<PAGE> 1
Pusuant to Rule 424(b)(5)
Registration No. 33-49965
Prospectus Supplement (To Prospectus dated June 1, 1994) (LOGO)
CHEMICAL BANKING CORPORATION
$150,000,000
7 7/8% SUBORDINATED DEBENTURES DUE 2006
Interest on the 7 7/8% Subordinated Debentures Due 2006 (the "Subordinated
Debentures") of Chemical Banking Corporation (the "Company") will be payable on
January 15 and July 15, commencing January 15, 1995. The Subordinated Debentures
will mature on July 15, 2006. The Subordinated Debentures may not be redeemed
prior to maturity and are not subject to any sinking fund.
The Subordinated Debentures will be subordinated to Senior Indebtedness of the
Company and, under certain circumstances, to Additional Senior Obligations of
the Company, as described in the accompanying Prospectus under "Description of
Debt Securities -- Subordinated Securities -- Subordination". The Subordinated
Debentures are subject to acceleration only in the event of bankruptcy or
reorganization of the Company. There will be no right of acceleration in the
case of a default in the payment of interest or a default in the performance of
any covenant or agreement in the Subordinated Debentures or the Subordinated
Indenture. See "Description of Debt Securities -- Subordinated
Securities -- Defaults and Waiver Thereof" in the accompanying Prospectus.
The Subordinated Debentures will be represented by one or more permanent global
Subordinated Debentures registered in the name of The Depository Trust Company
(the "Depositary") or its nominee. Beneficial interests in the permanent global
Subordinated Debentures will be shown on records maintained by participants, and
transfers thereof will be effected only through the Depositary or any
participant. See "Certain Terms of the Subordinated Debentures -- Book-Entry
System" in this Prospectus Supplement. Except as provided herein, Subordinated
Debentures in definitive form will not be issued. Settlement for the
Subordinated Debentures will be made in immediately available funds. The
Subordinated Debentures will trade in the Depositary's Same-Day Funds Settlement
System, and secondary market trading activity in the Subordinated Debentures
will therefore settle in immediately available funds. All payments of principal
and interest will be made by the Company in immediately available funds. See
"Certain Terms of the Subordinated Debentures -- Same-Day Settlement and
Payment" in this Prospectus Supplement.
The Subordinated Debentures are unsecured debt obligations of the Company, are
not deposits or other obligations of a depository institution and are not
insured by the Federal Deposit Insurance Corporation or any other governmental
agency.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SUBORDINATED DEBENTURE 99.149% .65% 98.499%
TOTAL $148,723,500 $975,000 $147,748,500
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from July 27, 1994.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting" in this Prospectus Supplement.
(3) Before deducting expenses payable by the Company estimated at $100,000.
------------------------------------------------------------
This Prospectus Supplement and the accompanying Prospectus may be used by
affiliates of the Company in connection with offers and sales related to
secondary market transactions in the Subordinated Debentures. Such affiliates
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
The Subordinated Debentures are offered by the several Underwriters, subject to
prior sale, when, as and if issued by the Company and accepted by the
Underwriters and subject to certain other conditions. The several Underwriters
reserve the right to withdraw, cancel or modify such offers and to reject orders
in whole or in part. It is expected that the delivery of the Subordinated
Debentures will be made in book-entry form through the facilities of the
Depositary on or about July 27, 1994.
CHEMICAL SECURITIES INC.
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SMITH BARNEY INC.
The date of this Prospectus Supplement is July 20, 1994.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SUBORDINATED
DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
CHEMICAL BANKING CORPORATION
The Company is a bank holding company organized under the laws of Delaware
in 1968 and registered under the Bank Holding Company Act of 1956, as amended.
The Company conducts domestic and international financial services businesses
through various bank and non-bank subsidiaries. The principal bank subsidiaries
of the Company are Chemical Bank, a New York banking corporation ("Chemical
Bank"), and Texas Commerce Bank National Association, a subsidiary of Texas
Commerce Bancshares, Inc., a bank holding company subsidiary of the Company
headquartered in Texas ("Texas Commerce"). For a more complete description of
the activities conducted by the Company, see "Business" in the accompanying
Prospectus.
