<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: January 19, 1995
----------------
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
January 17, 1995, that 1994 fourth quarter net income, before a
previously-announced restructuring charge, was $331 million, or
$1.24 per common share, compared with net income of $347
million, or $1.23 per common share, in the year-ago same period.
Including the restructuring charge of $260 million ($152 million
after-tax), reported net income in the fourth quarter of 1994
was $179 million, or $.63 per share.
For the full year 1994, net income before the fourth quarter
restructuring charge was $1.446 billion, or $5.25 per share, an
increase of 11 percent from 1993 net income on a comparable
basis of $1.305 billion, or $4.58 per share. Including the
restructuring charge, 1994 net income was $1.294 billion, or
$4.64 per share. Reported 1993 net income was $1.604 billion,
or $5.77 per share, which included income tax benefits of $331
million and a $115 million merger-related charge ($67 million
after-tax).
A copy of the Corporation's Press Release announcing the results
of operations for the 1994 Fourth quarter and full year 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 Fourth 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 January 19, 1995
----------------- 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 Stefans
(212) 270-7438
Investor Contact: John Borden
(212) 270-7318
For Immediate Release
Tuesday, January 17, 1995
New York, January 17 -- Chemical Banking Corporation today
reported net income, before a previously-announced restructuring
charge, for the fourth quarter of 1994 of $331 million, or $1.24
per common share, compared with net income of $347 million, or
$1.23 per common share, in the year-ago same period. Including the
restructuring charge of $260 million ($152 million after-tax),
reported net income in the fourth quarter of 1994 was $179 million,
or $.63 per share.
For the full year 1994, net income before the fourth quarter
restructuring charge was $1.446 billion, or $5.25 per share, an
increase of 11 percent from 1993 net income on a comparable basis
of $1.305 billion, or $4.58 per share. Including the restructuring
charge, 1994 net income was $1.294 billion, or $4.64 per share.
Reported 1993 net income was $1.604 billion, or $5.77 per share,
which included income tax benefits of $331 million and a $115
million merger-related charge ($67 million after-tax).
"Despite a difficult operating environment, 1994 was a good
year for Chemical and one in which we took important steps to
position ourselves for sustained success," said Walter V. Shipley,
chairman and chief executive officer. "We believe the series of
initiatives we announced in December will lift the corporation to a
new level of performance."
On December 1, 1994, the corporation announced a two-year
program designed to produce earnings per share growth of more than
15 percent in 1995 and 1996, and a core efficiency ratio of 57
percent and a return on common shareholders' equity of 16 percent
in 1996.
<PAGE> 6
Under the program, Chemical will reduce its existing cost base
by $440 million ($230 million in 1995), and at the same time focus
$180 million of new investment spending in a number of high growth
businesses. The net result should be flat expenses in 1995 and
1996 and annual revenue growth targeted at 4 to 6 percent. The pre-
tax restructuring charge of $260 million in the fourth quarter
covered the costs associated with severance and the disposition of
certain facilities.
NET INTEREST INCOME
Net interest income for the fourth quarter was $1,169 million,
compared with $1,149 million in the same year-ago period. For the
full year, net interest income was $4,674 million, compared with
$4,636 million in 1993. The rise in net interest income is
attributable to an increase in average interest-earning assets,
which more than offset the effect of rising interest rates.
Average interest-earning assets for the fourth quarter were
$131.8 billion, compared with $125.7 billion in the same year-ago
period. For the year, average interest-earning assets were $130.0
billion, compared with $124.9 billion for 1993.
The net yield on average interest-earning assets was 3.55
percent in the fourth quarter, compared with 3.65 percent in the
fourth quarter of 1993. The net yield on interest-earning assets
for the full year was 3.61 percent, compared with 3.73 percent for
all of 1993.
NONINTEREST REVENUE
Noninterest revenue for the fourth quarter was $815 million,
compared with $1,053 million in the same period a year ago.
Noninterest revenue for the full year was $3,597 million, compared
with $4,024 million for all of 1993.
Corporate finance and syndication fees were $133 million in
the fourth quarter, up 51 percent from $88 million in the fourth
quarter a year ago. For the full year 1994, corporate finance and
syndication fees were $405 million, up 20 percent from $338 million
in 1993. The fourth quarter and total 1994 corporate finance fees
were record results, reflecting Chemical's continued global
leadership in loan syndications and structured finance.
Fees for other banking services were $294 million in the
fourth quarter of 1994 and $1,148 million for the full year, up
from $278 million and $1,067 million in the corresponding periods
of 1993. This improvement primarily reflected increased revenues
generated by the credit card business.
<PAGE> 7
Combined revenues from all trading activities were $45 million
in the fourth quarter of 1994 and $645 million for the full year,
compared with $255 million and $1,073 million in the corresponding
periods of 1993. Trading revenues were adversely affected by a
difficult emerging markets debt trading environment and very low
year-end activity. In addition, as previously announced, trading
revenues in the fourth quarter of 1994 were reduced by $70 million
($40 million after-tax) as a result of losses sustained from
unauthorized foreign exchange transactions involving the Mexican
peso.
