<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of the Report: October 20, 1994 Commission file number 1-5805
------------------ -------
CHEMICAL BANKING CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2624428
- ---------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.
270 Park Avenue, New York, NY 10017
- ------------------------------ --------------
(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 270-6000
--------------
<PAGE> 2
Item 5. Other Events
- ---------------------
1.Chemical Banking Corporation ("the Corporation") announced on
October 18, 1994, that 1994 third quarter net income was $439
million, or $1.60 per common share, up 24 percent from earnings
on a comparable basis of $355 million, or $1.26 per share, in
the third quarter of 1993.
Reported net income in the 1993 third quarter was $502 million,
or $1.84 per common share, when the Corporation recognized
income tax benefits of $214 million and incurred a one-time
merger related charge of $115 million ($67 million after tax).
For the first nine months of 1994, net income was $1,115
million, an increase of 16 percent from $958 million on a
comparable basis in the same period of 1993. Reported net
income for the first nine months of 1993 was $1,257 million,
when the Corporation benefited from $366 million in accounting
changes and tax benefits and incurred the aforementioned one-
time merger related charge.
A copy of the Corporation's Press Release announcing the results
of operations for the 1994 third quarter is incorporated herein.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
- -------------------------------------------------------------------
The following exhibits are filed with this Report:
Exhibit Number Description
-------------- -----------------------------------
99 Press Release - 1994 Third Quarter
Earnings.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
CHEMICAL BANKING CORPORATION
(Registrant)
Dated October 20, 1994
----------------- by /s/Joseph L. Sclafani
-----------------------
Joseph L. Sclafani
Controller
[Principal Accounting Officer]
<PAGE> 4
EXHIBIT INDEX
Exhibit Number Description Page at Which Located
- -------------- ----------- ---------------------
99 Press Release 5
<PAGE> 5
Press Contact: Ken Herz
(212) 270-4621
John Meyers
(212) 270-7454
Investor Contact: John Borden
(212) 270-7318
For Immediate Release
Tuesday, October 18, 1994
New York, October 18 -- Chemical Banking Corporation today
reported third quarter net income of $439 million, or $1.60 per
common share, up 24 percent from earnings on a comparable basis of
$355 million, or $1.26 per share, in the third quarter of 1993.
Reported net income in last year's third quarter was $502
million, or $1.84 per share, which included income tax benefits of
$214 million and a one-time merger-related charge of $115 million
($67 million after-tax).
For the first nine months of 1994, net income was $1.115
billion, an increase of 16 percent from $958 million on a
comparable basis in the same period a year ago.
"Earnings benefited from solid performances in several core
businesses, including national consumer services and capital
markets-related activities, while credit costs continued to
decrease significantly," said Walter V. Shipley, chairman and chief
executive officer. "We also increased the common dividend by 16
percent and completed a stock repurchase program during the
quarter, reflecting our continued positive outlook for the
corporation."
The provision for losses for the third quarter was $100
million, down 38 percent from $160 million in the second quarter
and down 66 percent from $298 million in the third quarter a year
ago. At September 30, total nonperforming assets were $2,193
million, down 12 percent from $2,493 million at June 30 and down 47
percent from $4,132 million on September 30 a year ago.
<PAGE> 6
CAPITAL ACTIONS
On September 20, the corporation increased the quarterly
dividend on the outstanding shares of its common stock to 44 cents
per share, up 16 percent from 38 cents per share. On an annual
basis, this represents an increase in the dividend rate to $1.76,
from $1.52. Since March 1993, the corporation has increased the
common dividend by 47 percent. In addition, during the third
quarter the corporation completed the repurchase of 10 million
shares of its common stock in the open market under a stock
repurchase plan originally announced on May 27, 1994.
The corporation also redeemed its approximately $400 million
of Adjustable Rate Series C Preferred Stock on July 15, 1994 and
issued $200 million of Series L Adjustable Rate Cumulative
Preferred Stock on June 8, 1994. The one-time premium paid upon
redemption to holders of the Series C Preferred Stock reduced net
income per common share in the current quarter by $.05.
The corporation's estimated Tier I risk-based capital ratio
was 8.1 percent at September 30, compared with 7.9 percent a year
ago. At September 30, the estimated total risk-based capital ratio
was 12.3 percent, compared with 12.1 percent a year ago.
NET INTEREST INCOME
Net interest income for the third quarter was $1,177 million,
compared with $1,163 million in the same year-ago period. The
rise in net interest income is attributable to an increase in
average interest-earning assets.
Average interest-earning assets for the third quarter were
$129.5 billion, compared with $125.8 billion in the same year-ago
period.
The net yield on average interest-earning assets was 3.63
percent in the third quarter, compared with 3.68 percent in the
third quarter of 1993.
