<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: MARCH 31, 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)
(212) 552-2222
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
----- -----
The number of shares outstanding of the registrant's common stock was
177,549,941 at March 31, 1995.
Exhibit Index Located on Page 40
<PAGE> 2
The Chase Manhattan Corporation
March 31, 1995 Form 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Chase Manhattan Corporation and Subsidiaries:
Consolidated Statement of Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statement of Changes in Stockholders' Equity . . . . . . . . . . . . . . . 6
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comparative Financial Information:
Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Stockholder Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
The Chase Manhattan Bank, N.A. and Subsidiaries Consolidated
Statement of Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Average Balances, Interest and Average Rates - Taxable Equivalent . . . . . . . . . . 29
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Average Loan Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Analysis of Credit Loss Experience . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Consolidated Statement of Income (Five Quarters) . . . . . . . . . . . . . . . . . . . 37
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Item 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
2
<PAGE> 3
PART I. -- FINANCIAL INFORMATION
Item 1. Financial Statements
The Consolidated Statement of Condition of The Chase Manhattan Corporation (the
Company) and its subsidiaries (the Corporation or Chase) at March 31, 1995,
December 31, 1994 and March 31, 1994, the Consolidated Statement of Income for
the quarters ended March 31, 1995 and 1994, the Consolidated Statement of
Changes in Stockholders' Equity for the quarters ended March 31, 1995 and 1994
and the Consolidated Statement of Cash Flows for the quarters ended March 31,
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, The Chase Manhattan Bank
of Connecticut, N.A., 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>
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
---------- ------------ -----------
<S> <C> <C> <C>
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,424 $ 4,713 $ 4,483
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . . 6,521 6,791 5,054
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . . 7,347 7,280 6,556
Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,550 15,109 18,247
Investment Securities:
Held to Maturity (Market Value of $2,046, $2,054 and $1,354, Respectively). . 2,043 2,084 1,345
Available for Sale Carried at Fair Value . . . . . . . . . . . . . . . . . . 5,256 5,135 6,415
-------- -------- --------
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 7,299 7,219 7,760
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,135 63,038 61,635
Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . (1,419) (1,414) (1,429)
Assets Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . -- -- 121
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . . . 889 520 705
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202 1,276 917
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,919 1,895 1,791
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,855 7,611 6,752
-------- -------- --------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,722 $114,038 $112,592
-------- -------- --------
Liabilities and Stockholders' Equity
Deposits:
Domestic Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,541 $ 11,990 $ 11,429
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,934 21,264 24,839
Overseas Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,695 2,320 2,882
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,127 34,382 29,476
-------- -------- --------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,297 69,956 68,626
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . 11,489 9,312 8,345
Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,713 1,766 1,499
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . 2,640 2,884 2,892
Trading Account Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 14,651 9,664 11,263
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893 525 715
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 700 651 441
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . 6,517 5,851 5,148
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . 5,298 5,070 5,509
-------- -------- --------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,198 105,679 104,438
-------- -------- --------
Stockholders' Equity:
Nonredeemable Preferred Stock (Without Par Value, 56,000,000,
56,000,000 and 51,439,738 Shares Outstanding, Respectively) . . . . . . . . 1,400 1,400 1,399
Common Stock ($2.00 Par Value):
3/31/95 12/31/94 3/31/94
------------ ----------- -----------
Number of Shares:
Authorized 500,000,000 500,000,000 500,000,000
Issued 186,049,941 185,674,178 184,797,798 372 371 370
Outstanding 177,549,941 177,174,178 184,797,798
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,958 3,949 3,935
Net Unrealized Gains (Losses) on Investment Securities--Available
for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (38) (35) 10
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,138 2,980 2,440
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,830 8,665 8,154
Less: Treasury Stock at Cost (8,500,000, 8,500,000 and
No Shares, Respectively) . . . . . . . . . . . . . . . . . . . . . . . 306 306 --
------- ------- ------
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . 8,524 8,359 8,154
-------- ------- -------
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . $120,722 $114,038 $112,592
-------- ------- -------
<FN>
The accompanying notes on page 8 are an integral part of the financial statements.
</TABLE>
4
<PAGE> 5
Consolidated Statement of Income
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------
($ in millions, except per common share data) 1995 1994
------ ------
<S> <C> <C>
Interest Revenue
Interest and Fees on Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,409 $1,301
Interest on Deposits Placed with Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 130
Interest and Dividends on Investment Securities:
Held to Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 41
Available for Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 165
Interest on Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . . . . . . 250 326
Interest on Trading Account Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 119
------ ------
Total Interest Revenue 2,042 2,082
------ ------
Interest Expense
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650 525
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . . . . . . . . . . . 294 124
Commercial Paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 13
Other Short-Term Borrowings 93 393
Intermediate- and Long-Term Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 76
------ ------
Total Interest Expense 1,157 1,131
------ ------
Net Interest Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 885 951
Provision for Possible Credit Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 160
------ ------
Net Interest Revenue After Provision for Possible Credit Losses 820 791
------ ------
Other Operating Revenue
Fees and Commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469 446
Foreign Exchange Trading Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 85
Trading Account Revenue (Losses). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48) 94
Investment Securities Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 79
Other Revenue 135 149
------ ------
Total Other Operating Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672 853
------ ------
Other Operating Expenses
Salaries and Employee Benefits:
Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 415
Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 129
------ ------
596 544
Net Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 100
Equipment Rentals, Depreciation and Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . 83 71
Other Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 342
------ ------
Total Other Operating Expenses 1,078 1,057
------ ------
Income Before Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 587
Applicable Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 223
------ ------
Net Income $ 260 $ 364
------ ------
Net Income Applicable to Common Stock $ 229 $ 333
------ ------
Average Common and Common Equivalent Shares Outstanding (in millions) . . . . . . . . . . . . . . . 178.1 185.4
Primary Earnings Per Common Share Based on Average Shares Outstanding . . . . . . . . . . . . . . . $ 1.29 $ 1.80
------ ------
Cash Dividends Declared Per Common Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.40 $ 0.33
------ ------
<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>
Quarter Ended March 31,
-----------------------
1995 1994
($ in millions) ------ ------
<S> <C> <C>
Nonredeemable Preferred Stock
Balance at Beginning of Year (56,000,000 and 51,439,738 Shares, Respectively) . . . . . . . $1,400 $1,399
------ ------
Balance at End of Period (56,000,000 and 51,439,738 Shares, Respectively) 1,400 1,399
------ ------
Common Stock
Balance at Beginning of Year (185,674,178 and 184,290,491 Shares, Respectively) . . . . . . . 371 369
Shares Issued Pursuant to Dividend Reinvestment and Stock Purchase Plan
(100,726 and 214,761 Shares, Respectively) . . . . . . . . . . . . . . . . . . . . . . . . -- --
Shares Issued Pursuant to Stock Option and Incentive Plans (274,920 and 292,229 Shares,
Respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1
Shares Issued Pursuant to Stock Warrants (117 Shares and 317 Shares, Respectively) . . . . . -- --
------ ------
Balance at End of Period (186,049,941 and 184,797,798 Shares, Respectively) 372 370
------ ------
Surplus
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,949 3,922
Shares Issued Pursuant to Dividend Reinvestment and Stock Purchase Plan . . . . . . . . . . 3 7
Shares Issued Pursuant to Stock Option and Incentive Plans . . . . . . . . . . . . . . . . . 6 6
------ ------
Balance at End of Period 3,958 3,935
------ ------
Net Unrealized Gains (Losses) on Investment Securities--Available for Sale
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35) 264
Net Change in Unrealized Losses on Investment Securities--Available for Sale (Net
of Deferred Tax Benefits of $7 and $175, Respectively) . . . . . . . . . . . . . . . . . (3) (254)
------ ------
Balance at End of Period (38) 10
------ ------
Retained Earnings
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,980 2,168
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260 364
Cash Dividends:
Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (31) (31)
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (71) (61)
------ ------
Balance at End of Period (Includes Foreign Exchange Translation Adjustments of $11 and $12,
Respectively) 3,138 2,440
------ ------
Treasury Stock
Balance at Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (306) --
------ ------
Balance at End of Period (8,500,000 Shares and No Shares, Respectively) (306) --
------ ------
Total Stockholders' Equity $8,524 $8,154
------ ------
<FN>
The accompanying notes on page 8 are an integral part of the financial statements.
</TABLE>
6
<PAGE> 7
Consolidated Statement of Cash Flows
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended March 31,
--------------------------
1995 1994
($ in millions) ----- -----
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 260 $ 364
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 160
Depreciation and Amortization of Premises and Equipment . . . . . . . . . . . . . . . . . . 75 67
Accretion and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 30
Other Real Estate Valuation Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 45
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58) 120
Net Gains on Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (159) (220)
Net (Increase) Decrease in Operating Assets:
Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83) (1,239)
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 (46)
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 908 (891)
Net Increase (Decrease) in Operating Liabilities:
Trading Account Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (397) 1,012
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 25
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . . . . . . . . (342) 439
Other--Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 86
------ ------
Net Cash Provided (Used) by Operating Activities 491 (48)
------ ------
Cash Flows from Investing Activities:
Net Decrease in Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . . 457 315
Net (Increase) Decrease in Federal Funds Sold and Securities Purchased Under Resale Agreements. (72) 30
Investment Securities--Held to Maturity:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83) (158)
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . . . . . . . . . . 167 203
Investment Securities--Available for Sale Carried at Fair Value:
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (829) (1,845)
Proceeds from Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421 2,383
Proceeds from Maturities, Calls and Prepayments . . . . . . . . . . . . . . . . . . . . . . 432 451
Loans:
Net Increase in Loans Made to Customers . . . . . . . . . . . . . . . . . . . . . . . . . . (2,942) (5,190)
Payments for Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,024) (679)
Proceeds from Sales and Securitizations . . . . . . . . . . . . . . . . . . . . . . . . . . 2,969 4,662
Proceeds from Sales and Repayments of Assets Held for Accelerated Disposition . . . . . . . . . -- 153
Net Purchases of Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . (98) (76)
------ ------
Net Cash Provided (Used) by Investing Activities (602) 249
------ ------
Cash Flows from Financing Activities:
Net Decrease in Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,119) (3,149)
Net Increase in Federal Funds Purchased and Securities Sold Under Resale Agreements . . . . . . 2,118 455
Net Increase (Decrease) in Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . (53) 34
Net Increase (Decrease) in Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . (253) 1,054
Intermediate- and Long-Term Debt:
Proceeds from Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303 150
Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (91) (273)
Stockholders' Equity:
Cash Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (102) (92)
Proceeds from Issuance of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 14
------ ------
Net Cash Used by Financing Activities (187) (1,807)
------ ------
Effect of Exchange Rate Changes on Cash 9 21
------ ------
Net Decrease in Cash and Due from Banks (289) (1,585)
------ ------
Cash and Due from Banks at Beginning of Year 4,713 6,068
------ ------
Cash and Due from Banks at End of Period $4,424 $4,483
------ ------
Cash Paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,108 $1,106
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 13
Noncash Investing and Financing Activities:
Net Loan Transfers to Other Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16 $ 18
------ ------
<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 April 18, 1995, the Board of
Directors of the Company declared a quarterly dividend of $.45 per common share,
payable on May 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 March 31, 1995, under the more restrictive of these limitations, the
Bank could declare dividends during the remainder of 1995 of approximately $1.2
billion, combined with an additional amount equal to its net income from March
31, 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 $19 million, respectively,
combined with an additional amount equal to their respective retained net
profits from March 31, 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.
Various rules and regulations have been promulgated by the federal banking
agencies pursuant to the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA). These rules and regulations have resulted in increased costs
to the Company, the Bank and their affiliates; however, they have not had a
material effect on Chase's operations. At March 31, 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 FDICIA.
Further rules have been proposed under FDICIA, governing such matters as
accounting and capital requirements. Until the various regulations are adopted
in final form, however, it is difficult to assess how they will impact Chase's
financial condition or operations.
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 off-balance sheet commitments, such as commitments to extend
credit, guarantees, standby letters of credit and derivative contracts. 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. Specifically, 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. 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.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Trading Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Fair Value Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Capital Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Credit Risk Management
Loan Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Consumer Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Wholesale Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Net Loan Charge-offs and Annualized Credit Loss Experience Ratios . . . . . . . . . . . . . . . . . . . . 25
Nonaccrual, Restructured and Past Due Outstandings and Domestic Other Real Estate (ORE) Acquired . . . . . 26
</TABLE>
EARNINGS ANALYSIS
EARNINGS SUMMARY AND SELECTED FINANCIAL RATIOS
<TABLE>
<CAPTION>
First Quarter
--------------------------
($ in millions, except per share data) 1995 1994
------ ------
<S> <C> <C>
Net Interest Revenue . . . . . . . . . . . . . . . . . . . . . . . . $ 885 $ 951
Provision for Possible Credit Losses . . . . . . . . . . . . . . . . 65 160
Other Operating Revenue:
Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . 469 446
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . 203 407
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . 1,078 1,057
------ ------
Income Before Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 414 587
Applicable Income Taxes . . . . . . . . . . . . . . . . . . . . . . 154 223
------ ------
Net Income $ 260 $ 364
------ ------
Selected Financial Ratios
Net Income Per Common Share . . . . . . . . . . . . . . . . . . . $ 1.29 $ 1.80
Return on Average Common Stockholders' Equity . . . . . . . . . . 13.4% 20.2%
Return on Average Total Assets . . . . . . . . . . . . . . . . . . .85% 1.26%
Book Value (Period End)
Common Stockholders' Equity per Common Share . . . . . . . . . . . $40.12 $36.55
------ ------
</TABLE>
9
<PAGE> 10
OVERVIEW
The Corporation reported first quarter 1995 net income of $260 million ($1.29
per share), down from $364 million ($1.80 per share) for the first quarter of
1994, but up from $229 million ($1.10 per share) for the fourth quarter of 1994.
