<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: JUNE 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-5945
THE CHASE MANHATTAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2633613
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 Chase Manhattan Plaza, New York, New York 10081
(Address of principal executive offices) (Zip Code)
(2l2) 552-2222
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
----- -----
The number of shares outstanding of the registrant's common stock was
174,458,341 at June 30, 1995.
Exhibit Index Located on Page 41
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<PAGE> 2
The Chase Manhattan Corporation
June 30, 1995 Form 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. - FINANCIAL INFORMATION............................................................. 3
Item 1. FINANCIAL STATEMENTS.............................................................. 3
The Chase Manhattan Corporation and Subsidiaries:
Consolidated Statement of Condition............................................... 4
Consolidated Statement of Income.................................................. 5
Consolidated Statement of Changes in Stockholders' Equity......................... 6
Consolidated Statement of Cash Flows.............................................. 7
Notes to Consolidated Financial Statements........................................ 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................................... 9
Comparative Financial Information:
Financial Ratios.................................................................. 26
Stockholder Data.................................................................. 26
The Chase Manhattan Bank, N.A. and Subsidiaries Consolidated
Statement of Condition....................................................... 27
Average Balances, Interest and Average Rates - Taxable Equivalent................. 28
Investment Securities............................................................. 32
Average Loan Balances............................................................. 34
Analysis of Credit Loss Experience................................................ 34
Intermediate- and Long-Term Debt.................................................. 35
Consolidated Statement of Income (Five Quarters).................................. 36
PART II. - OTHER INFORMATION................................................................. 37
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................... 37
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................. 38
SIGNATURE............................................................................................. 40
EXHIBIT INDEX ........................................................................................ 41
</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 June 30, 1995,
December 31, 1994 and June 30, 1994, the Consolidated Statement of Income for
the quarters and six months ended June 30, 1995 and 1994, the Consolidated
Statement of Changes in Stockholders' Equity for the six months ended June 30,
1995 and 1994 and the Consolidated Statement of Cash Flows for the six months
ended June 30, 1995 and 1994 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, 1994 (the 1994 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, Chase Maryland, The
Chase Manhattan Bank of New Jersey, N.A. and The Chase Manhattan Private Bank
(Florida), N.A. The term Bank, as used in this report, refers to The Chase
Manhattan Bank, N.A. and its subsidiaries, including Chase Manhattan Overseas
Banking Corporation, which holds investments in overseas commercial banking and
financial services subsidiaries. The term nonbanking subsidiaries, as used in
this report, refers to subsidiaries of the Company not chartered as commercial
banks that are engaged in investment banking, mortgage banking, commercial and
consumer financing and other financial services.
3
<PAGE> 4
Consolidated Statement of Condition
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and Due from Banks ............................................................ $ 4,309 $ 4,713 $ 4,937
Interest-Bearing Deposits Placed with Banks ........................................ 6,623 6,791 5,968
Federal Funds Sold and Securities Purchased Under Resale Agreements ................ 8,722 7,280 6,986
Trading Account Assets ............................................................. 16,699 15,109 20,939
Investment Securities:
Held to Maturity (Market Value of $2,008, $2,054 and $1,647, Respectively) ...... 2,004 2,084 1,651
Available for Sale .............................................................. 5,106 5,135 5,475
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities ........................................................ 7,110 7,219 7,126
Loans .............................................................................. 64,239 63,038 60,482
Reserve for Possible Credit Losses ................................................. (1,416) (1,414) (1,435)
Customers' Liability on Acceptances ................................................ 960 520 633
Accrued Interest Receivable ........................................................ 1,195 1,276 901
Premises and Equipment ............................................................. 1,940 1,895 1,791
Other Assets ....................................................................... 8,375 7,611 6,167
------------------------------------------------------------------------------------------------------------------------------------
Total Assets $118,756 $114,038 $114,495
------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Deposits:
Domestic Offices:
Noninterest-Bearing ........................................................... $ 11,293 $ 11,990 $ 11,835
Interest-Bearing .............................................................. 20,897 21,264 23,459
Overseas Offices:
Noninterest-Bearing ........................................................... 3,024 2,320 2,859
Interest-Bearing .............................................................. 33,068 34,382 30,755
------------------------------------------------------------------------------------------------------------------------------------
Total Deposits ..................................................................... 68,282 69,956 68,908
Federal Funds Purchased and Securities Sold Under Repurchase Agreements ............ 12,519 9,312 7,032
Commercial Paper ................................................................... 1,700 1,766 1,487
Other Short-Term Borrowings ........................................................ 2,360 2,884 2,631
Trading Account Liabilities ........................................................ 11,787 9,664 14,052
Acceptances Outstanding ............................................................ 967 525 644
Accrued Interest Payable ........................................................... 686 651 471
Accounts Payable, Accrued Expenses and Other Liabilities ........................... 6,318 5,851 5,852
Intermediate- and Long-Term Debt ................................................... 5,568 5,070 4,825
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 110,187 105,679 105,902
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Nonredeemable Preferred Stock (Without Par Value, 56,000,000,
56,000,000 and 60,539,738 Shares Outstanding, Respectively).................... 1,400 1,400 1,627
Common Stock ($2.00 Par Value):
6/30/95 12/31/94 6/30/94
----------- ----------- -----------
Number of Shares:
Authorized 500,000,000 500,000,000 500,000,000
Issued 186,958,341 185,674,178 185,052,955
Outstanding 174,458,341 177,174,178 185,052,955...... 374 371 370
Surplus ......................................................................... 3,982 3,949 3,935
Net Unrealized Gains (Losses) on Investment Securities--Available for Sale....... (7) (35) 9
Retained Earnings ............................................................... 3,309 2,980 2,652
------------------------------------------------------------------------------------------------------------------------------------
Total 9,058 8,665 8,593
Less: Treasury Stock at Cost (12,500,000, 8,500,000 and No Shares,
Respectively) 489 306 --
------------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 8,569 8,359 8,593
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $118,756 $114,038 $114,495
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes on page 8 are an integral part of the financial
statements.
</TABLE>
4
<PAGE> 5
Consolidated Statement of Income
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
---------------------------------------
($ in millions, except per common share data) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Revenue
Interest and Fees on Loans ............................................................. $1,474 $1,376 $2,883 $2,677
Interest on Deposits Placed with Banks ................................................. 151 127 294 257
Interest and Dividends on Investment Securities:
Held to Maturity .................................................................... 31 42 63 83
Available for Sale .................................................................. 85 178 179 343
Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements ........ 269 490 519 815
Interest on Trading Account Assets ..................................................... 98 92 212 211
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Revenue 2,108 2,305 4,150 4,386
------------------------------------------------------------------------------------------------------------------------------------
Interest Expense
Deposits ............................................................................... 664 654 1,314 1,178
Federal Funds Purchased and Securities Sold Under Repurchase Agreements ................ 306 176 600 300
Commercial Paper ....................................................................... 28 17 54 30
Other Short-Term Borrowings ............................................................ 128 463 221 856
Intermediate- and Long-Term Debt ....................................................... 100 77 194 153
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense 1,226 1,387 2,383 2,517
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue ................................................................... 882 918 1,767 1,869
Provision for Possible Credit Losses ................................................... 75 150 140 310
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue After Provisions for Possible Credit Losses 807 768 1,627 1,559
------------------------------------------------------------------------------------------------------------------------------------
Other Operating Revenue
Fees and Commissions ................................................................... 483 480 952 926
Foreign Exchange Trading Revenue ....................................................... 60 78 152 163
Trading Account Revenue ................................................................ 75 73 27 168
Investment Securities Gains ............................................................ 2 1 26 80
Other Revenue .......................................................................... 130 168 265 318
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Total Other Operating Revenue 750 800 1,422 1,655
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Other Operating Expenses
Salaries and Employee Benefits:
Salaries ............................................................................ 453 418 904 833
Employee Benefits ................................................................... 146 118 291 247
------------------------------------------------------------------------------------------------------------------------------------
599 536 1,195 1,080
Net Occupancy .......................................................................... 89 98 182 199
Equipment Rentals, Depreciation and Maintenance ........................................ 85 74 168 145
Other Expenses ......................................................................... 331 365 637 707
------------------------------------------------------------------------------------------------------------------------------------
Total Other Operating Expenses 1,104 1,073 2,182 2,131
------------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes .................................................................... 453 495 867 1,083
Applicable Income Taxes ................................................................ 172 188 326 412
------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 281 $ 307 $ 541 $ 671
------------------------------------------------------------------------------------------------------------------------------------
Net Income Applicable to Common Stock $ 250 $ 272 $ 480 $ 606
------------------------------------------------------------------------------------------------------------------------------------
Average Common and Common Equivalent Shares Outstanding (in millions) .................. 180.7 186.2 179.5 185.6
Primary Earnings Per Common Share Based on Average Shares Outstanding .................. $ 1.38 $ 1.46 $ 2.67 $ 3.27
------------------------------------------------------------------------------------------------------------------------------------
Cash Dividends Declared Per Common Share ............................................... $ 0.45 $ 0.33 $ 0.85 $ 0.66
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes on page 8 are an integral part of the financial
statements.
</TABLE>
5
<PAGE> 6
Consolidated Statement of Changes in Stockholders' Equity
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
($ in millions) 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nonredeemable Preferred Stock
Balance at Beginning of Year (56,000,000 and 51,439,738 Shares, Respectively) ....................... $1,400 $1,399
Issuance of Preferred Stock Series N (9,100,000 Shares) ........................................... -- 228
------------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (56,000,000 and 60,539,738 Shares, Respectively) 1,400 1,627
------------------------------------------------------------------------------------------------------------------------------------
Common Stock
Balance at Beginning of Year (185,674,178 and 184,290,491 Shares, Respectively) ...................... 371 369
Shares Issued Pursuant to Dividend Reinvestment and Stock Purchase Plan
(188,105 and 316,924 Shares, Respectively) ...................................................... 1 --
Shares Issued Pursuant to Stock Option and Incentive Plans (1,090,204 and 444,146 Shares,
Respectively).................................................................................... 2 1
Shares Issued Pursuant to Stock Warrants (5,854 and 1,394 Shares, Respectively) ................... -- --
------------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (186,958,341 and 185,052,955 Shares, Respectively) 374 370
------------------------------------------------------------------------------------------------------------------------------------
Surplus
Balance at Beginning of Year ......................................................................... 3,949 3,922
Shares Issued Pursuant to Dividend Reinvestment and Stock Purchase Plan ........................... 6 10
Shares Issued Pursuant to Stock Option and Incentive Plans ........................................ 27 9
Other ............................................................................................. -- (6)
------------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period 3,982 3,935
------------------------------------------------------------------------------------------------------------------------------------
Net Unrealized Gains (Losses) on Investment Securities--Available for Sale
Balance at Beginning of Year ......................................................................... (35) 264
Net Change in Unrealized Gains (Losses) on Investment Securities--Available for Sale (Net of
Deferred Tax (Benefits) of $11 and $(177), Respectively) ........................................ 28 (255)
------------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (7) 9
------------------------------------------------------------------------------------------------------------------------------------
Retained Earnings
Balance at Beginning of Year ......................................................................... 2,980 2,168
Net Income ........................................................................................ 541 671
Cash Dividends:
Nonredeemable Preferred Stock ................................................................... (61) (65)
Common Stock .................................................................................... (151) (122)
------------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (Includes Foreign Exchange Translation Adjustments of $12 and $12,
Respectively) 3,309 2,652
------------------------------------------------------------------------------------------------------------------------------------
Treasury Stock
Balance at Beginning of Year (8,500,000 Shares and No Shares, Respectively) .......................... (306) --
Purchases (4,000,000 Shares and No Shares, Respectively) .......................................... (183) --
------------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period (12,500,000 Shares and No Shares, Respectively) (489) --
------------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity $8,569 $8,593
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes on page 8 are an integral part of the financial
statements.
</TABLE>
6
<PAGE> 7
Consolidated Statement of Cash Flows
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
($ in millions) 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income ............................................................................................. $ 541 $ 671
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Possible Credit Losses ................................................................ 140 310
Depreciation and Amortization of Premises and Equipment ............................................. 146 134
Accretion and Amortization .......................................................................... 99 61
Other Real Estate Valuation Losses .................................................................. -- 104
Deferred Income Taxes (Benefits) .................................................................... (167) 204
Net Gains on Sales of Assets ........................................................................ (290) (371)
Net (Increase) Decrease in Operating Assets:
Trading Account Assets .............................................................................. 1,027 (1,181)
Accrued Interest Receivable ......................................................................... 80 (30)
Other Assets ........................................................................................ 527 35
Net Increase (Decrease) in Operating Liabilities:
Trading Account Liabilities ......................................................................... (637) 949
Accrued Interest Payable ............................................................................ 35 55
Accounts Payable, Accrued Expenses and Other Liabilities ............................................ (665) 1,207
Other--Net ............................................................................................. 203 228
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 1,039 2,376
------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Net (Increase) Decrease in Interest-Bearing Deposits Placed with Banks ................................. 414 (506)
Net Increase in Federal Funds Sold and Securities Purchased Under Resale Agreements .................... (1,446) (401)
Investment Securities--Held to Maturity:
Payments for Purchases .............................................................................. (182) (600)
Proceeds from Maturities, Calls and Prepayments ..................................................... 308 340
Investment Securities--Available for Sale
Payments for Purchases .............................................................................. (1,807) (2,873)
Proceeds from Sales ................................................................................. 1,201 4,086
Proceeds from Maturities, Calls and Prepayments ..................................................... 897 860
Loans:
Net Increase in Loans Made to Customers ............................................................. (9,235) (5,253)
Payments for Purchases .............................................................................. (1,628) (3,995)
Proceeds from Sales and Securitizations ............................................................. 9,739 9,038
Net Purchases of Premises and Equipment ................................................................ (191) (143)
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided (Used) by Investing Activities (1,930) 553
-----------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Net Decrease in Deposits ............................................................................... (2,189) (3,245)
Net Increase (Decrease) in Federal Funds Purchased and Securities Sold Under Repurchase Agreements ..... 3,137 (862)
Net Increase (Decrease) in Commercial Paper ............................................................ (66) 22
Net Increase (Decrease) in Other Short-Term Borrowings ................................................. (536) 775
Intermediate- and Long-Term Debt:
Proceeds from Issuance .............................................................................. 690 300
Repayments .......................................................................................... (202) (1,133)
Stockholders' Equity:
Cash Dividends ...................................................................................... (212) (187)
Proceeds from Issuance of Nonredeemable Preferred Stock ............................................. -- 222
Proceeds from Issuance of Common Stock .............................................................. 36 20
Purchase of Treasury Stock .......................................................................... (183) --
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Net Cash Provided (Used) by Financing Activities 475 (4,088)
------------------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash 12 28
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Net Decrease in Cash and Due from Banks (404) (1,131)
------------------------------------------------------------------------------------------------------------------------------------
Cash and Due from Banks at Beginning of Year 4,713 6,068
------------------------------------------------------------------------------------------------------------------------------------
Cash and Due from Banks at End of Period $4,309 $4,937
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Cash Paid for:
Interest ............................................................................................ $2,347 $2,462
Income Taxes ........................................................................................ 164 11
Noncash Investing and Financing Activities:
Net Loan Transfers to Other Real Estate ............................................................. $ 33 $ 153
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes on page 8 are an integral part of the financial
statements.