Average interest-earning assets increased when compared with
the second quarter of 1994, primarily reflecting growth in consumer
loans, particularly from mortgage and credit card activities, and
in commercial loans, including those to middle market companies.
NONINTEREST REVENUE
Noninterest revenue for the third quarter was $984 million,
compared with $1,004 million in the same period a year ago.
Trust and investment management fees were $104 million in the
third quarter, compared with $97 million in the year-ago quarter,
reflecting the acquisition of Ameritrust Texas Corporation.
<PAGE> 7
Corporate finance fees were $97 million in the third quarter,
up from $95 million in the third quarter a year ago.
Fees for other banking services were $285 million in the
quarter, up from $266 million in the year-ago third quarter. This
improvement primarily reflected increased revenues generated by the
new co-branded Shell MasterCard.
Combined revenues from all trading activities were $212
million in the third quarter versus $268 million in the same year-
ago period, but up from $203 million in the second quarter and from
$185 million in the first quarter of 1994. The consistent results
of the past three quarters reflected the corporation's emphasis on
market-making and customer-related activities in its trading
business, while results for the third quarter of 1993 were affected
by a more favorable trading environment in certain markets such as
domestic fixed income and foreign exchange.
Other noninterest revenue for the third quarter was $202
million versus $154 million in the same period a year ago.
Revenues on equity-related investments in the third quarter were
$86 million, compared with $57 million in the same year-ago period.
The current quarter included $80 million from the sale of LDC-
related past-due interest bonds, versus $52 million from the sale
of such bonds in the 1993 third quarter.
NONINTEREST EXPENSE
Noninterest expense in the third quarter was $1,311 million,
compared with $1,255 million (excluding the one-time merger-related
charge of $115 million) in the third quarter of 1993.
Noninterest expense for the third quarter of 1994 included $28
million of expenses resulting from the July 1, 1994 acquisition of
Margaretten Financial Corporation. Expenses for the third quarter
of 1994 also reflected operating expenses of approximately $11
million associated with Ameritrust and $30 million in operating
costs connected with the Shell MasterCard.
Foreclosed property expense was $2 million in the quarter,
compared with $70 million in the third quarter a year ago,
reflecting significant progress in managing the corporation's
foreclosed real estate portfolio.
Total headcount at September 30, 1994 was 42,492 (including
1,574 from the Margaretten acquisition), compared with 41,670 at
September 30, 1993.
<PAGE> 8
PROVISION AND ALLOWANCE FOR LOSSES
The provision for losses was $100 million in the third
quarter, compared with $160 million in the second quarter of 1994
and $298 million in the third quarter of 1993.
Total net charge-offs were $125 million in the third quarter,
compared with $185 million (excluding the final valuation of the
LDC portfolio) in the second quarter of 1994 and $325 million in
the third quarter a year ago. Included in these amounts were
consumer net charge-offs of $100 million in the third quarter,
compared with consumer net charge-offs of $94 million in the second
quarter and $84 million in the third quarter a year ago.
Recoveries in the third quarter were $76 million, compared
with $55 million in the second quarter and $67 million in the third
quarter a year ago.
At September 30, the total allowance for losses was $2,650
million, compared with $2,972 million on the same date a year ago.
The LDC allowance was transferred to the general reserve in the
second quarter of 1994 following completion of the Brazilian
refinancing package and the final valuation of the LDC portfolio.
NONPERFORMING ASSETS
At September 30, total nonperforming assets were $2,193
million, down $300 million from June 30 and down $1,939 million, or
47 percent, from September 30, 1993.
Nonperforming loans at September 30 were $1,524 million, down
from $1,758 million at June 30 and down from $3,046 million at
September 30 last year. Assets acquired as loan satisfactions were
$669 million at September 30, down from $735 million at June 30 and
down $417 million from $1,086 million on September 30 a year ago.
OTHER FINANCIAL DATA
As previously mentioned, on July 1 Chemical completed its
tender offer for all of the outstanding common stock and the
depositary shares representing the preferred stock of Margaretten
Financial Corporation, a leading mortgage banking company. With
this acquisition, Chemical now ranks fourth nationwide in mortgage
originations and fifth in mortgage servicing.
The corporation's effective tax rate was 41.5 percent in the
third quarter. Tax expense in the year-ago third quarter included
an income tax benefit of $214 million.
The impact of marking the "Available for Sale" securities to
market resulted in a net unfavorable impact of approximately $296
million after-tax on the corporation's stockholders' equity at
September 30, 1994, compared with a net unfavorable impact of
<PAGE> 9
$291 million after-tax at June 30, 1994. The market valuation
does not include the favorable impact of related funding sources.
