<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: July 21, 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>
<PAGE> 2
Item 5. Other Events
---------------------
1. Chemical Banking Corporation ("the Corporation") announced on
July 19, 1994, that 1994 second quarter net income was $357
million, or $1.28 per common share, up nine percent from
earnings on a comparable basis of $327 million, or $1.14 per
share, in the second quarter of 1993.
Reported net income in last year's second quarter was
$381 million, or $1.35 per common share, when the
Corporation recognized income tax benefits of $54 million.
For the first six months of 1994, net income was $676 million,
an increase of 12 percent from $603 million on a comparable
basis in the first half of 1993. Reported net income for
the first six months of 1993 was $755 million, when the
Corporation benefited from $152 million in accounting changes
and tax benefits.
A copy of the Corporation's Press Release announcing the
results of operations for the 1994 second 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 Second Quarter
Earnings.
<PAGE>
<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 July 21, 1994 by /s/Joseph L. Sclafani
---------------- ---------------------
Joseph L. Sclafani
Controller
[Principal Accounting Officer]
<PAGE>
<PAGE> 4
EXHIBIT INDEX
Exhibit Number Description Page at Which Located
-------------- ----------- ---------------------
99 Press Release 5
<PAGE> 1
Press Contact: Ken Herz
(212) 270-4621
John Stefans
(212) 270-7438
Investor Contact: John Borden
(212) 270-7318
For Immediate Release
Tuesday, July 19, 1994
NEW YORK, July 19 -- Chemical Banking Corporation today
reported second quarter net income of $357 million, or $1.28 per
common share, up nine percent from earnings on a comparable basis of
$327 million, or $1.14 per share, in the second quarter of 1993.
Reported net income in last year's second quarter was $381
million, or $1.35 per share, when Chemical recognized income tax
benefits of $54 million.
For the first six months of 1994, net income was $676 million,
an increase of 12 percent from $603 million on a comparable basis in
the first half of 1993. Reported net income for the first six
months of 1993 was $755 million, when the corporation benefited from
$152 million in accounting changes and tax benefits.
"Chemical's core businesses performed well in the second
quarter's challenging environment. Our earnings also benefited from
a further improvement in the institution's risk profile, including a
substantial reduction in nonperforming assets and another sharp
decline in our provision and other credit costs," said Walter V.
Shipley, chairman and chief executive officer.
"We remain firmly on the path to improved operating return
levels, and revenue initiatives and productivity programs under way
throughout the corporation will contribute to ongoing improvements,"
Mr. Shipley said.
Completion of a Brazilian refinancing package during the second
quarter brought to a close the broad rescheduling program begun in
the mid-1980s. Accordingly, Chemical has combined its remaining LDC
reserve for possible loan losses with its general reserve and will
no longer report a separate LDC allowance.
<PAGE>
<PAGE> 2
At June 30, total nonperforming assets were $2,493 million,
down $710 million, or 22 percent, from $3,203 million on March 31
and down $2,370 million, or 49 percent, from June 30 a year ago.
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. This acquisition is not reflected in second quarter
results.
The corporation's estimated Tier I risk-based capital ratio was
8.4 percent at June 30, compared with 7.6 percent a year ago. At
June 30, the estimated total risk-based capital ratio was 12.4
percent, compared with 12.0 percent a year ago.
NET INTEREST INCOME
Net interest income for the second quarter was $1,185 million,
compared with $1,175 million in the same year-ago period. The rise
in net interest income is attributable to increases in average
earning assets, partially offset by a decline in average spread.
Average interest-earning assets for the second quarter were
$129.1 billion, compared with $125.6 billion in the same year-ago
period. The composition of average earning assets shifted in
response to growth in liquid assets to support trading businesses
and securities, more than offsetting declines in loans.
The net yield on interest-earning assets was 3.69 percent in
the second quarter, compared with 3.76 percent in the second quarter
of 1993. The shift to lower-spread liquid assets has exerted
downward pressure on the net yield on interest earning assets.
Compared with the first quarter of 1994, net interest income
and the net yield on earning assets improved. Growth in consumer
loans and declines in nonperforming loans contributed to a rise in
the average yield on the loan portfolio.
NONINTEREST REVENUE
Noninterest revenue for the second quarter was $867 million,
compared with $1,042 million in the same period a year ago, which
had included $44 million from the sale of interest due and unpaid
(IDU) bonds, as well as significantly higher trading revenues.