The principal executive offices of the Company are located at 270 Park
Avenue, New York, New York 10017. The telephone number of the Company is (212)
270-6000.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the
Subordinated Debentures offered hereby for general corporate purposes, including
the possible reduction of outstanding indebtedness of the Company and
investments in, or extensions of credit to, its bank and non-bank subsidiaries.
Pending specific application, the net proceeds will be invested temporarily or
applied to the reduction of short-term indebtedness of the Company.
CERTAIN TERMS OF THE SUBORDINATED DEBENTURES
The following description of the particular terms of the Subordinated
Debentures offered hereby supplements the description of the general terms of
the Subordinated Securities set forth under the heading "Description of Debt
Securities -- General" and " -- Subordinated Securities" in the accompanying
Prospectus, to which description reference is hereby made. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the accompanying Prospectus.
The Subordinated Debentures offered hereby constitute a series of
Subordinated Securities to be issued under the Subordinated Indenture referred
to in the accompanying Prospectus. The Subordinated Debentures will be limited
to $150,000,000 aggregate principal amount and will mature on July 15, 2006.
The Subordinated Debentures will bear interest at the rate set forth on the
cover page of this Prospectus Supplement from July 27, 1994, payable
semi-annually in arrears on January 15 and July 15 of each year, commencing
January 15, 1995, to the persons in whose names the Subordinated Debentures are
registered at the close of business on the preceding January 1 and July 1, as
the case may be.
The Subordinated Debentures are not redeemable prior to maturity and no
sinking fund is provided for the Subordinated Debentures.
The Subordinated Debentures will be issuable and transferable in
denominations of $1,000 and integral multiples thereof. The Subordinated
Debentures will be represented by one or more permanent global Subordinated
Debentures registered in the name of the Depositary or its nominee, as described
below.
The obligations of the Company pursuant to the Subordinated Debentures will
be subordinated in right of payment to all Senior Indebtedness of the Company
and, under certain circumstances, to all Additional Senior Obligations of the
Company, to the extent set forth in the accompanying Prospectus under the
heading "Description of Debt Securities -- Subordinated Securities --
Subordination". As of March 31, 1994, the
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<PAGE> 3
Senior Indebtedness and Additional Senior Obligations of the Company aggregated
approximately $6.3 billion.
The Subordinated Debentures are subject to acceleration only in the event
of bankruptcy or reorganization of the Company. There will be no right of
acceleration of the payment of the principal of the Subordinated Debentures upon
a default in the payment of interest or a default in the performance of any
covenant or agreement in the Subordinated Debentures or in the Subordinated
Indenture. See "Description of Debt Securities -- Subordinated
Securities -- Defaults and Waiver Thereof" in the accompanying Prospectus.
As discussed below, payment of principal of, and interest on, Subordinated
Debentures represented by one or more permanent global Subordinated Debentures
registered in the name of or held by the Depositary or its nominee will be made
in immediately available funds to the Depositary or its nominee, as the case may
be, as the registered owner and holder of such permanent global Subordinated
Debenture or Subordinated Debentures. See "Same-Day Settlement and Payment"
below.
BOOK-ENTRY SYSTEM
Upon issuance, the Subordinated Debentures will be represented by a
permanent global Subordinated Debenture or Subordinated Debentures. Each
permanent global Subordinated Debenture will be deposited with, or on behalf of,
the Depositary and registered in the name of a nominee of the Depositary. Except
under the limited circumstances described below, permanent global Subordinated
Debentures will not be exchangeable for definitive certificated Subordinated
Debentures.
Ownership of beneficial interests in a permanent global Subordinated
Debenture will be limited to institutions that have accounts with the Depositary
or its nominee ("participants") or persons that may hold interests through
participants. In addition, ownership of beneficial interests by participants in
such permanent global Subordinated Debenture will be evidenced only by, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such permanent global
Subordinated Debenture. Ownership of beneficial interests in such permanent
global Subordinated Debenture by persons that hold through participants will be
evidenced only by, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The Depositary has no knowledge of the actual beneficial owners of
the Subordinated Debentures. Beneficial owners will not receive written
confirmation from the Depositary of their purchase, but beneficial owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the participants through
which the beneficial owners entered the transaction. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in such permanent global Subordinated
Debenture.