On January 1, 1994, the corporation adopted FASB
Interpretation No. 39, which changed the reporting of unrealized
gains and losses on interest rate and foreign exchange contracts on
the balance sheet. The adoption of this Interpretation has
resulted in an increase of assets and liabilities of $17.0 billion
at September 30, 1994, with unrealized gains reported as Trading
Assets-Risk Management Instruments and the unrealized losses
reported in Other Liabilities.
Net income for the first nine months of 1993 included a $35
million net favorable impact from the January 1, 1993 adoption of
two accounting standards relating to the recognition of tax
benefits and the costs associated with postretirement benefits.
Total assets at September 30 were $169.3 billion, versus
$149.4 billion on the same date a year ago. Total loans at
September 30 were $77.1 billion, compared with $77.8 billion a year
ago. At the end of the third quarter, total deposits were $93.0
billion, compared with $95.5 billion at September 30, 1993.
The return on average total assets was 1.03 percent for the
third quarter, compared with 1.39 percent (.98 percent excluding
tax benefits and the one-time charge to expense) in the same year-
ago period.
The return on average common stockholders' equity was 16.92
percent for the third quarter, compared with 20.90 percent (14.26
percent excluding tax benefits and the one-time charge to expense)
in the year-ago third quarter.
Book value per common share was $38.29 at September 30, versus
$35.96 per share on the same date a year ago.
TEXAS COMMERCE BANCSHARES
Texas Commerce Bancshares (TCB) reported net income of $57
million in the third quarter, unchanged from a year ago. Its net
yield on interest-earning assets was 4.29 percent in the third
quarter, versus 3.75 percent in the 1993 third quarter. At
September 30, total assets of TCB were $20.1 billion, versus $22.0
billion a year ago.
-- 30 --
<PAGE> 10
<TABLE>
<CAPTION>
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
(in millions, except per share and ratio data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------- ------------------------------
Pro- Pro-
Forma<a> Forma<a>
1994 1993 1993 1994 1993 1993
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
- --------
Income Before Effect of Accounting Changes $ 439 $ 502 $ 355 $ 1,115 $1,222 $ 958
Net Effect of Changes in Accounting Principles -- -- -- -- 35 35
------ ------ ----- ------- ------ -----
Net Income $ 439 $ 502 $ 355 $ 1,115 $1,257 $ 993
====== ====== ===== ======= ====== =====
Net Income Applicable to Common Stock $ 396 $ 464 $ 317 $ 1,007 $1,140 $ 876
====== ====== ===== ======= ====== =====
PER COMMON SHARE:
- -----------------
Income Before Effect of Accounting Changes $ 1.60 $ 1.84 $ 1.26 $ 4.01 $ 4.41 $ 3.35
Net Effect of Changes in Accounting Principles -- -- -- -- .14 .14
------ ------ ------ ------- ------- ------
Net Income $ 1.60 $ 1.84 $ 1.26 $ 4.01 $ 4.55 $ 3.49
====== ====== ====== ======= ======= ======
Book Value at September 30, $38.29 $35.96 $ 38.29 $ 35.96
Market Value at September 30, $35.00 $45.00 $ 35.00 $ 45.00
Common Stock Dividends Declared $ 0.44<b> $ 0.33 $ 1.20<b> $ 0.99
COMMON SHARES:
- -------------
Average Outstanding 246.6 252.1 251.0 250.8
Period End Outstanding 244.4 252.3 244.4 252.3
BALANCE SHEET AVERAGES:
- ----------------------
Loans $ 75,387 $ 77,614 $ 74,674 $ 79,632
Securities $ 25,717 $ 23,551 $ 26,238 $ 23,630
Total Assets $168,979<C> $ 143,674 $165,750<C> $144,216
Deposits $ 92,794 $ 95,383 $ 94,606 $ 95,155
Long-Term Debt $ 8,546 $ 8,370 $ 8,472 $ 7,971
Stockholders' Equity $ 10,794 $ 10,663 $ 10,999 $ 10,435
PERFORMANCE RATIOS: (Average Balances) <d>
- ------------------
Return on Assets 1.03%<C> 1.39% .90%<C> 1.17%
Return on Common Stockholders' Equity 16.92% 20.90% 14.36% 17.86%
Return on Total Stockholders' Equity 16.14% 18.68% 13.55% 16.11%
CAPITAL RATIOS AT SEPTEMBER 30:
- ------------------------------
Total Stockholders' Equity to Assets 6.4%<C> 7.3%
Common Stockholders' Equity to Assets 5.5%<C> 6.1%
Tier 1 Leverage 5.9%<C><e> 6.9%
Risk Based Capital:
Tier 1 (4.0% required) 8.1%<e>* 7.9%
Total (8.0% required) 12.3%<e>* 12.1%
<FN>
<a>The Corporation recognized its remaining available Federal tax
benefits in the third quarter of 1993 and as a result the
Corporation's earnings beginning in the fourth quarter of 1993
are reported on a fully-taxed basis. The pro-forma columns
exclude the impact of the $115 million merger related charge
($67 million after tax) and assume the Corporation's 1993 third
quarter and nine month results are reported on a fully-taxed
basis.