</TABLE>
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Chase Manhattan Corporation and Subsidiaries
NOTE 1. REGULATORY LIMITATIONS
The Company's ability to pay dividends on its preferred and common stock is
derived from several sources, including, among other sources, dividends from the
Bank, Chase USA, Chase Maryland and the Company's nonbanking subsidiaries. As
discussed below, the ability of the Company's banking subsidiaries to pay
dividends is subject to certain restrictions. On July 19, 1995, the Board of
Directors of the Company declared a quarterly dividend of $.45 per common share,
payable on August 15, 1995.
As explained on page 77 of the 1994 Annual Report, national banks are subject
to various legal limitations on the amount of dividends that may be paid to
their stockholders. Under these limitations, a national bank may not pay a
dividend in an amount greater than its 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 June 30, 1995, under the more restrictive of these limitations, the Bank
could declare dividends during the remainder of 1995 of approximately $1.3
billion, combined with an additional amount equal to its net income from June
30, 1995 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 1995 of approximately $1.2 billion and $22 million, respectively,
combined with an additional amount equal to their respective retained net
profits from June 30, 1995 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.
At June 30, 1995, 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
to the Federal Deposit Insurance Corporation Improvement Act of 1991.
NOTE 2. RESERVE FOR POSSIBLE CREDIT LOSSES
The Reserve for Possible Credit Losses provides for risks of losses inherent in
the credit extension process. This reserve is a general reserve, available to
absorb losses related to the total loan portfolio and other extensions of
credit, including derivative contracts and off-balance sheet commitments, such
as commitments to extend credit, guarantees and standby letters of credit. The
reserve is increased by provisions for possible credit losses charged to expense
and decreased by charge-offs, net of recoveries. Charge-offs are recorded when,
in the judgment of Management, an extension of credit is deemed uncollectible,
in whole or in part.
The Provision for Possible Credit Losses is based on Management's evaluation
of the adequacy of the Reserve for Possible Credit Losses. As more fully
explained on page 47 of the 1994 Annual Report, this evaluation encompasses
consideration of past and potential future loss experience and changes in other
factors, including the composition and volume of the loan portfolio and
off-balance sheet commitments, the relationship of the reserve to the loan
portfolio and off-balance sheet commitments and worldwide economic conditions.
Effective January 1, 1995, Chase adopted Statement of Financial Accounting
Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan."
SFAS 114 applies only to impaired loans, with the exception of groups of
smaller-balance homogeneous loans that are collectively evaluated for impairment
(generally consumer loans). A loan is defined as impaired by SFAS 114 if, based
on current information and events, it is probable that a creditor will be unable
to collect all amounts due, both interest and principal, according to the
contractual terms of the loan agreement. Generally, Chase applies SFAS 114 to
nonaccrual loans, with the exception of nonaccrual consumer loans which are
collectively evaluated for impairment.
SFAS 114 requires that a portion of the overall reserve for possible credit
losses related to impaired loans be determined based on the present value of
expected cash flows discounted at the loan's effective interest rate or, as a
practical expedient, the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. Chase generally evaluates
impairment based on discounted cash flows. If, however, an impaired loan is
collateral dependent (mainly commercial real estate loans), the fair value of
the collateral is used to evaluate impairment. Prior to the adoption of SFAS
114, Chase's methodology for determining the adequacy of the reserve for
possible credit losses did not incorporate the concept of the time value of
money and expected future interest cash flows. In addition, SFAS 114 modifies
the accounting for in-substance foreclosures (ISF). A collateralized loan is now
considered an ISF and reclassified to Other Assets only when a creditor has
taken physical possession of the collateral regardless of whether formal
foreclosure proceedings have taken place. However, SFAS 114 did not affect
Chase's charge-off policy.
Effective January 1, 1995, Chase also adopted SFAS 118, "Accounting by
Creditors for an Impairment of a Loan - Income Recognition and Disclosure,"
which amends SFAS 114 to permit a creditor to use existing methods for
recognizing interest revenue on impaired loans. Generally, interest revenue
received on impaired loans continues either to be applied by Chase against
principal or to be realized as interest revenue, according to Management's
judgment as to the collectibility of principal.
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
Business Operations............................................................................................. 10
Net Interest Revenue--Taxable Equivalent Basis.................................................................. 13
Provision for Possible Credit Losses............................................................................ 13
Other Operating Revenue......................................................................................... 13
Other Operating Expenses........................................................................................ 14
Provision for Income Taxes...................................................................................... 14
Asset/Liability Management
Investment Securities........................................................................................... 15
Liquidity Risk Management....................................................................................... 15
Interest Rate Risk Management................................................................................... 16
Trading Activities................................................................................................... 18
Fair Value Disclosures............................................................................................... 21
Capital Management................................................................................................... 21
Credit Risk Management
Loan Composition................................................................................................ 22
Consumer Loans.................................................................................................. 22
Wholesale Loans................................................................................................. 23
Reserve for Possible Credit Losses.............................................................................. 24
Net Loan Charge-offs and Annualized Credit Loss Experience Ratios............................................... 24
Nonaccrual, Restructured and Past Due Outstandings and Domestic Other Real Estate (ORE) Acquired................ 25
</TABLE>
EARNINGS ANALYSIS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
EARNINGS SUMMARY AND SELECTED FINANCIAL RATIOS
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
-----------------------------------------------------
($ in millions, except per share data) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Interest Revenue................................................. $ 882 $ 918 $1,767 $1,869
Provision for Possible Credit Losses................................. 75 150 140 310
Other Operating Revenue:
Fees and Commissions.............................................. 483 480 952 926
Other Revenue..................................................... 267 320 470 729
Other Operating Expenses............................................. 1,104 1,073 2,182 2,131
------------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes.................................................. 453 495 867 1,083
Applicable Income Taxes ............................................. 172 188 326 412
------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 281 $ 307 $ 541 $ 671
------------------------------------------------------------------------------------------------------------------------------------
Selected Financial Ratios
Net Income Per Common Share....................................... $ 1.38 $ 1.46 $ 2.67 $ 3.27
Return on Average Common Stockholders' Equity........................ 14.2% 16.1% 13.8% 18.1%
Return on Average Total Assets.................................... .88% 1.03% .87% 1.15%
Book Value (Period End)
Common Stockholders' Equity per Common Share...................... $41.09 $37.64
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 10
OVERVIEW
The Corporation reported second quarter 1995 net income of $281 million ($1.38
per share), up from $260 million ($1.29 per share) for first quarter 1995 and
down from $307 million ($1.46 per share) for second quarter 1994. Net income for
the second quarter of 1994 included a $36 million after-tax gain from the sale
of Chase Bank of Arizona (Chase Arizona), a domestic banking subsidiary.
Excluding this gain, net income increased for second quarter 1995 over the same
period last year.
Second quarter 1995 business highlights:
- Corporate finance activity generated record investment banking fees of $79
million and equity gains of $83 million.
- Combined trading and trading-related revenue of $207 million was up
substantially from first quarter 1995, reflecting the turnaround in
international capital markets activity and demand for derivative products.
- Growth in consumer loans was distributed across all the businesses --
credit card, auto finance and mortgage compared with prior quarters.
- Asset quality continued to be strong and the credit loss provision of $75
million was $10 million higher than first quarter 1995, but $75 million
lower than the same period last year.
- Operating expenses, adjusted for restructuring charges incurred during the
quarter, were essentially level with the first quarter 1995.
- Headcount was further reduced during the quarter by 1,515.
For the first six months of 1995, Chase reported net income of $541 million
($2.67 per share), compared with $671 million ($3.27 per share) for the same
period in 1994.
BUSINESS OPERATIONS
As discussed on pages 27 to 31 of the 1994 Annual Report, Chase is a global
financial services company with a strong and diversified domestic base. Chase
serves customers through two core franchises: global financial services and U.S.
retail financial services. Global Financial Services serves the financial needs
of wholesale issuer and investor clients through integrated delivery of global
products and services. Retail businesses provide individuals nationwide with
consumer credit products and other financial services. In New York, New Jersey
and Connecticut, Chase also serves the broad banking requirements of individuals
and small-to-medium-sized businesses. Unallocated Corporate Items includes Real
Estate Finance, which manages Chase's discontinued commercial real estate
activities, LDC Portfolio Management, which oversees Chase's remaining portfolio
of previously refinanced LDC assets, and other corporate items not allocated to
specific business units.
A summary of financial results of business operations follows. Additional
information on each of the core businesses is provided on the following pages.
<TABLE>
<CAPTION>
====================================================================================================================================
Net Income Return on Allocated Equity
-------------------------------------------------------------------------------------
Second Quarter Six Months Second Quarter Six Months
-------------------------------------------------------------------------------------
($ in millions) 1995 1994 1995 1994 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Global Financial Services ............... $176 $157 $294 $378 15.7% 17.0% 12.7% 21.0%
Retail Businesses ....................... 115 183 230 323 15.6 31.3 16.0 27.7
Unallocated Corporate Items ............. (10) (33) 17 (30) N/M N/M N/M N/M
------------------------------------------------------------------------------------------------------------------------------------
Total $281 $307 $541 $671 14.2% 16.1% 13.8% 18.1%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
N/M - Not meaningful
</TABLE>
For the second quarter of 1995, Global Financial Services (GFS) reported net
income of $176 million, up 12% from $157 million for second quarter 1994. The
favorable change was due to higher revenues from corporate finance and trading
activities and credit recoveries.
For the first six months of 1995, GFS reported net income of $294 million,
down 22% from $378 million for the same period last year. This decline was due
to substantially lower trading revenues, principally related to emerging markets
trading, and higher expenses associated with business investments made largely
during the latter part of 1994.
For the second quarter of 1995, net income for the Retail businesses was $115
million, down 37% from $183 million for second quarter 1994. Excluding the one
time gain on sale of Chase Arizona in the second quarter of 1994, net income
declined, principally due to lower margins and the cost of aggressive marketing
initiatives in the credit card business.
For the first six months of 1995, Retail businesses reported net income of
$230 million, down 29% from $323 million reported for the same period last year.
This change was primarily due to competitive pressures in the credit card
business and the industry-wide decline in mortgage originations compared with
the prior year period.
10
<PAGE> 11
GLOBAL FINANCIAL SERVICES
<TABLE>
<CAPTION>
====================================================================================================================================
Second Quarter Six Months
--------------------------------------------------------
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Revenue................................................ $858 $801 $1,601 $1,690
Allocated Credit Loss Provision.............................. (3) 18 (21) 39
Total Expenses............................................... 584 536 1,157 1,049
Net Income .................................................. 176 157 294 378
------------------------------------------------------------------------------------------------------------------------------------
Return on Average Assets..................................... .86% .84% .74% 1.05%
Return on Allocated Equity................................... 15.7% 17.0% 12.7% 21.0%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[GRAPH 1]
For the second quarter of 1995, total revenue for GFS of $858 million was up
$57 million, or 7%, from the comparable 1994 period.
- In the transaction and information services businesses, payments and trade
volumes, and revenue were up over 1994 levels, however, custody fee
revenue declined. While custody assets continue to increase, current
custody fees, based in part on the prior quarters' securities values, do
not yet fully reflect the turnaround in emerging markets or recent
business growth.
- Trading and related net interest revenue for the second quarter of 1995
was higher than the comparable 1994 period, reflecting higher revenue from
foreign exchange, and interest rate and commodity derivatives.
- Investment banking revenue increased 31% from the prior year quarter, to
$166 million. Results included record investment banking fees of $79
million, reflecting increased capital raising activity, primarily for
clients in specialized industries around the world. Also included are
equity gains of $83 million, higher than last year's second quarter.
- Revenue from the loan portfolio increased slightly, principally due to an
increase in average wholesale loans associated with higher global
underwriting and syndications activity.
- Individual investment services revenue improved as compared with the
second quarter 1994, principally due to fees linked to higher fixed income
markets.
For the first six months of 1995, total revenue for GFS of $1,601 million was
down $89 million, or 5%, from the comparable 1994 period. This change was
largely due to the adverse conditions in the emerging markets and their impact
on trading revenue during first quarter 1995.
Asset quality measures within GFS businesses continue to be strong. The
second quarter and first six months of 1995 results reflect negative allocated
credit loss provisions of $(3) million and $(21) million, respectively,
resulting from net recoveries in these periods, versus allocated credit loss
provisions of $18 million and $39 million, in the comparable prior year periods.
GFS total expenses of $584 million were up $48 million, or 9%, from second
quarter 1994 levels. GFS expenses in the first six months of 1995 reflect
business investments made largely during the second half of 1994, notably in the
transaction and information services businesses and in Global Markets.
Productivity initiatives announced at year-end 1994 continued to benefit results
in the second quarter of 1995, with net reductions in headcount of 725 from
year-end 1994. GFS total expenses of $1,157 million for the first six months of
1995 were up $108 million, or 10%, from the first six months of 1994 levels,
reflecting business investments mentioned above.
11
<PAGE> 12
RETAIL BUSINESSES
<TABLE>
<CAPTION>
====================================================================================================================================
Second Quarter Six Months
---------------------------------------------------------
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Revenue................................................ $773 $865 $1,553 $1,662
Allocated Credit Loss Provision.............................. 96 98 192 196
Total Expenses............................................... 487 478 980 942
Net Income .................................................. 115 183 230 323
------------------------------------------------------------------------------------------------------------------------------------
Return on Average Assets..................................... 1.05% 1.85% 1.06% 1.64%
Return on Allocated Equity................................... 15.6% 31.3% 16.0% 27.7%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[GRAPH 2]
For the second quarter of 1995, total revenue for the Retail businesses of $773
million was $92 million, or 11%, lower than second quarter 1994.
- The credit card product revenue was $312 million in the second quarter of
1995, down $31 million from the comparable 1994 period. Competitive
repricing of credit cards reduced net interest revenue; however, managed
receivables grew $1 billion year-over-year due to new products and
aggressive promotions.
- A stable consumer deposit base continued to contribute net interest
revenue and retail banking fees. The decrease in second quarter revenue to
$164 million, from $168 million in the prior year second quarter, was
mainly due to one time gains related to upstate retail banking activities
realized in 1994.
- Business services revenue, including services provided to middle market
and small business customers, rose slightly for the second quarter of 1995
from the comparable 1994 period, due to improved net interest margin.
- Revenue from mortgage banking decreased $7 million, or 7%, over the second
quarter 1994. Revenue was adversely affected by the decline in mortgage
originations, reflecting the overall mortgage industry environment in
1995. Mortgage banking revenue in second quarter 1995 includes the impact
from the adoption of Statement of Financial Accounting Standards (SFAS)
No. 122, "Accounting for Mortgage Servicing Rights."
- Other Retail Products decreased $54 million from the prior year quarter
primarily due to the one time gain on sale of Chase Arizona in 1994.
Total revenue of $1,553 million for the first six months of 1995 was $109
million lower than the prior year period due to the competitive pressures in the
credit card business and lower mortgage originations in 1995, and the one time
gain on sale of Chase Arizona in 1994. The Allocated Credit Loss Provisions for
both the quarter and first six months of 1995 were essentially flat with the
comparable prior year periods.
For the second quarter of 1995, total expenses for the Retail businesses were
$487 million, or 2% higher than the same period last year. Incremental expenses
from the acquisition of American Residential Holding Corporation (AmRes) in
September 1994 were offset by lower expenses achieved by productivity
initiatives implemented by all Retail businesses and net reductions in headcount
of 1,900 from year-end 1994. Total expenses of $980 million were up $38 million,
or 4%, from the first six months of 1994 levels, principally due to the
acquisition of AmRes.