First quarter 1995 results included:
- Investment banking fees increased 40% over the first quarter
1994 to $66 million and equity gains of $74 million, while less
than those of the first quarter of 1994, exceeded the average
quarterly pace of 1994.
- Credit card outstandings and market share performance improved
during the quarter.
- Foreign exchange and derivative products trading revenue of $136
million, primarily customer-driven, was more than double the
level of the fourth quarter of 1994 and level with first quarter
1994 earnings. Significant losses were experienced in emerging
markets trading due to continuing volatility following the
Mexican peso devaluation.
- Asset quality continued to improve and the credit loss provision,
which fully covered net charge-offs, declined to $65 million,
from $160 million in the first quarter of 1994.
- Operating expenses declined from the fourth quarter of 1994. After
adjusting for a voluntary retirement program and other
streamlining costs, the decline was 4%. Virtually all businesses
contributed to this improvement.
- Headcount was reduced by 1,640 from year-end 1994, distributed
across all businesses.
BUSINESS OPERATIONS
As discussed on pages 27 to 31 of the 1994 Annual Report, Chase is a global
financial services company with a strong and diversified domestic base. Chase
serves customers through two core franchises: global financial services and U.S.
retail financial services. Global Financial Services serves the financial needs
of wholesale issuer and investor clients through integrated delivery of global
products and services. Retail businesses provide individuals nationwide with
consumer credit products and other financial services. In New York, New Jersey
and Connecticut, Chase also serves the broad banking requirements of individuals
and small-to-medium-sized businesses. In addition to these core business groups,
Real Estate Finance manages Chase's domestic commercial real estate loan
portfolio and LDC Portfolio Management oversees Chase's remaining portfolio of
previously refinanced LDC assets.
A summary of financial results of business operations follows. Additional
information on each of the core businesses is provided on the following pages.
<TABLE>
<CAPTION>
Return on
Net Income Allocated Equity
------------------ -------------------
First Quarter First Quarter
------------------ -------------------
($ in millions) 1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Global Financial Services . . . . . . . $116 $223 11.7% 25.2
Retail Businesses . . . . . . . . . . . 113 140 16.3 23.5
Real Estate Finance . . . . . . . . . . 17 (22) N/M N/M
LDC Portfolio Management . . . . . . . 22 37 N/M N/M
Unallocated Corporate Items . . . . . . (8) (14) N/M N/M
------ ------ ----- -----
Total $260 $364 13.4% 20.2%
------ ------ ----- -----
<FN>
N/M - Not meaningful
</TABLE>
For the first quarter of 1995, Global Financial Services (GFS) reported net
income of $116 million, down 48% from $223 million for first quarter 1994. This
change was largely due to the sharp drop in trading revenue from the comparable
1994 period, primarily due to a $141 million decline in securities trading and
underwriting revenue, most of which related to emerging markets trading
activities.
For the first quarter of 1995, net income for the Retail businesses was
$113 million, compared with $140 million for first quarter 1994. The decline in
net income from the same period last year was largely due to competitive
pressures in the credit card business and the industry-wide decline in mortgage
originations. Net income was favorably impacted by improved fee revenue,
improved asset quality and expense efficiency programs implemented in the last
quarter of 1994.
GLOBAL FINANCIAL SERVICES
<TABLE>
<CAPTION>
First Quarter
---------------------
($ in millions) 1995 1994
------ ------
<S> <C> <C>
Total Revenue . . . . . . . . . . . . $ 740 $ 890
Allocated Credit Loss Provision . . . (18) 21
Total Expenses . . . . . . . . . . . 573 511
Net Income . . . . . . . . . . . . . 116 223
------ ------
Return on Average Assets . . . . . . .59% 1.23%
Return on Allocated Equity . . . . . 11.7% 25.2%
------ ------
</TABLE>
Total revenue for GFS of $740 million was down $150 million, or 17%, from the
comparable 1994 period. This was largely due to the decline in revenue from
emerging markets trading activities. Management's actions to reduce certain
exposures contributed to emerging markets trading losses in the current quarter,
but reduced future exposure to those markets.
10
<PAGE> 11
Asset quality within GFS businesses continued to improve; the first quarter
1995 results reflect a negative allocated credit loss provision of $18 million
resulting from net recoveries, versus an allocated credit loss provision of $21
million in the comparable prior period.
GFS total expenses of $573 million were up $62 million or 12%, from first
quarter 1994 levels, reflecting business investments made throughout last year,
notably in the transaction and information services businesses and in Global
Markets. Productivity initiatives announced at year-end began to benefit results
in the first quarter of 1995, with net reductions in headcount from year-end
1994.
GLOBAL FINANCIAL SERVICES--REVENUE BY PRODUCT
In the transaction and information services businesses, payments and trade
volumes and revenue were up over 1994 levels, however, custody fee revenue
declined. The decline in custody fees was largely a function of lower emerging
markets securities values and clients shifting assets from emerging markets into
developed markets. This trend also affected revenue from individual investment
service products, with fees linked to lower fixed income market values as
compared with the first quarter 1994.
As previously noted, trading revenue for the first quarter of 1995 was
down significantly from the comparable 1994 period, due to the decline in
revenue from emerging markets trading activities. Partially offsetting this
decline was strong revenue from foreign exchange trading, up 8% and from
customer-driven derivative products, with revenue level with the comparable
1994 period.
Investment banking product revenue included an increase in investment
banking fees of 40% to $66 million, as loan syndication volume and global
dealflow continued to strengthen and reflect the benefits of the GFS integrated
business strategy. Equity gains of $74 million, while down from last year's
first quarter high, continued 1994's strong quarterly average.
The loan product posted a decline in revenue from the first quarter of
1994, largely due to the $1 billion decline in average wholesale loans
outstanding between the two periods. The decline in loans outstanding is
consistent with overall portfolio management objectives.
[GRAPH 1]
11
<PAGE> 12
RETAIL BUSINESSES
<TABLE>
<CAPTION>
First Quarter
--------------------
($ in millions) 1995 1994
------ ------
<S> <C> <C>
Total Revenue . . . . . . . . . . . . . $774 $797
Allocated Credit Loss Provision . . . . 96 98
Total Expenses . . . . . . . . . . . . 491 464
Net Income . . . . . . . . . . . . . . 113 140
----- -----
Return on Average Assets . . . . . . . 1.10% 1.51%
Return on Allocated Equity . . . . . . 16.3% 23.5%
----- -----
</TABLE>
Total revenue for the first quarter of 1995 for the Retail businesses was $774
million, $23 million lower than the first quarter of 1994, largely due to
declines in credit card revenue, as described below.
For the first quarter of 1995, total expenses for the Retail businesses
were $491 million or 6% higher than the same period last year. This was
primarily due to the acquisition of American Residential Holding Corporation
(AmRes) in September 1994. These incremental expenses have been reduced through
the rapid integration of AmRes into the mortgage network, as well as overall
rightsizing of the origination network in response to reduced market size. The
Retail businesses showed considerable improvement from continued productivity
initiatives, with headcount down 1,260, or 7%, from December 31, 1994.
RETAIL BUSINESSES --REVENUE BY PRODUCT
The credit card product produced revenue of $316 million in the first
quarter 1995, down $35 million from the comparable 1994 period. Although
competitive repricing of credit cards reduced net interest revenue, Chase's
market share increased during the first quarter of 1995. Aggressive, targeted
marketing and consolidation campaigns, beginning in the latter half of 1994,
increased average credit card outstandings by approximately $600 million over
fourth quarter 1994 levels.
Regional banking continued to contribute solid revenue from stable consumer
deposit products. Business services revenue, including services provided to
middle market and small business customers, rose 8% from the comparable 1994
level.
Revenue from mortgage banking increased $17 million, or 21%, over the first
quarter 1994. Revenue was adversely affected by the decline in mortgage
originations in the first quarter of 1995 reflecting the overall mortgage
industry environment. However, the impact of this trend was more than offset
during the first quarter of 1995 by increased revenue from mortgage servicing,
including higher fees and gains from the sales of mortgage servicing rights of
$36 million.
[GRAPH 2]
12
<PAGE> 13
NET INTEREST REVENUE -- TAXABLE EQUIVALENT BASIS
For the first quarter of 1995, net interest revenue, on a taxable equivalent
basis, was $891 million, compared with $958 million for the first quarter of
1994. The net interest margin was 3.54%, compared with 4.13% for the first
quarter of 1994. Average interest-earning assets were $102.0 billion, compared
with $94.0 billion for first quarter 1994. Average loans were $62.6 billion,
compared with $61.3 billion for the first quarter of 1994. The growth in average
loans from the first quarter of 1994 was virtually all within the Retail
businesses. Wholesale loans decreased, compared with the first quarter of 1994.
Net interest revenue and margin continue to be impacted by the changing
mix of interest-earning assets, higher U.S. interest rates and by competitive
pressure on loan spreads. With respect to its credit card business, Chase's
strategy to rebuild its market share through more competitive repricing of
selected market segments resulted in average credit card balances increasing by
approximately $600 million over fourth quarter 1994. However, such repricing
also had a negative impact on net interest revenue and margin. Net interest
revenue from mortgages also declined during the quarter.
NET INTEREST REVENUE AND INTEREST RATE SPREADS--TAXABLE EQUIVALENT BASIS*
<TABLE>
<CAPTION>
First Quarter
--------------------------------------------------------
1995 1994
--------------------------------------------------------
($ in millions) Amount Rate Amount Rate***
------------------- ---------------------
<S> <C> <C> <C> <C>
Interest Earned . . . . . . . . . . . . . . . . . . $2,048 8.15% $2,089 9.01%
Interest Paid . . . . . . . . . . . . . . . . . . . 1,157 5.45 1,131 5.86
------ ---- ------ ----
Net Interest Revenue $891 2.70% $958 3.15%
- --as a % of Average Gross Interest-Earning Assets ** ---- ----
3.54% 4.13%
---- ----
<FN>
* Net interest revenue is the amount by which interest revenue from
interest-earning assets exceeds the interest expense applicable to
interest-bearing liabilities. Taxable equivalency adjusts interest revenue
which is fully or partially exempt from income taxes to an amount
equivalent to an amount of interest revenue which would be fully taxable.
Net interest revenue, on a taxable equivalent basis, as a percentage of
average gross interest-earning assets, yields a ratio described as the net
interest margin. Net interest revenue, on a taxable equivalent basis, was
higher by $6 million and $7 million for the first quarter 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 29 and 31 for components of Average Gross Interest-Earning
Assets.
*** Reflects the extraordinary high level of local interest rates that
prevailed in certain Latin American countries with highly inflationary
economies.
</TABLE>
PROVISION FOR POSSIBLE CREDIT LOSSES
The provision for possible credit losses was $65 million, $95 million lower than
the first quarter of 1994. See Credit Risk Management section starting on page
22 for a discussion of the Reserve for Possible Credit Losses and asset quality.
OTHER OPERATING REVENUE
<TABLE>
<CAPTION>
First Quarter
--------------
($ in millions) 1995 1994
---- ----
<S> <C> <C>
Fees and Commissions:
Consumer Banking . . . . . . . . . . . . . . . . . . . $158 $144
Trust and Fiduciary . . . . . . . . . . . . . . . . . 132 142
Investment Banking . . . . . . . . . . . . . . . . . . 66 47
Other . . . . . . . . . . . . . . . . . . . . . . . . 113 113
---- ----
Total Fees and Commissions 469 446
---- ----
All Other Operating Revenue:
Foreign Exchange Trading . . . . . . . . . . . . . . . 92 85
Trading Account Gains (Losses) . . . . . . . . . . . . (48) 94
Investment Securities Gains . . . . . . . . . . . . . 24 79
Equity Gains . . . . . . . . . . . . . . . . . . . . . 74 84
Accelerated Disposition Portfolio Gains . . . . . . . -- 53
Other . . . . . . . . . . . . . . . . . . . . . . . . 61 12
---- ----
Total Other Operating Revenue $672 $853
---- ----
</TABLE>
13
<PAGE> 14
Total other operating revenue for the first quarter of 1995 was $672 million, or
21% lower than the same period of 1994, primarily due to lower levels of trading
revenue and investment securities gains, and the absence of gains from the
accelerated disposition of real estate.
Fees and commissions were $469 million, up 5% from the first quarter of
1994, reflecting significant investment banking fees as well as increased
consumer banking fees from mortgage servicing activities. Investment banking
fees increased from $47 million to $66 million, as loan syndication volume and
global dealflow continued to strengthen, reflecting the benefits of the GFS
integrated business strategy.