<b>In the third quarter of 1994, the Corporation increased its
quarterly common stock dividend to $0.44 per share from $0.38
per share.
<C>On January 1, 1994, the Corporation adopted FASI 39, which
increased total assets by approximately $17.0 billion at
September 30, 1994 and total average assets by approximately
$19.5 billion for the 1994 third quarter and $15.6 billion for
the first nine months of 1994.
<d>Performance ratios are based on annualized net income amounts.
<e>The 1994 amounts exclude the net unfavorable impact on
stockholders' equity of $296 million resulting from the
adoption of SFAS No. 115.
*Estimated
</TABLE>
<PAGE> 11
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Three Months Ended
September 30,
-------------------
1994 1993
-------- --------
INTEREST INCOME
Loans $1,473 $ 1,372
Securities 422 428
Trading Assets 181 117
Federal Funds Sold and Securities
Purchased Under Resale Agreements 151 89
Deposits with Banks 86 67
------ ------
Total Interest Income 2,313 2,073
------ ------
INTEREST EXPENSE
Deposits 597 537
Short-Term and Other Borrowings 405 238
Long-Term Debt 134 135
------ ------
Total Interest Expense 1,136 910
------ ------
NET INTEREST INCOME 1,177 1,163
Provision for Losses 100 298
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOSSES 1,077 865
------ ------
NONINTEREST REVENUE
Trust and Investment Management Fees 104 97
Corporate Finance and Syndication Fees 97 95
Service Charges on Deposit Accounts 78 73
Fees for Other Banking Services 285 266
Trading Account and Foreign Exchange Revenue 212 268
Securities Gains 6 51
Other Revenue 202 154
------ ------
Total Noninterest Revenue 984 1,004
------ ------
NONINTEREST EXPENSE
Salaries 574 518
Employee Benefits 108 94
Occupancy Expense 145 148
Equipment Expense 100 81
Foreclosed Property Expense 2 70
Restructuring Charge -- 115
Other Expense 382 344
------ ------
Total Noninterest Expense 1,311 1,370
------ ------
INCOME BEFORE INCOME TAX EXPENSE 750 499
Income Tax Expense (Benefit) 311 (3)
------ ------
NET INCOME $ 439 $ 502
====== ======
NET INCOME APPLICABLE TO COMMON STOCK $ 396 $ 464
====== ======
NET INCOME PER COMMON SHARE $ 1.60 $ 1.84
====== ======
AVERAGE COMMON SHARES OUTSTANDING 246.6 252.1
<PAGE> 12
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Nine Months Ended
September 30,
-------------------
1994 1993
------- -------
INTEREST INCOME
Loans $4,155 $ 4,270
Securities 1,270 1,299
Trading Assets 545 314
Federal Funds Sold and Securities
Purchased Under Resale Agreements 372 245
Deposits with Banks 280 201
------ ------
Total Interest Income 6,622 6,329
------ ------
INTEREST EXPENSE
Deposits 1,660 1,699
Short-Term and Other Borrowings 1,056 743
Long-Term Debt 401 400
------ ------
Total Interest Expense 3,117 2,842
------ ------
NET INTEREST INCOME 3,505 3,487
Provision for Losses 465 973
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOSSES 3,040 2,514
------ ------
NONINTEREST REVENUE
Trust and Investment Management Fees 322 297
Corporate Finance and Syndication Fees 272 250
Service Charges on Deposit Accounts 222 217
Fees for Other Banking Services 854 789
Trading Account and Foreign Exchange Revenue 600 818
Securities Gains 65 126
Other Revenue 447 474
------ ------
Total Noninterest Revenue 2,782 2,971
------ ------
NONINTEREST EXPENSE
Salaries 1,634 1,548
Employee Benefits 329 301
Occupancy Expense 431 438
Equipment Expense 275 244
Foreclosed Property Expense 39 226
Restructuring Charge 48 158
Other Expense 1,160 1,043
------ ------
Total Noninterest Expense 3,916 3,958
------ ------
INCOME BEFORE INCOME TAX EXPENSE AND EFFECT
OF ACCOUNTING CHANGES 1,906 1,527
Income Tax Expense 791 305
------ ------
INCOME BEFORE EFFECT OF ACCOUNTING CHANGES 1,115 1,222
Net Effect of Changes in
Accounting Principles -- 35<a>
------ ------
NET INCOME $1,115 $ 1,257
====== ======
NET INCOME APPLICABLE TO COMMON STOCK $1,007 $ 1,140
====== ======
PER COMMON SHARE:
Income Before Effect of
Accounting Changes $ 4.01 $ 4.41
Net Effect of Changes in
Accounting Principles -- .14<a>
------- --------
Net Income $ 4.01 $ 4.55
======= ========
AVERAGE COMMON SHARES OUTSTANDING 251.0 250.8
<a> On January 1, 1993, the Corporation adopted SFAS 106 which
resulted in a charge of $415 million relating to
postretirement benefits and also adopted SFAS 109 which
resulted in an income tax benefit of $450 million.