12
<PAGE> 13
NET INTEREST REVENUE -- TAXABLE EQUIVALENT BASIS
Net interest revenue, on a taxable equivalent basis, was $888 million for the
second quarter of 1995, compared with $924 million for the second quarter of
1994. Net interest margin was 3.51%, compared with 3.83% reported for the second
quarter of 1994. Average interest-earning assets were $101.6 billion, compared
with $96.9 billion for the same period last year. Average loans increased to
$64.3 billion for the current quarter from the $60.6 billion level reported for
the second quarter of 1994.
For the first six months of 1995, net interest revenue, on a taxable
equivalent basis, was $1,779 million, compared with $1,882 million for the same
period last year. The net interest margin was 3.53% for the first six months of
1995, compared with 3.98% for the same period last year. Net interest revenue
decreased by $103 million over the same period last year due to the competitive
pressures on loan pricing and the prevailing interest rate environment. The
growth in lower-spread liquid assets has also caused a reduction in the overall
net yield on average interest-earning assets. For the first six months of 1995,
average interest-earning assets were $101.8 billion, compared with $95.4 billion
for 1994. Average loans were $63.5 billion for the first six months of 1995
compared with $60.9 billion reported for 1994.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST REVENUE AND INTEREST RATE SPREADS--TAXABLE EQUIVALENT BASIS*
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
--------------------------------------------------------------------------------------------
1995 1994 1995 1994
--------------------------------------------------------------------------------------------
($ in millions) Amount Rate Amount Rate Amount Rate Amount Rate
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Earned................... $2,114 8.35% $2,311 9.57% $4,162 8.25% $4,399 9.29%
Interest Paid..................... 1,226 5.73 1,387 6.93 2,383 5.59 2,517 6.40
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue $ 888 2.62% $ 924 2.64% $1,779 2.66% $1,882 2.89%
--as a % of Average Gross
Interest-Earning Assets ** 3.51% 3.83% 3.53% 3.98%
------------------------------------------------------------------------------------------------------------------------------------
<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 for both the second quarter of 1995 and 1994,
respectively, and $12 million and $13 million for the first six months of
1995 and 1994, 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 28 and 30 for components of Average Gross Interest-Earning
Assets.
</TABLE>
PROVISION FOR POSSIBLE CREDIT LOSSES
The provision for possible credit losses was $75 million, or $10 million higher
than the first quarter of 1995 and $75 million lower than the second quarter of
last year.
The provision for possible credit losses for the first six months of 1995 was
$140 million, compared with $310 million for the same period last year. See
Credit Risk Management section starting on page 22 for a discussion of the
Reserve for Possible Credit Losses and asset quality.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
OTHER OPERATING REVENUE
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
------------------------------------------------------------
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fees and Commissions:
Consumer Banking ........................................ $167 $164 $ 325 $ 309
Trust and Fiduciary ..................................... 130 140 262 282
Investment Banking ...................................... 79 68 145 115
Other ................................................... 107 108 220 220
------------------------------------------------------------------------------------------------------------------------------------
Total Fees and Commissions 483 480 952 926
------------------------------------------------------------------------------------------------------------------------------------
All Other Operating Revenue:
Foreign Exchange Trading ................................ 60 78 152 163
Trading Account ......................................... 75 73 27 168
Investment Securities Gains ............................. 2 1 26 80
Equity Gains ............................................ 83 55 157 139
Accelerated Disposition Portfolio Gains ................. -- 15 -- 68
Other ................................................... 47 98 108 111
------------------------------------------------------------------------------------------------------------------------------------
Total Other Operating Revenue $750 $800 $1,422 $1,655
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Total other operating revenue for the second quarter of 1995 was $750 million,
or 6% lower than the same period of 1994, due to a lower level of foreign
exchange trading, the absence of gains from accelerated disposition of real
estate and the inclusion of a $55 million gain from the sale of Chase Arizona in
the second quarter of 1994 other revenue category.
13
<PAGE> 14
Fees and commissions of $483 million were essentially level with the prior
year quarter and up from the first quarter 1995, due to significant investment
banking fees of $79 million, reflecting increased capital raising activity for
clients in specialized industries around the world. Trust and fiduciary fee
revenue declined from second quarter 1994. While custody assets continue to
increase, current custody fees, based in part on the prior quarters' securities
values, do not yet fully reflect the turnaround in emerging markets or recent
business growth.
For the first six months of 1995, fees and commissions were $952 million, up
$26 million from the first six months of 1994, due to higher fees from
investment banking activities as well as increased consumer banking fees from
mortgage servicing volumes.
Total trading revenue was $135 million for second quarter 1995, compared with
$151 million for the second quarter of 1994. For the first six months of 1995,
total trading revenue was $179 million compared with $331 million for the first
six months of 1994. For a detailed discussion, refer to Trading Activities
section starting on page 18.
For the second quarter of 1995, total other revenue was $132 million, down
from $169 million for the same period last year, which included in the other
revenue category a gain of $55 million from the sale of Chase Arizona. Equity
gains of $83 million for the second quarter of 1995 were significantly above the
$55 million of equity gains recognized in the second quarter of 1994.
Included in other revenue were gains from the sale of mortgage servicing
rights of $3 million for the second quarter of 1995, compared with $17 million
for second quarter 1994. As of April 1, 1995, Chase adopted SFAS No. 122,
"Accounting for Mortgage Servicing Rights." The impact to Chase of adopting SFAS
122 was to recognize originated mortgage servicing rights which resulted in a
gain of $16 million in the second quarter 1995.
Total other revenue for the first six months of 1995 was $291 million, down
from $398 million for the same period in 1994. The year ago period included
significant gains from the liquidation of real estate assets held for
accelerated disposition, investment securities gains resulting from Chase's
program of reducing its cross-border Brady exposures in its available for sale
investment portfolio and, as discussed above, a gain on the sale of Chase
Arizona.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
OTHER OPERATING EXPENSES
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
---------------------------------------------------------
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and Employee Benefits..................................... $ 599 $ 536 $1,195 $1,080
Net Occupancy...................................................... 89 98 182 199
Equipment Rentals, Depreciation and Maintenance.................... 85 74 168 145
Other Expenses..................................................... 331 365 637 707
------------------------------------------------------------------------------------------------------------------------------------
Total Other Operating Expenses $1,104 $1,073 $2,182 $2,131
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Total operating expenses were $1,104 million for the second quarter of 1995,
compared with $1,073 million for the same period of last year. Compared with the
second quarter of 1994, operating expenses increased due to the acquisition of
American Residential Mortgage Company as well as investments made in key
strategic businesses. In addition, second quarter 1995 reflected a $15 million
restructuring charge, primarily related to the recently announced disposition of
Chase's futures brokerage business.
Productivity initiatives continue to result in headcount reductions, with
total headcount down 1,515 during the quarter to 33,535 at June 30, 1995. Since
year-end 1994, headcount has been reduced by over 3,100, including the employees
who elected early retirement. As previously announced, Chase has retained the
firm Tandon Capital Associates to assist Chase in improving its productivity on
an expedited basis. Management continues to expect that its productivity
initiatives will result in a reduction of Chase's base expenses in excess of
$400 million in 1996.
For the first six months of 1995, other operating expenses were $2,182
million, compared with $2,131 million for 1994. Excluding the impact of the
third quarter 1994 AmRes mortgage acquisition, operating expenses were
essentially level year over year.
PROVISION FOR INCOME TAXES
For the second quarter of 1995, the provision for income taxes was $172 million,
compared with $188 million for the same period last year. The effective tax rate
was 38% for both the second quarters of 1995 and 1994, respectively.
For the first six months of 1995, the provision for income taxes was $326
million, compared with $412 million for the same period last year.
14
<PAGE> 15
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 34 to 38 of the 1994 Annual Report.
INVESTMENT SECURITIES
Information regarding Chase's investment securities portfolio and related
accounting policies is contained on pages 34, 56, 57, and 63 to 65 of the 1994
Annual Report. At June 30, 1995, net unrealized gains in the investment
securities held to maturity portfolio were $4 million, compared with net
unrealized losses of $30 million and $4 million at December 31, 1994 and June
30, 1994, respectively. With respect to those investment securities that are
available for sale and carried at fair value, the net unrealized losses
reflected in stockholders' equity, net of taxes, were $7 million at June 30,
1995 compared with $35 million at December 31, 1994 and net unrealized gains of
$9 million at June 30, 1994.
For further information on the investment securities portfolios, see pages 32
and 33.
LIQUIDITY RISK MANAGEMENT
As discussed on pages 34 and 35 of the 1994 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 liquid 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 June 30, 1995,
these assets totaled $41.5 billion, compared with $39.0 billion at December 31,
1994. In addition to maintaining this portfolio of liquid assets, Chase also has
core consumer assets, such as loans secured by 1-4 family residential
properties, credit card receivables and automobile loans, that can be sold or
securitized. During the second quarter of 1995, Chase securitized both
residential mortgage loans and credit card receivables. See Credit Risk
Management section on page 23.
The Company maintains a $750 million revolving credit agreement that expires
on October 27, 1995; no borrowings have ever been made under this credit
facility.
In managing liquidity, Chase takes into account the various legal
limitations, including the extent to which banks may pay dividends to their
parent companies or finance or otherwise supply funds to certain of their
affiliates, as discussed in Note 1, Regulatory Limitations, in Notes to
Consolidated Financial Statements on page 8.
15
<PAGE> 16
INTEREST RATE RISK MANAGEMENT
ALM RISK MANAGEMENT
As discussed on pages 35 to 38 of the 1994 Annual Report, fluctuations in market
interest rates may impact Chase's net interest revenue due to 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 effect of interest rate changes on 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 and common
stockholders' equity. During the first six months of 1995, the quarterly
exposures in the tactical (18-month) time horizon averaged 1.8% of quarterly
core net income. The objective in managing interest rate risk is to support the
achievement of business strategies, while protecting earnings and liquidity.
At June 30, 1995, as shown in the following chart, 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 contracts, including interest rate swaps, futures, forwards and
option-related contracts. Derivative contracts 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
contracts and the linked balance sheet positions are also performed. In
implementing its strategy, Chase does not use derivative contracts with leverage
features.
The following chart provides a quantification of Chase's interest rate
sensitivity gap as of June 30, 1995, 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
contracts on these gaps. This chart also displays only a static view of Chase's
interest rate sensitivity gap and does not capture the dynamics of balance
sheet, rate and spread movements, nor Management's actions that may be taken to
manage this position.
[GRAPH 3]
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 July 1 and maturing on August 28 would
have a gap impact of $64 million ($100 million x 59 days/92 days) in the 1 to 3
month repricing time frame.
(2) Variable-rate balances are reported based on their repricing dates.
Fixed-rate balances are reported based on their scheduled contractual maturity
dates, except for certain investment securities and loans secured by 1-4 family
residential properties that are based on anticipated prepayments. Given the
indeterminate date of any sales, investment securities that may be sold prior to
maturity are similarly reported, depending on their variable or fixed rate
terms.
(3) Prime-priced loans are considered as 1 to 3 month assets, fixed-rate credit
card receivables are reported based on a declining schedule over a five-year
period, while stockholders' equity is assigned a 5-year maturity.
(4) Trading Account Assets and Liabilities are considered overnight maturities.
(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.
16
<PAGE> 17
At June 30, 1995, Chase had approximately $27 billion and $14 billion,
respectively, of notional swap principal and other ALM contracts outstanding
related to such interest rate risk management activities, compared with $50
billion and $17 billion, respectively, at December 31, 1994. The following table
summarizes certain of Chase's assets and liabilities at June 30, 1995, the
corresponding interest revenue earned on such assets or interest expense
incurred on such liabilities for the six months ended June 30, 1995, as well as
the notional or contract amounts of related derivative contracts used for ALM
purposes at June 30, 1995. Also disclosed is the favorable or unfavorable
percentage impact these derivative contracts had on the related interest amounts
reflected in Chase's Consolidated Statement of Income. As shown, Chase's use of
derivative contracts reduced interest expense on deposits and intermediate- and
long-term debt, and increased interest revenue on investment securities by the
percentages indicated.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
DERIVATIVE CONTRACTS AND RELATED LINKED BALANCE SHEET POSITIONS AND INTEREST REVENUE (EXPENSE)
------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended
Contract/ June 30, 1995
Notional Amount Income Statement
--------------------------- -------------------------
Published Published Favorable
Balance Interest Other Interest (Unfavorable)
Sheet Rate ALM Revenue Percentage
($ in millions) Amount Swaps Contracts* (Expense) Impact**
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
June 30, 1995
Interest-Bearing Deposits Placed with Banks...... $ 6,623 $ 200 $ 500 $ 294 --%
Investment Securities............................ 7,110 1,000 1,900 242 2
Loans............................................ 64,239 2,200 1,100 2,883 --
Deposits......................................... 68,282 21,100 9,900 (1,314) 4
Intermediate- and Long-Term Debt................. 5,568 3,000 600 (194) 4
------------------------
$27,500 $14,000
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Includes currency exchange agreements, forward, futures and purchased option
and option-related contracts.
** Represents the favorable (unfavorable) percentage impact of ALM derivative
contracts on the related interest revenue or interest expense amount prior
to the impact of derivative contracts.
</TABLE>
The following table summarizes the outstanding ALM contract/notional amounts of
interest rate swaps and other ALM contracts at June 30, 1995, by yearly
intervals. The decrease in notional amounts from one period to the next period
represents maturities of the underlying contracts. 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 June 30,
1995. 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 contracts purchased,
as reflected in the tables on page 18.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING ALM CONTRACT/NOTIONAL AMOUNTS BY YEARLY INTERVALS
------------------------------------------------------------------------------------------------------------------------------------
For The Twelve Months Beginning July 1,
------------------------------------------------------------------------------------
($ in millions) 1995 1996 1997 1998 1999 Thereafter
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receive Fixed Swaps:
Contract/Notional Amount .............. $21,500 $11,300 $10,800 $8,900 $6,000 $5,200
Weighted Average:
Receive Rate ........................ 6.70% 6.78% 6.90% 7.05% 7.03% 6.82%
Pay Rate ............................ 5.92 5.86 6.22 6.44 6.69 7.00
Pay Fixed Swaps:
Contract/Notional Amount .............. $ 6,000 $ 4,700 $ 2,000 $1,500 $1,100 $1,000
Weighted Average:
Receive Rate ........................ 5.83% 5.84% 6.22% 6.43% 6.68% 6.90%
Pay Rate ............................ 7.67 8.30 8.29 8.28 8.26 8.03
Other ALM Contracts ...................... $14,000 $ 6,800 $ 6,600 $6,200 $4,300 $4,300
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
As discussed on page 36 of the 1994 Annual Report, Chase uses derivative
contracts as part of its ALM activities to manage the earnings risk arising from
timing differences in repricing characteristics principally arising from its
customer-related assets and liabilities. Consistent with Chase's overall ALM
objectives to reduce its longer-term exposure to a decline in interest rates,
certain fixed-rate liabilities are hedged using derivative contracts.
