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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report March 19, 1996
(Date of earliest event reported)
THE CHASE MANHATTAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-5945 13-2633613
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
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)
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
Chemical Banking Corporation ("Chemical") announced on March
19, 1996 that its Board of Directors had declared a
quarterly dividend on its common stock of $.56 per share, an
increase from the previous quarter's dividend of $.50 per
share. The dividend will be payable on April 30, 1996 to
holders of record at the close of business on April 4, 1996.
Since the record date is after the merger of Chemical and
The Chase Manhattan Corporation ("Chase"), Chase common
stockholders will also receive such dividend. A copy of the
press release relating to the dividend announcement is
attached as an exhibit hereto.
Chemical and Chase announced on March 21, 1996 their revised
estimates of merger-related costs and anticipated savings as
well as their financial targets for the "new" Chase
Manhattan Corporation (the "Corporation") following the
merger on March 31, 1996.
The two companies announced that they now anticipate annual
savings from their merger to be $1.7 billion, $200 million
greater than previously estimated. This increase results
from higher than expected salary, real estate and technology
and systems integration savings.
The companies also said that they expected 30 percent of the
savings to be realized by the end of 1996, 70 percent by
year-end 1997 and the total by the end of 1998. These
annual expense reductions are expected to be realized
without any job eliminations beyond those announced in
August 1995.
Also announced were one-time costs related to the merger of
$1.9 billion, an increase of $400 million from earlier
estimates. These increased costs are associated with
severance, facilities consolidations, disposal of equipment
and systems integration, as well as the elimination of
certain operations. Of that figure, $1.65 billion, or
approximately $1.0 billion on an after-tax basis, will be
taken as a charge in the first quarter of 1996, with the
remaining $250 million of expenses to be substantially
incurred over the two years following the merger.
The companies also confirmed longer-term financial targets
for the Corporation of double-digit operating earnings per
share growth in each of the three years through 1998, and a
core efficiency ratio in the low 50 percent range and a
return on average common shareholders' equity of 18 percent
or higher by the end of 1998.
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The companies also for the first time announced their 1996
operating goals for the merged institution:
o Earnings per share growth in excess of 15 percent
o Efficiency ratio in the high 50 percent range
o Operating revenue growth of 5-7 percent
o Non-interest expenses of approximately $9.1 billion
o Return on common shareholders' equity of 17 percent
The companies also announced that they expected that first
quarter 1996 operating earnings to exceed analysts'
consensus estimate of $1.61 per share. In addition to the
merger-related restructuring charge noted above, they
announced a number of special items to be recognized in the
first quarter. These items include a charge of $100 million
against the Corporation's reserve for credit losses, as a
result of conforming charge-off policies with respect to
credit card receivables; the loss of $60 million ($37
million after-tax) on the sale of a building in Japan; a
charge of $40 million ($25 million after-tax) related to the
conforming of pension liabilities; and anticipated aggregate
tax benefits and refunds of $150 million.
The managements of the companies also emphasized that their
target of overall revenue growth of 5-7% for 1996 was on an
"operating" basis (that is, on a basis that excludes special
one-time items and the impact of securitizations), rather
than on a "reported" basis and that such target was based on
their expectation that the Corporation's net interest income
would increase by approximately 3-4% in 1996 (excluding the
impact of securitizations undertaken during the year) and
that the Corporation's non-interest revenue would increase
by more than 7% over the 1995 amount. With respect to
credit quality, management indicated that it believes the
quality of the Corporation's commercial and industrial loan
portfolio will remain relatively stable in 1996 (although it
did not expect commercial loan recoveries to equal 1995
levels), but that the Corporation's credit card net charge-
offs as a percentage of average credit card receivables
outstanding were expected to approximate 4.5% during 1996
(as compared with approximately 4.0% in 1995). A higher
level of credit card net charge-offs is expected as a result
of the 25% growth in outstandings experienced during 1995
and anticipated further growth in outstandings of 15-20% in
1996, and from anticipated higher levels of delinquencies
and personal bankruptcies.