<PAGE> 13
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
NONINTEREST REVENUE DETAIL
(in millions)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1994 1993 1994 1993
------ ------ ------ ------
TRUST AND INVESTMENT
MANAGEMENT FEES:
Personal Trust Fees $ 49 $ 46 $ 156 $ 143
Corporate and Institutional
Trust Fees 45 40 136 125
Other, primarily Foreign
Asset Management 10 11 30 29
----- ----- ----- -----
Total $104 $ 97 $ 322 $ 297
===== ===== ===== =====
FEES FOR OTHER BANKING SERVICES:
Credit Card Services Revenue $ 79 $ 59 $ 229 $ 167
Fees in Lieu of Compensating
Balances 49 52 156 156
Commissions on Letters of Credit
and Acceptances 40 39 116 119
Loan Commitment Fees 21 23 66 69
Mortgage Servicing Fees 23 16 57 48
Other Fees 73 77 230 230
----- ----- ----- -----
Total $285 $266 $ 854 $ 789
===== ===== ===== =====
TRADING ACCOUNT AND FOREIGN
EXCHANGE REVENUE:
Interest Rate Contracts $ 95 $116 $ 318 $ 342
Foreign Exchange Revenue 56 79 156 243
Debt Instruments and Other 61 73 126 233
----- ----- ----- -----
Total $212 $268 $ 600 $ 818
===== ===== ===== =====
OTHER REVENUE:
Revenue from Equity-Related
Investments $ 86 $ 57 $ 235 $ 200
Net Gains on LDC-Related Interest
Bond Sales 80 52 125 152
All Other Revenue 36 45 87 122
----- ----- ----- -----
Total $202 $154 $ 447 $ 474
===== ===== ===== =====
CHEMICAL BANKING CORPORATION and Subsidiaries
NONINTEREST EXPENSE DETAIL
(in millions)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1994 1993 1994 1993
------ ------ ------ ------
OTHER EXPENSE:
Professional Services $ 55 $ 48 $ 160 $ 145
Marketing Expense 45 40 142 108
FDIC Assessments 39 42 122 134
Telecommunications 39 30 102 84
Amortization of Intangibles 29 26 85 76
All Other 175 158 549 496
----- ----- ----- -----
Total $382 $344 $1,160 $1,043
===== ===== ====== ======
<PAGE> 14
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
September 30, September 30,
1994 1993
------------- -------------
ASSETS
Cash and Due from Banks $ 8,080 $ 7,335
Deposits with Banks 5,256 4,920
Federal Funds Sold and Securities
Purchased Under Resale Agreements 13,173 11,782
Trading Assets:
Debt and Equity Instruments 11,467 9,547
Risk Management Instruments 18,711<a> --
Securities:
Held-to-Maturity 8,695 16,639
Available-for-Sale 16,271 7,210
Loans (Net of Unearned Income) 77,138 77,779
Allowance for Losses (2,650) (2,972)
Premises and Equipment 2,114 1,811
Due from Customers on Acceptances 1,200 1,262
Accrued Interest Receivable 1,106 1,140
Assets Acquired as Loan Satisfactions 669 1,086
Other Assets 8,104 11,869
--------- --------
TOTAL ASSETS $ 169,334 $149,408
========= ========
LIABILITIES
Deposits:
Demand (Noninterest Bearing) $ 20,430 $ 21,813
Time and Savings 46,338 52,158
Foreign 26,193 21,497
--------- --------
Total Deposits 92,961 95,468
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 19,469 13,530
Other Borrowed Funds 14,969 13,699
Acceptances Outstanding 1,207 1,279
Accounts Payable and Accrued Liabilities 2,385 3,093
Other Liabilities 18,980<a> 3,109
Long-Term Debt 8,555 8,303
--------- ---------
TOTAL LIABILITIES 158,526 138,481
--------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock 1,450 1,854
Common Stock 254 253
Capital Surplus 6,545 6,545
Retained Earnings 3,221 2,287
Net Unrealized Loss on Securities
Available-for-Sale, Net of Taxes (296)<b> --
Treasury Stock, at Cost (366)[C] (12)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 10,808 10,927
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 169,334 $149,408
========= =========
<a> On January 1, 1994, the Corporation adopted FASB
Interpretation No. 39. As a result, assets and liabilities
increased by $17.0 billion at September 30, 1994 with
unrealized gains reported as Trading Assets-Risk Management
Instruments and the unrealized losses reported in Other
Liabilities. Prior to adoption, unrealized gains and losses
were reported net in Other Assets.