Other noninterest revenue was $165 million in the fourth
quarter of 1994 and $612 million for the full year, compared with
$236 million and $710 million in the corresponding periods of 1993.
Revenues on equity-related investments in the fourth quarter were
$127 million, compared with $78 million in the same year-ago
period, and $362 million for all of 1994, compared with $278
million in 1993. The current quarter included $2 million from the
sale of LDC-related past-due interest bonds, versus $154 million
from the sale of such bonds in the 1993 fourth quarter, and $127
million for full year 1994, compared with $306 million in 1993.
NONINTEREST EXPENSE
Noninterest expense in the fourth quarter was $1,333 million,
excluding the $260 million restructuring charge, compared with
$1,335 million in the fourth quarter of 1993. For the full year,
noninterest expense was $5,201 million, versus $5,135 million a
year ago, excluding all restructuring charges.
Equipment expense for the fourth quarter was $107 million,
compared with $93 million in the same year-ago period, and $382
million for the full year 1994, compared with $337 million in 1993.
These increases result from investments in new technology in
trading and consumer banking.
Foreclosed property expense was $2 million in the quarter,
compared with $61 million in the fourth quarter a year ago,
reflecting significant progress in managing the corporation's
foreclosed real estate portfolio. For the full year, foreclosed
property expense was $41 million, versus $287 million for all of
1993.
PROVISION AND ALLOWANCE FOR LOSSES
The provision for losses for the fourth quarter was $85
million, down 15 percent from $100 million in the third quarter and
down 70 percent from $286 million in the fourth quarter a year ago.
The provision has declined for six consecutive quarters, reflecting
the continued improvement in the corporation's risk profile. For
the full year, the provision for losses was $550 million, compared
with $1,259 million for all of 1993.
<PAGE> 8
Total net charge-offs were $258 million in the fourth quarter,
compared with $125 million in the third quarter of 1994 and $232
million in the fourth quarter a year ago. Included in the fourth
quarter net charge-offs were $148 million taken in conjunction with
the transfer of certain real estate loans to the "held for sale"
category in order to facilitate rapid disposition. Also included
were consumer net charge-offs of $111 million in the fourth
quarter, compared with consumer net charge-offs of $100 million in
the third quarter and $89 million in the fourth quarter a year ago.
Recoveries in the fourth quarter were $82 million, compared
with $76 million in the third quarter and $105 million in the
fourth quarter a year ago. For the full year, recoveries were $319
million, compared with $343 million in 1993.
At December 31, the total allowance for losses was $2,480
million, compared with $3,020 million on the same date a year ago.
NONPERFORMING ASSETS
At December 31, total nonperforming assets were $1,139
million, down $1,054 million from September 30 and down $2,386
million, or 68 percent, from December 31, 1993. The reduction in
nonperforming assets is largely attributable to the planned sale of
approximately $735 million of real estate loans (approximately $580
million nonperforming) designated as "held for sale" as well as
continued improvement in the corporation's credit profile.
Nonperforming assets have decreased by 83 percent from their peak
levels of $6,587 million in September 1992.
Nonperforming loans at December 31 were $929 million, down
from $1,524 million at September 30 and down from $2,591 million at
December 31 last year. Assets acquired as loan satisfactions were
$210 million at December 31, down from $669 million at September 30
and down $724 million from $934 million on December 31, 1993.
OTHER FINANCIAL DATA
The company announced on December 1 that it plans to
repurchase up to 6 million shares of its common stock over the next
12 months and said it will consider expanding the new stock buyback
program upon completion of contemplated divestitures. This follows
a 10 million share buyback program completed in September 1994.
The corporation's estimated Tier I risk-based capital ratio
was 8.1 percent at December 31, compared with 8.1 percent a year
ago. At December 31, the estimated total risk-based capital ratio
was 12.2 percent, compared with 12.2 percent a year ago.
The corporation's effective tax rate was 41.5 percent in the
fourth quarter. The corporation's earnings in 1994 were reported
on a fully-taxed basis. Tax expense in 1993 included income tax
benefits of $331 million.
<PAGE> 9
The impact of marking the "available for sale" securities to
market resulted in a net unfavorable impact of approximately $438
million after-tax on the corporation's stockholders' equity at
December 31, 1994, compared with a net unfavorable impact of $296
million after-tax at September 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 $16.0 billion
at December 31, 1994, with unrealized gains reported as Trading
Assets-Risk Management Instruments and the unrealized losses
reported in Other Liabilities.
Net income for 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 December 31 were $171.4 billion, compared with
$149.9 billion on the same date a year ago. Total loans at
December 31 were $78.8 billion, compared with $75.4 billion a year
ago. At December 31, 1994, total deposits were $96.5 billion,
compared with $98.3 billion at December 31, 1993.