Trust and fiduciary fees of $132 million were down from the first quarter
of 1994 due to reduced custody and private banking fees. The decline in custody
fees resulted principally from clients shifting assets from emerging markets
into developed markets and lower emerging markets securities values. Private
banking fees were impacted by lower fixed income market values, compared with
first quarter 1994.
Total trading revenue was $44 million for first quarter 1995, compared with
$179 million for the first quarter of 1994. For a detailed discussion, refer to
the Trading Activities Section on page 19.
For the first quarter of 1995, total other revenue was $159 million, down
from $228 million for the same period last year, which included gains of $53
million from liquidation of real estate assets held for accelerated disposition.
Equity gains of $74 million for the first quarter of 1995, while down from last
year's first quarter high, continued 1994's strong quarterly average.
The investment securities gains for both periods resulted principally from
Chase's program of reducing its cross-border Brady exposures in its available
for sale investment portfolio. Chase has no such exposure in its held to
maturity investment portfolio.
Included in other revenue were gains from the sale of mortgage servicing
rights of $36 million for first quarter 1995.
OTHER OPERATING EXPENSES
<TABLE>
<CAPTION>
First Quarter
--------------------
($ in millions) 1995 1994
------ -------
<S> <C> <C>
Salaries and Employee Benefits . . . . . . . . . . . . . . . . $ 596 $ 544
Net Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . 93 100
Equipment Rentals, Depreciation and Maintenance . . . . . . . . 83 71
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306 342
------ ------
Total Other Operating Expenses $1,078 $1,057
------ ------
</TABLE>
Total operating expenses were $1,078 million for the first quarter of 1995, up
from $1,057 million for the same period of last year. Compared with the first
quarter of 1994, operating expenses increased 2% due to the third quarter 1994
acquisition of AmRes as well as investments made in key strategic businesses.
Investments and capital expenditures Chase made throughout last year provide a
foundation for continued growth in Chase's transaction and information services
businesses and strengthen our trading capabilities.
On a comparable basis, excluding the voluntary retirement program and other
productivity initiatives, operating expenses were 4% lower than the fourth
quarter of 1994. This decline reflected cost savings realized from these
productivity initiatives, including the integration of recent acquisitions into
the mortgage banking network. Headcount was also reduced by 4% from 36,690 at
year-end 1994 to 35,050 at March 31, 1995, including the employees who elected
early retirement. In addition, Chase has announced several productivity
initiatives over the past few months which are intended to, among other things,
reduce operating expenses. These initiatives include the previously discussed
voluntary retirement program effected in the fourth quarter of 1994, and the
decision to restructure Chase's futures brokerage services by significantly
reducing its execution and clearing of exchange traded futures. In May 1995,
Chase announced that it had retained the firm Tandon Capital Associates to
assist Chase in improving its productivity on an expedited basis. Management
expects that its productivity initiatives will result in a reduction of Chase's
base expenses in excess of $400 million in 1996.
PROVISION FOR INCOME TAXES
For the first quarter of 1995, the provision for income taxes was $154 million,
compared with $223 million for the same period last year. The effective tax
rates were 37% and 38% for the first quarters of 1995 and 1994, respectively.
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 March 31, 1995, net unrealized gains in the investment
securities held to maturity portfolio were $3 million, compared with net
unrealized gains (losses) of $(30) million and $9 million at December 31, 1994
and March 31, 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 $38 million at March 31,
1995 compared with $35 million at December 31, 1994 and a net unrealized gain of
$10 million at March 31, 1994.
For further information on the investment securities portfolios, see pages
33 and 34.
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 assets,
including cash and due from banks, interest-bearing deposits placed with banks,
federal funds sold and securities purchased under resale agreements, trading
account assets and investment securities available for sale. At March 31, 1995,
these assets totaled $44.1 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 first quarter of 1995, Chase securitized 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.
INTEREST RATE 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 quarter of 1995, the quarterly exposures
over the tactical (18-month) time horizon averaged 2.0% 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 March 31, 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.
15
<PAGE> 16
The following chart provides a quantification of Chase's interest rate
sensitivity gap as of March 31, 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 April 1 and maturing on May 29 would have
a gap impact of $65 million ($100 million x 59 days/91 days) in the 1 to 3 month
repricing time frame.
(2) Variable rate balances are reported based on their repricing dates. Fixed
rate balances are reported based on their scheduled contractual maturity dates,
except for certain investment securities and loans secured by 1-4 family
residential properties that are based on anticipated prepayments. Given the
indeterminate date of any sales, investment securities that may be sold prior to
maturity are similarly reported, depending on their variable or fixed rate
terms.
(3) Prime-priced loans are considered as 1 to 3 month assets, fixed-rate credit
card receivables are reported based on a declining schedule over a five-year
period, while stockholders' equity is assigned a 5-year maturity.
(4) Trading Account Assets are considered overnight assets.
(5) Core demand deposits, noninterest-bearing time deposits, savings accounts
and money market accounts are classified as 7-year maturities. The balance, or
noncore portions of these deposits, are tranched from overnight to 1-year
maturities. The interest rate sensitivity assumptions presented for these
deposits are based on historical and current experiences regarding product
portfolio retention and interest rate repricing behavior.
At March 31, 1995, Chase had approximately $39 billion and $17 billion,
respectively, of notional swap principal and other ALM contracts outstanding
related to such interest rate risk management activities, compared with $50
billion and $17 billion, respectively, at December 31, 1994. The following table
summarizes certain of Chase's assets and liabilities at March 31, 1995, the
corresponding interest revenue earned on such assets or interest expense
incurred on such liabilities for the three months ended March 31, 1995, as well
as the notional or contract amounts of related linked derivative contracts used
for ALM purposes. Also disclosed is the favorable or unfavorable percentage
impact these derivative contracts had on the related interest amounts reflected
in Chase's Consolidated Statement of Income. As shown, Chase's use of derivative
contracts reduced interest expense on deposits and intermediate- and long-term
debt and interest revenue on placings, and increased interest revenue on
investment securities by the percentages indicated.
16
<PAGE> 17
DERIVATIVE CONTRACTS AND RELATED LINKED BALANCE SHEET POSITIONS AND
INTEREST REVENUE (EXPENSE)
<TABLE>
<CAPTION>
Three Months Ended
Contract/ March 31, 1995
Notional Amount Income Statement
------------------------- --------------------------
Published Published Favorable
Balance Interest Other Interest (Unfavorable)
Sheet Rate ALM Revenue Percentage
($ in millions) Amount Swaps Contracts* (Expense) Impact**
---------- --------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
March 31, 1995
Interest-Bearing Deposits Placed with Banks. . . S 6,521 $ 100 $ 300 $ 143 (1)%
Investment Securities . . . . . . . . . . . . . 7,299 1,000 3,200 126 4
Loans . . . . . . . . . . . . . . . . . . . . . 64,135 4,000 1,200 1,409 --
Deposits . . . . . . . . . . . . . . . . . . . . 68,297 30,200 11,800 (650) 4
Intermediate- and Long-Term Debt . . . . . . . . 5,298 3,400 600 (94) 6
-------- --------
$38,700 $17,100
-------- --------
<FN>
* Includes currency exchange agreements, forward, futures and purchased
option and option-related contracts.
** Represents the favorable (unfavorable) percentage impact of ALM derivative
contracts on the related interest revenue or interest expense amount prior
to the impact of derivative contracts.
</TABLE>
The following table summarizes the outstanding ALM contract/notional amounts of
interest rate swaps and other ALM contracts at March 31, 1995, by yearly
intervals. The decrease in notional amounts from one period to the next period
represents maturities of the underlying contracts. The weighted average interest
rates to be received and paid on such swaps are presented for each yearly
interval. The variable rates, which are generally based on London Interbank
Offered Rate (LIBOR), are presented using the forward yield curve at March 31,
1995. However, actual repricings are generally based on the 3 - month or 6 -
month LIBOR rates in effect at the actual repricing dates, not the forward yield
curve. To the extent that the current 3 - month and 6 - month LIBOR rates
change, the variable rates of interest received or paid will change. Future
interest rate changes are not known, but could materially impact the variable
rates presented below. However, Chase expects the impact of these changes to be
mitigated by corresponding changes in the interest rates and values associated
with the linked assets and liabilities. In addition, net interest revenue will
be affected by the amortization of net deferred gains/(losses) on closed
derivative contracts and premiums paid on open ALM option contracts purchased,
as reflected in the tables on page 18.
OUTSTANDING ALM CONTRACT/NOTIONAL AMOUNTS BY YEARLY INTERVALS
<TABLE>
<CAPTION>
For The Twelve Months Beginning April 1,
-----------------------------------------------------------------------------------
($ in millions) 1995 1996 1997 1998 1999 Thereafter
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receive Fixed Swaps:
Contract/Notional Amount . . . $26,400 $14,400 $12,400 $8,000 $4,900 $3,600
Weighted Average:
Receive Rate . . . . . . . . 6.61% 6.74% 6.90% 7.23% 7.41% 7.10%
Pay Rate . . . . . . . . . . 6.72 7.29 7.46 7.57 7.71 7.97
Pay Fixed Swaps:
Contract/Notional Amount . . . . $12,300 $ 5,300 $ 2,500 $1,800 $1,700 $1,300
Weighted Average:
Receive Rate . . . . . . . . 6.74% 7.29% 7.45% 7.57% 7.71% 7.92%
Pay Rate . . . . . . . . . . 6.38 7.99 7.84 7.79 7.75 7.97
Other ALM Contracts . . . . . . $17,100 $ 8,000 $ 6,700 $6,500 $5,800 $4,300
------- ------- ------- ------ ------ ------
</TABLE>
17
<PAGE> 18
As discussed on page 36 of the 1994 Annual Report, Chase uses derivative
contracts as part of its ALM activities to manage the earnings risk arising from
timing differences in repricing characteristics principally arising from its
customer-related assets and liabilities. Consistent with Chase's overall ALM
objectives to reduce its longer-term exposure to a decline in interest rates,
certain fixed-rate liabilities are hedged using derivative contracts.
Significant changes in value to Chase's ALM derivative contracts and related
linked balance sheet positions for the first three months of 1995 are presented
below.
CHANGE IN VALUE OF CERTAIN ALM DERIVATIVE CONTRACTS AND
LINKED BALANCE SHEET POSITIONS
<TABLE>
<CAPTION>
For Three Months Ended March 31, 1995
--------------------------------------------------------
Change in Value of Linked Change in Value of
($ in millions) Balance Sheet Positions Related ALM Derivatives
------------------------- -----------------------
<S> <C> <C>
Balance Sheet Assets/Liabilities:
Deposits* . . . . . . . . . . . . . . . . . . . . . $(374) $200
Company's Intermediate- and Long-Term Debt . . . . . (124) 97
<FN>
* Core deposits are valued by a model that forecasts future core deposit
costs versus alternative source of funds using simulation techniques. Key
assumptions include alternative cost of funds of 3 - month LIBOR, core
deposit operating costs, reserve requirement of 10%, inflation of 3% per
annum, and an interest elasticity of demand for balances of (0.4). This
valuation is performed on a "going concern" basis, which assumes new
business replaces any runoff.
</TABLE>
The change in value of Chase's ALM derivative contracts from December 31, 1994
to March 31, 1995 was as follows:
CHANGE IN VALUE OF ALM DERIVATIVE CONTRACTS
<TABLE>
<CAPTION>
March 31, December 31, Change in
($ in millions) 1995 1994 Value
--------- ------------ ---------
<S> <C> <C> <C>
ALM Derivative Contracts:
Net Deferred Gains (Losses). . . . . . . . . $ (73) $ (97) $ 24
Net Unrealized Gains (Losses). . . . . . . . (338) (597) 259
------ ------ ----
Net ALM Derivative Contract Gains (Losses) $(411) $(694) $283
------ ------ ----
</TABLE>
The net deferred losses at March 31, 1995 are expected to be amortized over the
periods reflected in the following table. The amortization of deferred gains and
losses are recognized as yield adjustments to the interest revenue or expense
associated with the linked assets or liabilities.
AMORTIZATION OF NET DEFERRED GAINS (LOSSES) RELATED TO
CLOSED ALM DERIVATIVE CONTRACTS
<TABLE>
<CAPTION>
($ in millions) 1995 1996 1997 1998 1999 2000 Thereafter Total
---- ---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Gains (Losses)
Amortization $45 $27 $(14) $(48) $(55) $(63) $35 $(73)
</TABLE>
In addition, Chase's Consolidated Statement of Condition included unamortized
premiums on open ALM option contracts purchased amounting to $134 million and
$140 million at March 31, 1995 and December 31, 1994, respectively. The premiums
at March 31, 1995 will be amortized over the periods indicated in the following
table.