<b> On December 31, 1993, the Corporation adopted SFAS 115.
Securities that are identified as available-for-sale are
accounted for at fair value with the related unrealized gains
and losses included in stockholders' equity.
[C] During the 1994 third quarter, the Corporation completed the
repurchase of 10 million shares of its common stock in the
open market under a stock repurchase plan.
<PAGE> 15
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(in millions)
Nine Months Ended
September 30,
-------------------
1994 1993
------ ------
BALANCE AT JANUARY 1, $11,164 $ 9,851
Net Income 1,115 1,257
Dividends Declared:
Preferred Stock (96) (117)
Common Stock (299) (249)
Issuance of Preferred Stock 200 400
Redemption of Preferred Stock (404) (394)
Premium on Redemption of Preferred Stock (12) --
Issuance of Common Stock 16 177
Restricted Stock Granted (11) --
Net Changes in Treasury Stock (354)<a> --
Net Change in the Fair Value of
Available-for-Sale Securities,
Net of Taxes (511) --
Accumulated Translation Adjustment -- 2
-------- --------
Net Change in Stockholders' Equity (356) 1,076
-------- --------
BALANCE AT SEPTEMBER 30, $10,808 $10,927
======== ========
<a> During the 1994 third quarter, the Corporation completed the
repurchase of 10 million shares of its common stock in the
open market under a stock repurchase plan.
<PAGE> 16
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
LOAN INFORMATION
(in millions)
September 30, September 30,
1994 1993
------------- -------------
LOANS:
Domestic Commercial:
Commercial Real Estate $ 6,361 $ 7,797
Other Commercial 23,867 26,851
------- -------
Total Commercial Loans 30,228 34,648
------- -------
Domestic Consumer:
Residential Mortgage 13,152 11,492
Credit Card 8,329 6,436
Other Consumer 6,990 6,084
------- -------
Total Consumer Loans 28,471 24,012
------- -------
Total Domestic Loans 58,699 58,660
Foreign <a> 18,439 19,119
------- -------
Total Loans $77,138 $77,779
======= =======
<a> Included in Foreign are loans previously classified as LDC
loans. Previously reported loan amounts have been
reclassified to conform with the September 30, 1994
presentation.
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
ALLOWANCE RELATED INFORMATION
(in millions, except ratios)
Three Months Nine Months
Ended Ended
Allowance for Losses September 30, September 30,
-------------- -------------
1994 1993 1994 1993
---- ---- ---- ----
Non-LDC Allowance:
Balance at Beginning
of Period $ 2,676 $2,421 $ 2,423 $ 2,206
Provision for Losses 100 298 465 973 <a>
Net Charge-Offs (125) (298) (540) (973)<a>
Transfer from LDC Allowance -- -- 300 200
Allowance Related To
Purchased Assets
of First City Banks -- -- -- 19
Other (1) 8 2 4
------ ------ ------ ------
Balance at End of Period 2,650 2,429 2,650 2,429
------ ------ ------ ------
LDC Allowance:
Balance at Beginning
of Period -- 570 597 819
Provision for Losses -- -- -- --
Net (Charge-Offs) Recoveries -- (1) (239) 70
Losses on Sales and Swaps -- (26) (58) (146)
Transfer to Non-LDC Allowance -- -- (300) (200)
------ ------ ------ ------
Balance at End of Period -- 543 0 543
------ ------ ------ ------
Total Allowance for
Losses $ 2,650 $2,972 $ 2,650 $ 2,972
======= ====== ======= =======
Allowance Coverage Ratios:
Allowance for Losses to:
Loans at Period-End 3.44% 3.82%
Average Loans 3.55% 3.73%
Nonperforming Loans 173.88% 97.57%
<a> The provision and non-LDC net charge-offs included $55 million
related to the decision to accelerate the disposition of
certain nonperforming residential mortgages.
<PAGE> 17
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
NONPERFORMING ASSETS INFORMATION
(in millions)
September 30, September 30,
1994 1993
------------- -------------
NONPERFORMING ASSETS:
Domestic Commercial:
Commercial Real Estate $ 570 $ 767
Other Commercial 474 1,150
------- -------
Total Commercial Loans 1,044 1,917
------- -------
Domestic Consumer:
Residential Mortgage 147 93
Other Consumer 23 22
------- -------
Total Consumer Loans 170 115
------- -------
Total Domestic 1,214 2,032
Foreign, primarily commercial <a> 310 1,014
------- -------
Total Nonperforming Loans 1,524 3,046
Assets Acquired as Loan Satisfactions 669 1,086
------- -------
Total Nonperforming Assets $2,193 $ 4,132
======= =======
<a> Includes nonperforming loans previously classified as LDC
nonperforming loans. Previously reported loan amounts have
been reclassified to conform with the September 30, 1994
presentation.