There were no LDC-related past due interest bond sales in the second
quarter of 1994.
Trust and investment management fees were $108 million in the
second quarter of 1994, compared with $102 million in the year-ago
quarter, reflecting the acquisition of Ameritrust Texas Corporation
in September 1993.
<PAGE>
<PAGE> 3
Corporate finance fees were $93 million in the quarter, up 11
percent from $84 million a year ago.
Fees for other banking services were $279 million in the
quarter, compared with $272 million in the year-ago second quarter.
This improvement primarily reflected increased revenues generated by
the new co-branded Shell MasterCard
Combined revenues from all trading activities were $203 million
in the second quarter, versus a record $298 million in the same
year-ago period but up from $185 million in the first quarter of
1994. The decline in trading results in the second quarter when
compared with record results in last year's second quarter reflected
difficult conditions in certain markets, including emerging market
debt and European government bonds, as well as in many foreign
exchange markets.
A decline in other noninterest revenue in the second quarter
reflected lower revenues on equity-related investments. The 1994
second quarter result was $66 million, compared with $115 million a
year ago.
NONINTEREST EXPENSE
Noninterest expense in the second quarter was $1,281 million,
compared with $1,312 million in the same year-ago quarter.
Expenses for the second quarter of 1994 reflected additional
costs of $47 million associated with the acquisition of Ameritrust
and operating costs connected with the Shell MasterCard, including
marketing expenses that increased $21 million, largely reflecting
the advertising campaign for the co-branded program.
Foreclosed property expense was $2 million in the quarter
compared with $85 million in the year-ago period, reflecting
significant progress in managing the corporation's foreclosed real
estate portfolio. The current quarter's expense benefited by
approximately $15 million of gains from the sale of foreclosed
property.
Total headcount at June 30, 1994 was 40,988, compared with
41,303 at June 30, 1993, as staff increases in areas with revenue
growth initiatives were more than offset by reductions from
continued integration and productivity efforts.
<PAGE>
<PAGE> 4
PROVISION AND ALLOWANCE FOR LOSSES
The provision for losses was $160 million in the second
quarter, compared with $205 million in the first quarter of 1994 and
$363 million in the second quarter of 1993.
Non-LDC net charge-offs were $185 million in the second
quarter, compared with $230 million in the first quarter of 1994 and
$363 million in the second quarter a year ago.
Following completion of the Brazilian refinancing package, a
final valuation of the LDC portfolio resulted in a $291 million
charge in the second quarter. The remaining LDC reserve of $300
million, after the final valuation, was transferred to the general
reserve.
At June 30, the allowance for losses was $2,676 million,
compared with $2,991 million on the same date a year ago (including
$570 million related to the LDC allowance).
NONPERFORMING ASSETS
At June 30, total nonperforming assets were $2,493 million,
down $710 million, or 22 percent, from March 31 and down $2,370
million, or 49 percent, from June 30, 1993.
Nonperforming loans at June 30 were $1,758 million, down from
$2,369 million at March 31 and down from $3,764 million at June 30
last year. Assets acquired as loan satisfactions were $735 million
at June 30, down from $834 million at March 31 and down $364 million
from $1,099 million on June 30 a year ago.
The nonperforming amounts include LDCs of $145 million at June
30, down from $524 million at March 31, principally the result of
the completion of the Brazilian refinancing program. New bonds
received in exchange for old debt and approximately $160 million
face value of interest bonds, representing the majority of the
remaining unpaid interest, have been designated as "Available for
Sale."
<PAGE>
<PAGE> 5
NONPERFORMING ASSETS
($ in millions) 6/30/94 3/31/94 6/30/93
------- ------- -------
Nonperforming loans* $1,758 $2,369 $3,764
Assets acquired as loan
satisfactions 735 834 1,099
------ ------ ------
Total nonperforming assets $2,493 $3,203 $4,863
====== ====== ======
ALLOWANCE FOR LOSSES ($ in millions) 6/30/94 6/30/93
------- -------
Total allowance for losses $2,676 $2,991**
As a % of total loans 3.6% 3.8%
As a % of nonperforming loans 152% 79%
* Includes loans previously classified as LDC loans.
