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Previous: CALIFORNIA REAL ESTATE INVESTMENT TRUST, SC 13D/A, 1997-07-17 |
Next: CHURCH LOANS & INVESTMENTS TRUST, 305B2/A, 1997-07-17 |
<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 ACT OF 1934
Date of Report: July 15, 1997 Commission file number 1-5805
-------------- ------
THE CHASE MANHATTAN 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
- ---------------------
The Chase Manhattan Corporation (the "Corporation") reported on July 15, 1997
that fully diluted operating earnings for the second quarter of 1997, before
merger-related restructuring costs, rose to $2.11 per share from $1.82 per
share in the second quarter of 1996. Fully-diluted operating earnings per share
for the first six months rose to $4.11 from $3.62 in the prior-year period.
Including merger-related restructuring costs, net income was $925 million for
the 1997 second quarter, compared with $856 million for the second quarter of
1996.
A copy of the Corporation's press release is attached as an exhibit hereto.
That press release contains statements that are forward-looking within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to risks and uncertainties and the Corporation's actual
results may differ materially from those set forth in such forward-looking
statements. Factors that would affect the prospects of the Corporation's
business are discussed in the Annual Report to Stockholders on Form 10-K for
the year ended December 31, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ---------------------------------------------------------------------------
The following exhibits are filed with this report:
Exhibit Number Description
- -------------- -----------
99.1 Press Release - 1997 Second Quarter Earnings.
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE CHASE MANHATTAN CORPORATION
(Registrant)
Dated July 17, 1997 by /s/JOSEPH L. SCLAFANI
-------------- ------------------------
Joseph L. Sclafani
Controller
[Principal Accounting Officer]
3
<PAGE> 4
EXHIBIT INDEX
Exhibit Number Description Page at Which Located
- -------------- ----------- ---------------------
99.1 Press Release - 1997 Second
Quarter Earnings 5
4
<PAGE> 1
[CHASE LETTERHEAD]
NEWS RELEASE
Investor Contact: John Borden Press Contacts: Kathleen Baum
212-270-7318 212-270-5089
John Stefans
For Immediate Release 212-270-7438
CHASE OPERATING EPS RISES 16 PERCENT IN THE 1997 SECOND QUARTER
New York, July 15, 1997 -- The Chase Manhattan Corporation today
reported that fully diluted operating earnings per share rose to $2.11 before
merger-related restructuring costs, from $1.82 in the second quarter of 1996.
Fully-diluted operating earnings per share for the first six months rose to
$4.11 from $3.62 in the prior-year period.
Operating net income rose by $100 million to $969 million in the 1997
second quarter. Including merger-related restructuring costs, net income was
$925 million compared with $856 million. In the first half of 1997, operating
net income was $1,915 million compared with $1,737 million in the same 1996
period.
SECOND QUARTER 1997 HIGHLIGHTS
- Revenue on a managed basis rose seven percent, with gains across both
business franchises
- Incremental merger savings were $185 million, bringing cumulative
merger savings to $945 million
- Return on average common stockholders' equity was 20 percent, compared
with 19 percent in the 1996 quarter
- The efficiency ratio on a managed basis improved to 54 percent
- The Corporation purchased $630 million of its common equity under its
previously-announced stock buy-back program
"These excellent second quarter results demonstrate Chase's vibrant
wholesale and consumer business franchises, and the benefits of our
customer-focused execution," said Walter V. Shipley, chairman and chief
executive officer. "We remain on track to meet our earnings and efficiency goals
while continuing to make the investments necessary to ensure future growth."
(More)
<PAGE> 2
2
SECOND QUARTER LINE OF BUSINESS RESULTS
Global Wholesale Banking
Operating net income from Global Wholesale Banking rose 24 percent;
total revenues increased by 8 percent.
Net income from Chase's Global Markets businesses rose substantially,
reflecting record trading results. Total trading revenues were $655 million,
including $164 million of trading-related net interest income, the result of
very strong performance across the breadth of Chase's trading and sales platform
amid favorable market conditions. Chase benefited from active market making and
client business in its traditional foreign exchange and interest rate
activities, strong growth in specialty derivative products and continued high
levels of securities trading and underwriting.
Corporate finance and loan syndication fees rebounded sharply from
first quarter levels, and rose in comparison with the prior year quarter.
Investment banking deal flow increased across the full range of market and
customer segments. Revenues from securities underwriting continued to grow, as
the volume of lead mandates increased in an active high yield market.
Equity-related investment revenues, while slightly above trend, were lower
compared with strong 1996 second quarter levels.