The return on average total assets (ROA) was .78 percent for
the fourth quarter, excluding the restructuring charge of $260
million, compared with .94 percent in the same year-ago period.
The ROA for the full year was .87 percent, excluding the
restructuring charge, compared with .90 percent on a comparable
basis for all of 1993.
The return on average common stockholders' equity (ROE) was
12.70 percent for the fourth quarter, excluding the restructuring
charge, compared with 13.38 percent in the year-ago fourth quarter.
The ROE for the full year was 13.94 percent, excluding the
restructuring charge, compared with 13.22 percent on a comparable
basis for all of 1993.
Book value per common share was $37.88 at December 31, versus
$37.60 per share on the same date a year ago.
TEXAS COMMERCE BANCSHARES
Texas Commerce Bancshares (TCB) reported net income of $38
million in the fourth quarter and $206 million for the year,
compared with $39 million and $169 million in the same periods of
1993. At December 31, total assets of TCB were $20.0 billion,
versus $21.8 billion a year ago.
<PAGE> 10
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
(in millions, except per share and ratio data)
Three Months Ended
December 31,
-------------------
Pro-
Forma<a>
1994 1994 1993
----- ----- -----
EARNINGS:
Net Income $ 179 $ 331 $ 347
===== ===== =====
Net Income Applicable to Common Stock $ 149 $ 301 $ 309
===== ===== =====
PER COMMON SHARE:
Net Income $0.63 $1.24 $1.23
====== ===== =====
Book Value at December 31, $37.88 $37.60
Market Value at December 31, $35.88 $40.13
Common Stock Dividends Declared $ 0.44<b> $ 0.38
COMMON SHARES:
Average Outstanding 244.5 252.5
Period End Outstanding 244.5 252.9
BALANCE SHEET AVERAGES:
Loans $ 76,894 $ 76,063
Securities $ 26,120 $ 23,727
Total Assets $ 169,435(c) $146,870
Deposits $ 95,226 $ 97,149
Long-Term Debt $ 8,262 $ 8,295
Stockholders' Equity $ 10,854 $ 11,032
PERFORMANCE RATIOS: (Average Balances) <d>
Return on Assets 0.42%(c) 0.78%(c) 0.94%
Return on Common Stockholders' Equity 6.29% 12.70% 13.38%
Return on Total Stockholders' Equity 6.54% 12.10% 12.48%
[FN]
<a> The pro-forma column excludes the impact of the $260
million restructuring charge ($152 million after-tax)
recorded in the fourth quarter of 1994.
<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 average assets by approximately
$17.8 billion for the 1994 fourth quarter.
<d> Performance ratios are based on annualized net income
amounts.
<PAGE> 11
<TABLE>
<CAPTION>
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
(in millions, except per share and ratio data)
For The Year Ended
December 31,
----------------------------------------------
Pro- Pro-
Forma<a> Forma<b>
1994 1994 1993 1993
----- ----- ----- -----
<S> <C> <C> <C> <C>
EARNINGS:
Income Before Effect of Accounting Changes $1,294 $1,446 $1,569 $1,305
Net Effect of Changes in Accounting Principles -- -- 35 35
------ ------ ------ ------
Net Income $1,294 $1,446 $1,604 $1,340
====== ====== ====== ======
Net Income Applicable to Common Stock $1,156 $1,308 $1,449 $1,185
====== ====== ====== ======
PER COMMON SHARE:
Income Before Effect of Accounting Changes $ 4.64 $ 5.25 $ 5.63 $ 4.58
Net Effect of Changes in Accounting Principles -- -- .14 .14
------ ------ ------ ------
Net Income $ 4.64 $ 5.25 $ 5.77 $ 4.72
====== ====== ====== ======
Book Value at December 31, $ 37.88 $ 37.60
Market Value at December 31, $ 35.88 $ 40.13
Common Stock Dividends Declared $ 1.64(c) $ 1.37
COMMON SHARES:
Average Outstanding 249.3 251.2
Period End Outstanding 244.5 252.9
BALANCE SHEET AVERAGES:
Loans $ 75,234 $ 78,739
Securities $ 26,207 $ 23,654
Total Assets $166,679<d> $144,881
Deposits $ 94,763 $ 95,656
Long-Term Debt $ 8,419 $ 8,053
Stockholders' Equity $ 10,962 $ 10,583
PERFORMANCE RATIOS: (Average Balances)
Return on Assets 0.78%<d> 0.87%<d> 1.11% 0.90%<f>
Return on Common Stockholders' Equity 12.32% 13.94% 16.66% 13.22%<f>
Return on Total Stockholders' Equity 11.80% 13.19% 15.16% 12.33%<f>
CAPITAL RATIOS AT DECEMBER 31:
Total Stockholders' Equity to Assets 6.2%<d> 7.4%
Common Stockholders' Equity to Assets 5.4%<d> 6.3%
Tier 1 Leverage <e> 5.9%<d> 6.8%
Risk Based Capital: <e>
Tier 1 (4.0% required) 8.1%* 8.1%
Total (8.0% required) 12.2%* 12.2%
<FN>
<a> The pro-forma column excludes the impact of the $260
million restructuring charge ($152 million after-tax)
recorded in the fourth quarter of 1994.