AMORTIZATION OF PREMIUMS ON OPEN ALM OPTION CONTRACTS PURCHASED
<TABLE>
<CAPTION>
($ in millions) 1995 1996 1997 1998 1999 2000 Thereafter Total
---- ---- ---- ---- ---- ---- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premium Amortization $14 $18 $17 $17 $14 $13 $41 $134
</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 March 31, 1995 and December
31, 1994, outstanding interest rate contracts related to mortgage servicing
assets were approximately $6 billion and mortgage loan sales were approximately
$1 billion. In addition, approximately $1 billion of foreign currency forward
contracts, primarily related to Chase's net investments in overseas entities,
were outstanding at March 31, 1995 and December 31, 1994. The effect of these
activities are not material to Chase's consolidated financial position or
results of operations.
18
<PAGE> 19
TRADING ACTIVITIES
As discussed on pages 38 to 42 of the 1994 Annual Report, Chase conducts its
trading activities in the Global Markets business sector, functioning as an
intermediary between customers (both issuers and investors) and the global
foreign exchange and capital markets. Global Markets designs, trades and markets
a broad range of derivative risk management products.
The net market risk exposures created as a result of providing these
services to customers are managed on a consolidated basis by Global Markets as
part of Chase's trading activities. As a secondary business objective, Global
Markets may create proprietary positions to take advantage of market
opportunities that are not directly associated with customer activities.
Combined trading and trading-related revenue (including revenue classified
as net interest revenue for financial statement purposes) for Global Markets are
set forth below:
COMBINED TRADING AND TRADING-RELATED REVENUE*
<TABLE>
<CAPTION>
Quarter Ended March 31,
-----------------------
($ in millions) 1995 1994
------ --------
<S> <C> <C>
Income Statement Classification:
Foreign Exchange Trading Revenue . . . . . . . . . . . . . . $ 92 $ 85
Trading Account Revenue . . . . . . . . . . . . . . . . . . (48) 94
Net Interest Revenue** . . . . . . . . . . . . . . . . . . . 50 45
----- -----
Total $ 94 $224
----- -----
Business Diversification:
Foreign Exchange*** . . . . . . . . . . . . . . . . . . . . $ 90 $ 90
Interest Rate and Commodity Derivatives**** . . . . . . . . 55 55
Securities Trading and Underwriting***** . . . . . . . . . . (51) 79
----- -----
Total $ 94 $224
----- -----
<FN>
* Prior period amounts have been reclassified to conform with current
presentation.
** 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.
*** 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.
</TABLE>
Combined trading and trading-related revenue was $94 million for first quarter
1995, down substantially from the comparable 1994 period, primarily due to a
$141 million decline in trading account revenue derived from securities trading
and underwriting activities, most of which related to emerging markets.
Management's actions to reduce certain trading positions contributed to emerging
markets losses in the first quarter of 1995, but reduced future exposure to
those markets. Partially offsetting the effect of emerging markets results was
strong foreign exchange trading revenue, which was up 8% from first quarter
1994. In addition, revenue from customer-driven derivative products was level
with first quarter 1994.
TRADING ACCOUNT ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
March 31, December 31,
($ in millions) 1995 1994
---------- ------------
<S> <C> <C>
Assets:
Securities and Loans. . . . . . . . . . . . . . $ 7,147 $ 6,833
Other, Principally Derivative Contracts*. . . . 13,403 8,276
------- -------
Total $20,550 $15,109
------- -------
Liabilities:
Securities Sold But Not Yet Purchased . . . . . $ 1,518 $ 1,692
Derivative Contracts* . . . . . . . . . . . . . 13,133 7,972
------- -------
Total $14,651 $ 9,664
------- -------
<FN>
* The average fair values of trading derivative contract assets for the
first quarter of 1995 and for the year 1994 were $8.2 billion and $10.2
billion, respectively; and those of trading derivative contract
liabilities were $8.0 billion and $9.7 billion, respectively.
</TABLE>
19
<PAGE> 20
TRADING ACCOUNT SECURITIES AND LOANS
<TABLE>
<CAPTION>
March 31, December 31,
($ in millions) 1995 1994
--------- ------------
<S> <C> <C>
U.S. Government and Agency and Municipal Securities . . . . . $2,559 $1,126
Foreign Securities . . . . . . . . . . . . . . . . . . . . . 3,192 3,437
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 887
Corporate Debt Securities . . . . . . . . . . . . . . . . . . 695 763
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518 620
--------- ------------
Total $7,147 $6,833
--------- ------------
</TABLE>
TRADING DERIVATIVE CONTRACTS
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------------------- --------------------------
Notional Credit Risk Notional Credit Risk
($ in millions) Amount* Amount Amount Amount
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Interest Rate Contracts:
Interest Rate Swaps . . . . . . . . . . . . . . . . $320,200 $ 4,900 $250,100 $4,800
Currency Exchange Agreements . . . . . . . . . . . 20,900 1,500 18,900 1,100
Forwards and Futures . . . . . . . . . . . . . . . 275,700 200 252,300 200
Options, Caps and Floors Purchased . . . . . . . . 89,300 800 57,900 700
Options, Caps and Floors Written** . . . . . . . . 70,300 -- 72,200 --
-------- ----------- -------- -----------
Less: Master Netting Agreements . . . . . . . . 3,400 3,000
Net Interest Rate Contracts 4,000 3,800
----------- -----------
Foreign Exchange Contracts:
Spot, Forwards and Futures . . . . . . . . . . . . 643,700 18,800 541,900 6,600
Options Purchased . . . . . . . . . . . . . . . . 48,700 1,900 36,800 700
Options Written** . . . . . . . . . . . . . . . . 47,100 -- 49,000 --
-------- ----------- -------- -----------
Less: Master Netting Agreements . . . . . . . . 11,800 3,100
Net Foreign Exchange Contracts 8,900 4,200
----------- -----------
Commodity Contracts** . . . . . . . . . . . . . . . 16,900 700 13,400 400
-------- ----------- -------- -----------
Total Before Cross Product Netting Agreements 13,600 8,400
----------- -----------
Less: Cross Product Netting Agreements . . . . . 200 100
----------- -----------
Total Trading Derivative Assets $13,400 $8,300
----------- -----------
<FN>
* The notional amounts of exchange traded interest rate contracts, foreign
exchange contracts, and commodity contracts were $81.1 billion, $8.5
billion and $1.9 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 March 31, 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.
MATURITY OF TRADING DERIVATIVE CONTRACTS*
<TABLE>
<CAPTION>
At March 31, 1995 Interest Foreign
Rate Exchange
Contracts Contracts
--------- ---------
<S> <C> <C>
Less than 3 months . . . . . . 24% 63%
3 to 6 months . . . . . . . . 13 20
6 to 12 months . . . . . . . . 19 15
1 to 3 years . . . . . . . . . 27 1
3 to 5 years . . . . . . . . . 10 1
Over 5 years . . . . . . . . . 7 --
--- ---
Total 100% 100%
--- ---
<FN>
* Approximate percentages based upon remaining life of notional amounts.
</TABLE>
20
<PAGE> 21
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 $10 million in aggregate at March 31, 1995, having averaged
approximately $12 million during the quarter. The decline in quarter-end risk
dollars from the average can be primarily attributed to reduced 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 quarter, actual declines in value were within
predicted declines in value at a frequency consistent with Chase's defined
confidence level of 97.5%.
CREDIT RISK
Chase's predominant credit risk exposures (net replacement values) in its
trading businesses relate to derivative contracts. Derivative credit risk
exposures are primarily of a medium-term nature, while credit exposures in most
other products are of a short-term nature. In terms of industry exposure,
depository institutions, substantially all in OECD countries, represent 62% of
net replacement value, with no other major industry greater than 5% of the total
net exposure. For other than depository institutions, no single counterparty has
a credit exposure exceeding $110 million. The net replacement value of contracts
identified as being potential problem contracts was not material at March 31,
1995. Presented in the following table are the percentages of total net
replacement value by counterparty type and by major country exposures.
DERIVATIVE-RELATED CREDIT RISK EXPOSURE*
<TABLE>
<CAPTION>
At March 31, 1995 Percentage of Total Net
Replacement Value
-----------------------
<S> <C>
Counterparty Type:
Depository Institutions . . . . . . . . . . . . . . 62%
Other . . . . . . . . . . . . . . . . . . . . . . . 38
-----
Total 100%
-----
Country of Risk:
United States . . . . . . . . . . . . . . . . . . . 22%
Japan . . . . . . . . . . . . . . . . . . . . . . . 17
United Kingdom . . . . . . . . . . . . . . . . . . 11
Italy . . . . . . . . . . . . . . . . . . . . . . . 10
Switzerland . . . . . . . . . . . . . . . . . . . . 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 quarter of 1995 and for 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 March 31, 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 March 31, 1995, the estimated
net fair value of Chase's on- and off-balance-sheet financial instruments was
not adversely impacted during the first quarter of 1995.
21
<PAGE> 22
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 March 31, 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 March 31, 1995 was $8,524 million or
7.06% of total assets, compared with $8,359 million, or 7.33%, and $8,154
million, or 7.24%, at December 31, 1994 and March 31, 1994, respectively. A
discussion regarding Chase's recent capital position is set forth below and on
pages 42 and 43 of the 1994 Annual Report.
TIER 1 AND TIER 2 CAPITAL
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
--------- --------- ---------
<S> <C> <C> <C>
Tier 1 Capital . . . . . . . $ 7,937 $ 7,759 $ 7,636
Tier 2 Capital . . . . . . . 4,387 4,194 4,087
-------- -------- --------
Total Capital $ 12,324 $ 11,953 $ 11,723
-------- -------- --------
</TABLE>
Chase's Tier 1 risk-based capital ratio was 8.32% at March 31, 1995 as
compared with 8.30% at December 31, 1994 and 8.43% at March 31, 1994. During the
first quarter of 1995, the increase in Tier 1 capital was due primarily to
retained earnings. The Tier 1 capital ratio was also impacted by higher net
risk-weighted assets of $95.4 billion at March 31, 1995, compared with $93.5
billion at December 31, 1994. During the first quarter of 1995, Tier 2 capital
increased due to the issuance of $303 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 first
quarter of 1995 was principally comprised of $150 million due 2000 and $100
million due 2002. 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.
On April 18, 1995, the Company's Board of Directors increased the quarterly
common stock dividend from 40 cents to 45 cents per share, payable on May 15,
1995.
CAPITAL RATIOS*
<TABLE>
<CAPTION>
Minimum
March 31, December 31, March 31, Regulatory
1995 1994 1994 Guidelines
---------- ------------ --------- -------------
<S> <C> <C> <C> <C>
Tier 1 Leverage Ratio (a). . . . 7.37% 7.37% 7.28% 3.00-5.00%
Risk-Based Capital Ratios: (b)
Tier 1. . . . . . . . . . 8.32 8.30 8.43 4.00
Total Capital . . . . . . 12.91 12.78 12.94 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 March 31, 1994, the
loan portfolio balances at March 31, 1995 reflected a 14% growth in domestic
consumer loans, which consisted 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 30% to $2.0 billion while
loans in overseas offices were essentially unchanged.
All tables in this section exclude the accelerated disposition portfolio,
unless otherwise noted.
22
<PAGE> 23
LOAN COMPOSITION
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
---------- ------------ ---------
<S> <C> <C> <C>
Domestic Offices:
Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13,724 $13,350 $15,203
Consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,287 33,432 29,216
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . . . . 190 177 185
-------- -------- --------
Total Domestic Offices 46,821 46,605 44,234
-------- -------- --------
Overseas Offices:
Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,629 13,985 14,971
Consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,738 2,500 2,477
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . . . . 53 52 47
-------- --------- --------
Total Overseas Offices 17,314 16,433 17,401
-------- --------- --------
Total Loans $64,135 $63,038 $61,635
-------- --------- --------
</TABLE>
Key data on the worldwide consumer loan portfolio are summarized below.
CONSUMER LOANS
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
-------- ------------ ---------
<S> <C> <C> <C>
Domestic Offices:
Secured by 1-4 Family Residential Properties . . . . . . . . . . . . $15,327 $15,092 $14,086
Credit Card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,044 7,733 6,174
Other Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,916 10,607 8,956
-------- ------- -------
Total Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . 33,287 33,432 29,216
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,738 2,500 2,477
-------- ------- -------
Total Consumer Loans $36,025 $35,932 $31,693
-------- -------- --------
</TABLE>
The increase in domestic consumer loans from March 31, 1994 to March 31,
1995 was due to increased demand for 1-4 family loans experienced during the
last quarter of 1994 and increased credit card and auto finance outstandings
throughout the period, offset by sales and securitizations. During the first
quarter of 1995, Chase originated and subsequently securitized or sold $246
million of residential mortgage loans, and sold an additional $1.2 billion of
such loans, primarily through traditional secondary market outlets.
Additionally, on March 15, 1995, Chase securitized $1.0 billion of credit card
receivables. There were no new securitizations of credit card receivables in
1994. At March 31, 1995, the aggregate amount of securitized credit card
receivables was $3.5 billion, compared with $2.7 billion and $3.6 billion at
December 31, 1994 and March 31, 1994, respectively.
Credit card securitization transactions are structured with a revolving
period and a subsequent amortization period. During the first quarter of 1995,
$189 million of previously securitized credit card receivables were amortized
and $563 million are scheduled to amortize during the remainder of 1995.