Significant changes in value to Chase's ALM derivative contracts and related
linked balance sheet positions for the first six months of 1995 are presented
below.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
CHANGE IN VALUE OF CERTAIN ALM DERIVATIVE CONTRACTS AND LINKED BALANCE SHEET POSITIONS
------------------------------------------------------------------------------------------------------------------------------------
For Six Months Ended June 30, 1995
---------------------------------------------------------
Change in Value of Linked Change in Value of
($ in millions) Balance Sheet Positions Related ALM Derivatives
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance Sheet Assets/Liabilities:
Deposits*........................................................... $(1,012) $463
Company's Intermediate- and Long-Term Debt.......................... (287) 222
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Deposits are valued by a model that forecasts future deposit costs versus
alternative funding sources using simulation techniques. Key assumptions
include alternative funding costs of 3-month LIBOR, deposit operating costs,
reserve requirement of 10%, and Chase's long-run interest elasticity of
demand for balances. This valuation is performed on a "going concern" basis,
which assumes new business replaces any runoff.
</TABLE>
The change in value of Chase's ALM derivative contracts from December 31, 1994
to June 30, 1995 is as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
CHANGE IN VALUE OF ALM DERIVATIVE CONTRACTS
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, Change in
($ in millions) 1995 1994 Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALM Derivative Contracts:
Net Deferred Gains/(Losses)......................................... $(28) $ (97) $ 69
Net Unrealized Gains/(Losses)....................................... 9 (597) 606
------------------------------------------------------------------------------------------------------------------------------------
Net ALM Derivative Contract Gains/(Losses) $(19) $(694) $675
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The net deferred losses at June 30, 1995 are expected to be amortized over the
periods reflected in the following table. The amortization of deferred gains
and losses are recognized as yield adjustments to the interest income or
expense associated with the linked assets or liabilities.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
AMORTIZATION OF NET DEFERRED GAINS/(LOSSES) RELATED TO CLOSED ALM DERIVATIVE CONTRACTS
------------------------------------------------------------------------------------------------------------------------------------
($ in millions) 1995 1996 1997 1998 1999 2000 Thereafter Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Gains/(Losses)
Amortization $37 $39 $(6) $(43) $(47) $(56) $48 $(28)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In addition, Chase's Consolidated Statement of Condition included unamortized
premiums on open ALM option contracts purchased amounting to $127 million and
$140 million at June 30, 1995 and December 31, 1994, respectively. The premiums
at June 30, 1995 will be amortized over the periods indicated in the following
table.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
AMORTIZATION OF PREMIUMS ON OPEN ALM OPTION CONTRACTS PURCHASED
------------------------------------------------------------------------------------------------------------------------------------
($ in millions) 1995 1996 1997 1998 1999 2000 Thereafter Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premium Amortization $9 $17 $17 $17 $14 $13 $40 $127
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
OTHER RISK MANAGEMENT ACTIVITIES
As discussed on page 38 of the 1994 Annual Report, Chase also uses derivative
contracts to reduce interest rate, foreign currency and other market risks
associated with certain assets and liabilities. At June 30, 1995 and December
31, 1994, outstanding notional amounts of interest rate contracts related to
mortgage servicing assets were approximately $5 billion and $6 billion,
respectively, and those related to mortgage loan sales were approximately $1
billion for both time periods. In addition, approximately $1 billion of notional
amounts of foreign currency contracts, primarily forward contracts related to
Chase's net investments in overseas entities, were outstanding at both June 30,
1995 and December 31, 1994. The effect of these activities are not material to
Chase's consolidated financial position or results of operations.
TRADING ACTIVITIES
As discussed on pages 38 to 42 of the 1994 Annual Report, Chase conducts its
trading activities in the Global Markets business sector, functioning as an
intermediary between customers (both issuers and investors) and the global
foreign exchange and capital markets. Global Markets designs, trades and markets
a broad range of derivative risk management products.
The net market risk exposures created as a result of providing these services
to customers are managed on a consolidated basis by Global Markets as part of
Chase's trading activities. As a secondary business objective, Global Markets
may create proprietary positions to take advantage of market opportunities that
are not directly associated with customer activities.
18
<PAGE> 19
Combined trading and trading-related revenue (including revenue classified as
net interest revenue for financial statement purposes) for Global Markets are
set forth below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
COMBINED TRADING AND TRADING-RELATED REVENUE*
------------------------------------------------------------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
----------------------------------------------------------
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Business Diversification:
Foreign Exchange**..................................................... $ 74 $ 69 $164 $159
Interest Rate and Commodity Derivatives***............................. 60 39 115 95
Securities Trading and Underwriting****................................ 73 73 22 152
-----------------------------------------------------------------------------------------------------------------------------------
Total $207 $181 $301 $406
------------------------------------------------------------------------------------------------------------------------------------
Income Statement Classification:
Foreign Exchange Trading Revenue....................................... $ 60 $ 78 $152 $163
Trading Account Revenue................................................ 75 73 27 168
Net Interest Revenue*****.............................................. 72 30 122 75
------------------------------------------------------------------------------------------------------------------------------------
Total $207 $181 $301 $406
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Prior period amounts have been reclassified to conform with current
presentation.
** Includes gains and losses from foreign exchange spot, forward, futures and
options contracts.
*** Includes gains and losses from interest rate swaps, currency exchange
agreements, future rate agreements, interest rate futures, options, caps
and floors; precious metals spot, forward, futures and options contracts;
and commodity and equity index linked derivative contracts.
**** Includes gains and losses from U.S. and foreign government, government
agency, and corporate debt securities, emerging markets securities and
loans, and related derivative contracts.
***** 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>
The combined trading and trading-related revenue of $207 million for second
quarter 1995 was more than double that of the first quarter 1995 and $26 million
more than second quarter 1994. The substantial increase from first quarter 1995
was due to a significant improvement in securities trading and underwriting
revenue, most of which related to international capital markets activity. Such
revenue for the current quarter was $73 million. In addition, interest rate and
commodity derivatives revenue of $60 million was favorably impacted by improved
customer demand, especially compared to second quarter 1994. Foreign exchange
revenue of $74 million, although lower than the first quarter of 1995 due to a
less volatile marketplace, was slightly higher than the same period of 1994.
For the first six months of 1995, combined trading revenue was $301 million,
compared with $406 million for the first six months of 1994. The year-over-year
decline was largely a result of the Mexican peso devaluation and its impact on
the emerging markets during first quarter 1995.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS AND LIABILITIES
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31,
($ in millions) 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Securities and Loans................................................................................ $ 7,257 $ 6,833
Other, Principally Derivative Contracts*............................................................ 9,442 8,276
------------------------------------------------------------------------------------------------------------------------------------
Total $16,699 $15,109
------------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Securities Sold But Not Yet Purchased............................................................... $ 1,494 $ 1,692
Derivative Contracts*............................................................................... 10,293 7,972
------------------------------------------------------------------------------------------------------------------------------------
Total $11,787 $ 9,664
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* The average fair values of trading derivative contract assets for the first
six months of 1995 and for the year 1994 were $10.6 billion and $10.2
billion, respectively; and those of trading derivative contract liabilities
were $10.2 billion and $9.7 billion, respectively.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
TRADING ACCOUNT SECURITIES AND LOANS
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31,
($ in millions) 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government and Agency and Municipal Securities.................................................... $2,397 $1,126
Foreign Securities..................................................................................... 2,829 3,437
Loans.................................................................................................. 240 887
Corporate Debt Securities.............................................................................. 1,196 763
Other.................................................................................................. 595 620
------------------------------------------------------------------------------------------------------------------------------------
Total $7,257 $6,833
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
TRADING DERIVATIVE CONTRACTS
------------------------------------------------------------------------------------------------------------------------------------
June 30, 1995 December 31, 1994
----------------------------------------------------------------------------------
Notional Credit Risk Notional Credit Risk
($ in millions) Amount* Amount Amount Amount
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Rate Contracts:
Interest Rate Swaps.......................... $335,600 $ 5,600 $250,100 $4,800
Currency Exchange Agreements................. 23,100 1,500 18,900 1,100
Forwards and Futures......................... 236,800 300 252,300 200
Options, Caps and Floors Purchased........... 96,100 1,000 57,900 700
Options, Caps and Floors Written**........... 77,200 -- 72,200 --
------------------------------------------------------------------------------------------------------------------------------------
Less: Master Netting Agreements............ 4,300 3,000
Net Interest Rate Contracts 4,100 3,800
------------------------------------------------------------------------------------------------------------------------------------
Foreign Exchange Contracts:
Spot, Forwards and Futures................... 634,300 11,200 541,900 6,600
Options Purchased............................ 49,200 1,100 36,800 700
Options Written**............................ 46,500 -- 49,000 --
------------------------------------------------------------------------------------------------------------------------------------
Less: Master Netting Agreements............ 7,200 3,100
Net Foreign Exchange Contracts 5,100 4,200
------------------------------------------------------------------------------------------------------------------------------------
Commodity Contracts**........................... 15,600 400 13,400 400
------------------------------------------------------------------------------------------------------------------------------------
Total Before Cross Product Netting Agreements 9,600 8,400
------------------------------------------------------------------------------------------------------------------------------------
Less: Cross Product Netting Agreements..... 200 100
------------------------------------------------------------------------------------------------------------------------------------
Total Trading Derivative Assets $ 9,400 $8,300
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* The notional amounts of exchange traded interest rate contracts, foreign
exchange contracts, and commodity contracts were $60.2 billion, $10.9
billion and $1.5 billion, respectively. The credit risk amounts of these
contracts were minimal since exchange-traded contracts principally settle
daily in cash.
** Options, caps and floors written have no credit risk. Commodity contract
notional amounts include options written of $2.7 billion and $2.8 billion
at June 30, 1995 and December 31, 1994, respectively.
</TABLE>
The change in the credit risk amounts of foreign exchange contracts reflects the
decline in the value of the U.S. dollar against most major currencies.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
MATURITY OF TRADING ACCOUNT DERIVATIVE CONTRACTS*
------------------------------------------------------------------------------------------------------------------------------------
Interest Foreign
Rate Exchange
At June 30, 1995 Contracts Contracts
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than 3 months..................................................................................... 23% 63%
3 to 6 months.......................................................................................... 12 20
6 to 12 months......................................................................................... 19 15
1 to 3 years........................................................................................... 27 2
3 to 5 years........................................................................................... 12 --
Over 5 years........................................................................................... 7 --
------------------------------------------------------------------------------------------------------------------------------------
Total 100% 100%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Approximate percentages based upon remaining life of notional amounts.
</TABLE>
MARKET RISK
Chase's base level of daily risk dollars for its trading activities (before
Management's judgment overlays or stress testing) are estimated to be
approximately $11 million in aggregate at June 30, 1995, having averaged
approximately $13 million during the first six months of 1995. The decline in
quarter-end risk dollars from the average is primarily attributed to reduced
volatility and positions in international securities.
Chase continuously validates the accuracy and applicability of risk dollars
by comparing actual portfolio changes in value against predicted changes in
value, or risk dollars. During the first six months of 1995, actual declines in
value were within predicted declines in value at a frequency consistent with
Chase's defined confidence level of 97.5%.
20
<PAGE> 21
CREDIT RISK
Chase's predominant credit risk exposures (net replacement values) in its
trading businesses relate to derivative contracts. Interest rate derivative
credit risk exposures are primarily of a medium-term nature, while credit risk
exposures in most other trading products are of a short-term nature. In terms of
industry exposure, depository institutions, substantially all in OECD countries,
represent 61% of net replacement value, with no other major industry greater
than 3% of the total net exposure. For other than depository institutions, the
largest single counterparty credit risk exposure is $102 million. The net
replacement value of contracts identified as being potential problem contracts
was not material at June 30, 1995. Presented in the following table are the
percentages of total net replacement value by counterparty type and by major
country exposures.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
DERIVATIVE-RELATED CREDIT RISK EXPOSURE*
------------------------------------------------------------------------------------------------------------------------------------
Percentage of Total Net
At June 30, 1995 Replacement Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Counterparty Type:
Depository Institutions................................................................................................ 61%
Other.................................................................................................................. 39
------------------------------------------------------------------------------------------------------------------------------------
Total 100%
------------------------------------------------------------------------------------------------------------------------------------
Country of Risk:
United States.......................................................................................................... 23%
Japan.................................................................................................................. 20
United Kingdom......................................................................................................... 9
Italy.................................................................................................................. 8
France................................................................................................................. 5
Other.................................................................................................................. 35
------------------------------------------------------------------------------------------------------------------------------------
Total 100%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Includes foreign exchange, interest rate and commodity contracts.
</TABLE>
Chase's credit losses arising from derivative contracts have not been material
during the first six months of 1995 and throughout 1994. Leveraged derivatives
are contracts that contain features that may increase the contract's volatility
by a factor significantly disproportionate to its stated notional amount. Chase
does not engage in these types of derivatives to any material extent and, at
June 30, 1995, the amount of such contracts was minimal.
FAIR VALUE DISCLOSURES
Chase monitors the estimated fair value of its on- and off- balance-sheet
financial instruments as discussed on pages 58 to 60 of the 1994 Annual Report.
Based upon market and other conditions existing at June 30, 1995, the estimated
net fair value of Chase's on- and off-balance-sheet financial instruments was
not materially adversely impacted during the second quarter of 1995.
CAPITAL MANAGEMENT
Capital management is an ongoing process that consists of providing equity and
long-term debt for both current and future financial positioning. Chase manages
its capital to execute its strategic business plans and to support its growth
and investments 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 June 30, 1995, 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 June 30, 1995 was $8,569 million or
7.22% of total assets, compared with $8,359 million, or 7.33%, and $8,593
million, or 7.32%, at December 31, 1994 and June 30, 1994, respectively.
In the second quarter of 1995, Chase repurchased 4 million shares of its
common stock. These repurchases were made pursuant to a repurchase program
intended to offset the shares of common stock to be issued in the pending
acquisition of U.S. Trust Corporation. A discussion regarding Chase's recent
capital position is set forth below and on pages 42 and 43 of the 1994 Annual
Report.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
TIER 1 AND TIER 2 CAPITAL
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier 1 Capital....................................................... $ 8,023 $ 7,759 $ 7,852
Tier 2 Capital....................................................... 4,658 4,194 4,148
------------------------------------------------------------------------------------------------------------------------------------
Total Capital $12,681 $11,953 $12,000
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Chase's Tier 1 risk-based capital ratio was 8.22% at June 30, 1995, compared
with 8.30% at December 31, 1994 and 8.71% at June 30, 1994. The decrease in the
Tier 1 capital ratio since December 31, 1994 was due to higher net risk-weighted
assets of $97.6 billion at June 30, 1995, compared with $93.5 billion at
December 31, 1994, and by the repurchase of 4 million shares of common stock,
partially offset by higher
21
<PAGE> 22
retained earnings. During the first six months of 1995, Tier 2 capital increased
due to the issuance of $653 million of subordinated notes, partially offset by
the discount applicable to subordinated debt with remaining maturities of five
years or less. The Company's issuance of subordinated notes in the second
quarter of 1995 was principally comprised of $150 million due 2002 and $150
million due 2005. The net proceeds from these issuances were used for general
corporate purposes, including advances to or investments in banking and
nonbanking subsidiaries of the Company and the repayment of commercial paper or
other indebtedness of the Company.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
CAPITAL RATIOS*
------------------------------------------------------------------------------------------------------------------------------------
Minimum
June 30, December 31, June 30, Regulatory
1995 1994 1994 Guidelines
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tier 1 Leverage Ratio (a).............................................. 7.19% 7.37% 7.47% 3.00-5.00%
Risk-Based Capital Ratios: (b)
Tier 1............................................................ 8.22 8.30 8.71 4.00
Total Capital..................................................... 12.99 12.78 13.32 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 1 and Tier 2
Capital.