<b> 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 column excludes the impact of the
$115 million merger related charge ($67 million after-
tax) recorded in the third quarter of 1993 and also
assumes the Corporation's results for the year ended
December 31, 1993 are reported on a fully-taxed basis.
(c) In the third quarter of 1994, the Corporation increased
its quarterly common stock dividend to $0.44 per share
from $0.38 per share.
<d> On January 1, 1994, the Corporation adopted FASI 39,
which increased total assets by approximately $16.0
billion at December 31, 1994 and total average assets by
$16.1 billion for the year ended December 31, 1994.
<e> The amounts exclude the net unfavorable impact on
stockholders' equity of $438 million in 1994, and the net
favorable impact on stockholders' equity of $215 million
in 1993, resulting from the adoption of SFAS No. 115.
<f> The pro-forma 1993 performance ratios exclude the impact
of accounting changes of $35 million.
*Estimated
</TABLE>
<PAGE> 12
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Three Months Ended
December 31,
------------------
1994 1993
------- -------
INTEREST INCOME
Loans $1,575 $1,350
Securities 445 428
Trading Assets 177 135
Federal Funds Sold and Securities
Purchased Under Resale Agreements 178 94
Deposits with Banks 91 67
------ ------
Total Interest Income 2,466 2,074
------ ------
INTEREST EXPENSE
Deposits 718 542
Short-Term and Other Borrowings 444 249
Long-Term Debt 135 134
------ ------
Total Interest Expense 1,297 925
------ ------
NET INTEREST INCOME 1,169 1,149
Provision for Losses 85 286
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOSSES 1,084 863
------ ------
NONINTEREST REVENUE
Trust and Investment Management Fees 99 109
Corporate Finance and Syndication Fees 133 88
Service Charges on Deposit Accounts 78 71
Fees for Other Banking Services 294 278
Trading Account and Foreign Exchange Revenue 45 255
Securities Gains 1 16
Other Revenue 165 236
------ ------
Total Noninterest Revenue 815 1,053
------ ------
NONINTEREST EXPENSE
Salaries 571 522
Employee Benefits 110 95
Occupancy Expense 142 149
Equipment Expense 107 93
Foreclosed Property Expense 2 61
Restructuring Charge 260 --
Other Expense 401 415
------ ------
Total Noninterest Expense 1,593 1,335
------ ------
INCOME BEFORE INCOME TAX EXPENSE 306 581
Income Tax Expense 127 234
------ ------
NET INCOME $ 179 $ 347
====== ======
NET INCOME APPLICABLE TO COMMON STOCK $ 149 $ 309
====== ======
NET INCOME PER COMMON SHARE $ 0.63 $ 1.23
====== ======
AVERAGE COMMON SHARES OUTSTANDING 244.5 252.5
<PAGE> 13
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
For The Year Ended
December 31,
--------------------
1994 1993
------- -------
INTEREST INCOME
Loans $5,730 $5,620
Securities 1,715 1,727
Trading Assets 722 449
Federal Funds Sold and Securities
Purchased Under Resale Agreements 550 339
Deposits with Banks 371 268
------ ------
Total Interest Income 9,088 8,403
------ ------
INTEREST EXPENSE
Deposits 2,378 2,241
Short-Term and Other Borrowings 1,500 992
Long-Term Debt 536 534
------ ------
Total Interest Expense 4,414 3,767
------ ------
NET INTEREST INCOME 4,674 4,636
Provision for Losses 550 1,259
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOSSES 4,124 3,377
------ ------
NONINTEREST REVENUE
Trust and Investment Management Fees 421 406
Corporate Finance and Syndication Fees 405 338
Service Charges on Deposit Accounts 300 288
Fees for Other Banking Services 1,148 1,067
Trading Account and Foreign Exchange Revenue 645 1,073
Securities Gains 66 142
Other Revenue 612 710
------ ------
Total Noninterest Revenue 3,597 4,024
------ ------
NONINTEREST EXPENSE
Salaries 2,205 2,070
Employee Benefits 439 396
Occupancy Expense 573 587
Equipment Expense 382 337
Foreclosed Property Expense 41 287
Restructuring Charge 308 158
Other Expense 1,561 1,458
------ ------
Total Noninterest Expense 5,509 5,293
------ ------
INCOME BEFORE INCOME TAX EXPENSE AND EFFECT
OF ACCOUNTING CHANGES 2,212 2,108
Income Tax Expense 918 539
------ ------
INCOME BEFORE EFFECT OF ACCOUNTING CHANGES 1,294 1,569
Net Effect of Changes in
Accounting Principles -- 35<a>
------ ------
NET INCOME $1,294 $1,604
====== ======
NET INCOME APPLICABLE TO COMMON STOCK $1,156 $1,449
====== ======
PER COMMON SHARE:
Income Before Effect of
Accounting Changes $ 4.64 $ 5.63
Net Effect of Changes in