** The 6/30/93 amount includes $570 million previously classified as
LDC allowance.
STOCKHOLDERS' EQUITY AND CAPITAL RATIOS
($ in billions) 6/30/94 6/30/93
------- -------
Total stockholders' equity $11.2 $10.5
Common stockholders' equity $9.3 $8.7
Ratios: Total equity to assets 6.6%<a> 7.2%
Common equity to assets 5.5%<a> 6.0%
Tier I Leverage 6.4%<a,b> 6.6%
Risk-based capital:
Tier I (4.0% required) 8.4%<b,c> 7.6%
Total (8.0% required) 12.4%<b,c> 12.0%
<PAGE>
<PAGE> 6
[FN]
<a> On January 1, 1994, the corporation adopted FASI 39, which
increased total assets by approximately $19.0 billion at June
30, 1994 and total average assets by approximately $14.1 billion
for the 1994 second quarter and $13.6 billion for the first six
months of 1994.
<b> The 1994 ratios exclude the net unfavorable impact on
stockholders' equity of $291 million resulting from marking the
available for sale portfolio to market.
[C] Estimated.
OTHER FINANCIAL DATA
In the second quarter of 1994, the corporation announced its
intention to repurchase up to 10 million shares of its common stock
on the open market from time to time during the next 12 months. As
of June 30, 1994, the corporation had repurchased approximately 3.2
million shares of its common stock.
The corporation also redeemed all shares of its 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 corporation's effective tax rate was 41.5 percent in the
second quarter, compared with 29.7 percent in the same period of
1993. Tax expense included an income tax benefit of $54 million in
the second quarter of 1993.
The impact of marking the "Available for Sale" securities to
market resulted in a net unfavorable impact of approximately $291
million after-tax on the corporation's stockholders' equity at June
30, 1994, compared with an unfavorable impact of $192 million after-
tax at March 31, 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 changes 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 $19.0 billion at June 30,
1994, with unrealized gains reported as Trading Assets-Risk
Management Instruments and the unrealized losses reported in Other
Liabilities.
Total assets at June 30 were $168.9 billion, versus $145.5
billion on the same date a year ago. Total loans at June 30 were
$74.7 billion, compared with $79.2 billion a year ago. At the end
of the second quarter, total deposits were $92.0 billion, compared
with $94.6 billion at June 30, 1993.
The return on average total assets was .87 percent for the
second quarter, compared with 1.04 percent in the same year-ago
period.
<PAGE>
<PAGE> 7
The return on average common stockholders' equity was 13.90
percent for the second quarter, compared with 15.97 percent in the
year-ago second quarter.
Book value per common share was $37.17 at June 30, versus $34.47
per share on the same date a year ago.
TEXAS COMMERCE BANCSHARES
Texas Commerce Bancshares (TCB) reported net income of $60
million in the second quarter, versus $44 million a year ago. Its
net yield on interest-earning assets was 4.21 percent in the second
quarter, versus 4.02 percent in the 1993 second quarter. At June
30, total assets of TCB were $20.9 billion, versus $22.1 billion a
year ago.