The Company has been advised by the Depositary that upon the issuance of a
permanent global Subordinated Debenture and the deposit of such permanent global
Subordinated Debenture with the Depositary, the Depositary will immediately
credit, on its book-entry registration and transfer system, the respective
principal amounts represented by such permanent global Subordinated Debenture to
the accounts of such participants.
Payment of principal of, and interest on, Subordinated Debentures
represented by a permanent global Subordinated Debenture registered in the name
of or held by the Depositary or its nominee will be made to the Depositary or
its nominee, as the case may be, as the registered owner and holder of the
permanent global Subordinated Debenture representing such Subordinated
Debentures. The Company has been advised by the Depositary that upon receipt of
any payment of principal of, or interest on, a permanent global Subordinated
Debenture, the Depositary will immediately credit, on its book-entry
registration and transfer system, accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such permanent global Subordinated Debenture as shown in the records
of the Depositary. Payments by participants to owners of beneficial interests in
a permanent global Subordinated Debenture held through such participants will be
governed by standing instructions and customary practices, as is now the case
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<PAGE> 4
with securities held for the accounts of customers in bearer form or registered
in "street name", and will be the sole responsibility of such participants,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
None of the Company, the Trustee or any other agent of the Company or the
Trustee will have any responsibility or liability for any aspect of the records
of the Depositary, any nominee or any participant relating to, or payments made
on account of, beneficial interests in a permanent global Subordinated Debenture
or for maintaining, supervising or reviewing any of the records of the
Depositary, any nominee or any participant relating to such beneficial
interests.
A permanent global Subordinated Debenture is exchangeable for definitive
Subordinated Debentures registered in the name of, and a transfer of a permanent
global Subordinated Debenture may be registered to, any person other than the
Depositary or its nominee, only if:
(a) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such permanent global Subordinated Debenture
or if at any time the Depositary ceases to be registered or in good
standing under the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
(b) the Company in its sole discretion determines that such permanent
global Subordinated Debenture shall be exchangeable for definitive
Subordinated Debentures in registered form; or
(c) there shall have occurred and be continuing an Event of Default or
an event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default under the Subordinated Debentures.
Any permanent global Subordinated Debenture that is exchangeable pursuant to the
preceding sentence will be exchangeable in whole for definitive Subordinated
Debentures in registered form, of like tenor and of an equal aggregate principal
amount as the permanent global Subordinated Debenture, in denominations of
$1,000 and integral multiples thereof. Such definitive Subordinated Debentures
will be registered in the name or names of such persons as the Depositary shall
instruct the Trustee. It is expected that such instructions may be based upon
directions received by the Depositary from its participants with respect to
ownership of beneficial interests in such permanent global Subordinated
Debenture. Any principal and interest will be payable, the transfer of the
definitive Subordinated Debentures will be registerable and the definitive
Subordinated Debentures will be exchangeable at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which will initially
be Chemical Bank), except that, at the option of the Company, interest may be
paid by mailing a check to the address of the person entitled thereto as it
appears in the Subordinated Debenture register.
Except as provided above, owners of beneficial interests in such permanent
global Subordinated Debenture will not be entitled to receive physical delivery
of Subordinated Debentures in definitive form and will not be considered the
holders thereof for any purpose under the Subordinated Indenture, and no
permanent global Subordinated Debenture shall be exchangeable except for another
permanent global Subordinated Debenture of like denomination and tenor to be
registered in the name of the Depositary or its nominee. Accordingly, each
person owning a beneficial interest in such permanent global Subordinated
Debenture must rely on the procedures of the Depositary and, if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the permanent
global Subordinated Debenture or the Subordinated Indenture.