(a) Tier 1 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 1 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>
CREDIT RISK MANAGEMENT
As further discussed on pages 43 and 44 of the 1994 Annual Report, Chase has
established and implemented policies and procedures to actively manage credit
risk, both on- and off-balance sheet. In comparison with June 30, 1994, the loan
portfolio balances at June 30, 1995 reflected a 13% growth in domestic consumer
loans, which consists of loans secured by 1-4 family residential properties,
home equity loans, credit card receivables, auto loans and other forms of
installment loans. During the same period, domestic commercial real estate loans
within the wholesale portfolio declined 19% to $2.0 billion, while total loans
in overseas offices increased 5% to $18.1 billion.
All tables in this section exclude the accelerated disposition portfolio.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
LOAN COMPOSITION
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic Offices:
Wholesale......................................................... $13,806 $13,350 $14,668
Consumer.......................................................... 32,489 33,432 28,743
Less: Unearned Discount and Fee Revenue........................... 177 177 154
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Offices 46,118 46,605 43,257
------------------------------------------------------------------------------------------------------------------------------------
Overseas Offices:
Wholesale......................................................... 15,338 13,985 14,666
Consumer.......................................................... 2,837 2,500 2,606
Less: Unearned Discount and Fee Revenue........................... 54 52 47
------------------------------------------------------------------------------------------------------------------------------------
Total Overseas Offices 18,121 16,433 17,225
------------------------------------------------------------------------------------------------------------------------------------
Total Loans $64,239 $63,038 $60,482
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key data on the worldwide consumer loan portfolio are summarized below.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
CONSUMER LOANS
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic Offices:
Secured by 1-4 Family Residential Properties........................ $14,998 $15,092 $13,254
Credit Card......................................................... 6,130 7,733 6,408
Auto Loans.......................................................... 6,998 6,227 5,218
Lease Financings.................................................... 1,375 969 732
Other Consumer...................................................... 2,988 3,411 3,131
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Offices................................................. 32,489 33,432 28,743
Overseas Offices....................................................... 2,837 2,500 2,606
------------------------------------------------------------------------------------------------------------------------------------
Total Consumer Loans $35,326 $35,932 $31,349
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
The increase in domestic consumer loans from June 30, 1994 to June 30, 1995 was
due to increased demand for loans secured by 1-4 family residential properties,
credit card loans, auto loans and lease financings throughout the period, offset
by sales and securitizations. During the first six months of 1995, Chase
securitized or sold $2.1 billion of residential mortgage loans, and sold an
additional $2.4 billion of such loans, primarily through traditional secondary
market outlets. Additionally, Chase securitized credit card receivables of $1.0
billion on March 15, 1995 and $1.5 billion on June 15, 1995. There were no new
securitizations of credit card receivables in 1994. At June 30, 1995, the
aggregate amount of securitized credit card receivables outstanding was $4.8
billion, compared with $2.7 billion and $3.3 billion at December 31, 1994 and
June 30, 1994, respectively.
Credit card securitization transactions are structured with a revolving
period and a subsequent amortization period. During the first six months of
1995, $376 million of previously securitized credit card receivables were
amortized and $376 million are scheduled to amortize during the remainder of
1995.
Credit card securitization transactions do not materially impact earnings
since Chase continues to service the credit card accounts after the receivables
are securitized. This income is recorded in Fees and Commissions and Other
Revenue, as opposed to Net Interest Revenue offset by the Provision for Possible
Credit Losses.
For analytical purposes only, the following table summarizes the net impact
of securitization of credit card receivables as an increase (decrease) in
Chase's consolidated statement of income line items.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
------------------------------------------------
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Interest Revenue ................................................ $(77) $(68) $(134) $(142)
Decrease in Provision for Possible Credit Losses..................... 34 41 65 90
Fees and Commissions................................................. 41 27 67 52
Other Revenue........................................................ 10 -- 17 --
------------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes.................................................. $ 8 $ -- $ 15 $ --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Average domestic credit card receivables, net loan charge-offs and average loss
ratio amounts are presented below both had the securitization transactions not
taken place and per actual financial statement presentation.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
----------------------------------------------------
1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Receivables ($ in billions)
Prior to Securitization........................................... $10.7 $9.7 $10.5 $9.8
Net of Securitization............................................. 7.1 6.3 7.4 6.2
Net Loan Charge-offs ($ in millions)
Prior to Securitization........................................... $102 $101 $200 $214
Net of Securitization............................................. 68 60 135 124
Average Loss Ratio
Prior to Securitization........................................... 3.82% 4.18% 3.85% 4.41%
Net of Securitization............................................. 3.80 3.83 3.67 4.04
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Key data on the worldwide wholesale loan portfolio are summarized below.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
WHOLESALE LOANS
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic Offices:
Commercial Real Estate.............................................. $ 1,964 $ 2,055 $ 2,428
Commercial and Industrial........................................... 8,271 8,291 7,975
Other Wholesale..................................................... 3,571 3,004 4,265
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Offices................................................. 13,806 13,350 14,668
------------------------------------------------------------------------------------------------------------------------------------
Overseas Offices:
Commercial and Industrial........................................... 9,599 9,020 9,931
Other Wholesale..................................................... 5,739 4,965 4,735
------------------------------------------------------------------------------------------------------------------------------------
Total Overseas Offices................................................. 15,338 13,985 14,666
------------------------------------------------------------------------------------------------------------------------------------
Total Wholesale Loans $29,144 $27,335 $29,334
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Wholesale loans in overseas offices increased from $14.7 billion at June 30,
1994 to $15.3 billion at June 30, 1995 from higher levels of global loan
underwriting and syndication activity, partially offset by repayments.
23
<PAGE> 24
RESERVE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF RESERVE FOR POSSIBLE CREDIT LOSSES
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter
----------------------------------
($ in millions) 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at Beginning of Period ........................................................... $1,419* $1,429
Additions:
Provision for Possible Credit Losses Charged to Expense................................ 75 150
Deductions:
Charge-Offs............................................................................ 114 193
Recoveries............................................................................. (37) (47)
------------------------------------------------------------------------------------------------------------------------------------
Net Loan Charge-Offs................................................................... 77 146
Reserves of Disposed Subsidiaries and Other Adjustments................................... (1) 2
------------------------------------------------------------------------------------------------------------------------------------
Balance at End of Period $1,416* $1,435
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Includes $17 million and $18 million of related SFAS 114 valuation
allowance at June 30, 1995 and March 31, 1995, respectively.
</TABLE>
Chase adopted SFAS 114 and SFAS 118 effective January 1, 1995. This did not have
any impact on Chase's results of operations nor on its financial position,
including the level of the reserve for possible credit losses. Instead, it
resulted only in a reallocation of the existing reserve for possible credit
losses.
At June 30, 1995, the recorded investment in loans that are considered
impaired under SFAS 114 was $495 million. No SFAS 114 reserve is required for
$445 million of recorded investment in impaired loans, since previously taken
charge-offs and interest applied to principal have reduced the recorded
investment values to amounts that are less than the SFAS 114 calculated values.
The remaining $50 million of impaired loans required a SFAS 114 reserve for
possible credit losses of $17 million. The average recorded investment in
impaired loans during the three months and six months ended June 30, 1995 was
approximately $512 million and $521 million, respectively. For the three months
and six months ended June 30, 1995, Chase recognized interest revenue on these
impaired loans of $4 million and $6 million, respectively.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NET LOAN CHARGE-OFFS AND ANNUALIZED CREDIT LOSS EXPERIENCE RATIOS
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
--------------------------------------------------------------
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Loan Charge-offs:
Domestic:
Consumer ........................................................ $92 $ 91 $182 $187
Commercial Real Estate .......................................... (12) 51 (14) 102
Commercial and Other ............................................ 5 4 (15) 13
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic ....................................................... 85 146 153 302
------------------------------------------------------------------------------------------------------------------------------------
Total International .................................................. (8) -- (14) --
------------------------------------------------------------------------------------------------------------------------------------
Total ................................................................ $77 $146 $139 $302
------------------------------------------------------------------------------------------------------------------------------------
Net Loan Charge-offs as a Percentage of Average Loans:
Domestic:
Consumer ........................................................ 1.09% 1.25% 1.10% 1.29%
Commercial Real Estate .......................................... (2.51) 6.93 (1.38) 6.82
Commercial and Other ............................................ .18 .14 (.27) .22
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Credit Loss Ratio .73 1.36 .67 1.40
------------------------------------------------------------------------------------------------------------------------------------
Total International Credit Loss Ratio (.18) -- (.16) --
------------------------------------------------------------------------------------------------------------------------------------
Total Credit Loss Ratio .48% .97% .44% 1.00%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Net loan charge-offs for the second quarter of 1995 were $77 million, down $69
million from the second quarter of 1994. Domestic commercial real estate net
loan charge-offs declined $63 million from the second quarter of 1994. Net loan
charge-offs for the first six months of 1995 were $139 million, down $163
million from the first six months of 1994. For further details on the reserve
for possible credit losses and net loan charge-offs, see Analysis of Credit Loss
Experience on page 34.
24
<PAGE> 25
NONACCRUAL, RESTRUCTURED AND PAST DUE OUTSTANDINGS AND DOMESTIC ORE ACQUIRED
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NONACCRUAL AND RESTRUCTURED OUTSTANDINGS AND DOMESTIC ORE
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic Outstandings:
Commercial Real Estate.............................................. $195 $266 $330
Commercial and Industrial........................................... 150 109 173
Other............................................................... 140 135 196
------------------------------------------------------------------------------------------------------------------------------------
Domestic Outstandings 485 510 699
------------------------------------------------------------------------------------------------------------------------------------
Overseas Outstandings:
Refinancing Countries............................................... 48 54 60
Commercial Real Estate.............................................. 5 8 10
Commercial and Industrial........................................... 44 47 38
Other............................................................... 45 41 56
------------------------------------------------------------------------------------------------------------------------------------
Overseas Outstandings 142 150 164
------------------------------------------------------------------------------------------------------------------------------------
Total Nonaccrual and Restructured Outstandings $627* $660 $863
------------------------------------------------------------------------------------------------------------------------------------
Domestic ORE $194 $251 $589
------------------------------------------------------------------------------------------------------------------------------------
As a % of Total Gross Assets:
Nonaccrual and Restructured Outstandings .52% .57% .74%
Nonaccrual and Restructured Outstandings and Domestic ORE .68 .79 1.25
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Considered impaired loans as defined by SFAS 114, with the exception of $132
million, principally consumer loans.
</TABLE>
The substantial decrease in nonaccrual and restructured outstandings at June 30,
1995, as compared with June 30, 1994 was due to repayments, charge-offs and
transfers to accrual status.
Nonaccrual loans that have been restructured but remain in nonaccrual status
amounted to $63 million, $44 million and $52 million at June 30, 1995, December
31, 1994 and June 30, 1994, respectively, and continue to be included in the
preceding table.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
NEGATIVE IMPACT OF NONACCRUAL AND RESTRUCTURED OUTSTANDINGS
------------------------------------------------------------------------------------------------------------------------------------
Second Quarter Six Months
($ in millions) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Revenue That Would Have Been
Recorded Under Original Terms..................................... $18 $18 $29 $34
Interest Revenue Actually Realized................................... 4 2 6 6
------------------------------------------------------------------------------------------------------------------------------------
Negative Impact on Interest Revenue $14 $16 $23 $28
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
ACCRUING LOANS PAST DUE 90 DAYS OR MORE
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic Loans:
Consumer*........................................................... $154 $192 $164
Commercial Real Estate.............................................. 3 8 5
Commercial and Other................................................ 9 19 18
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Loans................................................... 166 219 187
------------------------------------------------------------------------------------------------------------------------------------
Overseas Loans......................................................... 167 181 37
------------------------------------------------------------------------------------------------------------------------------------
Total Accruing Loans Past Due 90 Days or More $333 $400 $224
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Includes loans secured by 1-4 family residential properties.
</TABLE>
Accruing loans that are contractually past due 90 days or more are generally
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 loans secured by 1-4 family residential properties, are generally
charged off according to internally established delinquency schedules, which do
not permit delinquencies to exceed 180 days. Such loans secured by 1-4 family
residential properties 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.
25
<PAGE> 26
Financial Ratios
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended
1995 1994 June 30,
----------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 2nd Qtr. 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings Ratios
Net Income as a Percentage of Average:
Total Assets ...................................... .88% .85% 1.03% .87% 1.15%
Common Stockholders' Equity* ...................... 14.22 13.43 16.11 13.83 18.11
Total Stockholders' Equity ........................ 13.33 12.68 14.80 13.01 16.48
------------------------------------------------------------------------------------------------------------------------------------
Leverage Ratios--Averages
Common Stockholders' Equity as a % of Total Assets.... 5.52% 5.59% 5.70% 5.55% 5.72%
Total Stockholders' Equity as a % of Total Assets..... 6.61 6.72 6.98 6.66 6.96
------------------------------------------------------------------------------------------------------------------------------------
Common Stockholders' Equity Per Common Share ......... $41.09 $40.12 $37.64
------------------------------------------------------------------------------------------------------------------------------------
Capital Ratios at Quarter End**
Common Stockholders' Equity as a % of Total Assets.... 6.04% 5.90% 6.08%
Total Stockholders' Equity as a % of Total Assets..... 7.22 7.06 7.32
Tier I Leverage ...................................... 7.19 7.37 7.47
Tier I Capital as a % of Net Risk-Weighted Assets..... 8.22 8.32 8.71
Total Capital as a % of Net Risk-Weighted Assets ..... 12.99 12.91 13.32
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Based on Net Income, adjusted as applicable.
** Based on Federal Reserve Board definitions. Risk-based capital and
leverage ratios exclude the equity, assets and off-balance sheet
positions of Chase Securities Inc., the Corporation's U.S. underwriting
and dealing subsidiary.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Chase Manhattan Bank, N.A. and Subsidiaries
Capital Ratios at Quarter End*
Tier I Leverage....................................... 7.01% 7.18% 6.93%
Tier I Capital as a % of Net Risk-Weighted Assets..... 8.24 8.20 8.24
Total Capital as a % of Net Risk-Weighted Assets...... 11.62 11.80 12.08
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Based on Office of the Comptroller of the Currency definition.