<PAGE>
<PAGE> 8
<TABLE>
<CAPTION>
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
(in millions, except per share and ratio data)
Three Months Ended Six Months Ended
June 30, June 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 $ 357 $ 381 $ 327 $ 676 $ 720 $ 603
Net Effect of Changes in Accounting Principles -- -- -- -- 35 35
---- ---- ---- ---- ---- ----
Net Income $ 357 $ 381 $ 327 $ 676 $ 755 $ 638
==== ==== ==== ==== ==== ====
Net Income Applicable to Common Stock $ 324 $ 341 $ 287 $ 611 $ 676 $ 559
==== ==== ==== ==== ==== ====
PER COMMON SHARE:
- ----------------
Income Before Effect of Accounting Changes $ 1.28 $ 1.35 $ 1.14 $ 2.41 $ 2.56 $ 2.09
Net Effect of Changes in Accounting Principles -- -- -- -- .14 .14
------ ------ ------ ------ ------- ------
Net Income $ 1.28 $ 1.35 $ 1.14 $ 2.41 $ 2.70 $ 2.23
======= ====== ====== ====== ======= ======
Book Value at June 30, $37.17 $ 34.47 $ 37.17 $ 34.47
Market Value at June 30, $38.50 $ 40.88 $ 38.50 $ 40.88
Common Stock Dividends Declared $ 0.38<b> $ 0.33 $ 0.76<b> $ 0.66
COMMON SHARES:
- -------------
Average Outstanding 253.1 251.7 253.1 250.1
Period End Outstanding 250.9 251.8 250.9 251.8
BALANCE SHEET AVERAGES:
- ----------------------
Loans $ 74,144 $ 79,900 $ 74,312 $ 80,654
Securities $ 26,594 $ 24,029 $ 26,500 $ 23,670
Total Assets $164,066<C> $146,350 $164,109<C> $144,489
Deposits $ 93,978 $ 95,293 $ 95,527 $ 95,037
Long-Term Debt $ 8,370 $ 8,062 $ 8,434 $ 7,768
Stockholders' Equity $ 11,052 $ 10,544 $ 11,103 $ 10,324
PERFORMANCE RATIOS: (Average Balances) <d>
- --------------------
Return on Assets .87%<C> 1.04% .83%<C> 1.05%
Return on Common Stockholders' Equity 13.90% 15.97% 13.07% 16.22%
Return on Total Stockholders' Equity 12.96% 14.49% 12.28% 14.75%
CAPITAL RATIOS AT JUNE 30:
- -------------------------
Total Stockholders' Equity to Assets 6.6%<C> 7.2%
Common Stockholders' Equity to Assets 5.5%<C> 6.0%
Tier 1 Leverage 6.4%<C><e> 6.6%
Risk-Based Capital:
Tier 1 (4.0% required) 8.4%<e>* 7.6%
Total (8.0% required) 12.4%<e>* 12.0%
</TABLE>
[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 assume the Corporation's 1993 second quarter
and six month results are reported on a fully-taxed basis.
<b> In the fourth quarter of 1993, the Corporation increased its quarterly
common stock dividend to $0.38 per share.
[C] On January 1, 1994, the Corporation adopted FASI 39, which increased total
assets by approximately $19.0 billion at June 30, 1994 and total average
assets by approximately $14.1 billion for the 1994 second quarter and
$13.6 billion for the first half 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 $291 million resulting from the adoption of SFAS No. 115.
*Estimated
<PAGE> 9
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Three Months Ended
June 30,
------------------
1994 1993
----- -----
INTEREST INCOME
Loans $1,375 $1,433
Securities 432 443
Trading Assets 191 103
Federal Funds Sold and Securities
Purchased Under Resale Agreements 121 80
Deposits with Banks 100 73
------ ------
Total Interest Income 2,219 2,132
------ ------
INTEREST EXPENSE
Deposits 543 569
Short-Term and Other Borrowings 359 253
Long-Term Debt 132 135
------ ------
Total Interest Expense 1,034 957
------ ------
NET INTEREST INCOME 1,185 1,175
Provision for Losses 160 363
------ ------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES 1,025 812
------ ------
NONINTEREST REVENUE
Trust and Investment Management Fees 108 102
Corporate Finance and Syndication Fees 93 84
Service Charges on Deposit Accounts 75 77
Fees for Other Banking Services 279 272
Trading Account and Foreign Exchange Revenue 203 298
Securities Gains 13 5
Other Revenue 96 204
------ ------
Total Noninterest Revenue 867 1,042
------ ------
NONINTEREST EXPENSE