Accounting Principles -- .14<a>
------- -------
Net Income $ 4.64 $ 5.77
======= =======
AVERAGE COMMON SHARES OUTSTANDING 249.3 251.2
[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> 14
<TABLE>
<CAPTION>
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
NONINTEREST REVENUE DETAIL
(in millions)
Three Months Ended For The Year Ended
December 31, December 31,
------------------ ------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Trust and Investment Management Fees:
Personal Trust Fees $ 50 $ 53 $ 206 $ 196
Corporate and Institutional Trust Fees 40 43 176 168
Other, primarily Foreign Asset Management 9 13 39 42
------ ------ ------ ------
Total $ 99 $ 109 $ 421 $ 406
====== ====== ====== ======
Fees for Other Banking Services:
Credit Card Services Revenue $ 86 $ 71 $ 315 $ 238
Fees in Lieu of Compensating Balances 47 53 203 209
Commissions on Letters of Credit and Acceptances 35 36 151 155
Loan Commitment Fees 20 21 86 90
Mortgage Servicing Fees 22 15 79 63
Other Fees 84 82 314 312
------ ------ ------ ------
Total $ 294 $ 278 $1,148 $1,067
====== ====== ====== ======
Trading Account and Foreign Exchange Revenue:
Interest Rate Contracts $ 73 $ 111 $ 391 $ 453
Foreign Exchange Revenue (4)<a> 59 152<a> 302
Debt Instruments and Other (24) 85 102 318
------ ------ ------ ------
Total $ 45 $ 255 $ 645 $1,073
====== ====== ====== ======
Other Revenue:
Revenue from Equity-Related Investments $ 127 $ 78 $ 362 $ 278
Net Gains on LDC-Related Interest Bond Sales 2 154 127 306
All Other Revenue 36 4 123 126
------ ------ ------ ------
Total $ 165 $ 236 $ 612 $ 710
====== ====== ====== ======
<FN>
<a> Reflects $70 million reduction as a result of losses
sustained from unauthorized foreign exchange transactions
involving the Mexican peso.
</TABLE>
<TABLE>
<CAPTION>
CHEMICAL BANKING CORPORATION and Subsidiaries
NONINTEREST EXPENSE DETAIL
(in millions)
Three Months Ended For The Year Ended
December 31, December 31,
------------------ ------------------
1994 1993 1994 1993
------- ------- ------ ------
<S> <C> <C> <C> <C>
Other Expense:
Professional Services $ 65 $ 48 $ 225 $ 193
Marketing Expense 44 79 186 187
FDIC Assessments 38 41 160 175
Telecommunications 32 31 134 115
Amortization of Intangibles 30 30 115 106
All Other 192 186 741 682
------- ------ ------ -------
Total $ 401 $ 415 $1,561 $ 1,458
======= ====== ====== =======
</TABLE>
<PAGE> 15
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions)
December 31, December 31,
1994 1993
------------ ------------
ASSETS
Cash and Due from Banks $ 8,832 $ 6,852
Deposits with Banks 5,649 6,030
Federal Funds Sold and Securities
Purchased Under Resale Agreements 12,797 10,556
Trading Assets:
Debt and Equity Instruments 11,093 11,679
Risk Management Instruments 17,709<a> --
Securities:
Held-to-Maturity 8,566 10,108
Available-for-Sale 18,431 15,840
Loans (Net of Unearned Income) 78,767 75,381
Allowance for Losses (2,480) (3,020)
Premises and Equipment 2,134 1,910
Due from Customers on Acceptances 1,088 1,077
Accrued Interest Receivable 1,190 1,106
Assets Acquired as Loan Satisfactions 210 934
Assets Held for Accelerated Disposition 526 --
Other Assets 6,911 11,435
-------- --------
TOTAL ASSETS $171,423 $149,888
======== ========
LIABILITIES
Deposits:
Demand (Noninterest Bearing) $ 21,399 $ 23,443
Time and Savings 46,799 51,940
Foreign 28,308 22,894
-------- --------
Total Deposits 96,506 98,277
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 23,098 12,857
Other Borrowed Funds 11,843 11,908
Acceptances Outstanding 1,104 1,099
Accounts Payable and Accrued Liabilities 2,361 2,607
Other Liabilities 17,808<a> 3,784
Long-Term Debt 7,991 8,192
-------- --------
TOTAL LIABILITIES 160,711 138,724
======== ========
STOCKHOLDERS' EQUITY
Preferred Stock 1,450 1,654
Common Stock 254 253
Capital Surplus 6,544 6,553
Retained Earnings 3,263 2,501
Net Unrealized Gain (Loss) on
Securities Available-for-Sale,
Net of Taxes (438) 215
Treasury Stock, at Cost (361)<b> (12)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 10,712 11,164
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $171,423 $149,888
======== ========
[FN]
<a> On January 1, 1994, the Corporation adopted FASB
Interpretation No. 39. As a result, assets and
liabilities increased by $16.0 billion at December 31,
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> 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