Credit card securitization transactions do not materially impact earnings
since Chase continues to service the credit card accounts after the receivables
are securitized. This servicing income is recorded in Fees and Commissions and
Other Revenue, as opposed to Net Interest Revenue offset by the Provision for
Possible Credit Losses.
23
<PAGE> 24
For analytical purposes only, the following table summarizes the net impact
of securitization of credit card receivables as an increase (decrease) in
Chase's consolidated statement of income line items.
<TABLE>
<CAPTION>
First Quarter
--------------------
($ in millions) 1995 1994
----- -----
<S> <C> <C>
Net Interest Revenue . . . . . . . . . . . . . . . . . $(57) $(74)
Decrease in Provision for Possible Credit Losses . . . 31 49
Fees and Commissions . . . . . . . . . . . . . . . . . 26 25
Other Revenue . . . . . . . . . . . . . . . . . . . . 7 --
----- -----
Income Before Taxes $ 7 $--
----- -----
</TABLE>
The average domestic credit card receivables, net loan charge-offs and
average loss ratio prior to and net of the securitization transactions are
presented below.
<TABLE>
<CAPTION>
Prior to Net of
Securitization Securitization
-------------- --------------
<S> <C> <C>
Average Receivables ($ in billions)
First Quarter 1995 . . . . . . . . . . . . . . . . $10.4 $ 7.6
Fourth Quarter 1994 . . . . . . . . . . . . . . . . 9.8 7.0
First Quarter 1994 . . . . . . . . . . . . . . . . 9.9 6.2
Net Loan Charge-offs ($ in millions)
First Quarter 1995 . . . . . . . . . . . . . . . . $ 98 $ 67
Fourth Quarter 1994 . . . . . . . . . . . . . . . . 100 67
First Quarter 1994 . . . . . . . . . . . . . . . . 113 64
Average Loss Ratio
First Quarter 1995 . . . . . . . . . . . . . . . . 3.85% 3.57%
Fourth Quarter 1994 . . . . . . . . . . . . . . . . 4.05 3.82
First Quarter 1994 . . . . . . . . . . . . . . . . 4.63 4.18
----- ------
</TABLE>
Key data on the worldwide wholesale loan portfolio are summarized below.
WHOLESALE LOANS
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
-------- ----------- ----------
<S> <C> <C> <C>
Domestic Offices:
Commercial Real Estate . . . . $ 1,998 $ 2,055 $ 2,841
Commercial and Industrial . . . 8,943 8,291 8,175
Other Wholesale . . . . . . . . 2,783 3,004 4,187
------- -------- --------
Total Domestic Office 13,724 13,350 15,203
------- -------- --------
Overseas Offices:
Commercial and Industrial . . . 9,788 9,020 10,243
Other Wholesale . . . . . . . . 4,841 4,965 4,728
------- -------- --------
Overseas Offices . . . . . . . . . 14,629 13,985 14,971
------- -------- --------
Total Wholesale Loans $28,353 $ 27,335 $ 30,174
------- -------- --------
</TABLE>
Wholesale loans in overseas offices decreased from $15.0 billion at March
31, 1994 to $14.6 billion at March 31, 1995 through repayments, partially offset
by new lending.
24
<PAGE> 25
RESERVE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
RECONCILIATION OF RESERVE FOR POSSIBLE CREDIT LOSSES
First Quarter Fourth Quarter First Quarter
($ in millions) 1995 1994 1994
-------------- -------------- -------------
<S> <C> <C> <C>
Balance at Beginning of Period . . . . . . . . . . . . . . . . . . $1,414 $1,416 $1,425
Additions:
Provision for Possible Credit Losses Charged to Expense. . 65 90 160
Deductions:
Charge-Offs. . . . . . . . . . . . . . . . . . . . . . . . 108 141 203
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . (46) (46) (47)
------- ------- -------
Net Loan Charge-Offs . . . . . . . . . . . . . . . . . . . 62 95 156
Reserves of Disposed Subsidiaries and Other Adjustments. . . . . . 2 3 --
Balance at End of Period $1,419* $1,414 $1,429
------- ------- -------
<FN>
* Includes $18 million of related SFAS 114 valuation allowance.
</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 March 31, 1995, the recorded investment in loans that are considered
impaired under SFAS 114 was $530 million. No SFAS 114 reserve is required for
$478 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 $52 million of impaired loans required a SFAS 114
reserve for possible credit losses of $18 million. The average recorded
investment in impaired loans during the three months ended March 31, 1995 was
approximately $530 million. For the three months ended March 31, 1995, Chase
recognized interest revenue on these impaired loans of $3 million.
<TABLE>
<CAPTION>
NET LOAN CHARGE-OFFS AND ANNUALIZED CREDIT LOSS EXPERIENCE RATIOS
First Quarter
----------------------------
($ in millions) 1995 1994
------- ------
<S> <C> <C>
Net Loan Charge-offs:
Domestic:
Consumer. . . . . . . . . . . . . . . . . . . . . . $ 90 $ 96
Commercial Real Estate. . . . . . . . . . . . . . . (2) 51
Commercial and Other. . . . . . . . . . . . . . . . (20) 9
------ ------
Total Domestic 68 156
------ ------
Total International (6) --
------ ------
Total $ 62 $156
------ ------
Net Loan Charge-offs as a Percentage of Average Loans:
Domestic:
Consumer. . . . . . . . . . . . . . . . . . . . . . 1.10% 1.34%
Commercial Real Estate. . . . . . . . . . . . . . . (.39) 6.72
Commercial and Other. . . . . . . . . . . . . . . . (.85) .32
------ ------
Total Domestic Credit Loss Ratio. . . . . . . . . . . . . . . . .61 1.45
------ ------
Total International Credit Loss Ratio . . . . . . . . . . . . . (.14) --
------ ------
Total Credit Loss Ratio . . . . . . . . . . . . . . . . . . . . .40% 1.03%
</TABLE>
Net loan charge-offs for the first quarter of 1995 were $62 million, down $94
million from the first quarter of 1994. Domestic commercial real estate net loan
charge-offs declined $53 million. For further details on the reserve for
possible credit losses and net loan charge-offs, see Analysis of Credit Loss
Experience on page 35.
25
<PAGE> 26
NONACCRUAL, RESTRUCTURED AND PAST DUE OUTSTANDINGS AND DOMESTIC ORE ACQUIRED
<TABLE>
<CAPTION>
NONACCRUAL AND RESTRUCTURED OUTSTANDINGS AND DOMESTIC ORE
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
-------- ------------- --------
<S> <C> <C> <C>
Domestic Outstandings:
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . $233 $266 $ 469
Commercial and Industrial . . . . . . . . . . . . . . . . . . . 141 109 195
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 135 204
---- ---- -----
Domestic Outstandings 508 510 868
---- ---- -----
Overseas Outstandings:
Refinancing Countries . . . . . . . . . . . . . . . . . . . . . 53 54 69
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . 7 8 11
Commercial and Industrial . . . . . . . . . . . . . . . . . . . 36 47 45
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 41 75
---- ---- -----
Overseas Outstandings 136 150 200
---- ---- ------
Total Nonaccrual and Restructured Outstandings . . . . . . . . . . $644 $660 $1,068
---- ---- ------
Domestic ORE $214 $251 $ 810
---- ---- ------
As a % of Total Gross Assets:
Nonaccrual and Restructured Outstandings . . . . . . . . . . .53% .57% .94%
Nonaccrual and Restructured Outstandings and Domestic ORE . . .70 .79 1.65
---- ---- ------
</TABLE>
The substantial decrease in nonaccrual and restructured outstandings at March
31, 1995, as compared with March 31, 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 $65 million, $44 million and $92 million at March 31, 1995,
December 31, 1994 and March 31, 1994, respectively, and continue to be included
in the preceding table.
NEGATIVE IMPACT OF NONACCRUAL AND RESTRUCTURED OUTSTANDING
<TABLE>
<CAPTION>
First Quarter
--------------------------
($ in millions) 1995 1994
---- ----
<S> <C> <C>
Interest Revenue That Would Have Been
Recorded Under Original Terms . . . . . . . . . . . . . . . . . . $14 $18
Interest Revenue Actually Realized . . . . . . . . . . . . . . . . 3 4
--- ---
Negative Impact on Interest Revenue $11 $14
--- ---
</TABLE>
ACCRUING LOANS PAST DUE 90 DAYS OR MORE
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
-------- ----------- --------
<S> <C> <C> <C>
Domestic Loans:
Consumer* . . . . . . . . . . . . . . . . . . . . . . . . . . . $164 $192 $170
Commercial Real Estate . . . . . . . . . . . . . . . . . . . . . 6 8 10
Commercial and Other . . . . . . . . . . . . . . . . . . . . . . 17 19 16
---- ---- ----
Total Domestic Loans . . . . . . . . . . . . . . . . . . . . . . 187 219 196
---- ---- ----
Overseas Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 173 181 6
---- ---- ----
Total Accruing Loans Past Due 90 Days or More . . . . . . . . . . $360 $400 $202
---- ---- ----
<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.
26
<PAGE> 27
FINANCIAL RATIOS
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1994
1995 ------------------------------------------------
1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings Ratios
Net Income as a Percentage of Average:
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . .85% .74% .99% 1.03% 1.26%
Common Stockholders' Equity* . . . . . . . . . . . . . . . . 13.43 11.32 15.83 16.11 20.15
Total Stockholders' Equity . . . . . . . . . . . . . . . . . 12.68 10.89 14.57 14.80 18.21
----- ----- ----- ----- -----
Leverage Ratios--Averages
Common Stockholders' Equity as a % of Total Assets . . . . . . 5.59% 5.66% 5.61% 5.67% 5.74%
Total Stockholders' Equity as a % of Total Assets . . . . . . 6.72 6.80 6.77 6.98 6.93
----- ----- ----- ----- -----
Common Stockholders' Equity Per Common Share . . . . . . . . . $40.12 $39.28 $38.83 $37.64 $36.55
----- ----- ----- ----- -----
Capital Ratios at Quarter End**
Common Stockholders' Equity as a % of Total Assets . . . . . . 5.90% 6.10% 6.01% 6.08% 6.00%
Total Stockholders' Equity as a % of Total Assets . . . . . . 7.06 7.33 7.21 7.32 7.24
Tier 1 Leverage . . . . . . . . . . . . . . . . . . . . . . . 7.37 7.37 7.31 7.47 7.28
Tier 1 Capital as a % of Net Risk-Weighted Assets . . . . . . 8.32 8.30 8.51 8.71 8.43
Total Capital as a % of Net Risk-Weighted Assets . . . . . . . 12.91 12.78 13.22 13.32 12.94
----- ----- ----- ----- -----
<FN>
* Based on Net Income, adjusted as applicable.
** Based on Federal Reserve Board definitions. Risk-based capital and
leverage ratios exclude the equity, assets and off-balance sheet
positions of Chase Securities Inc., the Corporation's U.S. underwriting
and dealing subsidiary.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
The Chase Manhattan Bank, N.A. and Subsidiaries
Capital Ratios at Quarter End*
Tier 1 Leverage . . . . . . . . . . . . . . . . . . . . . . . 7.18% 6.97% 6.90% 6.93% 6.51%
Tier 1 Capital as a % of Net Risk-Weighted Assets . . . . . . 8.20 8.18 8.25 8.24 7.74
Total Capital as a % of Net Risk-Weighted Assets . . . . . . 11.80 11.93 12.06 12.08 11.66
----- ----- ----- ----- -----
<FN>
* Based on Office of the Comptroller of the Currency definition.
