liabilities of $5,712 and $11,469, respectively, for 1997; net
liabilities of $9,827 and $12,770, respectively, for 1998; net liabilities of $10,392 and
$12,655, respectively, for 1999 and net liabilities of $7,740 and $9,496, respectively, for
2000.
</TABLE>
<PAGE> 1
EXHIBIT 10-K
The Company has two different forms of termination agreements, forms of
which were filed as Exhibit 10L to the Company's Annual Report on Form 10-K for
the year ended December 31, 1990.
As of September 30, 1994, the following Executive Officers had entered
into the first form of such termination agreement with the Company:
Thomas G. Labrecque
Arthur F. Ryan*
Richard J. Boyle
Michael P. Esposito, Jr.
- -----------------------------
* Resigned October 22, 1994.
As of September 30, 1994, the following Executive Officers had entered
into the second form of such termination agreement with the Company:
Deborah L. Duncan
A. Wright Elliott
John J. Farrell
E. Michel Kruse
Arjun K. Mathrani
John V. Scicutella
L. Edward Shaw, Jr.
39
<PAGE> 1
Computation of Earnings Per Common Share Exhibit 11
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------- ---------------------------
($ in millions, except per share amounts) 1994 1993 1994 1993
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Primary:
Net Income Before Cumulative Effect of Change in
Accounting Principle . . . . . . . . . . . . . . . . . . . . . . . $305 $267 $976 $153
Cumulative Effect of Change in Accounting Principle - Adoption of
SFAS 109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- 500
--- --- --- ---
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305 267 976 653
Less: Preferred Stock Dividend Requirements . . . . . . . . . . . . 31 36 96 109
--- --- --- ---
Net Income Applicable to Common Stock $274 $231 $880 $544
--- --- --- ---
Average Common and Common Equivalent Shares Outstanding . . . . . . . 184,417,030 184,331,872 185,038,631 168,166,248
--- --- --- ---
Before Cumulative Effect of Change in Accounting Principle . . . . . $1.49 $1.25 $4.76 $0.26
Cumulative Effect of Change in Accounting Principle - Adoption of
SFAS 109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- 2.97
--- --- --- ---
Primary Earnings Per Common Share . . . . . . . . . . . . . . . . . . $1.49 $1.25 $4.76 $3.23
--- --- --- ---
Assuming Full Dilution:
Net Income Applicable to Common Stock $274 $231 $880 $544
--- --- --- ---
Average Common and Common Equivalent Shares Outstanding . . . . . . . 184,417,030 184,331,872 185,038,631 168,166,248
Add: Shares Issuable Upon Exercise of Stock Options, Warrants and
Conversion of Restricted Stock Units . . . . . . . . . . . . . . . 740,520 1,590,761 1,037,686 1,693,871
--- --- --- ---
Shares of Common and Common Equivalent Stock Outstanding --
As Adjusted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,157,550 185,922,633 186,076,317 169,860,119
--- --- --- ---
Earnings Per Common Share Assuming Full Dilution $1.48 $1.24 $4.73 $3.20
---- ---- ---- ----
</TABLE>
40
<PAGE> 1
Computation of Ratios of Earnings to Fixed Charges Exhibit 12
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
---------------- ---------------------------------------------
($ in millions) 1994 1993 1993 1992 1991 1990 1989
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . $ 976 $ 653 $ 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 . . . . . . . . . . . . 976 153 466 639 520 (334) (665)
Less: Equity in Undistributed Income (Loss)
of Unconsolidated Subsidiaries and