Finally, as part of the Corporation's commitment to a
disciplined capital policy, management indicated that it:
had targeted a Tier 1 capital ratio for the Corporation of 8-
8.25%; would divest or take other appropriate action to
address any businesses determined by the Corporation to be
underperforming; would return excess capital to
shareholders; would, for the 180 days following consummation
of the merger, repurchase shares of common stock of the
Corporation only for
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employee benefit plan purposes and in accordance with the
pooling-of-interests accounting rules; and expected that,
following the merger, the dividend practice of the
Corporation would be to pay a common stock dividend equal to
approximately 25-35% of the Corporation's net income less
preferred dividends. Future dividend policies of the
Corporation following the merger will be determined by the
Board of Directors in light of the earnings and financial
condition of the Corporation and its subsidiaries and other
factors, including applicable governmental regulations and
policies.
A copy of the companies' joint press release is attached as
an exhibit hereto. That press release and this Current
Report on Form 8-K contain statements that are forward-
looking within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject
to risks and uncertainties, and the Corporation's actual
results following the merger may differ materially from
those set forth in such forward-looking statements. Factors
that might cause such a difference include, but are not
limited, to the following:
Because of the inherent uncertainties associated with
merging two large companies, there can be no assurance that
the Corporation will be able to realize fully the cost
savings it currently expects to realize as a result of the
merger, or that such savings will be realized at the times
currently anticipated. Currently unforseen changes in real
estate markets or personnel requirements, if they occur,
could affect the timing and magnitude of the anticipated
savings. Further, the technology integration and systems
conversions to be undertaken in connection with the merger
include 67 major suites of systems and over 1,500 underlying
individual applications. Each suite will be processing
volumes at much higher levels than previously and operating
feeds to the selected suites have had to be adapted to
conform to processing requirements. Since these activities
are highly complex and technologically sophisticated,
currently unanticipated problems, if they occur, could delay
the implementation timing or cost more than anticipated.
The Corporation's revenue growth outlook assumes retention
of major clients of Chase and Chemical with minimal merger-
related revenue loss. However, the Corporation operates in
a highly competitive environment, which is expected to
become increasingly competitive, and there is no assurance
that current customers of Chemical and Chase will continue
to do the same level of business with the new Corporation
following the merger.
Furthermore, the Corporation has identified its global
markets, global services, investment banking, private
banking and national consumer business as businesses that it
believes will be primarily responsible for providing the
anticipated revenue growth of the Corporation. However,
there is no
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assurance that such businesses will experience revenue
growth at the rates currently anticipated. The
profitability of these businesses, as well as the
Corporation's credit quality, could be adversely affected by
a worsening of general economic conditions, particularly by
a higher domestic interest rate environment, as well as by
foreign and domestic trading market conditions. An economic
downturn or significantly higher interest rates could
increase the risk that a greater number of the Corporation's
customers would become delinquent on their loans or other
obligations to the Corporation, or would refrain from
securing additional debt. In addition, a higher level of
domestic interest rates could affect the amount of assets
under management by the Corporation (for example, by
affecting the flows of moneys to or from the mutual funds
managed by the Corporation), impact the willingness of
financial investors to participate in loan syndications and
underwritings managed by the Corporation's corporate finance
business, adversely impact the Corporation's loan and
deposit spreads and affect its domestic trading revenues.
Revenues from foreign trading markets may also be subject to
negative fluctuations as a result of the impact of
unfavorable political and diplomatic developments, social
instability and changes in the policies of central banks or
foreign governments, and the impact of these fluctuations
could be accentuated by the volatility and lack of relative
liquidity in some of these foreign trading markets.