</TABLE>
STOCKHOLDER DATA
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1994
1995 -------------------------------------------------
($ in millions, except per share data) 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Quarterly Cash Dividends:
Common Stock:
Per Share . . . . . . . . . . . . . . . . . . . . . . . . . $ .40 $ .40 $ .40 $ .33 $ .33
Aggregate . . . . . . . . . . . . . . . . . . . . . . . . . $ 70.9 $ 72.2 $ 73.8 $61.0 $60.9
Preferred Stock:
Floating Rate Series F . . . . . . . . . . . . . . . . . . -- -- -- 5.4 3.4
10 1/2% Series G . . . . . . . . . . . . . . . . . . . . . 3.7 3.7 3.7 3.7 3.7
9.76% Series H . . . . . . . . . . . . . . . . . . . . . . 2.5 2.5 2.5 2.5 2.5
10.84% Series I . . . . . . . . . . . . . . . . . . . . . . 5.4 5.4 5.4 5.4 5.4
9.08% Series J . . . . . . . . . . . . . . . . . . . . . . 3.4 3.4 3.4 3.4 3.4
8-1/2% Series K . . . . . . . . . . . . . . . . . . . . . . 3.6 3.6 3.6 3.6 3.6
8.32% Series L . . . . . . . . . . . . . . . . . . . . . . 5.0 5.0 5.0 5.0 5.0
8.40% Series M . . . . . . . . . . . . . . . . . . . . . . 3.6 3.6 3.6 3.6 3.6
Adjustable Rate Series N . . . . . . . . . . . . . . . . . 3.8 3.7 3.5 2.0 --
---- ---- ---- ---- ----
Total Preferred Stock 31.0 30.9 30.7 34.6 30.6
------ ------ ------ ----- -----
Total Cash Dividends $101.9 $103.1 $104.5 $95.6 $91.5
------ ------ ------ ----- -----
Cash Dividends Paid on Common Stock as Percentage of Net
Income Applicable to Common Stock . . . . . . . . . . . . . 30.9% 36.5% 26.9% 22.4% 18.3%
Total Cash Dividends Paid as a Percentage of Net Income . . . 39.1 45.0 34.2 31.1 25.1
----- ---- ----- ---- ----
</TABLE>
27
<PAGE> 28
Consolidated Statement of Condition
The Chase Manhattan Bank, N.A. and Subsidiaries
<TABLE>
<CAPTION>
March 31, December 31, March 31,
($ in millions) 1995 1994 1994
-------- ------------ ---------
<S> <C> <C> <C>
Assets
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,264 $ 4,518 $ 4,236
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . . . . . 6,755 7,002 5,173
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . . . . . 2,799 3,824 3,999
Trading Account Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,253 13,088 15,524
Investment Securities:
Held to Maturity (Market Value of $1,745, $1,739 and $719, Respectively). . . . . 1,737 1,760 706
Available for Sale Carried at Fair Value . . . . . . . . . . . . . . . . . . . . 4,521 4,502 5,707
-------- --------- ---------
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 6,258 6,262 6,413
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,474 50,607 50,083
Reserve for Possible Credit Losses . . . . . . . . . . . . . . . . . . . . . . . (1,097) (1,092) (1,099)
Assets Held for Accelerated Disposition . . . . . . . . . . . . . . . . . . . . . . -- -- 120
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . . . . . 889 520 705
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 907 966 603
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,785 1,759 1,626
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,748 6,525 5,770
-------- --------- ---------
Total Assets $99,035 $93,979 $93,153
-------- --------- ---------
Liabilities and Stockholder's Equity
Deposits:
Domestic Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,224 $11,648 $11,005
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,856 17,888 20,065
Overseas Offices:
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,695 2,320 2,882
Interest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,155 33,645 29,494
-------- --------- ---------
Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,930 65,501 63,446
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . . . 2,817 2,580 2,519
Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,704 2,308 2,156
Trading Account Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,545 8,066 10,215
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893 525 715
Accrued Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 574 374
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . . . . . 5,695 4,620 4,267
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 2,804 2,803 3,038
-------- --------- ---------
Total Liabilities 91,988 86,977 86,730
-------- --------- ---------
Stockholder's Equity:
Capital Stock ( $15 Par Value):
3/31/95 12/31/94 3/31/94
---------- ---------- ----------
Number of Shares:
Authorized 81,744,445 81,744,445 81,744,445
Outstanding 61,127,184 61,038,415 60,794,266 . . . . . . . . . . 917 916 912
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,666 4,656 4,391
Net Unrealized Losses on Investment Securities - Available for Sale . . . . . . . (98) (65) (27)
Undivided Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,562 1,495 1,147
------- ------- -------
Total Stockholder's Equity 7,047 7,002 6,423
------- ------- -------
Total Liabilities and Stockholder's Equity $99,035 $93,979 $93,153
------- ------- -------
<FN>
The accompanying notes on page 8 are an integral part of the financial statements.
Member Federal Deposit Insurance Corporation
</TABLE>
28
<PAGE> 29
Average Balances, Interest and Average Rates -- Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1995
--------------------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
---------- ---------- ---------
<S> <C> <C> <C>
Assets
Interest-Earning Assets:
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . $ 8,287 $ 143 6.98%
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . 14,830 250 6.83
Trading Account Assets-Interest-Earning*. . . . . . . . . . . . . . . . . . 8,873 114 5.22
Investment Securities:
Held to Maturity:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,732 27 6.28
Tax-Exempt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320 8 10.87
-------- ---- -----
Total Held to Maturity 2,052 35 6.99
Available for Sale:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,219 93 7.26
Tax-Exempt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 2 6.69
-------- ---- -----
Total Available for Sale 5,309 95 7.25**
-------- ---- -----
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . 7,361 130 7.18
Loans:
Domestic Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,233 1,071 9.39
Overseas Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,379 340 8.43
-------- ----- -----
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,612 1,411 9.14
Reserve for Possible Credit Losses*** . . . . . . . . . . . . . . . . . . . (1,403) -- --
-------- ----- -----
Total Interest-Earning Assets***, Net 100,560 2,048 8.15
-------- ------ -----
Summary--Gross Interest-Earning Assets:
Domestic Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,846 1,434 8.21
Overseas Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,117 614 8.00
-------- ------ -----
Total Gross Interest-Earning Assets 101,963 $2,048 8.15%
-------- ------- ------
Noninterest-Earning Assets:
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . 6,095
Trading Account Assets-Noninterest-Earning****. . . . . . . . . . . . . . . 8,180
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . 773
Premises and Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,911
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . 1,144
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,257
--------
Total Noninterest-Earning Assets 23,360
--------
Total Assets $123,920
--------
<FN>
* Includes only trading securities.
** Average rate based on average amortized cost.
*** Reserve for Possible Credit Losses excluded from calculations of average
balances and average rates, as appropriate.
**** Includes foreign exchange, interest rate, and commodity derivative
contracts.
Note: Loan and other asset amounts include nonaccrual and restructured loans
and ORE, as applicable.
Note: Average rates for overseas offices in the above table reflect
significantly lower Brazilian rates due to the significant decrease in
Brazilian inflation beginning in the third quarter of 1994.
</TABLE>
29
<PAGE> 30
Average Balances, Interest and Average Rates -- Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1995
---------------------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
----------- ---------- ---------
<S> <C> <C> <C>
Liabilities, Redeemable Preferred Stock and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Domestic Offices:
Savings and Negotiable Order of Withdrawal Deposits . . . . . . . . . . . $ 5,166 $ 29 2.29%
Money Market Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 9,420 82 3.53
Negotiable Certificates of Deposit . . . . . . . . . . . . . . . . . . . 1,001 19 7.77
Other Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 5,677 50 3.53
-------- ---- ------
Total Domestic Offices 21,264 180 3.43
Overseas Offices 36,188 470 5.26
-------- ---- ------
Total Interest-Bearing Deposits . . . . . . . . . . . . . . . . . . . . . . 57,452 650 4.58
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . 18,899 294 6.31
Other Short-Term Borrowings:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,689 89 9.79
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800 30 15.37
-------- ---- ------
Total Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . 4,489 119 10.78
Intermediate- and Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . 5,199 94 7.33
-------- ---- ------
Total Interest-Bearing Liabilities 86,039 1,157 5.45
-------- ---- ------
Summary--Interest-Bearing Liabilities:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,642 777 5.47
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,397 380 5.42
-------- ---- ------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . 12,614
Deposits in Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . 2,415
Trading Account Liabilities* . . . . . . . . . . . . . . . . . . . . . . . . 9,824
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 776
Accounts Payable, Accrued Expenses and Other Liabilities . . . . . . . . . . 3,926
--------
Total Noninterest-Bearing Liabilities 29,555
--------
Total Liabilities 115,594
--------
Stockholders' Equity:
Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . 1,400
Common Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . 6,926
--------
Total Stockholders' Equity 8,326
--------
Total Liabilities and Stockholders' Equity $123,920
--------
Taxable Equivalent Net Interest Revenue and Average Interest Rate Spread $ 891 2.70%
---- ------
Net Interest Revenue as a Percentage of Gross Interest-Earning Assets 3.54%
------
<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>
30
<PAGE> 31
Average Balances, Interest and Average Rates - Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1994
---------------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
--------- -------- --------
<S> <C> <C> <C>
Assets
Interest-Earning Assets:
Interest-Bearing Deposits Placed with Banks . . . . . . . . . . . . . . . . $ 6,207 $ 130 8.50%
Federal Funds Sold and Securities Purchased Under Resale Agreements . . . . 10,789 326 12.25
Trading Account Assets* . . . . . . . . . . . . . . . . . . . . . . . . . . 7,116 119 6.76
Investment Securities:
Held to Maturity
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955 34 14.41
Tax-Exempt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396 11 11.72
------ ----- -----
Total Held to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . 1,351 45 13.62
Available for Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,148 165 9.35**
------ ----- -----
Total Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . 8,499 210 10.02
Loans:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,153 891 8.19
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,116 410 9.70***
- - ------ ----- -----
Total Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,269 1,301 8.61
Reserve for Possible Credit Losses**** . . . . . . . . . . . . . . . . . . (1,441) - -
Accelerated Disposition Portfolio-Interest-Earning . . . . . . . . . . . . 101 3 13.31-
Total Interest-Earning Assets****, Net 92,540 2,089 9.01
------ ----- -----
Summary--Gross Interest-Earning Assets:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,490 1,075 6.87
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,491 1,014 13.48
------ ------ -----
Total Gross Interest-Earning Assets 93,981 $2,089 9.01%
------ ------ -----
Noninterest-Earning Assets:
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . 6,174
Trading Account Assets-Noninterest-Earning***** . . . . . . . . . . . . . . 9,400
Customers' Liability on Acceptances . . . . . . . . . . . . . . . . . . . . 706
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 1,790
Accrued Interest Receivable . . . . . . . . . . . . . . . . . . . . . . . . 823
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,644
------
Total Noninterest-Earning Assets 24,53
-------
Total Assets $117,077
-------
<FN>
* Includes only trading securities.
** Average rate based on average amortized cost.
*** Reflects the extraordinary high level of local interest rates prevailing
in certain Latin American countries with highly inflationary economies.
**** Reserve for Possible Credit Losses excluded from calculations of average
balances and average rates, as appropriate.
***** Includes foreign exchange, interest rate, and commodity derivative
contracts.
Note: Loan and other asset amounts include nonaccrual and restructured loans
and ORE, as applicable, but exclude assets held in the accelerated
disposition portfolio. Accruing, nonaccruing and restructured loans in
the accelerated disposition portfolio were treated as interest-earning in
the above table, while ORE in the accelerated disposition portfolio was
treated as noninterest-earning.
</TABLE>
31
<PAGE> 32
Average Balances, Interest and Average Rates -- Taxable Equivalent
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter 1994
----------------------------------------
Average Average
($ in millions, based on daily averages) Balance Interest Rate
------- -------- -------
<S> <C> <C> <C>
Liabilities, Redeemable Preferred Stock and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
Domestic Offices:
Savings and Negotiable Order of Withdrawal Deposits . . . . . . . . . . . . . $ 5,612 $ 24 1.73%
Money Market Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,515 34 1.19
Negotiable Certificates of Deposit. . . . . . . . . . . . . . . . . . . . . . 1,519 26 7.08
Other Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,232 25 1.40
------ ----- ------
Total Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . 25,878 109 1.71
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,049 416 5.61
------- ----- ------
Total Interest-Bearing Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 55,927 525 3.80
Federal Funds Purchased and Securities Sold Under Repurchase Agreements . . . . . 12,764 124 3.94
Other Short-Term Borrowings:
Domestic Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,830 79 11.36
Overseas Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,196 327 110.76*
------- ----- ------
Total Other Short-Term Borrowings . . . . . . . . . . . . . . . . . . . . 4,026 406 40.88
Intermediate- and Long-Term Debt. . . . . . . . . . . . . . . . . . . . . . . . . 5,563 76 5.58
------- ----- ------
Total Interest-Bearing Liabilities . . . . . . . . . . . . . . . . . . . 78,280 1,131 5.86
------- ----- ------
Summary--Interest-Bearing Liabilities:
Domestic Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,340 338 2.73
Overseas Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,940 793 11.50
------- ----- ------
Noninterest-Bearing Liabilities:
Deposits in Domestic Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . 14,085
Deposits in Overseas Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,476
Trading Account Liabilities** . . . . . . . . . . . . . . . . . . . . . . . . . . 9,916
Acceptances Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714
Accounts Payable, Accrued Expenses and Other Liabilities. . . . . . . . . . . . . 3,491
-------
Total Noninterest-Bearing Liabilities . . . . . . . . . . . . . . . . . . 30,682
-------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,962
-------
Stockholders' Equity:
Nonredeemable Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1,399
Common Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,716
-------
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . 8,115
-------
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . $117,077
-------
Taxable Equivalent Net Interest Revenue and Average Interest Rate Spread $ 958 3.15%
------ ----
Net Interest Revenue as a Percentage of Gross Interest-Earning Assets 4.13%
----
<FN>
* Reflects the extraordinary high level of local interest rates prevailing
in certain Latin American countries with highly inflationary economies.
** Includes short sales, and foreign exchange, interest rate, and commodity
derivative contracts.