Associated Companies . . . . . . . . . . . . . . . . . 7 21 36 11 (32) (40) (20)
Income Taxes (Benefits) . . . . . . . . . . . . . . . . . . 583 93 265 186 124 203 196
Fixed Charges Excluding Interest On Deposits . . . . . . . 1,736 1,962 2,670 2,277 1,988 3,190 3,938
----- ----- ----- ----- ----- ----- -----
Total Earnings, Excluding Interest On
Deposits, As Adjusted . . . . . . . . . . . . . . . . . . 3,288 2,187 3,365 3,091 2,664 3,099 3,489
Interest On Deposits . . . . . . . . . . . . . . . . . . . 1,717 1,545 2,014 2,935 4,374 5,273 5,080
----- ----- ----- ----- ----- ----- -----
Total Earnings, Including Interest On
Deposits, As Adjusted . . . . . . . . . . . . . . . . . . $5,005 $3,732 $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 . . . . . . . . . . . . . $1,685 $1,908 $2,591 $2,205 $1,920 $3,115 $3,860
One-Third of Net Rental Expenses . . . . . . . . . . . . . 51 54 79 72 68 75 78
----- ----- ----- ----- ----- ----- -----
Total Fixed Charges For Ratio, Excluding
Interest On Deposits . . . . . . . . . . . . . . . . . . 1,736 1,962 2,670 2,277 1,988 3,190 3,938
Interest On Deposits . . . . . . . . . . . . . . . . . . . 1,717 1,545 2,014 2,935 4,374 5,273 5,080
----- ----- ----- ----- ----- ----- -----
Total Fixed Charges For Ratio, Including
Interest On Deposits $3,453 $3,507 $4,684 $5,212 $6,362 $8,463 $9,018
----- ----- ----- ----- ----- ----- -----
Ratio Of Earnings To Fixed Charges:
Excluding Interest On Deposits . . . . . . . . . . . . . . 1.9x 1.1x 1.3x 1.4x 1.3x ** **
Including Interest On Deposits . . . . . . . . . . . . . . 1.4x 1.1x 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 years ended December 31, 1990 and 1989, earnings did not cover
fixed charges by $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 first nine months of 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.
41
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CHASE
MANHATTAN CORPORATION AND ITS SUBSIDIARIES (CHASE) CONSOLIDATED STATEMENT OF
CONDITION AT SEPTEMBER 30, 1994; THE CONSOLIDATED STATEMENTS OF INCOME, CHANGES
IN STOCKHOLDERS' EQUITY AND CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 5,559
<INT-BEARING-DEPOSITS> 7,055
<FED-FUNDS-SOLD> 7,712
<TRADING-ASSETS> 19,302
<INVESTMENTS-HELD-FOR-SALE> 5,813
<INVESTMENTS-CARRYING> 2,018
<INVESTMENTS-MARKET> 2,005
<LOANS> 61,405
<ALLOWANCE> 1,416
<TOTAL-ASSETS> 117,065
<DEPOSITS> 68,922
<SHORT-TERM> 16,926<F1>
<LIABILITIES-OTHER> 17,746<F2>
<LONG-TERM> 5,031
<COMMON> 371
0
1,400
<OTHER-SE> 6,669
<TOTAL-LIABILITIES-AND-EQUITY> 117,065
<INTEREST-LOAN> 3,929
<INTEREST-INVEST> 545
<INTEREST-OTHER> 1,713<F3>
<INTEREST-TOTAL> 6,187
<INTEREST-DEPOSIT> 1,717
<INTEREST-EXPENSE> 3,402
<INTEREST-INCOME-NET> 2,785
<LOAN-LOSSES> 410
<SECURITIES-GAINS> 95
<EXPENSE-OTHER> 3,197
<INCOME-PRETAX> 1,559
<INCOME-PRE-EXTRAORDINARY> 976
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 976
<EPS-PRIMARY> 4.76
<EPS-DILUTED> 4.73
<YIELD-ACTUAL> 3.97
<LOANS-NON> 701
<LOANS-PAST> 217
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,425
<CHARGE-OFFS> 552
<RECOVERIES> 130
<ALLOWANCE-CLOSE> 1,416
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Fed Funds Purch. and SSURA 11,959
Comm. Paper and Other S-T Borrow. 4,967
<F2>Trading Account Liabilities 11,841
Acceptances O/S and Accr. Int. Pay. 1,171
Accts. Pay., Accru. Exp. and Other Liab. 4,734
<F3>Interest on Dep. Placed with Banks 365
Interest on Fed Funds Sold and SPURA 1,048
Interest on Trading Account Assets 300
</FN>
</TABLE>