</TABLE>
Stockholder Data
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended
1995 1994 June 30,
-----------------------------------------------------------------
($ in millions, except per share data) 2nd Qtr. 1st Qtr. 2nd Qtr. 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Quarterly Cash Dividends:
Common Stock:
Per Share .................................................. $ .45 $ .40 $ .33 $ .85 $ .66
Aggregate .................................................. $ 79.8 $ 70.9 $61.0 $150.7 $121.9
Preferred Stock:
Floating Rate Series F ..................................... -- -- 5.4 -- 8.8
10 1/2% Series G ........................................... 3.7 3.7 3.7 7.4 7.4
9.76% Series H ............................................. 2.5 2.5 2.5 5.0 5.0
10.84% Series I ............................................ 5.4 5.4 5.4 10.8 10.8
9.08% Series J ............................................. 3.4 3.4 3.4 6.8 6.8
8-1/2% Series K ............................................ 3.6 3.6 3.6 7.2 7.2
8.32% Series L ............................................. 5.0 5.0 5.0 10.0 10.0
8.40% Series M ............................................. 3.6 3.6 3.6 7.2 7.2
Floating Rate Series N ..................................... 3.6 3.8 2.0 7.4 2.0
------------------------------------------------------------------------------------------------------------------------------------
Total Preferred Stock 30.8 31.0 34.6 61.8 65.2
------------------------------------------------------------------------------------------------------------------------------------
Total Cash Dividends $110.6 $101.9 $95.6 $212.5 $187.1
------------------------------------------------------------------------------------------------------------------------------------
Cash Dividends Paid on Common Stock as a Percentage of Net
Income Applicable to Common Stock 31.9% 30.9% 22.4% 31.4% 20.1%
Total Cash Dividends Paid as a Percentage of Net Income 39.3 39.1 31.0 39.2 27.8
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 27
Consolidated Statement of Condition
The Chase Manhattan Bank, N.A. and Subsidiaries
<TABLE>
<CAPTION>
June 30, December 31, June 30,
($ in millions) 1995 1994 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and Due from Banks ......................................................... $ 4,279 $ 4,518 $ 4,658
Interest-Bearing Deposits Placed with Banks ..................................... 6,752 7,002 6,139
Federal Funds Sold and Securities Purchased Under Resale Agreements ............. 1,665 3,824 3,552
Trading Account Assets .......................................................... 13,434 13,088 18,831
Investment Securities:
Held to Maturity (Market Value of $1,956, $1,739 and $1,094, Respectively) ... 1,953 1,760 1,086
Available for Sale ........................................................... 4,434 4,502 4,775
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities ................................................ 6,387 6,262 5,861
Loans ........................................................................... 54,881 50,607 48,765
Reserve for Possible Credit Losses .............................................. (1,114) (1,092) (1,107)
Customers' Liability on Acceptances ............................................. 960 520 633
Accrued Interest Receivable ..................................................... 902 966 597
Premises and Equipment .......................................................... 1,824 1,759 1,653
Other Assets .................................................................... 7,423 6,525 5,124
------------------------------------------------------------------------------------------------------------------------------------
Total Assets ............................................................. $97,393 $93,979 $94,706
------------------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholder's Equity
Deposits:
Domestic Offices:
Noninterest-Bearing ........................................................ $11,207 $11,648 $11,442
Interest-Bearing ........................................................... 19,441 17,888 19,003
Overseas Offices:
Noninterest-Bearing ........................................................ 3,024 2,320 2,859
Interest-Bearing ........................................................... 32,318 33,645 30,475
------------------------------------------------------------------------------------------------------------------------------------
Total Deposits ........................................................... 65,990 65,501 63,779
Federal Funds Purchased and Securities Sold Under Repurchase Agreements ......... 2,471 2,580 1,456
Other Short-Term Borrowings ..................................................... 1,455 2,308 2,027
Trading Account Liabilities ..................................................... 10,479 8,066 12,831
Acceptances Outstanding ......................................................... 967 525 644
Accrued Interest Payable ........................................................ 569 574 399
Accounts Payable, Accrued Expenses and Other Liabilities ........................ 5,657 4,620 4,276
Intermediate- and Long-Term Debt ................................................ 2,408 2,803 2,544
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 89,996 86,977 87,956
------------------------------------------------------------------------------------------------------------------------------------
Stockholder's Equity:
Capital Stock ( $15 Par Value):
6/30/95 12/31/94 6/30/94
------- -------- -------
Number of Shares:
Authorized 81,744,445 81,744,445 81,744,445
Outstanding 61,425,980 61,038,415 60,874,205..... 921 916 913
Surplus....................................................................... 4,869 4,656 4,615
Net Unrealized Losses on Investment Securities - Available for Sale........... (47) (65) (25)
Undivided Profits ............................................................ 1,654 1,495 1,247
------------------------------------------------------------------------------------------------------------------------------------
Total Stockholder's Equity 7,397 7,002 6,750
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $97,393 $93,979 $94,706
------------------------------------------------------------------------------------------------------------------------------------
<FN>
The accompanying notes on page 8 are an integral part of the financial
statements.
Member Federal Deposit Insurance Corporation
</TABLE>
27
<PAGE> 28
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Second Quarter
---------------------------------------------------------------
1995 1994
---------------------------------------------------------------
Average Average Average Average
($ 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........................ $ 7,601 $ 151 7.97% $ 6,931 $ 127 7.35%
Federal Funds Sold and Securities Purchased Under Resale
Agreements........................................................ 15,340 269 7.02 13,594 490 14.45
Trading Account Assets-Interest-Earning*........................... 7,140 98 5.52 8,255 92 4.47
Investment Securities:
Held to Maturity
Taxable....................................................... 1,679 26 6.19 1,124 35 12.50
Tax-Exempt.................................................... 304 8 10.76 369 11 11.47
------------------------------------------------------------------------------------------------------------------------------------
Total Held to Maturity 1,983 34 6.89 1,493 46 12.24
Available for Sale:
Taxable....................................................... 5,124 85 6.65 5,958 178 11.96
Tax-Exempt.................................................... 60 1 6.22 12 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Available for Sale........................................ 5,184 86 6.65** 5,970 178 11.96**
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities........................................ 7,167 120 6.72 7,463 224 12.02
Loans:
Domestic Offices................................................ 46,866 1,115 9.54 43,456 915 8.45
Overseas Offices................................................ 17,456 361 8.30 17,128 461 10.79
------------------------------------------------------------------------------------------------------------------------------------
Total Loans........................................................ 64,322 1,476 9.20 60,584 1,376 9.11
Reserve for Possible Credit Losses***.............................. (1,407) -- -- (1,445) -- --
Accelerated Disposition Portfolio-Interest-Earning................. -- -- -- 45 2 15.90
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets***, Net 100,163 2,114 8.35 95,427 2,311 9.57
------------------------------------------------------------------------------------------------------------------------------------
Summary--Gross Interest-Earning Assets:
Domestic Offices................................................... 70,954 1,476 8.35 66,073 1,150 6.98
Overseas Offices................................................... 30,616 638 8.35 30,799 1,161 15.12
------------------------------------------------------------------------------------------------------------------------------------
Total Gross Interest-Earning Assets 101,570 $2,114 8.35% 96,872 $2,311 9.57%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-Earning Assets:
Cash and Due from Banks............................................ 5,504 5,847
Trading Account Assets-Noninterest-Earning****.................... 12,665 9,325
Customers' Liability on Acceptances................................ 897 696
Premises and Equipment............................................. 1,939 1,798
Accrued Interest Receivable........................................ 1,068 904
Other Assets....................................................... 5,825 5,007
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-Earning Assets 27,898 23,577
------------------------------------------------------------------------------------------------------------------------------------
Total Assets $128,061 $119,004
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Includes only trading securities.
** Average rate based on average amortized cost.
*** Reserve for Possible Credit Losses excluded from calculations of average
balances and average rates, as appropriate.
**** Includes foreign exchange, interest rate, and commodity derivative
contracts.
Note: Loan and other asset amounts include nonaccrual and restructured loans
and ORE, as applicable.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation beginning in the third quarter of 1994.
</TABLE>
28
<PAGE> 29
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Second Quarter
-------------------------------------------------------------
1995 1994
-------------------------------------------------------------
Average Average Average Average
($ in millions, based on daily averages) Balance Interest Rate Balance Interest Rate
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Domestic Offices:
Savings and Negotiable Order of Withdrawal Deposits............... $ 5,039 $ 30 2.37% $ 5,595 $ 26 1.88%
Money Market Deposits............................................. 9,369 92 3.96 10,918 47 1.73
Negotiable Certificates of Deposit................................ 846 18 8.51 1,358 25 7.48
Other Time Deposits............................................... 5,783 61 4.23 6,732 74 4.35
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Offices 21,037 201 3.84 24,603 172 2.80
Overseas Offices 35,827 463 5.18 31,732 482 6.09
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits........................................ 56,864 664 4.68 56,335 654 4.65
Federal Funds Purchased and Securities Sold Under Repurchase
Agreements............................................................ 19,053 306 6.43 14,317 176 4.93
Other Short-Term Borrowings:
Domestic Offices.................................................... 3,612 120 13.29 3,013 48 6.43
Overseas Offices.................................................... 757 36 19.43 1,282 432 135.22
------------------------------------------------------------------------------------------------------------------------------------
Total Other Short-Term Borrowings...................................... 4,369 156 14.35 4,295 480 44.86
Intermediate- and Long-Term Debt....................................... 5,476 100 7.33 5,360 77 5.73
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities 85,762 1,226 5.73 80,307 1,387 6.93
------------------------------------------------------------------------------------------------------------------------------------
Summary--Interest-Bearing Liabilities:
Domestic Offices....................................................... 57,827 853 5.92 50,628 469 3.71
Overseas Offices....................................................... 27,935 373 5.35 29,679 918 12.42
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices........................................... 12,040 13,271
Deposits in Overseas Offices........................................... 2,586 2,574
Trading Account Liabilities*........................................... 14,026 10,939
Acceptances Outstanding................................................ 903 705
Accounts Payable, Accrued Expenses and Other Liabilities............... 4,280 2,896
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-Bearing Liabilities 33,835 30,385
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 119,597 110,692
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Nonredeemable Preferred Stock.......................................... 1,400 1,532
Common Stockholders' Equity............................................ 7,064 6,780
------------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 8,464 8,312
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $128,061 $119,004
------------------------------------------------------------------------------------------------------------------------------------
Taxable Equivalent Net Interest Revenue and Average Interest Rate Spread $ 888 2.62% $ 924 2.64%
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue as a Percentage of Gross Interest-Earning Assets 3.51% 3.83%
------------------------------------------------------------------------------------------------------------------------------------
<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 beginning in 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>
Six Months Ended
--------------------------------------------------------------
June 30, 1995 June 30, 1994
--------------------------------------------------------------
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........................ $ 7,942 $ 294 7.46% $ 6,571 $ 257 7.89%
Federal Funds Sold and Securities Purchased Under Resale
Agreements........................................................ 15,086 519 6.93 12,199 815 13.48
Trading Account Assets--Interest-Earning*.......................... 8,002 212 5.35 7,689 211 5.52
Investment Securities:
Held to Maturity
Taxable....................................................... 1,705 52 6.23 1,040 69 13.37
Tax-Exempt.................................................... 312 17 10.82 382 22 11.60
------------------------------------------------------------------------------------------------------------------------------------
Total Held to Maturity 2,017 69 6.94 1,422 91 12.90
Available for Sale
Taxable....................................................... 5,172 179 6.96 6,549 343 10.54
Tax-Exempt.................................................... 74 2 6.50 7 -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Available for Sale........................................ 5,246 181 6.95** 6,556 343 10.54**
------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities........................................ 7,263 250 6.95 7,978 434 10.96
Loans:
Domestic Offices................................................ 46,551 2,185 9.47 43,803 1,807 8.32
Overseas Offices................................................ 16,921 702 8.36 17,122 870 10.25
------------------------------------------------------------------------------------------------------------------------------------
Total Loans........................................................ 63,472 2,887 9.17 60,925 2,677 8.86
Reserve for Possible Credit Losses***.............................. (1,405) -- -- (1,443) -- --
Accelerated Disposition Portfolio--Interest-Earning................ -- -- -- 73 5 14.12
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Earning Assets***, Net 100,360 4,162 8.25 93,992 4,399 9.29
------------------------------------------------------------------------------------------------------------------------------------
Summary--Gross Interest-Earning Assets:
Domestic Offices................................................... 70,900 2,911 8.28 64,789 2,225 6.92
Overseas Offices................................................... 30,865 1,251 8.18 30,646 2,174 14.31
------------------------------------------------------------------------------------------------------------------------------------
Total Gross Interest-Earning Assets 101,765 $4,162 8.25% 95,435 $4,399 9.29%
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-Earning Assets:
Cash and Due from Banks............................................ 5,798 6,009
Trading Account Assets--Noninterest-Earning****.................... 10,435 9,362
Customers' Liability on Acceptances................................ 835 701
Premises and Equipment............................................. 1,925 1,794
Accrued Interest Receivable........................................ 1,106 864
Other Assets....................................................... 5,543 5,324
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-Earning Assets 25,642 24,054
------------------------------------------------------------------------------------------------------------------------------------
Total Assets $126,002 $118,046
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Includes only trading securities.
** Average rate based on average amortized cost.
*** Reserve for Possible Credit Losses excluded from calculations of average
balances and average rates, as appropriate.
**** Includes foreign exchange, interest rate, and commodity derivative
contracts.
Note: Loan and other asset amounts include nonaccrual and restructured loans
and ORE, as applicable.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation beginning in the third quarter of 1994.
</TABLE>
30
<PAGE> 31
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------------------------------------
June 30, 1995 June 30, 1994
-------------------------------------------------------------
Average Average Average Average
($ in millions, based on daily averages) Balance Interest Rate Balance Interest Rate
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Domestic Offices:
Savings and Negotiable Order of Withdrawal Deposits............... $ 5,102 $ 59 2.33% $ 5,603 $ 50 1.82%
Money Market Deposits............................................. 9,395 175 3.74 11,215 81 1.45
Negotiable Certificates of Deposit................................ 923 37 8.11 1,439 52 7.27
Other Time Deposits............................................... 5,730 111 3.88 6,980 139 4.03
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Offices 21,150 382 3.63 25,237 322 2.58
Overseas Offices 36,007 932 5.22 30,895 856 5.59
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits........................................ 57,157 1,314 4.63 56,132 1,178 4.23
Federal Funds Purchased and Securities Sold Under Repurchase
Agreements............................................................ 18,976 600 6.37 13,545 300 4.47
Other Short-Term Borrowings:
Domestic Offices.................................................... 3,650 208 11.53 2,922 91 6.28
Overseas Offices.................................................... 778 67 17.35 1,239 795 129.36
------------------------------------------------------------------------------------------------------------------------------------
Total Other Short-Term Borrowings...................................... 4,428 275 12.55 4,161 886 42.93
Intermediate- and Long-Term Debt....................................... 5,338 194 7.33 5,461 153 5.65
------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Liabilities 85,899 2,383 5.59 79,299 2,517 6.40
------------------------------------------------------------------------------------------------------------------------------------
Summary--Interest-Bearing Liabilities:
Domestic Offices....................................................... 57,735 1,631 5.69 50,485 856 3.42
Overseas Offices....................................................... 28,164 752 5.39 28,814 1,661 11.62
------------------------------------------------------------------------------------------------------------------------------------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices........................................... 12,325 13,676
Deposits in Overseas Offices........................................... 2,501 2,526
Trading Account Liabilities*........................................... 11,937 10,431
Acceptances Outstanding................................................ 840 709
Accounts Payable, Accrued Expenses and Other Liabilities............... 4,105 3,191
------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-Bearing Liabilities 31,708 30,533
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 117,607 109,832
------------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Nonredeemable Preferred Stock.......................................... 1,400 1,466
Common Stockholders' Equity............................................ 6,995 6,748
------------------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 8,395 8,214
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $126,002 $118,046
------------------------------------------------------------------------------------------------------------------------------------
Taxable Equivalent Net Interest Revenue and Average Interest Rate
Spread $1,779 2.66% $1,882 2.89%
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue as a Percentage of Gross Interest-Earning Assets 3.53% 3.98%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Includes short sales, and foreign exchange, interest rate, and commodity
derivative contracts.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation beginning in the third quarter of 1994.