The Company understands that, under existing industry practices, in the
event that the Company requests any action of holders, or an owner of a
beneficial interest in such permanent global Subordinated Debenture desires to
give or take any action that a holder is entitled to give or take under the
Subordinated Indenture, the Depositary would authorize the participants holding
the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
The Depositary has advised the Company that the Depositary is a limited
purpose trust company organized under the laws of the State of New York, a
"banking organization" within the meaning of the New
S-4
<PAGE> 5
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the Exchange Act. The Depositary was created
to hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The Depositary
is owned by a number of its participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the Depositary's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly. The rules applicable to the Depositary and it
participants are on file with the Securities and Exchange Commission.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Subordinated Debentures will be made in immediately
available funds. So long as the Subordinated Debentures are represented by a
permanent global Subordinated Debenture or Subordinated Debentures, all payments
of principal and interest will be made by the Company in immediately available
funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. So long as the
Subordinated Debentures are represented by a permanent global Subordinated
Debenture or Subordinated Debentures registered in the name of the Depositary or
its nominee, the Subordinated Debentures will trade in the Depositary's Same-Day
Funds Settlement System, and secondary market trading activity in the
Subordinated Debentures will therefore be required by the Depositary to settle
in immediately available funds. No assurance can be given as to the effect, if
any, of settlement in immediately available funds on the trading activity in the
Subordinated Debentures.
INTERIM RESULTS
The following summarizes the Company's financial results for the second
quarter of 1994. Such information is qualified in its entirety by, and should be
read in conjunction with, the information included in the Company's Current
Report on Form 8-K to be dated July 21, 1994.
On July 19, 1994, the Company reported net income of $357 million, or $1.28
per common share, for the second quarter of 1994, an increase of 9 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 the second quarter of 1993 was
$381 million, or $1.35 per share, a period in which the Company recognized
income tax benefits of $54 million.
For the first six months of 1994, the Company's net income was $676
million, an increase of 12 percent from net income of $603 million on a
comparable basis for the first half of 1993. Reported net income for the first
six months of 1993 was $755 million, a period in which the Company recognized
$152 million as a result of accounting changes and tax benefits.
Completion of the Brazilian refinancing package during the second quarter
of 1994 brought to a close the broad LDC-rescheduling programs begun in the
mid-1980s. Accordingly, the Company has combined its remaining LDC allowance for
losses with its general allowance for losses and will no longer report a
separate LDC allowance.
On July 1, 1994, the Company completed its tender offer for the outstanding
common stock and the depositary shares representing the preferred stock of
Margaretten Financial Corporation, a leading mortgage banking company. With this
acquisition, the Company now ranks fourth nationwide in mortgage originations
and fifth in mortgage servicing. This acquisition is not reflected in the 1994
second quarter results.
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<PAGE> 6
NET INTEREST INCOME
Net interest income for the second quarter of 1994 was $1,185 million,
compared with $1,175 million for the comparable 1993 period. Average
interest-earning assets for the second quarter of 1994 were $129.1 billion,
compared with $125.6 billion in the comparable 1993 period. The net yield on
interest-earning assets was 3.69 percent in the second quarter of 1994, compared
with 3.76 percent in the second quarter of 1993.
NONINTEREST REVENUE
Noninterest revenue for the second quarter of 1994 was $867 million,
compared with $1,042 million in the second quarter of 1993, which had included
$44 million from the sale of Brazilian interest due and unpaid (IDU) bonds, as
well as significantly higher trading revenues. There were no sales of Brazilian
IDU bonds or Argentine past due interest bonds 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 second quarter of 1993,
reflecting the acquisition of Ameritrust Texas Corporation in September 1993.
Corporate finance fees were $93 million in the second quarter of 1994, an
increase of 11 percent from $84 million in the second quarter of 1993.
Fees for other banking services were $279 million in the second quarter of
1994, compared with $272 million in the second quarter of 1993. 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 of 1994, versus a record $298 million in the comparable 1993
quarter, and as compared with $185 million in the first quarter of 1994. The
decline in trading results in the second quarter of 1994, when compared with
results in the 1993 second quarter, reflected difficult conditions in certain
markets, including emerging market debt and European government bonds, as well
as in many foreign exchange markets.