Salaries 542 529
Employee Benefits 102 105
Occupancy Expense 140 145
Equipment Expense 91 88
Foreclosed Property Expense 2 85
Other Expense 404 360
------ ------
Total Noninterest Expense 1,281 1,312
------ ------
INCOME BEFORE INCOME TAX EXPENSE 611 542
Income Tax Expense 254 161
------ ------
NET INCOME $ 357 $ 381
====== ======
NET INCOME APPLICABLE TO COMMON STOCK $ 324 $ 341
====== ======
NET INCOME PER COMMON SHARE $ 1.28 $ 1.35
====== ======
AVERAGE COMMON SHARES OUTSTANDING 253.1 251.7
<PAGE> 10
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Six Months Ended
June 30,
-----------------
1994 1993
------- -------
INTEREST INCOME
Loans $2,682 $2,898
Securities 848 871
Trading Assets 364 197
Federal Funds Sold and Securities
Purchased Under Resale Agreements 221 156
Deposits with Banks 194 134
------ ------
Total Interest Income 4,309 4,256
------ ------
INTEREST EXPENSE
Deposits 1,063 1,162
Short-Term and Other Borrowings 651 505
Long-Term Debt 267 265
------ ------
Total Interest Expense 1,981 1,932
------ ------
NET INTEREST INCOME 2,328 2,324
Provision for Losses 365 675
------ ------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES 1,963 1,649
------ ------
NONINTEREST REVENUE
Trust and Investment Management Fees 218 200
Corporate Finance and Syndication Fees 175 155
Service Charges on Deposit Accounts 144 144
Fees for Other Banking Services 569 523
Trading Account and Foreign Exchange Revenue 388 550
Securities Gains 59 75
Other Revenue 245 320
------ ------
Total Noninterest Revenue 1,798 1,967
------ ------
NONINTEREST EXPENSE
Salaries 1,060 1,030
Employee Benefits 221 207
Occupancy Expense 286 290
Equipment Expense 175 163
Foreclosed Property Expense 37 156
Restructuring Charge 48 43
Other Expense 778 699
------ ------
Total Noninterest Expense 2,605 2,588
------ ------
INCOME BEFORE INCOME TAX EXPENSE AND EFFECT
OF ACCOUNTING CHANGES 1,156 1,028
Income Tax Expense 480 308
------ ------
INCOME BEFORE EFFECT OF ACCOUNTING CHANGES 676 720
Net Effect of Changes in Accounting Principles -- 35<a>
------ ------
NET INCOME $ 676 $ 755
====== ======
NET INCOME APPLICABLE TO COMMON STOCK $ 611 $ 676
====== ======
PER COMMON SHARE:
Income Before Effect of Accounting Changes $ 2.41 $ 2.56
Net Effect of Changes in Accounting Principles -- .14<a>
------- ------
Net Income $ 2.41 $ 2.70
======= ======
AVERAGE COMMON SHARES OUTSTANDING 253.1 250.1
[FN]
<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> 11
<TABLE>
<CAPTION>
CHEMICAL BANKING CORPORATION and Subsidiaries
NONINTEREST REVENUE DETAIL
(in millions)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
TRUST AND INVESTMENT MANAGEMENT FEES:
Personal Trust Fees $ 54 $ 46 $107 $ 97
Corporate and Institutional Trust Fees 45 46 91 85
Other, primarily Foreign Asset Management 9 10 20 18
----- ----- ----- -----
Total $108 $102 $218 $200
===== ===== ===== =====
FEES FOR OTHER BANKING SERVICES:
Credit Card Services Revenue $ 75 $ 55 $150 $108
Fees in Lieu of Compensating Balances 49 52 107 104
Commissions on Letters of Credit and Acceptances 39 40 76 80
Loan Commitment Fees 23 25 45 46
Mortgage Servicing Fees 18 17 34 32
Other Fees 75 83 157 153
----- ----- ----- -----
Total $279 $272 $569 $523
===== ===== ===== =====
TRADING ACCOUNT AND FOREIGN EXCHANGE REVENUE:
Interest Rate Contracts $135 $ 97 $223 $226
Foreign Exchange Revenue 55 96 100 164
Debt Instruments and Other 13 105 65 160
----- ----- ----- -----
Total $203 $298 $388 $550
===== ===== ===== =====
OTHER REVENUE:
Revenue from Equity-Related Investments $ 66 $115 $149 $143
Net Gains on LDC-Related Interest Bond Sales -- 44 45 100
All Other Revenue 30 45 51 77
----- ----- ----- -----
Total $ 96 $204 $245 $320
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