Net income from Chase Global Services rose 29 percent, the result of
growth in assets under custody and new business initiatives, as well as
continued productivity gains. Revenues from Asset Management and Private Banking
were higher, reflecting increased investment advisory activities.
Regional and Nationwide Consumer Banking
Higher revenues in Regional and Nationwide Consumer Banking were offset
by an increase in loan losses and expenses related to marketing initiatives and
new product offerings. As a result, operating net income declined in the
quarter.
Credit Card revenues rose by 13 percent as average managed receivables
increased by $2.2 billion. Net income declined in the quarter, reflecting higher
credit card charge-offs and expenses related to co-branding initiatives.
Net income from Mortgage Banking rose substantially, the result of
strong revenue growth and productivity gains from the reengineering of Chase's
mortgage origination business.
<PAGE> 3
3
Net income for Chase tri-state regional banking, which includes retail
payment and investments and middle market banking, increased by 9 percent,
reflecting revenue growth from higher deposit and investment levels, new
products and the benefits of ongoing efficiency initiatives.
ADDITIONAL SECOND QUARTER FINANCIAL INFORMATION
Asset Quality
The provision for credit losses was $189 million, compared with $250
million in the second quarter of 1996.
Total managed consumer net charge-offs in the second quarter of 1997
were $457 million, of which $190 million were related to assets retained on the
balance sheet. That compared with net charge-offs of $328 million in the second
quarter of 1996, of which $192 million were related to retained assets.
Managed credit card net charge-offs were $383 million in the 1997
second quarter or 5.99 percent of average managed receivables. That compared
with $279 million or 4.78 percent of average managed receivables in the
prior-year quarter.
Total commercial net recoveries were $2 million in the second quarter
of 1997 compared with total net charge-offs of $76 million in the second quarter
of 1996.
Nonperforming assets, at June 30, 1997, were $1,106 million, compared
with $1,126 million on March 31, 1997, and $1,639 million on June 30, 1996.
Other Financial Data
Total noninterest operating expense increased three percent to $2,389
million. The quarter included incremental merger savings of $185 million, which
were offset by investment spending and increased incentives related to strong
trading results. The quarter also included restructuring expenses of $71
million, bringing total restructuring expenses to $265 million. The Corporation
expects that the restructuring expense component of its previously-announced
$1.9 billion merger-related costs will rise by $100 million to $125 million.
The Corporation remains on track to achieve its 1997 financial goals,
including annual earnings per share growth of 15 percent; return on common
equity of 19 percent; an efficiency ratio of between 54 to 55 percent and
incremental merger savings of $635 million to $680 million. The Corporation
continues to target annual revenue growth of six to eight percent. Due primarily
to the reasons described in the paragraph above, underlying noninterest
operating expense for the full year is now expected to exceed six percent.
<PAGE> 4
4
During the 1997 second quarter, the Corporation purchased approximately
6.7 million common shares as part of a stock repurchase plan announced in
October of 1996. The Corporation reissued approximately 1.7 million treasury
shares under the Corporation's employee benefit plans, resulting in a net
repurchase of 5.0 million shares ($470 million) of its common stock.
# # #
<PAGE> 5
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
EARNINGS:
Income Before Restructuring Costs $ 969 $ 870 $ 1,915 $ 1,807 (a)
Restructuring Costs (After-Tax) (b) (44) (14) (63) (1,040)
------ ------ ------- -------
Net Income $ 925 $ 856 $ 1,852 $ 767
====== ====== ======= =======
Net Income Applicable to Common Stock $ 874 $ 801 $ 1,746 $ 658
====== ====== ======= =======
INCOME PER COMMON SHARE:
Primary:
Income Before Restructuring Costs $ 2.11 $ 1.83 $ 4.13 $ 3.81 (a)
Restructuring Costs (After-Tax) (b) (0.11) (0.03) (0.14) (2.33)
------ ------ ------- -------
Net Income $ 2.00 $ 1.80 $ 3.99 $ 1.48
====== ====== ======= =======
Assuming Full Dilution:
Income Before Restructuring Costs $ 2.11 $ 1.82 $ 4.11 $ 3.77 (a)
Restructuring Costs (After-Tax) (b) (0.11) (0.03) (0.14) (2.31)