</TABLE>
32
<PAGE> 33
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
SECURITIES--HELD TO MATURITY
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994 March 31, 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 $-- $ 1 $ 112 $ 115 $ 115 $ 26 $ 27
Federal Agency Securities** . . . 433 -- 13 420 452 431 394 394
State and Political Subdivision
Securities . . . . . . . . . . . 307 6 1 312 335 334 374 387
Other Bonds, Notes and
Debentures:
Securities Issued by OECD
Central Governments
and their Agencies*** . . . 802 12 -- 814 724 716 5 5
Securities Issued by Other
Foreign Central
Governments and
their Agencies . . . . . . 9 -- -- 9 10 10 10 10
Privately-Issued Mortgage-
Backed Securities . . . . . . 32 -- -- 32 33 33 218 213
Corporate and Other Debt
Securities . . . . . . . . . . 161 -- -- 161 229 229 139 139
------ --- --- ------ ------ ------ ------ ------
Total Other Bonds, Notes
and Debentures . . . . . . . . . . 1,004 12 -- 1,016 996 988 372 367
------ --- --- ------ ------ ------ ------ ------
Federal Reserve Bank and
Other Stock Investments . . . . . 186 -- -- 186 186 186 179 179
------ --- --- ------ ------ ------ ------ ------
Total $2,043 $18 $15 $2,046 $2,084 $2,054 $1,345 $1,354
------ --- --- ------ ------ ------ ------ ------
<FN>
* The fair values of securities are estimated utilizing independent pricing
services and are based on available market data, which often reflect
transactions of relatively small size and are not necessarily indicative
of the prices at which large amounts of particular issues could be sold.
** Primarily mortgage-backed Federal agency securities.
*** OECD includes all countries that are members of the Organization for
Economic Cooperation and Development, excluding the United States.
Note: Interest and dividends on investment securities at historical cost in
terms of taxable interest income, nontaxable interest income, and
dividends for the first quarter of 1995 were: $24 million, $5 million and
$3 million, respectively; and for the first quarter of 1994 were: $31
million, $7 million and $3 million, respectively.
</TABLE>
33
<PAGE> 34
INVESTMENT SECURITIES
The Chase Manhattan Corporation and Subsidiaries
SECURITIES--AVAILABLE FOR SALE
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994 March 31, 1994
----------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair Amortized Fair Amortized Fair
($ in millions) Cost Gains Losses Value* Cost Value* Cost Value*
--------- ---------- ---------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities . . . . . . $2,466 $ 9 $ 35 $2,440 $2,445 $2,418 $2,304 $2,308
Federal Agency Securities** . . . . . 646 1 21 626 646 621 1,118 1,115
State and Political Subdivision
Securities . . . . . . . . . . . . 81 -- -- 81 89 88 8 8
Other Bonds, Notes and
Debentures:
Securities Issued by OECD
Central Governments
and their Agencies*** . . . . 583 3 19 567 537 522 960 935
Securities Issued by Other
Foreign Central
Governments and
their Agencies . . . . . . 837 1 166 672 811 714 1,171 1,037
Privately-Issued Mortgage-
Backed Securities . . . . . . . 76 1 -- 77 77 76 88 90
Corporate and Other Debt
Securities . . . . . . . . . . . 155 15 2 168 173 188 420 443
------ ---- ---- ------ ------ ------ ------ ------
Total Other Bonds, Notes
and Debentures 1,651 20 187 1,484 1,598 1,500 2,639 2,505
------ ---- ---- ------ ------ ------ ------ ------
Federal Reserve Bank and
Other Stock Investments . . . . . . 487 139 1 625 422 508 338 479
------ ---- ---- ------ ------ ------ ------ ------
Total $5,331 $169 $244 $5,256 $5,200 $5,135 $6,407 $6,415
------ ---- ---- ------ ------ ------ ------ ------
<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 first quarter of 1995 were: $92 million, $1 million and
$1 million, respectively; and for the first quarter of 1994 were: $163
million, none and $2 million, respectively.
</TABLE>
34
<PAGE> 35
Average Loan Balances
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
First Quarter
----------------------
($ in millions, based on daily averages) 1995 1994
------ ------
<S> <C> <C>
Domestic Offices: . . . . . . . . . . . . . . . . . . . . . . . .
Wholesale . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Real Estate . . . . . . . . . . . . . . . . . . . $ 2,069 $ 3,076
Commercial and Industrial . . . . . . . . . . . . . . . . . . 8,543 8,370
Financial Institutions . . . . . . . . . . . . . . . . . . . 686 1,204
Lease Financings . . . . . . . . . . . . . . . . . . . . . . 845 827
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,015 1,683
Consumer:
Secured by 1-4 Family Residential Properties . . . . . . . . 14,882 13,937
Credit Card . . . . . . . . . . . . . . . . . . . . . . . . . 7,607 6,245
Lease Financings . . . . . . . . . . . . . . . . . . . . . . 1,045 657
Other Consumer . . . . . . . . . . . . . . . . . . . . . . . 9,722 8,328
------- --------
Total Domestic Offices, Gross . . . . . . . . . . . . . . . . . . 46,414 44,327
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . . . 181 174
------- --------
Total Domestic Offices 46,233 44,153
------- --------
Overseas Offices, Gross . . . . . . . . . . . . . . . . . . . . . 16,433 17,159
Less: Unearned Discount and Fee Revenue . . . . . . . . . . . . . 54 43
------- --------
Total Overseas Offices 16,379 17,116
------- --------
Total Average Loans $62,612 $61,269
------- --------
</TABLE>
Analysis of Credit Loss Experience
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1995 1994
----------------------------------------------------------
($ in millions) 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Reserve for Possible Credit Losses at
Beginning of Period . . . . . . . . . . . . . . . . $1,414 $1,416 $1,435 $1,429 $1,425
Net Loan Charge-Offs:
Domestic Loans:
Commercial Real Estate . . . . . . . . . . . . . . (2) 2 21 51 51
Commercial and Industrial . . . . . . . . . . . . (14) (6) 2 1 (4)
Financial Institutions . . . . . . . . . . . . . . -- 1 -- -- 12
Lease Financings (1) -- 4 3 1
Consumer . . . . . . . . . . . . . . . . . . . . . 90 96 90 91 96
Other . . . . . . . . . . . . . . . . . . . . . . (5) 2 -- -- --
------- ------- ------- ------ -------
Total Domestic Net Loan Charge-Offs 68 95 117 146 156
------- ------- ------- ------ -------
International Loans:
Commercial and Industrial . . . . . . . . . . . . (7) -- (3) -- 11
Financial Institutions . . . . . . . . . . . . . . -- 1 6 -- (1)
Consumer . . . . . . . . . . . . . . . . . . . . . 1 -- (1) -- --
Foreign Governments and Official Institutions . . -- (1) -- -- (10)
------- ------- ------- ------ -------
Total International Net Loan Charge-Offs* (6) -- 2 -- --
------ ------- ------ ------ ------
Total Net Loan Charge-Offs 62 95 119 146 156
------ ------- ------ ------ ------
Provision for Credit Losses Charged to Expenses . . . 65 90 100 150 160
Reserves of Disposed Subsidiaries and Other
Adjustments . . . . . . . . . . . . . . . . . . . . -- 4 (1) -- --
Foreign Exchange Translation Adjustments . . . . . . . 2 (1) 1 2 --
------ ------- ------- ------ ------
Reserve For Possible Credit Losses at End of Period $1,419 $1,414 $1,416 $1,435 $1,429
------ ------- ------ ------ ------
<FN>
* Includes net loan (recoveries) applicable to refinancing countries of
$(5) million, none, $(6) million, $(1) million and $(2) million,
respectively.
</TABLE>
35
<PAGE> 36
INTERMEDIATE- AND LONG-TERM DEBT
The Chase Manhattan Corporation and Subsidiaries
Intermediate- and Long-Term Debt consists of obligations having an original
maturity at issuance of more than one year. A summary of Intermediate- and
Long-Term Debt, net of unamortized original issue discount, outstanding at March
31, 1995 and December 31, 1994 and certain applicable terms is presented below.
The distribution of maturities is based on contractual maturity or the earliest
date that the debt can be redeemed at the option of the holder.
<TABLE>
<CAPTION>
Modified Amount Outstanding
Maturity Interest March 31, December 31, Other
($ in millions) Date Rate* 1995 1994 Data**
-------- -------- --------- ------------ ------
<S> <C> <C> <C> <C> <C>
Company:
Medium-Term Notes . . . . . . . . . . . . . . . . . . 1995--1997 6.90--9.61% $ 296 $ 321
Floating Rate Medium-Term Notes . . . . . . . . . . . 1995 6.41--7.18 30 58
Notes . . . . . . . . . . . . . . . . . . . . . . . . 1996 7.81 250 250 T
Notes . . . . . . . . . . . . . . . . . . . . . . . . 1997 7.16 227 227 T
Floating Rate Subordinated Notes. . . . . . . . . . . 1997 6.50 175 175 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 1997 7.55 200 200 S,T
Non-U.S. Currency Borrowings. . . . . . . . . . . . . 1998 5.30 56 52
Floating Rate Notes . . . . . . . . . . . . . . . . . 1999 6.10 10 10 R
Subordinated Medium-Term Notes. . . . . . . . . . . . 1999 6.79--7.33 175 175 S,T
Subordinated Medium-Term Notes. . . . . . . . . . . . 2001--2004 6.51--7.30 60 9 S,R,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 1999 9.57 275 275 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 1999 7.23 200 200 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 1999 7.15 200 200 S,T
Floating Rate Subordinated Notes. . . . . . . . . . . 2000 6.31 250 250 S,R,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2000 7.04 150 -- S,R,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2001 9.86 200 200 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2001 8.44 150 150 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2002 6.94 100 -- S,R,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2003 7.61 200 200 S,T
Floating Rate Subordinated Notes (Three Issues) . . . 2003 6.29--6.38 333 333 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2004 6.48 149 149 S,R,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2004 6.71 148 148 S,R,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2005 6.99 198 198 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2008 6.97 199 199 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2008 6.07 99 99 S,T
Subordinated Notes. . . . . . . . . . . . . . . . . . 2009 6.91 149 149 S,T
Floating Rate Subordinated Notes. . . . . . . . . . . 2009 6.44 296 311 S,R,T
Other Borrowings. . . . . . . . . . . . . . . . . . . 1995--1996 *** 7 5
---------- ---------- ------ ------ -----
Total 4,782 4,543
------ ------
Bank:
Floating Rate Subordinated Note . . . . . . . . . . . 1996 8.50 400 400 S,C
Subordinated Note Issued with Equity Contract . . . . 1999 9.25 150 150 S,C
Subordinated Note . . . . . . . . . . . . . . . . . . 1999 6.25 260 260 S,C
Fixed Rate Subordinated Notes (Three Issues) . . . . 2010 9.00 1,100 1,100 S,C
Subordinated Notes (Two Issues) . . . . . . . . . . . 2012 9.00 450 450 S,C
Other Borrowings. . . . . . . . . . . . . . . . . . . 1995--2013 *** 444 443
---------- ---------- ------ ------ -----
Total 2,804 2,803
------ ------
Other Subsidiaries:
Subordinated Notes (Two Issues) . . . . . . . . . . . 1997 5.63--7.25 235 235 S,C
Subordinated Note . . . . . . . . . . . . . . . . . . 2012 9.00 250 250 S,C
Other Borrowings. . . . . . . . . . . . . . . . . . . 1995--2014 *** 72 84
---------- ---------- ------ ------ -----
Total 557 569
------ ------
Less: Investment by the Company in a Subordinated Note
Issued with Equity Contract of the Bank and other
Subordinated Notes . . . . . . . . . . . . . . . . 2,845 2,845 S,C
------ ------ -----
Total Intermediate-and Long-Term Debt $5,298 $5,070
------ ------
<FN>
* The interest rates shown have been adjusted to reflect the effect of ALM
derivative contracts, primarily interest rate swaps, used to convert a
majority of the Company's fixed rate debt to floating rates. The interest
rates shown for floating rate issues, including the aforementioned
converted issues, are those in effect at March 31, 1995. Such floating
interest rates are determined by formulas, subject to certain minimum
rates.
** Issues indicated by:
"S"--Subordinated in right of payment to claims of depositors and certain
other creditors, as applicable.
"C"--Held by the Company.
"R"--Redeemable in whole, or in part, at the option of Chase, prior to
maturity.
"T"--Qualifies as Tier 2 capital under the Risk-based Capital guidelines.
*** Consists of numerous borrowings that bear interest at rates generally
reflecting market conditions in the applicable countries at the time of
issuance or repricing.