Additional factors that could affect the prospects of the
Corporation's businesses, including actions that might be
taken by its banking regulators or the results of pending
legislation or judicial decisions, are further discussed in
Chemical's Annual Report on Form 10-K for the year ended
December 31, 1995.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(c) Exhibits
99.1 Press release of Chemical dated March 19, 1996.
99.2 Press release dated March 21, 1996.
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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)
By: /s/ Ronald C. Mayer
-----------------------
Ronald C. Mayer
Secretary
March 25, 1996
67595
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EXHIBIT INDEX
Exhibit Document
99.1 Press release of Chemical dated March 19, 1996.
99.2 Press release dated March 21, 1996.
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[CHEMICAL LOGO]
Press Contact: Kathleen Baum
212-270-5089
Investor Contact: John Borden
212-270-7318
For Immediate Release
Tuesday, March 19, 1996
CHEMICAL RAISES DIVIDEND
New York, March 19, 1996 -- The Board of Directors of
Chemical Banking Corporation today increased the quarterly
dividend on the outstanding shares of the corporations common
stock to $.56 per share, up 12 percent from $50 per share,
payable April 30, 1996, to stockholders of record at the close of
business on April 4, 1996. On an annual basis, this would
represent an increase in the dividend rate to $2.24 per share
from $2.00 per share.
Because the record date will occur after the merger of
Chemical Banking Corporation and The Chase Manhattan Corporation
on March 31, 1996, all stockholders on the record date, whether
they are former Chase or former Chemical stockholders, will be
entitled to receive the announced dividend.
# # #
67667
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News Release
For Immediate Release
March 21, 1996 Press Contact: Kathleen Baum
(212) 270-5089
John Stefans
(212) 270-7438
Investor Contact: John Borden
(212) 270-7318
Chemical and Chase Raise Estimates of Annual Expense Savings
and One-Time Costs of Their Merger
New York, March 21, 1996 -- Chemical Banking Corporation and
The Chase Manhattan Corporation today announced they have raised
their estimates of annual expense savings and one-time costs,
increasing the value of their merger. They said they now
anticipate annual savings to be $1.7 billion, $200 million
greater than previously estimated. The increase results from
higher than expected salary, real estate and technology and
systems integration savings.
The companies said they expect 30 percent of the savings to
be realized by the end of 1996, 70 percent by year-end 1997 and
the total by the end of 1998. These annual expense reductions
are expected to be realized without any job eliminations beyond
those announced n August 1995.
Also announced were one-time costs related to the merger of $1.9
billion, an increase of $400 million from earlier estimates.
These increased costs are associated with severance, facilities
consolidation, disposal of equipment and systems integration, as
well as the elimination of certain operations. Of that figure,
$1.65 billion, or approximately $1.0 billion on an after-tax
basis, will be taken as a charge in the first quarter of 1996,
with the additional $250 million on expenses to be substantially
incurred over the two years following the merger.
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The companies also confirmed longer-term financial targets
for the new Chase of double-digit operating earnings per share
growth in each of the three years through 1998, and a core
efficiency ratio in the low 50 percent range and a return on
average common shareholders' equity of 18 percent or better by
the end of 1998.
The companies also for the first time announced their 1996
operating goals for the merged institution:
o Earnings per share growth in excess of 15 percent
o Efficiency ratio in the high 50 percent range
o Operating revenue growth of 5-7 percent
o Non-interest expenses of approximately $9.1 billion
o Return on common shareholders' equity of 17 percent.
The companies also announced that they expect first quarter
1996 operating earnings to exceed the analysts' consensus
estimate of $1.61 per share. In addition to the merger-related
restructuring charge noted above, they announced a number of
special items to be recognized in the first quarter. These items
include a charge of $100 million against a new Chase's reserve
for credit losses, as a result of conforming charge-off policies
with respect to credit card receivables; the loss of $60 million
($27 milion after-tax) on the sale of a building in Japan; a
charge of $40 million (25 million after-tax) related to
conforming pension liabilities, and anticipated aggregate tax
benefits and refunds of $150 million.
# # #
The forward-looking statements contained in this release are
subject to risks and uncertainties. The Corporation's actual
results following the merger may differ materially from those set
forth in such forward-looking statements. Reference is made to
the Corporation's reports filed with the Securities and Exchange
Commission for a discussion of factors that may cause such
differences to occur.