------ ------ ------- -------
Net Income $ 2.00 $ 1.79 $ 3.97 $ 1.46
====== ====== ======= =======
PER COMMON SHARE:
Book Value at June 30, $44.44 $40.47 $ 44.44 $ 40.47
Market Value at June 30, $97.06 $70.63 $ 97.06 $ 70.63
Common Stock Dividends Declared (c) $ 0.62 $ 0.56 $ 1.24 $ 1.12
COMMON SHARES OUTSTANDING:
Average Common and Common Equivalent Shares 434.9 444.8 438.0 445.4
Average Common Shares Assuming Full Dilution 436.0 448.4 439.7 450.2
Common Shares at Period End 423.3 437.1 423.3 437.1
PERFORMANCE RATIOS: (AVERAGE BALANCES) (d)
Income Before Restructuring Costs:
Return on Assets 1.11% 1.10% 1.12% 1.15%
Return on Common Stockholders' Equity 20.20% 19.00% 19.87% 19.27% (a)
Return on Total Stockholders' Equity 18.76% 17.58% 18.45% 17.84%
Net Income:
Return on Assets 1.06% 1.08% 1.09% 0.49%
Return on Common Stockholders' Equity 19.23% 18.67% 19.18% 7.47%
Return on Total Stockholders' Equity 17.91% 17.30% 17.84% 7.57%
Efficiency Ratio (e) 58% 58% 58% 59%
Efficiency Ratio - Excluding Securitizations (e) 54% 56% 54% 57%
CAPITAL RATIOS AT JUNE 30:
Common Stockholders' Equity to Assets 5.3% 5.5%
Total Stockholders' Equity to Assets 5.9% 6.3%
Tier 1 Leverage 6.6% 6.6%
Risk-Based Capital:
Tier 1 (4.0% required) 7.8% * 8.0%
Total (8.0% required) 11.4% * 11.8%
FULL-TIME EQUIVALENT EMPLOYEES AT JUNE 30, 68,132 68,828
</TABLE>
(a) Includes nonrecurring items which had a $70 million net favorable impact on
net income. Excluding these items, net income was $1,737 million,
primary earnings per share was $3.66, fully-diluted earnings per share
was $3.62 and return on common stockholders' equity was 18.48%.
(b) Reflects merger-related restructuring charge of $1,022 million, after-tax,
which was recorded on March 31, 1996. In addition, after-tax
merger-related expenses were incurred ($4 million in the first quarter
of 1996, $14 million in the second quarter of 1996, $19 million in the
first quarter of 1997 and $44 million in the second quarter of 1997)
and recognized under an existing accounting pronouncement.
(c) The Corporation increased its quarterly common stock dividend to $0.62 per
share, from $0.56 per share, in the first quarter of 1997.
(d) Performance ratios are based on annualized amounts.
(e) Excludes restructuring costs, foreclosed property expense and nonrecurring
items.
* Estimated
<PAGE> 6
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
JUNE 30, MARCH 31, JUNE 30,
1997 1997 1996
------ ------ -------
<S> <C> <C> <C>
INTEREST INCOME
Loans $3,082 $3,112 $ 3,028
Securities 735 722 685
Trading Assets 705 626 388
Federal Funds Sold and Securities Purchased Under Resale Agreements 697 559 514
Deposits with Banks 114 106 156
------ ------ -------
Total Interest Income 5,333 5,125 4,771
------ ------ -------
INTEREST EXPENSE
Deposits 1,568 1,515 1,458
Short-Term and Other Borrowings 1,510 1,302 1,087
Long-Term Debt 273 257 221
------ ------ -------
Total Interest Expense 3,351 3,074 2,766
------ ------ -------
NET INTEREST INCOME 1,982 2,051 2,005
Provision for Credit Losses 189 220 250
------ ------ -------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 1,793 1,831 1,755
------ ------ -------
NONINTEREST REVENUE
Corporate Finance and Syndication Fees 274 168 258
Trust, Custody and Investment Management Fees 321 310 302
Credit Card Revenue 248 278 233
Service Charges on Deposit Accounts 95 91 100
Fees for Other Financial Services 392 383 381
Trading Revenue 491 422 397
Securities Gains 30 101 24
Revenue from Equity-Related Investments 179 164 219
Other Revenue 128 182 (a) 35
------ ------ -------
Total Noninterest Revenue 2,158 2,099 1,949
------ ------ -------
NONINTEREST EXPENSE
Salaries 1,110 1,124 (b) 1,046
Employee Benefits 219 222 225
Occupancy Expense 193 187 207
Equipment Expense 193 190 181
Foreclosed Property Expense -- 3 (8)
Other Expense 685 (c) 691 (c) 651
------ ------ -------
Total Noninterest Expense Before Restructuring Charge 2,400 2,417 2,302
Restructuring Charge and Expenses 71 30 22
------ ------ -------
Total Noninterest Expense 2,471 2,447 2,324
------ ------ -------
INCOME BEFORE INCOME TAX EXPENSE 1,480 1,483 1,380
Income Tax Expense 555 556 524
------ ------ -------
NET INCOME $ 925 $ 927 $ 856
====== ====== =======
NET INCOME APPLICABLE TO COMMON STOCK $ 874 $ 872 $ 801
====== ====== =======
NET INCOME PER COMMON SHARE:
Primary $ 2.00 $ 1.98 $ 1.80
====== ====== =======
Assuming Full Dilution $ 2.00 $ 1.97 $ 1.79
====== ====== =======
</TABLE>
(a) Includes $44 million gain on the sale of a partially-owned foreign
investment.