</TABLE>
36
<PAGE> 37
Consolidated Statement of Income (Five Quarters)
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
1995 1994
-----------------------------------------------------
($ in millions, except per share data) 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Interest Revenue
Interest and Fees On Loans. . . . . . . . . . . . . . . . . $1,409 $1,341 $1,252 $1,376 $1,301
Interest On Deposits Placed With Banks. . . . . . . . . . . 143 133 108 127 130
Interest and Dividends on Investment Securities:
Held to Maturity. . . . . . . . . . . . . . . . . . . . . 32 32 29 42 41
Available for Sale. . . . . . . . . . . . . . . . . . . . 94 92 90 178 165
Interest On Federal Funds Sold and Securities Purchased
Under Resale Agreements . . . . . . . . . . . . . . . . . 250 228 233 490 326
Interest On Trading Account Assets. . . . . . . . . . . . . 114 121 89 92 119
------ ------ ------ ------ ------
Total Interest Revenue 2,042 1,947 1,801 2,305 2,082
------ ------ ------ ------ ------
Interest Expense
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . 650 609 538 654 525
Federal Funds Purchased and Securities Sold Under
Repurchase Agreements . . . . . . . . . . . . . . . . . . 294 256 203 176 124
Commercial Paper. . . . . . . . . . . . . . . . . . . . . . 26 23 16 17 13
Other Short-Term Borrowings . . . . . . . . . . . . . . . . 93 72 52 463 393
Intermediate- and Long-Term Debt. . . . . . . . . . . . . . 94 83 76 77 76
------ ------ ------ ------ ------
Total Interest Expense 1,157 1,043 885 1,387 1,131
------ ------ ------ ------ ------
Net Interest Revenue 885 904 916 918 951
Provision for Possible Credit Losses 65 90 100 150 160
------ ------ ------ ------ ------
Net Interest Revenue After Provisions for Possible
Credit Losses 820 814 816 768 791
------ ------ ------ ------ ------
Other Operating Revenue
Fees and Commissions. . . . . . . . . . . . . . . . . . . . . 469 492 458 480 446
Foreign Exchange Trading Revenue. . . . . . . . . . . . . . 92 67 50 78 85
Trading Account Revenue (Losses). . . . . . . . . . . . . . (48) (35) 138 73 94
Investment Securities Gains . . . . . . . . . . . . . . . . 24 11 15 1 79
Other Revenue . . . . . . . . . . . . . . . . . . . . . . . 135 137 66 168 149
------ ------ ------ ------ ------
Total Other Operating Revenue 672 672 727 800 853
------ ------ ------ ------ ------
Other Operating Expenses
Salaries and Employee Benefits:
Salaries. . . . . . . . . . . . . . . . . . . . . . . . . 451 475 464 418 415
Employee Benefits . . . . . . . . . . . . . . . . . . . . 145 281 122 118 129
------ ------ ------ ------ ------
596 756 586 536 544
Net Occupancy . . . . . . . . . . . . . . . . . . . . . . 93 98 98 98 100
Equipment Rentals, Depreciation and Maintenance . . . . . 83 85 77 74 71
Other Expenses. . . . . . . . . . . . . . . . . . . . . . 306 336 306 365 342
------ ------ ------ ------ ------
Total Other Operating Expenses 1,078 1,275 1,067 1,073 1,057
------ ------ ------ ------ ------
Income Before Taxes. . . . . . . . . . . . . . . . . . . 414 211 476 495 587
Applicable Income Taxes (Benefits) . . . . . . . . . . . 154 (18) 171 188 223
------ ------ ------ ------ ------
Net Income $ 260 $ 229 $ 305 $ 307 $ 364
------ ------ ------ ------ ------
Net Income Applicable to Common Stock $ 229 $ 198 $ 274 $ 272 $ 333
------ ------ ------ ------ ------
Average Common and Common Equivalent Shares
Outstanding (in millions) 178.1 179.8 184.4 186.2 185.4
------ ------ ------ ------ ------
Primary Earnings Per Common Share $ 1.29 $ 1.10 $ 1.49 $ 1.46 $ 1.80
------ ------ ------ ------ ------
Cash Dividends Declared Per Common Share $ .40 $ .40 $ .40 $ .33 $ .33
------ ------ ------ ------ ------
</TABLE>
37
<PAGE> 38
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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 three months ended
March 31, 1995
(b) Report on Form 8-K
The registrant filed the following reports on Form 8-K during the
quarter ended March 31, 1995:
Date of
Report Items Reported
1/17/95 - 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) Statement of Condition of The Chase Manhattan
Corporation at December 31, 1994 and 1993.
(ii) Statement of Income of The Chase Manhattan
Corporation for the quarters and years ended
December 31, 1994 and 1993.
(iii) Summary of Changes in Stockholders Equity of The
Chase Manhattan Corporation for the twelve months
ended December 31, 1994 and 1993.
(iv) Statement of Condition of The Chase Manhattan Bank,
N.A. at December 31, 1994 and 1993.
1/17/95 -- 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 issuance and sale of
$150,000,000 aggregate principal amount of 8.80%
Subordinated Notes Due 2000.
1/26/95 -- 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
$100,000,000 aggregate principal amount of 9.05%
Subordinated Notes Due 2002.
38
<PAGE> 39
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE CHASE MANHATTAN CORPORATION
(Registrant)
Date: May 15, 1995 By: /s/ LESTER J. STEPHENS, JR.
-------------------------------------
Lester J. Stephens, Jr.
(Senior Vice President and Controller)
39
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DOCUMENT PAGE
<S> <C> <C>
10M Amended list of Executive Officers who have entered into termination agreements
with the Company 41
11 Statement re: Computation of Earnings Per Common Share for the
quarters ended March 31, 1995 and 1994 42
12 Statement re: Computation of Ratios of Earnings to Fixed Charges for the
quarters ended March 31, 1995 and 1994 and for each of the five
years in the period ended December 31, 1994 43
27 Financial Data Schedule for the three months ended March 31, 1995 44
</TABLE>
40
<PAGE> 41
EDGAR Graphics Appendix
Pursuant to Regulation S-T Item 304, the following is a description of the
graphic image material identified in the foregoing Management's Discussion and
Analysis of Financial Condition and Results of Operations by the word [Graph]
followed by the number of the graphic or image.
<TABLE>
<CAPTION>
Graphic Number Page Description
- -------------- ---- -----------
<S> <C> <C>
1. 11 Bar graph entitled, "Global Financial Services - Revenue by Product
($ in millions)" showing the following revenue amounts in separate bars by product for the
first quarter 1995 and 1994, respectively: Transaction & Information Services - 279 and 283;
Trading - 94 and 223; Loan Portfolio - 165 and 183; Investment Banking - 145 and 147; Individual
Investment Services - 93 and 87; and Product Revenue Overlap & Other - (36) and (34).
2. 12 Bar graph entitled, "Retail Businesses - Revenue by Product ($ in millions)", showing the
following revenue amounts in separate bars by product for the first quarter 1995 and 1994,
respectively: Credit Card - 316 and 351; Consumer Deposit Products - 169 and 171; Business
Services - 116 and 107; Mortgage - 98 and 81; and Other Retail Products - 75 and 87.
3. 16 Bar graph entitled "Cumulative Interest Rate Gaps March 31, 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 9.1 and 5.3, for 1-3
months; net assets of 6.4 and 0.1, for 3- 9 months; net assets of 2.3 and net liabilities of
6.1, for 1996; net liabilities of 1.1 and 9.5, for 1997; net liabilities of 6.4 and 11.8, for
1998; net liabilities of 9.9 and 13.5, for 1999; net liabilities of 8.3 and 11.2, for 2000
and net liabilities of 7.5 and 10.4, 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 March 31, 1995, the following Executive Officers had entered into the
first form of such termination agreement with the Company:
Thomas G. Labrecque
Richard J. Boyle
Michael P. Esposito, Jr.
As of March 31, 1995, the following Executive Officers had entered into the
second form of such termination agreement with the Company:
Donald L. Boudreau
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
41
<PAGE> 1
Computation of Earnings Per Common Share Exhibit 11
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended March 31,
-------------------------
($ in millions, except per share amounts) 1995 1994
------ ------
<S> <C> <C>
Primary:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 260 $ 364
Less: Preferred Stock Dividend Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 31
------- -------
Net Income Applicable to Common Stock $ 229 $ 333
------- -------
Average Common and Common Equivalent Shares Outstanding. . . . . . . . . . . . . . . . . . . . . . 178,085,735 185,421,780
------- -------
Primary Earnings Per Common Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.29 $ 1.80
------- -------
Assuming Full Dilution:
Net Income Applicable to Common Stock $ 229 $ 333
------- -------
Average Common and Common Equivalent Shares Outstanding. . . . . . . . . . . . . . . . . . . . . . 178,085,735 185,421,780
Add: Shares Issuable Upon Exercise of Stock Options and Conversion of Restricted Stock Units. . . 1,234,071 893,704
------- -------
Shares of Common and Common Equivalent Stock Outstanding -- As Adjusted. . . . . . . . . . . . . . 179,319,806 186,315,484
------- -------
Earnings Per Common Share Assuming Full Dilution $ 1.28 $ 1.79
------- -------
</TABLE>
42
<PAGE> 1
Computation of Ratios of Earnings to Fixed Charges Exhibit 12
The Chase Manhattan Corporation and Subsidiaries
<TABLE>
<CAPTION>
Quarter Ended
March 31, 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) . . . . . . . . . . . . . . . $ 260 $ 364 $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 . . . . . . 260 364 1,205 466 639 520 (334)
Less: Equity in Undistributed Income (Loss)
of Unconsolidated Subsidiaries and
Associated Companies . . . . . . . . . . 5 1 7 36 11 (32) (40)
Income Taxes . . . . . . . . . . . . . . . . . . 154 223 565 265 186 124 203
Fixed Charges Excluding Interest On Deposits . . 525 624 2,187 2,670 2,277 1,988 3,190
------ ------ ------ ------ ------ ------ ------
Total Earnings, Excluding Interest On
Deposits, As Adjusted . . . . . . . . . . . . 934 1,210 3,950 3,365 3,091 2,664 3,099
Interest On Deposits . . . . . . . . . . . . . . 650 525 2,326 2,014 2,935 4,374 5,273
------ ------ ------ ------ ------ ------ ------
Total Earnings, Including Interest On
Deposits, As Adjusted . . . . . . . . . . . . $1,584 $1,735 $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 . . . . . . . $ 507 $ 606 $2,119 $2,591 $2,205 $1,920 $3,115
One-Third of Net Rental Expenses . . . . . . . . 18 18 68 79 72 68 75
------ ------ ------ ------ ------ ------ ------
Total Fixed Charges For Ratio, Excluding
Interest On Deposits . . . . . . . . . . . . . 525 624 2,187 2,670 2,277 1,988 3,190
Interest On Deposits . . . . . . . . . . . . . . 650 525 2,326 2,014 2,935 4,374 5,273
------ ------ ------ ------ ------ ------ ------
Total Fixed Charges For Ratio, Including
Interest On Deposits . . . . . . . . . . . . . $1,175 $1,149 $4,513 $4,684 $5,212 $6,362 $8,463
------ ------ ------ ------ ------ ------ ------
Ratio Of Earnings To Fixed Charges:
Excluding Interest On Deposits . . . . . . . . . 1.8x 1.9x 1.8x 1.3x 1.4x 1.3x **
Including Interest On Deposits . . . . . . . . . 1.3x 1.5x 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.
43
<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 MARCH 31, 1995; THE CONSOLIDATED STATEMENTS
OF INCOME, CHANGES IN STOCKHOLDERS' EQUITY AND CASH FLOWS FOR THE THREE
MONTHS ENDED MARCH 31, 1995 AND THE FORM 10-Q OF THE CHASE MANHATTAN
CORPORATION FOR THE QUARTER ENDED MARCH 31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,424
<INT-BEARING-DEPOSITS> 6,521
<FED-FUNDS-SOLD> 7,347
<TRADING-ASSETS> 20,550
<INVESTMENTS-HELD-FOR-SALE> 5,256
<INVESTMENTS-CARRYING> 2,043
<INVESTMENTS-MARKET> 2,046
<LOANS> 64,135
<ALLOWANCE> 1,419
<TOTAL-ASSETS> 120,722
<DEPOSITS> 68,297
<SHORT-TERM> 15,842<F1>
<LIABILITIES-OTHER> 22,761<F2>
<LONG-TERM> 5,298
<COMMON> 372
0
1,400
<OTHER-SE> 6,752
<TOTAL-LIABILITIES-AND-EQUITY> 120,722
<INTEREST-LOAN> 1,409
<INTEREST-INVEST> 126
<INTEREST-OTHER> 507<F3>
<INTEREST-TOTAL> 2,042
<INTEREST-DEPOSIT> 650
<INTEREST-EXPENSE> 1,157
<INTEREST-INCOME-NET> 885
<LOAN-LOSSES> 65
<SECURITIES-GAINS> 24
<EXPENSE-OTHER> 1,078
<INCOME-PRETAX> 414
<INCOME-PRE-EXTRAORDINARY> 260
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 260
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.28
<YIELD-ACTUAL> 3.54
<LOANS-NON> 644
<LOANS-PAST> 360
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,414
<CHARGE-OFFS> 108
<RECOVERIES> 46
<ALLOWANCE-CLOSE> 1,419
<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 11,489
Commercial Paper 1,713
Other Short-Term Borrowings 2,640
Total 15,842
<F2>Other liabilities include the following:
Trading Account Liabilities 14,651
Acceptances Outstandings 893
Accrued Interest Payable 700
Accounts Payable, Accrued Expenses
and Other Liabilities 6,517
Total 22,761
<F3>Other interest income includes the following:
Interest on Deposits Placed with Banks 143
Interest on Federal Funds Sold and
Securities Purchased Under Resale
Agreements 250
Interest on Trading Account Assets 114
Total 507
</FN>
</TABLE>