Other noninterest revenue in the second quarter of 1994 was $66 million,
compared with $115 million in the second quarter of 1993, reflecting lower
revenues on equity-related investments.
NONINTEREST EXPENSE
Noninterest expense in the second quarter of 1994 was $1,281 million,
compared with $1,312 million in the second quarter of 1993.
Expenses for the second quarter of 1994 reflected additional costs of $47
million associated with the acquisition of Ameritrust Texas Corporation and
operating costs connected with the Shell MasterCard program (including marketing
expenses that increased by $21 million largely reflecting the advertising
campaign for the program).
Foreclosed property expense was $2 million in the second quarter of 1994,
compared with $85 million in the second quarter of 1993, reflecting significant
progress in managing the Company's foreclosed real estate portfolio. The 1994
second quarter foreclosed property 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.
PROVISION AND ALLOWANCE FOR LOSSES
The provision for losses was $160 million in the second quarter of 1994,
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 of 1994, compared with $230 million in the first quarter of 1994 and
$363 million in the second quarter of 1993.
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<PAGE> 7
Following completion of the Brazilian refinancing package, a final
valuation of the LDC portfolio resulted in a $291 million charge in the second
quarter of 1994. The remaining LDC allowance for losses of $300 million, after
taking into account the aforementioned charge, was transferred to the general
allowance for losses.
At June 30, 1994, the allowance for losses was $2,676 million, compared
with $2,991 million at June 30, 1993 (including $570 million related to the LDC
allowance).
NONPERFORMING ASSETS
At June 30, 1994, total nonperforming assets were $2,493 million, a
decrease of $710 million, or 22 percent, from March 31, 1994 and a decrease of
$2,370 million, or 49 percent, from June 30, 1993.
Nonperforming loans at June 30, 1994 were $1,758 million, a decline from
$2,369 million at March 31, 1994 and a decline from $3,764 million at June 30,
1993. Assets acquired as loan satisfactions were $735 million at June 30, 1994,
a decline from $834 million at March 31, 1994 and a decrease of $364 million
from $1,099 million on June 30, 1993. The nonperforming amounts include
nonperforming LDC loans of $145 million at June 30, 1994, a decline from $524
million at March 31, 1994, principally as a result of the completion of the
Brazilian refinancing program.
STOCKHOLDERS' EQUITY AND CAPITAL RATIOS
The following table summarizes certain capital levels of the Company at the
dates indicated.
<TABLE>
<CAPTION>
AT JUNE 30,
---------------------
1994 1993
----- -----
($ IN BILLIONS)
<S> <C> <C>
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%
</TABLE>
- ---------------
(a) On January 1, 1994, the Company adopted Financial Accounting Standards Board
Interpretation No. 39 ("FASI 39"), which increased total assets by
approximately $19.0 billion at June 30, 1994 and increased total average
assets by approximately $14.1 billion for the second quarter of 1994 and by
approximately $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 Company announced its intention to
repurchase up to 10 million shares of its common stock on the open market from
time to time during the 12 months following such announcement. As of June 30,
1994, the Company had repurchased approximately 3.2 million shares of its common
stock.
The Company also redeemed all shares of its Adjustable Rate Cumulative
Preferred Stock, Series C, on July 15, 1994 and issued $200 million of
Adjustable Rate Cumulative Preferred Stock, Series L, on June 8, 1994.
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<PAGE> 8
The Company's effective tax rate was 41.5 percent in the second quarter of
1994, compared with 29.7 percent in the second quarter 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 Company'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 Company adopted FASI 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" on the Company's balance
sheet.
Total assets at June 30, 1994 were $168.9 billion, versus $145.5 billion at
June 30, 1993. Total loans at June 30, 1994 were $74.7 billion, compared with
$79.2 billion at June 30, 1993. At June 30, 1994, 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
of 1994, compared with 1.04 percent for the second quarter of 1993.
The return on average common stockholders' equity was 13.90 percent for the
second quarter of 1994, compared with 15.97 percent for the second quarter of
1993. Book value per common share was $37.17 at June 30, 1994, versus $34.47 per
common share at June 30, 1993.