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
NET CHARGE-OFFS INFORMATION
(in millions)
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- --------------
1994 1993 1994 1993
---- ---- ---- ----
NET CHARGE-OFFS:
Domestic Commercial:
Commercial Real Estate $ 20 $ 51 $ 143 $ 178
Other Commercial 9 118 96 331
----- ----- ----- ------
Total Commercial 29 169 239 509
----- ----- ----- ------
Domestic Consumer:
Residential Mortgage 12 2 24 65
Credit Card 84 76 247 245
Other Consumer 4 6 13 20
----- ----- ----- ------
Total Consumer 100 84 284 330
----- ----- ----- ------
Total Domestic Charge-offs 129 253 523 839
Foreign <a> (4) 72 314 210
----- ----- ----- ------
Total Net Charge-offs $125 $325 $ 837 $1,049
===== ===== ===== ======
<a> Includes charge-offs previously classified as LDC charge-offs.
Previously reported net charge-off amounts have been
reclassified to conform with the 1994 presentation.
<PAGE> 18
<TABLE>
<CAPTION>
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
Average Consolidated Balance Sheet, Interest and Rates
(Taxable-Equivalent Interest and Rates; in millions)
Three Months Ended Three Months Ended
September 30, 1994 September 30, 1993
---------------------------------- -----------------------------------
Average Rate Average Rate
Balance Interest(Annualized) Balance Interest (Annualized)
------- -------------------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Deposits with Banks $ 5,181 $ 86 6.56% $ 4,596 $ 67 5.76%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 12,270 151 4.87% 11,421 89 3.10%
Trading Assets 10,899 181 6.58% 8,593 117 5.40%
Securities:
Held-to-Maturity 8,738 139 6.33% -- -- --%
Available-for-Sale 16,979 286 6.68% -- -- --%
Securities <a> -- -- --% 23,551 428 7.22%
Loans 75,387 1,477 7.78% 77,614 1,376 7.04%
-------- ------- -------- -------
Total Interest-Earning Assets 129,454 $2,320 7.11% 125,775 $ 2,077 6.56%
Allowance for Losses (2,714) (3,077)
Cash and Due from Banks 8,545 8,337
Risk Management Instruments 20,420 --
Other Assets 13,274 12,639
-------- --------
Total Assets $ 168,979 $ 143,674
======== ========
LIABILITIES
Domestic Retail Time Deposits $ 43,049 $ 307 2.83% $ 46,905 $ 305 2.58%
Domestic Negotiable
Certificates of Deposit
and Other Deposits 4,851 47 3.81% 6,208 47 3.02%
Deposits in Foreign Offices 23,580 243 4.09% 20,672 185 3.56%
-------- ------- -------- -------
Total Interest-Bearing Deposits 71,480 597 3.31% 73,785 537 2.89%
-------- ------- -------- -------
Short-Term and Other Borrowings:
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 20,987 242 4.56% 14,747 111 2.99%
Commercial Paper 2,957 32 4.41% 2,415 20 3.30%
Other 8,105 131 6.44 % 6,696 107 6.34%
-------- ------- -------- -------
Total Short-Term and
Other Borrowings 32,049 405 5.02% 23,858 238 3.96%
Long-Term Debt 8,546 134 6.22% 8,370 135 6.39%
-------- ------- -------- -------
Total Interest-
Bearing Liabilities 112,075 1,136 4.02% 106,013 910 3.41%
-------- ------- -------- -------
Demand Deposits 21,314 21,598
Risk Management Instruments 19,459 --
Other Liabilities 5,337 5,400
-------- --------
Total Liabilities 158,185 133,011
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 1,511 1,854
Common Stockholders' Equity 9,283 8,809
-------- --------
Total Stockholders' Equity 10,794 10,663
-------- --------
Total Liabilities and
Stockholders' Equity $ 168,979 $ 143,674
======== ========
INTEREST RATE SPREAD 3.09% 3.15%
===== =====
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING
ASSETS $1,184 3.63% $ 1,167 3.68%
======== ===== ======= =====
<FN>
<a> On December 31, 1993 the Corporation adopted SFAS 115.