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(in millions)
For The Year Ended
December 31,
----------------------
1994 1993
------- -------
BALANCE AT JANUARY 1, $ 11,164 $ 9,851
-------- --------
Net Income 1,294 1,604
Dividends Declared:
Preferred Stock (126) (155)
Common Stock (406) (345)
Issuance of Preferred Stock 200 400
Redemption of Preferred Stock (404) (594)
Premium on Redemption of Preferred Stock (12) (17)
Issuance of Common Stock 15 200
Restricted Stock Granted (11) --
Net Changes in Treasury Stock (349)<a> --
Net Change in the Fair Value of
Available-for-Sale Securities,
Net of Taxes (653) 215
Accumulated Translation Adjustment -- 5
-------- --------
Net Change in Stockholders' Equity (452) 1,313
-------- --------
BALANCE AT DECEMBER 31, $ 10,712 $ 11,164
======== ========
[FN]
<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> 17
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
LOAN INFORMATION
(in millions)
December 31, December 31,
1994 1993
------------ ------------
LOANS:
Domestic Commercial:
Commercial Real Estate $ 5,650 $ 7,338
Other Commercial 24,723 23,690
------- -------
Total Commercial Loans 30,373 31,028
------- -------
Domestic Consumer:
Residential Mortgage 13,560 12,244
Credit Card 9,261 7,176
Other Consumer 7,265 6,266
------- -------
Total Consumer Loans 30,086 25,686
------- -------
Total Domestic Loans 60,459 56,714
Foreign <a> 18,308 18,667
------- -------
Total Loans $ 78,767 $ 75,381
======== ========
[FN]
<a> Included in Foreign are loans previously classified as
LDC loans. Previously reported loan amounts have been
reclassified to conform with the December 31, 1994
presentation.
<TABLE>
<CAPTION>
CHEMICAL BANKING CORPORATION and Subsidiaries
ALLOWANCE RELATED INFORMATION
(in millions, except ratios)
Three Months Ended For The Year Ended
Allowance for Losses December 31, December 31,
----------------- -----------------
1994 1993 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
Non-LDC Allowance:
Balance at Beginning of Period $ 2,650 $2,429 $2,423 $ 2,206
Provision for Losses 85 286 550 1,259 <a>
Net Charge-Offs (110) (286) (650) (1,259)<a>
Charge for Assets Held for Accelerated Disposition (148) -- (148) --
Transfer from LDC Allowance -- -- 300 200
Allowance Related To Purchased Assets
of First City Banks -- -- -- 19
Other 3 (6) 5 (2)
------ ------ ------ ------
Balance at End of Period 2,480 2,423 2,480 2,423
------ ------ ------ ------
LDC Allowance:
Balance at Beginning of Period -- 543 597 819
Provision for Losses -- -- -- --
Net (Charge-Offs) Recoveries -- 60 (239) 130
Losses on Sales and Swaps -- (6) (58) (152)
Transfer to Non-LDC Allowance -- -- (300) (200)
------ ------ ------ ------
Balance at End of Period -- 597 -- 597
------ ------ ------ ------
Total Allowance for Losses $2,480 $3,020 $2,480 $3,020
====== ====== ====== ======
Allowance Coverage Ratios:
Allowance for Losses to:
Loans at Period-End 3.15% 4.01%
Average Loans 3.30% 3.84%
Nonperforming Loans 266.95% 116.56%
<FN>
<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> 18
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
NONPERFORMING ASSETS INFORMATION
AND ASSETS HELD FOR ACCELERATED DISPOSITION
(in millions)
December 31, December 31,
1994 1993
------------ ------------
NONPERFORMING ASSETS:<a>
Domestic Commercial:
Commercial Real Estate $ 156 $ 682
Other Commercial 358 891
-------- --------
Total Commercial Loans 514 1,573
-------- --------
Domestic Consumer:
Residential Mortgage 92 101
Other Consumer 12 24
-------- --------
Total Consumer Loans 104 125
-------- --------
Total Domestic 618 1,698
Foreign, primarily Commercial <b> 311 893
-------- --------
Total Nonperforming Loans 929 2,591
Assets Acquired as Loan Satisfactions 210 934
-------- --------
Total Nonperforming Assets $ 1,139 $ 3,525
======== ========
ASSETS HELD FOR ACCELERATED DISPOSITION:
Loans $ 336 $ --
Real Estate Owned 190 --
-------- --------
Assets Held for Accelerated Disposition $ 526 $ --
-------- --------
[FN]
<a> Reflects approximately $580 million decrease related to
the decision to accelerate the disposition of certain
nonperforming real estate assets.
<b> Includes nonperforming loans previously classified as LDC
nonperforming loans. Previously reported loan amounts
have been reclassified to conform with the December 31,
1994 presentation.