CHEMICAL BANKING CORPORATION and Subsidiaries
NONINTEREST EXPENSE DETAIL
(in millions)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ --------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OTHER EXPENSE:
Professional Services $ 59 $ 55 $105 $ 97
Marketing Expense 57 36 97 68
FDIC Assessments 41 44 83 92
Telecommunications 33 28 63 54
Amortization of Intangibles 27 28 56 50
All Other 187 169 374 338
---- ---- ---- ----
Total Other Expense $404 $360 $778 $699
==== ==== ==== ====
</TABLE>
<PAGE> 12
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
June 30, June 30,
1994 1993
--------- ---------
ASSETS
Cash and Due from Banks $ 9,463 $ 7,650
Deposits with Banks 4,461 3,763
Federal Funds Sold and Securities
Purchased under Resale Agreements 12,803 9,664
Trading Assets:
Debt and Equity Instruments 10,935 8,332
Risk Management Instruments 20,632<a> --
Securities:
Held-to-Maturity 8,923 17,009
Available-for-Sale 16,606 6,834
Loans (Net of Unearned Income) 74,685 79,200
Allowance for Losses (2,676) (2,991)
Premises and Equipment 2,034 1,796
Due from Customers on Acceptances 1,202 1,225
Accrued Interest Receivable 1,029 1,118
Assets Acquired as Loan Satisfactions 735 1,099
Other Assets 8,089 10,823
-------- --------
TOTAL ASSETS $168,921 $145,522
======== ========
LIABILITIES
Deposits:
Demand (Noninterest Bearing) $ 22,066 $ 22,163
Time and Savings 47,737 52,342
Foreign 22,153 20,087
-------- --------
Total Deposits 91,956 94,592
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 20,764 14,634
Other Borrowed Funds 12,604 10,786
Acceptances Outstanding 1,205 1,240
Accounts Payable and Accrued Liabilities 1,998 3,085
Other Liabilities 20,878<a> 2,215
Long-Term Debt 8,336 8,437
-------- --------
TOTAL LIABILITIES 157,741 134,989
======== ========
STOCKHOLDERS' EQUITY
Preferred Stock 1,854 1,854
Common Stock 254 252
Capital Surplus 6,557 6,534
Retained Earnings 2,920 1,905
Net Unrealized Loss on Securities
Available-for-Sale, Net of Taxes (291)<b> --
Treasury Stock, at Cost (114) (12)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 11,180 10,533
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $168,921 $145,522
========= =========
[FN]
<a> On January 1, 1994, the Corporation adopted FASB Interpretation No. 39.
As a result, assets and liabilities increased by $19.0 billion at
June 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.
<PAGE> 13
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(in millions)
1994 1993
------- -------
BALANCE AT JANUARY 1, $ 11,164 $ 9,851
------- -------
Net Income 676 755
Dividends Declared:
Preferred Stock (65) (78)
Common Stock (192) (166)
Issuance of Preferred Stock 200 400
Redemption of Preferred Stock -- (394)
Issuance of Common Stock 16 163
Restricted Stock Granted (11) --
Net Changes in Treasury Stock (102)<a> --
Net Unrealized Loss on Securities
Available-for-Sale, Net of Taxes (506) --
Accumulated Translation Adjustment -- 2
------- -------
Net Change in Stockholders' Equity 16 682
------- -------
BALANCE AT JUNE 30, $ 11,180 $10,533
======= =======
<a> As of June 30, 1994, the Corporation has repurchased approximately
3.2 million shares of its Common Stock.
<PAGE> 14
CHEMICAL BANKING CORPORATION and Subsidiaries
LOAN INFORMATION
(in millions)
June 30, June 30,
1994 1993
------- -------
LOANS:
Commercial:
Commercial Real Estate $ 7,176 $ 8,804
Other Commercial <a> 40,694 46,247
------- --------
Total Commercial 47,870 55,051
------- --------
Consumer:
Residential Mortgage 12,487 11,834
Credit Card 7,774 6,279
Other Consumer 6,554 6,036
------- --------
Total Consumer 26,815 24,149
------- --------
Total Loans $74,685 $ 79,200
======= ========
[FN]
<a> Included in Other Commercial are loans previously classified as LDC loans.