</TABLE>
31
<PAGE> 32
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
SECURITIES--HELD TO MATURITY
------------------------------------------------------------------------------------------------------------------------------------
June 30, 1995 December 31, 1994 June 30, 1994
------------------------------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair Amortized Fair
($ in millions) Cost Gains Losses Value* Cost Value* Cost Value*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities ................... $ 113 $-- $-- $ 113 $ 115 $ 115 $ 120 $ 120
Federal Agency Securities** ................ 413 -- 6 407 452 431 511 497
State and Political Subdivision
Securities .............................. 304 6 1 309 335 334 366 376
Other Bonds, Notes and
Debentures:
Securities Issued by OECD
Central Governments
and their Agencies*** ............. 806 6 2 810 724 716 204 202
Securities Issued by Other
Foreign Central
Governments and
their Agencies .................. 7 -- -- 7 10 10 9 9
Privately-Issued Mortgage-
Backed Securities ................... 32 1 -- 33 33 33 32 33
Corporate and Other Debt
Securities .......................... 141 -- -- 141 229 229 230 231
------------------------------------------------------------------------------------------------------------------------------------
Total Other Bonds, Notes
and Debentures .......................... 986 7 2 991 996 988 475 475
------------------------------------------------------------------------------------------------------------------------------------
Federal Reserve Bank and
Other Stock Investments ................. 188 -- -- 188 186 186 179 179
------------------------------------------------------------------------------------------------------------------------------------
Total $2,004 $13 $ 9 $2,008 $2,084 $2,054 $1,651 $1,647
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* The fair values of securities are estimated utilizing independent
pricing services and are based on available market data, which often
reflect transactions of relatively small size and are not necessarily
indicative of the prices at which large amounts of particular issues
could be sold.
** Primarily mortgage-backed federal agency securities.
*** OECD includes all countries that are members of the Organization for
Economic Cooperation and Development, excluding the United States.
Note: Interest and dividends on investment securities at historical cost in
terms of taxable interest income, nontaxable interest income, and
dividends for the second quarter and the first six months of 1995 were:
$23 million, $5 million and $3 million; and $46 million, $11 million and
$6 million, respectively; and for the second quarter and first six
months of 1994, such amounts were: $32 million, $7 million and $3
million; and $64 million, $14 million and $5 million, respectively.
</TABLE>
32
<PAGE> 33
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
SECURITIES--AVAILABLE FOR SALE
------------------------------------------------------------------------------------------------------------------------------------
June 30, 1995 December 31, 1994 June 30, 1994
------------------------------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair Amortized Fair
($ in millions) Cost Gains Losses Value* Cost Value* Cost Value*
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities ........... $2,089 $ 4 $ 28 $2,065 $2,445 $2,418 $2,393 $2,382
Federal Agency Securities** ........ 536 -- 13 523 646 621 668 648
State and Political Subdivision
Securities ...................... 33 -- -- 33 89 88 23 23
Other Bonds, Notes and
Debentures:
Securities Issued by OECD
Central Governments
and their Agencies*** ..... 860 3 24 839 537 522 636 622
Securities Issued by Other
Foreign Central
Governments and
their Agencies .......... 846 2 106 742 811 714 1,105 1,006
Privately-Issued Mortgage-
Backed Securities ........... 75 -- -- 75 77 76 83 82
Corporate and Other Debt
Securities .................. 213 16 4 225 173 188 213 229
------------------------------------------------------------------------------------------------------------------------------------
Total Other Bonds, Notes
and Debentures 1,994 21 134 1,881 1,598 1,500 2,037 1,939
------------------------------------------------------------------------------------------------------------------------------------
Federal Reserve Bank and
Other Stock Investments ......... 481 125 2 604 422 508 348 483
------------------------------------------------------------------------------------------------------------------------------------
Total $5,133 $150 $177 $5,106 $5,200 $5,135 $5,469 $5,475
------------------------------------------------------------------------------------------------------------------------------------
<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 available for sale in
terms of taxable interest income, nontaxable interest income and
dividends for the second quarter and first six months of 1995 were: $82
million, $1 million and $2 million; and $174 million, $2 million and $3
million, respectively; and for the second quarter and first six months
of 1994 were: $177 million, none and $1 million; and $340 million, none
and $3 million, respectively.
</TABLE>
33
<PAGE> 34
Average Loan Balances
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1995 1994 Six Months Ended June 30,
---------------------------------------------------------------------------
($ in millions, based on daily averages) 2nd Quarter 1st Quarter 2nd Quarter 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic Offices:
Wholesale:
Commercial Real Estate ....................... $ 1,917 $ 2,165 $ 2,953 $ 2,043 $ 3,014
Commercial and Industrial..................... 8,877 8,447 8,459 8,661 8,415
Financial Institutions........................ 719 686 1,049 703 1,126
Lease Financings ............................. 825 845 790 834 808
Other Wholesale............................... 1,007 1,015 1,230 1,011 1,455
Consumer:
Secured by 1-4 Family Residential Properties.. 15,436 14,882 13,891 15,160 13,914
Credit Card................................... 7,135 7,607 6,283 7,370 6,265
Lease Financings ............................. 1,249 1,045 707 1,148 682
Auto Loans.................................... 6,716 6,270 4,996 6,494 4,692
Other Consumer................................ 3,176 3,452 3,279 3,313 3,609
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Offices, Gross...................... 47,057 46,414 43,637 46,737 43,980
Less: Unearned Discount and Fee Revenue............ 191 181 181 186 177
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Offices 46,866 46,233 43,456 46,551 43,803
------------------------------------------------------------------------------------------------------------------------------------
Overseas Offices, Gross............................ 17,511 16,433 17,175 16,975 17,167
Less: Unearned Discount and Fee Revenue............ 55 54 47 54 45
------------------------------------------------------------------------------------------------------------------------------------
Total Overseas Offices 17,456 16,379 17,128 16,921 17,122
------------------------------------------------------------------------------------------------------------------------------------
Total Average Loans $64,322 $62,612 $60,584 $63,472 $60,925
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Analysis of Credit Loss Experience
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1995 1994 Six Months Ended June 30,
--------------------------------------------------------------------------
($ in millions) 2nd Quarter 1st Quarter 2nd Quarter 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Reserve for Possible Credit Losses at
Beginning of Period ................................... $1,419 $1,414 $1,429 $1,414 $1,425
Net Loan Charge-Offs:
Domestic Loans:
Commercial Real Estate .............................. (12) (2) 51 (14) 102
Commercial and Industrial ........................... 6 (14) 1 (8) (3)
Financial Institutions .............................. -- -- -- -- 12
Lease Financings .................................... (1) (1) 3 (2) 4
Consumer ............................................ 92 90 91 182 187
Other ............................................... -- (5) -- (5) --
------------------------------------------------------------------------------------------------------------------------------------
Total Domestic Net Loan Charge-Offs 85 68 146 153 302
------------------------------------------------------------------------------------------------------------------------------------
International Loans:
Commercial and Industrial ........................... (2) (7) -- (9) 11
Financial Institutions .............................. -- -- -- -- (1)
Consumer ............................................ 1 1 -- 2 --
Foreign Governments and Official Institutions ....... -- -- -- -- (10)
Other ............................................... (7) -- -- (7) --
------------------------------------------------------------------------------------------------------------------------------------
Total International Net Loan Charge-Offs (8) (6) -- (14) --
------------------------------------------------------------------------------------------------------------------------------------
Total Net Loan Charge-Offs .......................... 77 62 146 139 302
------------------------------------------------------------------------------------------------------------------------------------
Provision for Credit Losses Charged to Expenses .......... 75 65 150 140 310
Foreign Exchange Translation Adjustments ................. (1) 2 2 1 2
------------------------------------------------------------------------------------------------------------------------------------
Reserve For Possible Credit Losses at End of Period $1,416 $1,419 $1,435 $1,416 $1,435
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 35
INTERMEDIATE- AND LONG-TERM DEBT
The Chase Manhattan Corporation and Subsidiaries
Intermediate- and Long-Term Debt consists of obligations having an original
maturity at issuance of more than one year. A summary of Intermediate- and
Long-Term Debt, net of unamortized original issue discount, outstanding at June
30, 1995 and December 31, 1994 and certain applicable terms is presented below.
<TABLE>
<CAPTION>
====================================================================================================================================
Modified Amount Outstanding
Maturity Interest June 30, December 31, Other
($ in millions) Date Rate* 1995 1994 Data**
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Company:
Medium-Term Notes ...................................... 1995--1997 7.59--9.61% $ 266 $ 321
Floating Rate Medium-Term Notes ........................ 1995 6.29 25 58
Notes .................................................. 1996 7.81 250 250 T
Notes .................................................. 1997 7.10 227 227 T
Floating Rate Subordinated Notes ....................... 1997 6.31 175 175 S,T
Subordinated Notes ..................................... 1997 7.50 200 200 S,T
Non-U.S. Currency Borrowings ........................... 1998 5.30 59 52
Floating Rate Notes .................................... 1999 6.70 10 10 R
Subordinated Medium-Term Notes ......................... 1999 7.35--7.89 175 175 S,T
Subordinated Notes (Three Issues) ...................... 1999 6.98--10.00 675 675 S,T
Floating Rate Subordinated Notes ....................... 2000 6.19 250 250 S,R,T
Subordinated Notes ..................................... 2000 7.04 150 -- S,R,T
Subordinated Notes (Two Issues) ........................ 2001 8.32--9.38 350 350 S,T
Subordinated Medium-Term Notes ......................... 2001--2010 5.96--7.30 114 9 S,R,T
Subordinated Notes (Two Issues) ........................ 2002 6.56--6.94 250 -- S,R,T
Subordinated Notes ..................................... 2003 7.42 200 200 S,T
Floating Rate Subordinated Notes (Three Issues) ........ 2003 6.19--6.38 333 333 S,T
Subordinated Notes (Two Issues) ........................ 2004 6.36--6.71 297 297 S,R,T
Subordinated Notes ..................................... 2005 6.38 150 -- S,R,T
Subordinated Notes ..................................... 2005 6.50 198 198 S,T
Subordinated Notes (Two Issues) ........................ 2008 6.63--6.97 298 298 S,T
Subordinated Notes ..................................... 2009 6.91 149 149 S,T
Floating Rate Subordinated Notes ....................... 2009 6.19 274 311 S,R,T
Other Borrowings ....................................... 1995--1996 *** 9 5
------------------------------------------------------------------------------------------------------------------------------------
Total 5,084 4,543
------------------------------------------------------------------------------------------------------------------------------------
Bank:
Floating Rate Subordinated Note ........................ 1996 8.50 -- 400 S,C
Subordinated Note Issued with Equity Contract .......... 1999 9.25 150 150 S,C
Subordinated Note ...................................... 1999 6.25 260 260 S,C
Fixed Rate Subordinated Notes (Three Issues) .......... 2010 9.00 1,100 1,100 S,C
Subordinated Notes (Two Issues) ........................ 2012 9.00 450 450 S,C
Other Borrowings ....................................... 1995--2013 *** 448 443
------------------------------------------------------------------------------------------------------------------------------------
Total 2,408 2,803
------------------------------------------------------------------------------------------------------------------------------------
Other Subsidiaries:
Subordinated Notes (Three Issues) ...................... 1997--1998 5.63--7.25 270 235 S,C
Subordinated Note ...................................... 2012 9.00 250 250 S,C
Other Borrowings ....................................... 1995--2014 *** 36 84
------------------------------------------------------------------------------------------------------------------------------------
Total 556 569
------------------------------------------------------------------------------------------------------------------------------------
Less: Investment by the Company in a Subordinated Note Issued
with Equity Contract of the Bank and other Subordinated
Notes................................................ 2,480 2,845 S,C
------------------------------------------------------------------------------------------------------------------------------------
Total Intermediate-and Long-Term Debt $5,568 $5,070
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* The interest rates shown have been adjusted to reflect the effect of ALM
derivative contracts, primarily interest rate swaps, used to convert a
majority of the Company's fixed rate debt to floating rates. The
interest rates shown for floating rate issues, including the
aforementioned converted issues, are those in effect at June 30, 1995 or
in the case of those issues redeemed in 1995 at the date of redemption.
Such floating interest rates are determined by formulas, subject to
certain minimum rates.
** Issues indicated by:
"S"--Subordinated in right of payment to claims of depositors and certain
other creditors, as applicable.
"C"--Held by the Company.
"R"--Redeemable in whole, or in part, at the option of Chase, prior to
maturity.
"T"--Qualifies as Tier 2 capital under the Risk-based Capital guidelines.
*** Consists of numerous borrowings that bear interest at rates generally
reflecting market conditions in the applicable countries at the time of
issuance or repricing.
</TABLE>
35
<PAGE> 36
Consolidated Statement of Income (Five Quarters)
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1995 1994
------------------------------------------------------------------------------------------------------------------------------------
($ in millions, except per share data) 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest Revenue
Interest and Fees On Loans ................................. $1,474 $1,409 $1,341 $1,252 $1,376
Interest On Deposits Placed With Banks ..................... 151 143 133 108 127
Interest and Dividends on Investment Securities:
Held to Maturity ......................................... 31 32 32 29 42
Available for Sale ....................................... 85 94 92 90 178
Interest On Federal Funds Sold and Securities Purchased
Under Resale Agreements .................................. 269 250 228 233 490
Interest On Trading Account Assets ......................... 98 114 121 89 92
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Revenue 2,108 2,042 1,947 1,801 2,305
------------------------------------------------------------------------------------------------------------------------------------
Interest Expense
Deposits ................................................... 664 650 609 538 654
Federal Funds Purchased and Securities Sold Under
Repurchase Agreements .................................... 306 294 256 203 176
Commercial Paper ........................................... 28 26 23 16 17
Other Short-Term Borrowings ................................ 128 93 72 52 463
Intermediate- and Long-Term Debt ........................... 100 94 83 76 77
------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense 1,226 1,157 1,043 885 1,387
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue .......................................... 882 885 904 916 918
Provision for Possible Credit Losses .......................... 75 65 90 100 150
------------------------------------------------------------------------------------------------------------------------------------
Net Interest Revenue After Provision for Possible Credit
Losses 807 820 814 816 768
------------------------------------------------------------------------------------------------------------------------------------
Other Operating Revenue
Fees and Commissions ....................................... 483 469 492 458 480
Foreign Exchange Trading Revenue ........................... 60 92 67 50 78
Trading Account Revenue (Losses) ........................... 75 (48) (35) 138 73
Investment Securities Gains ................................ 2 24 11 15 1
Other Revenue .............................................. 130 135 137 66 168
------------------------------------------------------------------------------------------------------------------------------------
Total Other Operating Revenue 750 672 672 727 800
------------------------------------------------------------------------------------------------------------------------------------
Other Operating Expenses
Salaries and Employee Benefits:
Salaries ................................................. 453 451 475 464 418
Employee Benefits ........................................ 146 145 281 122 118
------------------------------------------------------------------------------------------------------------------------------------
599 596 756 586 536
Net Occupancy .............................................. 89 93 98 98 98
Equipment Rentals, Depreciation and Maintenance ............ 85 83 85 77 74
Other Expenses ............................................. 331 306 336 306 365
------------------------------------------------------------------------------------------------------------------------------------
Total Other Operating Expenses 1,104 1,078 1,275 1,067 1,073
------------------------------------------------------------------------------------------------------------------------------------
Income Before Taxes ........................................... 453 414 211 476 495
Applicable Income Taxes ....................................... 172 154 (18) 171 188
------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 281 $ 260 $ 229 $ 305 $ 307
------------------------------------------------------------------------------------------------------------------------------------
Net Income Applicable to Common Stock $ 250 $ 229 $ 198 $ 274 $ 272
------------------------------------------------------------------------------------------------------------------------------------
Average Common and Common Equivalent Shares
Outstanding (in millions) 180.7 178.1 179.8 184.4 186.2
------------------------------------------------------------------------------------------------------------------------------------
Primary Earnings Per Common Share $ 1.38 $ 1.29 $ 1.10 $ 1.49 $ 1.46
------------------------------------------------------------------------------------------------------------------------------------
Cash Dividends Declared Per Common Share $ .45 $ .40 $ .40 $ .40 $ .33
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 37
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of stockholders of the registrant was held on
April 18, 1995. Information concerning matters voted upon at the
Annual Meeting is set forth below.