<TABLE>
<CAPTION>
CHEMICAL BANKING CORPORATION and Subsidiaries
NET CHARGE-OFFS INFORMATION
(in millions)
Three Months Ended For The Year Ended
December 31, December 31,
--------------------- -------------------
- -------
1994 1993 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET CHARGE-OFFS:
Domestic Commercial:
Commercial Real Estate $ 22 $ 66 $ 165 $ 244
Other Commercial (16) 91 80 422
------ ------ ------ ------
Total Commercial 6 157 245 666
------ ------ ------ ------
Domestic Consumer:
Residential Mortgage 23 2 47 67
Credit Card 82 77 329 322
Other Consumer 6 10 19 30
------ ------ ------ ------
Total Consumer 111 89 395 419
------ ------ ------ ------
Total Domestic Charge-offs 117 246 640 1,085
Foreign <a> (7) (14) 307 196
------ ------ ------ ------
Total Net Charge-offs $ 110 $ 232 $ 947 $1,281
====== ====== ====== ======
Charge for Assets Held for Accelerated Disposition $ 148 $ -- $ 148 $ --
====== ====== ====== ======
<FN>
<a> Includes charge-offs previously classified as LDC charge-
offs and losses on sales and swaps. Previously reported
net charge-off amounts have been reclassified to conform
with the 1994 presentation.
</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)
Three Months Ended Three Months Ended
December 31, 1994 December 31, 1993
----------------------------- ----------------------------
Average Rate Average Rate
Balance Interest(Annualized) Balance Interest(Annualized)
------- --------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Deposits with Banks $ 6,078 $ 91 6.06% $ 4,128 $ 67 6.52%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 12,107 178 5.85% 11,491 94 3.23%
Trading Assets 10,589 177 6.68% 10,305 135 5.23%
Securities:
Held-to-Maturity 8,613 141 6.50% -- -- --%
Available-for-Sale 17,507 307 6.96% -- -- --%
Securities <a> -- -- --% 23,727 430 7.19%
Loans 76,894 1,579 8.16% 76,063 1,354 7.08%
-------- ------ -------- ------
Total Interest-Earning Assets 131,788 $ 2,473 7.47% 125,714 $2,080 6.58%
Allowance for Losses (2,667) (3,050)
Cash and Due from Banks 7,977 8,886
Risk Management Instruments 19,248 --
Other Assets 13,089 15,320
-------- ---------
Total Assets $ 169,435 $ 146,870
======== =========
LIABILITIES
Domestic Retail Time Deposits $ 42,094 $ 336 3.17% $ 46,986 $ 299 2.52%
Domestic Negotiable
Certificates of Deposit
and Other Deposits 5,015 49 3.90% 5,756 45 3.07%
Deposits in Foreign Offices 26,933 333 4.97% 21,556 198 3.69%
-------- ------ -------- ------
Total Interest-Bearing Deposits 74,042 718 3.87% 74,298 542 2.90%
-------- ------ -------- ------
Short-Term and Other Borrowings:
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 20,950 277 5.25% 14,191 100 2.79%
Commercial Paper 3,095 40 5.13% 2,363 18 3.17%
Other 7,972 127 6.32% 7,052 131 7.37%
-------- ------ -------- ------
Total Short-Term and
Other Borrowings 32,017 444 5.50% 23,606 249 4.20%
Long-Term Debt 8,262 135 6.49% 8,295 134 6.43%
-------- ------ -------- ------
Total Interest-
Bearing Liabilities 114,321 1,297 4.52% 106,199 925 3.47%
-------- ------ -------- ------
Demand Deposits 21,184 22,851
Risk Management Instruments 17,807 --
Other Liabilities 5,269 6,788
-------- --------
Total Liabilities 158,581 135,838
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 1,450 1,852
Common Stockholders' Equity 9,404 9,180
-------- --------
Total Stockholders' Equity 10,854 11,032
-------- --------
Total Liabilities and
Stockholders' Equity $ 169,435 $ 146,870
======== ========
INTEREST RATE SPREAD 2.95% 3.11%
==== ====
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING
ASSETS $ 1,176 3.55% $1,155 3.65%
====== ==== ====== ====
<FN>
<a> On December 31, 1993 the Corporation adopted SFAS 115.