<TABLE>
<CAPTION>
CHEMICAL BANKING CORPORATION and Subsidiaries
ALLOWANCE RELATED INFORMATION
(in millions, except ratios)
Three Months Ended Six Months Ended
ALLOWANCE FOR LOSSES June 30, June 30,
---------------------- ---------------------
1994 1993 1994 1993
------- ------- ------ --------
<S> <C> <C> <C> <C>
NON-LDC ALLOWANCE:
Balance at Beginning of Period $ 2,400 $ 2,220 $ 2,423 $ 2,206
Provision for Losses 160 363 <a> 365 675 <a>
Net Charge-Offs (185) (363)<a> (415) (675)<a>
Transfer from LDC Allowance 300 200 300 200
Allowance related to purchased assets
of First City Banks -- -- -- 19
Other 1 1 3 (4)
------- ------- -------- -------
Balance at End of Period 2,676 2,421 2,676 2,421
LDC ALLOWANCE:
Balance at Beginning of Period $ 591 $ 768 $ 597 $ 819
Provision for Losses -- -- -- --
Net (Charge-Offs) Recoveries (291) 65 (239) 71
Losses on Sales and Swaps -- (63) (58) (120)
Transfer to Non-LDC Allowance (300) (200) (300) (200)
------- ------- ------- -------
Balance at End of Period 0 570 0 570
------- ------- ------- -------
Total Allowance for Losses $ 2,676 $ 2,991 $ 2,676 $ 2,991
======= ======= ======= =======
<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.
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
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
June 30, 1994 June 30, 1993
-------------------------------- ------------------------------
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
------- -------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Deposits with Banks $ 4,606 $ 100 8.66% $ 4,548 $ 73 6.40%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 11,732 121 4.13% 9,536 80 3.40%
Trading Assets 12,042 191 6.32% 7,591 103 5.43%
Securities 26,594 434 6.54% 24,029 444 7.39%
Loans 74,144 1,377 7.44% 79,900 1,438 7.19%
-------- -------- -------- -------
Total Interest-Earning Assets 129,118 $ 2,223 6.89% 125,604 $ 2,138 6.81%
Allowance for Losses (3,027) (3,095)
Cash and Due from Banks 8,618 8,548
Risk Management Instruments 15,984 --
Other Assets 13,373 15,293
-------- --------
Total Assets $164,066 $146,350
======== ========
LIABILITIES
Domestic Retail Time Deposits $ 44,308 $ 273 2.48% $ 46,775 $ 325 2.79%
Domestic Negotiable
Certificates of Deposit
and Other Deposits 5,202 44 3.45% 6,464 50 3.07%
Deposits in Foreign Offices 22,680 226 3.94% 20,533 194 3.74%
------- ------- -------- -------
Total Time & Savings Deposits 72,190 543 3.01% 73,772 569 3.08%
------- ------- -------- -------
Short-Term and Other Borrowings:
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 18,546 189 4.08% 16,747 123 2.94%
Commercial Paper 2,566 25 3.81% 2,591 23 3.55%
Other 9,391 145 6.20 % 7,070 107 6.03%
------- -------- -------- -------
Total Short-Term and
Other Borrowings 30,503 359 4.71% 26,408 253 3.83%
Long-Term Debt 8,370 132 6.34% 8,062 135 6.75%
------- ------- -------- -------
Total Interest-
Bearing Liabilities 111,063 1,034 3.73% 108,242 957 3.53%
------- ------- -------- -------
Demand Deposits 21,788 21,521
Risk Management Instruments 14,148 --
Other Liabilities 6,015 6,043
------- --------
Total Liabilities 153,014 135,806
STOCKHOLDERS' EQUITY
Preferred Stock 1,704 1,979
Common Stockholders' Equity 9,348 8,565
------- --------
Total Stockholders' Equity 11,052 10,544
------- --------
Total Liabilities and
Stockholders' Equity $164,066 $146,350
======= ========
SPREAD ON INTEREST-BEARING
LIABILITIES 3.16% 3.28%
===== ======
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING
ASSETS $ 1,189 3.69% $ 1,181 3.76%
======= ===== ======= ======
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
CHEMICAL BANKING CORPORATION and Subsidiaries
Average Consolidated Balance Sheet, Interest and Rates
(Taxable-Equivalent Interest and Rates; in millions)
Six Months Ended Six Months Ended
June 30, 1994 June 30, 1993
------------------------------- ---------------------------------
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