TEXAS COMMERCE
Texas Commerce reported net income of $60 million in the second quarter of
1994 versus $44 million in the second quarter of 1993. At June 30, 1994, total
assets of Texas Commerce were $20.9 billion, versus $22.1 billion at June 30,
1993.
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<PAGE> 9
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") between the Company and the several Underwriters
named below, the Company has agreed to sell to the Underwriters, and the
Underwriters have severally agreed to purchase from the Company, the following
respective principal amounts of the Subordinated Debentures:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
--------------------- ----------------
<S> <C>
Chemical Securities Inc. .................................... $ 30,000,000
Dean Witter Reynolds Inc. ................................... 30,000,000
Goldman, Sachs & Co. ........................................ 30,000,000
NationsBanc Capital Markets, Inc. ........................... 30,000,000
Smith Barney Inc. ........................................... 30,000,000
----------------
Total................................................... $150,000,000
=============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Subordinated
Debentures offered hereby if any of the Subordinated Debentures are purchased.
The Company has been advised that the Underwriters propose initially to
offer the Subordinated Debentures to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a concession not in excess of .40% of the principal amount. The
Underwriters may allow and such dealers may reallow a concession not in excess
of .25% of the principal amount on sales to certain other dealers. After the
initial public offering, the public offering price and such concessions may be
changed.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended, or to contribute to payments which the Underwriters may be required to
make in respect thereof.
Chemical Securities Inc. ("CSI") is a wholly-owned subsidiary of the
Company. Under Schedule E to the By-Laws ("Schedule E") of the National
Association of Securities Dealers, Inc. (the "NASD"), when an NASD member, such
as CSI, participates in the distribution of an affiliated company's securities,
the offering must be conducted in accordance with the applicable provisions of
Schedule E. The offer and sale of the Subordinated Debentures by CSI will comply
with the requirements of Schedule E regarding the underwriting of securities of
affiliates.
Certain of the Underwriters engage in transactions with and perform
services for the Company and its subsidiaries in the ordinary course of
business.
This Prospectus Supplement and the accompanying Prospectus may be used by
affiliates of the Company in connection with offers and sales related to
secondary market transactions in the Subordinated Debentures. Such affiliates
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
The Subordinated Debentures will not be listed on any securities exchange.
The Subordinated Debentures are a new series of securities with no established
trading market. The Underwriters have informed the Company that they intend to
make a market in the Subordinated Debentures, but are under no obligation to do
so and such market making may be terminated at any time. Therefore, no assurance
can be given as to the liquidity of, or the trading market for, the Subordinated
Debentures.
LEGAL OPINIONS
The validity of the Subordinated Debentures being offered hereby will be
passed upon for the Company by Simpson Thacher & Bartlett (a partnership which
includes professional corporations), New York, New York, and for the
Underwriters by Cravath, Swaine & Moore, New York, New York. Cravath, Swaine &
Moore has represented and continues to represent the Company and its
subsidiaries in a substantial number of matters on a regular basis.
S-9
<PAGE> 10
NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
- --------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
Chemical Banking Corporation S-2
Use of Proceeds S-2
Certain Terms of the Subordinated Debentures S-2
Interim Results S-5
Underwriting S-9
Legal Opinions S-9
PROSPECTUS
Available Information 2
Incorporation of Certain Documents by Reference 2
Chemical Banking Corporation 3
Consolidated Ratios of Earnings to Fixed Charges 4
Use of Proceeds 4
Description of Debt Securities 4
Description of Preferred Stock 15
Description of Common Stock 22
Description of Securities Warrants 23
Risk Factors Relating to Currency Warrants 24
Description of Currency Warrants 25
Plan of Distribution 26
Certain Regulatory Matters 28
Experts 32
Legal Opinions 32
</TABLE>
Prospectus Supplement
CHEMICAL BANKING
CORPORATION
$150,000,000
7 7/8% SUBORDINATED DEBENTURES
DUE 2006
(LOGO)
CHEMICAL SECURITIES INC.
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SMITH BARNEY INC.
Dated July 20, 1994