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
Average Consolidated Balance Sheet, Interest and Rates
(Taxable-Equivalent Interest and Rates; in millions)
Nine Months Ended Nine Months Ended
September 30, 1994 September 30, 1993
------------------------------- -------------------------------------
Average Rate Average Rate
Balance Interest(Annualized) Balance Interest (Annualized)
------- -------------------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Deposits with Banks $ 4,980 $ 280 7.49% $ 4,227 $ 201 6.34%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 11,964 372 4.15% 9,899 245 3.31%
Trading Assets 11,602 545 6.27% 7,285 314 5.75%
Securities:
Held-to-Maturity 9,405 479 6.81% -- -- --%
Available-for-Sale 16,833 797 6.33% -- -- --%
Securities <a> -- -- --% 23,630 1,301 7.36%
Loans 74,674 4,165 7.45% 79,632 4,283 7.19%
-------- ------- -------- -------
Total Interest-Earning Assets 129,458 $6,638 6.85% 124,673 $ 6,344 6.80%
Allowance for Losses (2,941) (3,095)
Cash and Due from Banks 8,664 8,420
Risk Management Instruments 17,284 --
Other Assets 13,285 14,218
-------- --------
Total Assets $165,750 $144,216
======== ========
LIABILITIES
Domestic Retail Deposits $ 44,457 $ 828 2.49% $ 46,466 $ 938 2.70%
Domestic Negotiable
Certificates of Deposit
and Other Deposits 5,166 137 3.56% 6,406 146 3.05%
Deposits in Foreign Offices 23,079 695 4.01% 20,904 615 3.92%
-------- ------- -------- -------
Total Interest-Bearing Deposits 72,702 1,660 3.05% 73,776 1,699 3.08%
-------- ------- -------- -------
Short-Term and Other Borrowings:
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 18,549 568 4.09% 15,890 372 3.13%
Commercial Paper 2,646 78 3.96% 2,463 65 3.50%
Other 9,047 410 6.06% 6,531 306 6.26%
-------- ------- -------- -------
Total Short-Term and
Other Borrowings 30,242 1,056 4.67% 24,884 743 3.99%
Long-Term Debt 8,472 401 6.33% 7,971 400 6.71%
-------- ------- -------- -------
Total Interest-
Bearing Liabilities 111,416 3,117 3.74% 106,631 2,842 3.56%
-------- ------- -------- -------
Demand Deposits 21,904 21,379
Risk Management Instruments 15,582 --
Other Liabilities 5,849 5,771
-------- --------
Total Liabilities 154,751 133,781
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 1,623 1,899
Common Stockholders' Equity 9,376 8,536
-------- --------
Total Stockholders' Equity 10,999 10,435
-------- --------
Total Liabilities and
Stockholders' Equity $165,750 $144,216
======== ========
INTEREST RATE SPREAD 3.11% 3.24%
===== =====
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING
ASSETS $3,521 3.63% $ 3,502 3.75%
======= ===== ======= =====
<FN>
<a> On December 31, 1993 the Corporation adopted SFAS 115.
<PAGE> 20
</TABLE>
UNAUDITED
TEXAS COMMERCE BANCSHARES, INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
1994 1993 1994 1993
---- ---- ---- ----
NET INTEREST INCOME $173 $171 $ 510 $ 523
Provision for Losses (10) (5) (30) 6
----- ----- ----- -----
Net Interest Income After
Provision for Losses 183 176 540 517
NONINTEREST REVENUE 99 107 307 297
NONINTEREST EXPENSE 193 206 582 652<a>
----- ----- ----- -----
Income Before Income Tax
Expense and Effect
of Accounting Changes 89 77 265 162
Income Tax Expense 32 20 97 46
----- ----- ----- -----
Income Before Effect of
Accounting Changes 57 57 168 116
Net Effect of Changes in
Accounting Principles -- -- -- 14
------ ----- ----- -----
NET INCOME $ 57 $ 57 $ 168 $ 130
====== ===== ===== =====
<a> Includes $43 million restructuring charge related to the
acquisition of certain former First City assets.
UNAUDITED
TEXAS COMMERCE BANCSHARES, INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
September 30,
--------------------
1994 1993
-------- -------
ASSETS
Cash and Due from Banks $ 1,783 $ 1,867
Deposits with Banks 5 5
Federal Funds Sold and Securities
Purchased Under Resale Agreements 3,584 5,966
Trading Assets 39<a> 12
Securities:
Held-to-Maturity 1,454 1,765
Available-for-Sale 1,569 359
Loans (Net of Unearned Income) 10,185 10,431
Allowance for Losses (320) (370)
Assets Acquired as Loan Satisfactions 69 113
All Other Assets 1,731 1,812
------- -------
TOTAL ASSETS $20,099 $21,960
======= =======
LIABILITIES
Demand Deposits (Noninterest Bearing) $ 5,425 $ 5,808
Domestic and Foreign Interest
Bearing Deposits 10,125 11,490
All Other Liabilities 2,805 2,851
------- -------
TOTAL LIABILITIES 18,355 20,149
STOCKHOLDER'S EQUITY 1,744 1,811
------- -------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $20,099 $21,960
======= =======
<a> Includes $14 million of risk management instruments as a
result of the adoption of FASB Interpretation No. 39.