------- -------- ----------- ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Deposits with Banks $ 4,878 $ 194 7.98% $ 4,040 $ 134 6.68%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 11,809 221 3.77% 9,126 156 3.45%
Trading Assets 11,960 364 6.12% 6,623 197 5.99%
Securities 26,500 851 6.47% 23,670 873 7.43%
Loans 74,312 2,688 7.29% 80,654 2,907 7.26%
-------- ------- -------- --------
Total Interest-Earning Assets 129,459 $ 4,318 6.72% 124,113 $ 4,267 6.92%
Allowance for Losses (3,057) (3,104)
Cash and Due from Banks 8,725 8,462
Risk Management Instruments 15,690 --
Other Assets 13,292 15,018
--------- --------
Total Assets $ 164,109 $144,489
========= ========
LIABILITIES
Domestic Retail Deposits $ 45,173 $ 521 2.32% $ 46,243 $ 633 2.76%
Domestic Negotiable
Certificates of Deposit
and Other Deposits 5,325 90 3.44% 6,507 99 3.06%
Deposits in Foreign Offices 22,825 452 3.97% 21,020 430 4.10%
--------- ------- -------- --------
Total Time & Savings Deposits 73,323 1,063 2.92% 73,770 1,162 3.17%
--------- ------- -------- --------
Short-Term and Other Borrowings:
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 17,310 326 3.80% 16,470 261 3.20%
Commercial Paper 2,488 46 3.69% 2,489 45 3.60%
Other 9,526 279 5.90% 6,447 199 6.22%
--------- ------- -------- --------
Total Short-Term and
Other Borrowings 29,324 651 4.47% 25,406 505 4.01%
Long-Term Debt 8,434 267 6.39% 7,768 265 6.89%
--------- ------- -------- --------
Total Interest-
Bearing Liabilities 111,081 1,981 3.59% 106,944 1,932 3.64%
--------- ------- -------- --------
Demand Deposits 22,204 21,267
Risk Management Instruments 13,611 --
Other Liabilities 6,110 5,954
--------- --------
Total Liabilities 153,006 134,165
--------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 1,679 1,922
Common Stockholders' Equity 9,424 8,402
--------- --------
Total Stockholders' Equity 11,103 10,324
--------- --------
Total Liabilities and
Stockholders' Equity $ 164,109 $144,489
========= ========
SPREAD ON INTEREST-BEARING
LIABILITIES 3.13% 3.28%
===== ======
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING
ASSETS $ 2,337 3.64% $ 2,335 3.79%
======= ===== ======= ======
</TABLE>
<PAGE> 17
<TABLE>
<CAPTION>
TEXAS COMMERCE BANCSHARES, INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1994 1993 1994 1993
------ ------ ------ ------
<C> <C> <C> <C>
NET INTEREST INCOME $ 175 $ 182 $ 337 $ 352
Provision for Losses (10) 5 (20) 11
----- ----- ----- -----
Net Interest Income After Provision for Losses 185 177 357 341
NONINTEREST REVENUE 102 97 208 190
NONINTEREST EXPENSE 192 206 389 446<a>
----- ----- ----- -----
Income Before Income Taxes and Effect
of Accounting Changes 95 68 176 85
Income Tax Expense 35 24 65 26
----- ----- ----- -----
Income Before Effect of Accounting Changes 60 44 111 59
Net Effect of Changes in Accounting Principles -- -- -- 14
----- ----- ----- -----
NET INCOME $ 60 $ 44 $ 111 $ 73
===== ===== ===== =====
<FN>
<a> Includes $43 million restructuring charge related to the acquisition
of certain former First City assets.
TEXAS COMMERCE BANCSHARES, INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
June 30,
-----------------
1994 1993
------ ------
ASSETS
Cash and Due from Banks $ 1,954 $ 2,024
Deposits with Banks 5 5
Federal Funds Sold and Securities
Purchased Under Resale Agreements 4,670 6,117
Trading Assets 34<a> 19
Securities:
Held-to-Maturity 1,368 1,648
Available-for-Sale 1,612 413
Loans (Net of Unearned Income) 9,736 10,435
Allowance for Losses (329) (382)
Assets Acquired as Loan Satisfactions 77 132
All Other Assets 1,764 1,670
-------- --------
TOTAL ASSETS $ 20,891 $ 22,081
======= =======
LIABILITIES
Demand Deposits (Noninterest Bearing) $ 5,632 $ 5,874
Domestic and Foreign Interest Bearing Deposits 10,223 11,772
All Other Liabilities 3,263 2,681
-------- --------
TOTAL LIABILITIES 19,118 20,327
-------- --------
STOCKHOLDER'S EQUITY 1,773 1,754
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 20,891 $ 22,081
======= =======
<FN>
<a> Includes $19 million of risk management instruments as a result of
the adoption of FASB Interpretation No. 39.
</TABLE>