Election of Directors
Management nominees for the Board of Directors each received at
least 140,622,139 votes and were all elected directors of the
Corporation. The following represents a break-down of votes cast
for and withheld with respect to each nominee for office:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Thomas G. Labrecque 140,685,928 1,282,436
Richard J. Boyle 140,683,087 1,285,277
David T. Kearns 140,657,553 1,310,811
Paul W. MacAvoy 140,663,409 1,304,955
Edmund T. Pratt, Jr. 140,628,458 1,339,906
Donald H. Trautlein 140,622,139 1,346,225
Resolutions Approved
</TABLE>
1. Approval of Price Waterhouse as independent auditors for
fiscal year beginning January 1, 1995.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
140,895,590 317,255 755,519
</TABLE>
2. Approval of the Annual Incentive Arrangement.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
123,729,802 16,655,453 1,583,109
</TABLE>
3. Approval of the Three-Year Incentive Arrangement.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
129,636,508 10,689,415 1,642,440
</TABLE>
4. Recommendation that the Board take steps to initiate further
stockholder action to reinstate annual election of directors.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NONVOTES
<S> <C> <C> <C> <C>
57,896,174 53,403,194 1,804,246 28,864,750
</TABLE>
37
<PAGE> 38
Resolutions Defeated
1. Request that the Board take steps to initiate further
stockholder action to provide for cumulative voting in the
election of directors.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NONVOTES
<S> <C> <C> <C> <C>
34,816,193 76,594,591 1,692,831 28,864,749
</TABLE>
2. Request for a report relating to structural adjustment
programs.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NONVOTES
<S> <C> <C> <C> <C>
5,446,710 101,770,475 5,886,429 28,864,750
</TABLE>
3. Recommendation that the retirement plan for non-employee
directors be withdrawn.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NONVOTES
<S> <C> <C> <C> <C>
29,904,046 80,213,632 2,985,937 28,864,749
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3(ii)
Amended By-Laws of The Chase Manhattan Corporation
Exhibit 10M
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
Statement re: Financial Data Schedule for the six months ended
June 30, 1995
38
<PAGE> 39
(b) Report on Form 8-K
The registrant filed the following reports on Form 8-K during the
quarter ended June 30, 1995:
<TABLE>
<CAPTION>
Date of
Report Items Reported
------- --------------
<S> <C>
4/17/95 -- 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 March 31, 1995,
December 31, 1994 and March 31, 1994.
(ii) Consolidated Statement of Income of The Chase
Manhattan Corporation for the quarters ended
March 31, 1995, December 31, 1994 and March 31,
1994.
(iii) Summary of Changes in Stockholders' Equity of
The Chase Manhattan Corporation for the
quarters ended March 31, 1995, December 31,
1994 and March 31, 1994.
(iv) Consolidated Statement of Condition of The
Chase Manhattan Bank, N.A. at March 31, 1995,
December 31, 1994 and March 31, 1994.
4/19/95 -- 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 8% Subordinated Notes Due 2002.
5/2/95 -- 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
entrance into a Euro Distribution Agreement covering
the issue and sale of up to $2,165,775,000 aggregate
principal amount of its Medium-Term Notes, Series B,
due from nine months from date of issue.
5/4/95 -- 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 $150,000,000 aggregate principal
amount of 8% Subordinated Notes Due 2005.
5/17/95 -- The items reported by the Registrant in this Current
Report on Form 8-K were Item 5 (Other Events) and Item
7 (Financial Statements, Pro forma Financial
Information and Exhibits) relating to the Registrant's
adoption of amendments to the By-Laws.
</TABLE>
39
<PAGE> 40
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE CHASE MANHATTAN CORPORATION
(Registrant)
Date: August 14, 1995 By: /s/ LESTER J. STEPHENS, JR.
Lester J. Stephens, Jr.
(Senior Vice President and Controller)
40
<PAGE> 41
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DOCUMENT PAGE
<S> <C> <C>
3(ii) Amended By-Laws of The Chase Manhattan Corporation
(incorporated herein by reference to Exhibit 3(ii) to the
Company's Current Report on Form 8-K dated May 17, 1995)
10M Amended list of Executive Officers who have entered into
termination agreements with the Company 42
11 Statement re: Computation of Earnings Per Common Share for the
quarters and six months ended June 30, 1995 and 1994 43
12 Statement re: Computation of Ratios of Earnings to Fixed Charges for the
six months ended June 30, 1995 and 1994 and for each of the five years in
the period ended December 31, 1994 44
27 Statement re: Financial Data Schedule for the six months ended June 30, 1995 45
</TABLE>
41
<PAGE> 42
EDGAR Graphics Appendix
Pursuant to Regulation S-T Item 304, the following is a description of the
graphic image material identified in the foregoing Management's Discussion and
Analysis of Financial Condition and Results of Operations by the word [Graph]
followed by the number of the graphic or image.
<TABLE>
<CAPTION>
Graphic Number Page Description
<S> <C> <C>
1. 11 Bar graph entitled, "Global
Financial Services - Revenue by
Product ($ in millions)", showing
the following revenue amounts in
separate bars by product for the
second quarter 1995 and 1994
respectively: Transaction &
Information Services - 284 and
286; Trading - 207 and 181; Loan
Portfolio - 158 and 153;
Investment Banking - 166 and 127;
Individual Investment Services -
88 and 85; Product Revenue
Overlap and Other - (45) and
(31). Graph also shows the
following revenue amounts in
separate bars by product for six
months 1995 and 1994
respectively: Transaction &
Information Services - 572 and
578; Trading - 301 and 406; Loan
Portfolio - 315 and 321;
Investment Banking - 310 and 272;
Individual Investment Services -
186 and 183; Product Revenue
Overlap and Other - (83) and (70)
2. 12 Bar graph entitled, "Retail
Businesses - Revenue by Product
($ in millions)", showing the
following revenue amounts in
separate bars by product for the
second quarter 1995 and 1994
receptively: Credit Card - 312 and 343;
Consumer Deposit - 164 and 168;
Business Services - 121 and 117;
Mortgage - 92 and 99; Other
Retail Product - 84 and 138.
Graph also shows the following
revenue amounts in separate bars
by product for six months 1995
and 1994 receptively: Credit Card
- 628 and 694; Consumer Deposit -
325 and 331; Business Services -
244 and 235; Mortgage - 190 and
180; Other Retail Products - 166
and 222.
</TABLE>
<PAGE> 43
<TABLE>
<S> <C> <C>
3. 16 Bar graph entitled "Cumulative
Interest Rate Gaps June 30, 1995
$ in billions" showing the net
assets or net liabilities, in
separate bars titled including
derivatives and excluding
derivatives, respectively, for
the following periods: net
assets of 4.8 and 2.9, for 3rd
Quarter 1995; net assets of 3.3
and net liabilities of 1.2, for
4th Quarter 1995; net assets of
0.2 and net liabilities of 5.9,
for 1996; net liabilities of 1.0
and 9.6, for 1997; net
liabilities of 5.1 and 12.3, for
1998; net liabilities of 8.7 and
14.2, for 1999; net liabilities
of 7.4 and 12.3, for 2000 and
net liabilities of 5.3 and 10.2,
for 2001.
</TABLE>
<PAGE> 1
Exhibit 10M
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, File No. 1-5945.
As of June 30, 1995, the following Executive Officers had entered into the
first form of such termination agreement with the Company:
Thomas G. Labrecque
Richard J. Boyle
As of June 30, 1995, the following Executive Officers had entered into the
second form of such termination agreement with the Company:
Donald L. Boudreau
Richard J. Canty
Deborah L. Duncan
A. Wright Elliott
John J. Farrell
Robert D. Hunter
E. Michel Kruse
Arjun K. Mathrani
L. Edward Shaw, Jr.
Douglas T. Williams
42
<PAGE> 1
Computation of Earnings Per Common Share Exhibit 11
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
---------------------------------------------------------
($ in millions, except per share amounts) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary:
Net Income ....................................................... $281 $307 $541 $671
Less: Preferred Stock Dividend Requirements ..................... 31 35 61 65
------------------------------------------------------------------------------------------------------------------------------
Net Income Applicable to Common Stock $250 $272 $480 $606
------------------------------------------------------------------------------------------------------------------------------
Average Common and Common Equivalent Shares Outstanding .......... 180,689,276 186,186,622 179,504,702 185,569,081
------------------------------------------------------------------------------------------------------------------------------
Primary Earnings Per Common Share ................................ $1.38 $1.46 $2.67 $3.27
------------------------------------------------------------------------------------------------------------------------------
Assuming Full Dilution:
Net Income Applicable to Common Stock $250 $272 $480 $606
------------------------------------------------------------------------------------------------------------------------------
Average Common and Common Equivalent Shares Outstanding .......... 180,689,276 186,186,622 179,504,702 185,569,081
Add: Shares Issuable Upon Exercise of Stock Options, Warrants and
Conversion of Restricted Stock Units .......................... 1,590,296 1,982,315 2,138,251 1,697,665
------------------------------------------------------------------------------------------------------------------------------
Shares of Common and Common Equivalent Stock Outstanding --
As Adjusted 182,279,572 188,168,937 181,642,953 187,266,746
------------------------------------------------------------------------------------------------------------------------------
Earnings Per Common Share Assuming Full Dilution $1.37 $1.45 $2.64 $3.24
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 1
<TABLE>
<CAPTION>
Computation of Ratios of Earnings to Fixed Charges Exhibit 12
The Chase Manhattan Corporation and Subsidiaries
Six Months Ended
June 30, Year Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------
($ in millions) 1995 1994 1994 1993 1992 1991 1990
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net Income (Loss) .......................... $ 541 $ 671 $1,205 $ 966 $ 639 $ 520 $ (334)
Less: Cumulative Effect of Change in
Accounting Principle* ................ -- -- -- 500 -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Before Cumulative Effect
of Change in Accounting Principle ....... 541 671 1,205 466 639 520 (334)
Less: Equity in Undistributed Income (Loss)
of Unconsolidated Subsidiaries and
Associated Companies ................. 7 5 7 36 11 (32) (40)
Income Taxes ............................... 326 412 565 265 186 124 203
Fixed Charges Excluding Interest On
Deposits ................................ 1,106 1,374 2,187 2,670 2,277 1,988 3,190
------------------------------------------------------------------------------------------------------------------------------------
Total Earnings, Excluding Interest On
Deposits, As Adjusted ................... 1,966 2,452 3,950 3,365 3,091 2,664 3,099
Interest On Deposits ....................... 1,314 1,178 2,326 2,014 2,935 4,374 5,273
------------------------------------------------------------------------------------------------------------------------------------
Total Earnings, Including Interest On
Deposits, As Adjusted ................... $3,280 $3,630 $6,276 $5,379 $6,026 $7,038 $8,372
------------------------------------------------------------------------------------------------------------------------------------
Fixed Charges:
Interest Expense and Amortization of Debt
Discount and Issuance Costs,
Excluding Interest On Deposits ....... $1,070 $1,339 $2,119 $2,591 $2,205 $1,920 $3,115
One-Third of Net Rental Expenses ........... 36 35 68 79 72 68 75
------------------------------------------------------------------------------------------------------------------------------------
Total Fixed Charges For Ratio, Excluding
Interest On Deposits .................... 1,106 1,374 2,187 2,670 2,277 1,988 3,190
Interest On Deposits ....................... 1,314 1,178 2,326 2,014 2,935 4,374 5,273
------------------------------------------------------------------------------------------------------------------------------------
Total Fixed Charges For Ratio, Including
Interest On Deposits $2,420 $2,552 $4,513 $4,684 $5,212 $6,362 $8,463
------------------------------------------------------------------------------------------------------------------------------------
Ratio Of Earnings To Fixed Charges:
Excluding Interest On Deposits ............. 1.8x 1.8x 1.8x 1.3x 1.4x 1.3x **
Including Interest On Deposits ............. 1.4x 1.4x 1.4x 1.1x 1.2x 1.1x **
------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Represents the cumulative effect of change in accounting principle
relating to the adoption of SFAS 109 ("Accounting for Income Taxes") in
the first quarter of 1993.
** For the year ended December 31, 1990, earnings did not cover fixed
charges by $91 million 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 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.
44
<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 JUNE 30, 1995; THE CONSOLIDATED STATEMENTS OF INCOME, CHANGES IN
STOCKHOLDERS' EQUITY AND CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND
THE FORM 10-Q OF THE CHASE MANHATTAN CORPORATION FOR THE QUARTER ENDED JUNE 30,
1995. SUCH INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS AND THE FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,309
<INT-BEARING-DEPOSITS> 6,623
<FED-FUNDS-SOLD> 8,722
<TRADING-ASSETS> 16,669
<INVESTMENTS-HELD-FOR-SALE> 5,106
<INVESTMENTS-CARRYING> 2,004
<INVESTMENTS-MARKET> 2,024
<LOANS> 64,239
<ALLOWANCE> 1,416
<TOTAL-ASSETS> 118,756
<DEPOSITS> 68,282
<SHORT-TERM> 16,579<F1>
<LIABILITIES-OTHER> 19,758<F2>
<LONG-TERM> 5,568
<COMMON> 374
0
1,400
<OTHER-SE> 6,795
<TOTAL-LIABILITIES-AND-EQUITY> 118,756
<INTEREST-LOAN> 2,883
<INTEREST-INVEST> 242
<INTEREST-OTHER> 1,025<F3>
<INTEREST-TOTAL> 4,150
<INTEREST-DEPOSIT> 1,314
<INTEREST-EXPENSE> 2,383
<INTEREST-INCOME-NET> 1,767
<LOAN-LOSSES> 140
<SECURITIES-GAINS> 26
<EXPENSE-OTHER> 2,182
<INCOME-PRETAX> 867
<INCOME-PRE-EXTRAORDINARY> 541
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 541
<EPS-PRIMARY> 2.67
<EPS-DILUTED> 2.64
<YIELD-ACTUAL> 3.53
<LOANS-NON> 627
<LOANS-PAST> 333
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,414
<CHARGE-OFFS> 222
<RECOVERIES> 83
<ALLOWANCE-CLOSE> 1,416
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Short term borrowings include the following:
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 12,519
Commercial Paper 1,700
Other Short-Term Borrowings 2,360
Total 16,579
<F2>Other liabilities include the following:
Trading Account Liabilities 11,787
Acceptances Outstandings 967
Accrued Interest Payable 686
Accounts Payable, Accrued Expenses
and Other Liabilities 6,318
Total 19,758
<F3>Other interest income includes the following:
Interest on Deposits Placed with Banks 294
Interest on Federal Funds Sold and
Securities Purchased Under Resale
Agreements 519
Interest on Trading Account Assets 212
Total 1,025
</FN>
</TABLE>