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
UNAUDITED
CHEMICAL BANKING CORPORATION and Subsidiaries
Average Consolidated Balance Sheet, Interest and Rates
(Taxable-Equivalent Interest and Rates; in millions)
For the Year Ended For The Year Ended
December 31, 1994 December 31, 1993
-------------------------- ---------------------------
Average Average
Balance Interest Rate Balance Interest Rate
------- --------- ---- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Deposits with Banks $ 5,257 $ 371 7.07% $ 4,202 $ 268 6.39%
Federal Funds Sold and
Securities Purchased Under
Resale Agreements 12,000 550 4.58% 10,300 339 3.29%
Trading Assets 11,347 722 6.37% 8,039 449 5.59%
Securities:
Held-to-Maturity 9,204 620 6.73% -- -- --%
Available-for-Sale 17,003 1,104 6.49% -- -- --%
Securities <a> -- -- --% 23,654 1,731 7.32%
Loans 75,234 5,745 7.64% 78,739 5,637 7.16%
-------- ------ -------- ------
Total Interest-Earning Assets 130,045 $ 9,112 7.01% 124,934 $8,424 6.74%
Allowance for Losses (2,872) (3,084)
Cash and Due from Banks 8,491 8,537
Risk Management Instruments 17,779 --
Other Assets 13,236 14,494
-------- --------
Total Assets $ 166,679 $ 144,881
======== ========
LIABILITIES
Domestic Retail Deposits $ 43,861 $ 1,164 2.66% $ 46,598 $1,237 2.65%
Domestic Negotiable
Certificates of Deposit
and Other Deposits 5,128 186 3.64% 6,242 191 3.05%
Deposits in Foreign Offices 24,051 1,028 4.27% 21,066 813 3.86%
-------- ------ -------- ------
Total Interest-Bearing Deposits 73,040 2,378 3.26% 73,906 2,241 3.03%
-------- ------ -------- ------
Short-Term and Other Borrowings:
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 19,154 844 4.41% 15,461 472 3.05%
Commercial Paper 2,760 118 4.29% 2,438 83 3.42%
Other 8,775 538 6.12% 6,663 437 6.56%
-------- ------ -------- ------
Total Short-Term and
Other Borrowings 30,689 1,500 4.89% 24,562 992 4.04%
Long-Term Debt 8,419 536 6.37% 8,053 534 6.64%
-------- ------ -------- ------
Total Interest-
Bearing Liabilities 112,148 4,414 3.94% 106,521 3,767 3.54%
-------- ------ -------- ------
Demand Deposits 21,723 21,750
Risk Management Instruments 16,143 --
Other Liabilities 5,703 6,027
-------- --------
Total Liabilities 155,717 134,298
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 1,579 1,887
Common Stockholders' Equity 9,383 8,696
-------- --------
Total Stockholders' Equity 10,962 10,583
-------- --------
Total Liabilities and
Stockholders' Equity $ 166,679 $ 144,881
======== ========
INTEREST RATE SPREAD 3.07% 3.20%
==== ====
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING
ASSETS $ 4,698 3.61% $4,657 3.73%
====== ==== ====== ====
<FN>
<a> On December 31, 1993 the Corporation adopted SFAS 115.
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
UNAUDITED
TEXAS COMMERCE BANCSHARES, INC. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions)
Three Months Ended For The Year Ended
December 31, December 31,
----------------- ------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET INTEREST INCOME $ 180 $ 169 $ 690 $ 692
Provision for Losses (10) (6) (40) --
------ ------ ------ ------
Net Interest Income After Provision for Losses 190 175 730 692
NONINTEREST REVENUE 93 95 400 392
NONINTEREST EXPENSE 223<a> 206 805<a> 858<b>
------ ------ ------ ------
Income Before Income Tax Expense and Effect
of Accounting Changes 60 64 325 226
Income Tax Expense 22 20 119 66
------ ------ ------ ------
Income Before Effect of Accounting Changes 38 44 206 160
Net Effect of Changes in Accounting Principles -- (5) -- 9
------ ------ ------ ------
NET INCOME $ 38 $ 39 $ 206 $ 169
====== ====== ====== ======
<FN>
<a> Includes $36 million restructuring charge ($23 million
after tax).
<b> Includes $43 million restructuring charge ($30 million
after tax) related to the acquisition of certain former
First City assets.
</TABLE>
TEXAS COMMERCE BANCSHARES, INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
December 31,
---------------------
1994 1993
------- -------
ASSETS
Cash and Due from Banks $ 2,273 $ 2,160
Deposits with Banks 5 5
Federal Funds Sold and Securities
Purchased Under Resale Agreements 2,708 5,154
Trading Assets 39<a> 16
Securities:
Held-to-Maturity 1,565 1,291
Available-for-Sale 1,452 1,455
Loans (Net of Unearned Income) 10,569 10,267
Allowance for Losses (311) (344)
Assets Acquired as Loan Satisfactions 63 95
All Other Assets 1,672 1,687
------- -------
TOTAL ASSETS $20,035 $21,786
======= =======
LIABILITIES
Demand Deposits (Noninterest Bearing) $ 5,469 $ 6,172
Domestic and Foreign Interest
Bearing Deposits 10,725 11,204
All Other Liabilities 2,194 2,663
------- -------
TOTAL LIABILITIES 18,388 20,039
======= =======
STOCKHOLDER'S EQUITY 1,647 1,747
------- -------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $20,035 $21,786
======= =======
[FN]
<a> Includes $15 million of risk management instruments as a
result of the adoption of FASB Interpretation No. 39.