(b) Includes $50 million of costs for the accelerated vesting of stock-based
incentive awards.
(c) Includes minority interest related to the Series A Preferred Shares of $11
million in each of the second and first quarters of 1997.
Certain amounts have been reclassified to conform to current presentation.
<PAGE> 7
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1996
------- -------
<S> <C> <C>
INTEREST INCOME
Loans $ 6,194 $ 6,269
Securities 1,457 1,405
Trading Assets 1,331 801
Federal Funds Sold and Securities Purchased Under Resale Agreements 1,256 1,015
Deposits with Banks 220 328
------- -------
Total Interest Income 10,458 9,818
------- -------
INTEREST EXPENSE
Deposits 3,083 3,102
Short-Term and Other Borrowings 2,812 2,113
Long-Term Debt 530 448
------- -------
Total Interest Expense 6,425 5,663
------- -------
NET INTEREST INCOME 4,033 4,155 (a)
Provision for Credit Losses 409 495
------- -------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 3,624 3,660
------- -------
NONINTEREST REVENUE
Corporate Finance and Syndication Fees 442 482
Trust, Custody and Investment Management Fees 631 587
Credit Card Revenue 526 466
Service Charges on Deposit Accounts 186 199
Fees for Other Financial Services 775 759
Trading Revenue 913 752
Securities Gains 131 76
Revenue from Equity-Related Investments 343 442
Other Revenue 310 (b) 71 (c)
------- -------
Total Noninterest Revenue 4,257 3,834
------- -------
NONINTEREST EXPENSE
Salaries 2,234 (d) 2,122
Employee Benefits 441 530 (e)
Occupancy Expense 380 428
Equipment Expense 383 365
Foreclosed Property Expense 3 (17)
Other Expense 1,376 1,311
------- -------
Total Noninterest Expense Before Restructuring Charge 4,817 4,739
Restructuring Charge and Expenses 101 1,678
------- -------
Total Noninterest Expense 4,918 6,417
------- -------
INCOME BEFORE INCOME TAX EXPENSE 2,963 1,077
Income Tax Expense 1,111 310 (f)
------- -------
NET INCOME $ 1,852 $ 767
======= =======
NET INCOME APPLICABLE TO COMMON STOCK $ 1,746 $ 658
======= =======
NET INCOME PER COMMON SHARE:
Primary $ 3.99 $ 1.48
======= =======
Assuming Full Dilution $ 3.97 $ 1.46
======= =======
</TABLE>
(a) Includes $54 million of interest related to tax audit settlements.
(b) Includes $44 million gain on the sale of a partially-owned foreign
investment.
(c) Includes $60 million loss on the sale of a building in Japan.
(d) Includes $50 million of costs for the accelerated vesting of stock-based
incentive awards as a result of the improvement in the Corporation's
stock price.
(e) Includes $40 million charge related to combining the Corporation's foreign
retirement plans.
(f) Includes tax benefits related to the restructuring charge as well as
aggregate tax benefits and refunds.
Certain amounts have been reclassified to conform to current presentation.
<PAGE> 8
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
NONINTEREST REVENUE DETAIL
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, MARCH 31, JUNE 30, JUNE 30,
1997 1997 1996 1997 1996
---- ---- ----- ------ -------
<S> <C> <C> <C> <C> <C>
FEES FOR OTHER FINANCIAL SERVICES:
Fees in Lieu of Compensating Balances $ 74 $ 81 $ 74 $ 155 $ 148
Commissions on Letters of Credit and Acceptances 74 72 82 146 171
Mortgage Servicing Fees 62 56 54 118 104
Loan Commitment Fees 29 27 30 56 60
Other Fees 153 147 141 300 276
---- ---- ----- ------ -------
Total $392 $383 $ 381 $ 775 $ 759
==== ==== ===== ====== =======
TRADING-RELATED REVENUE: (a)
Interest Rate Contracts $217 $183 $ 180 $ 400 $ 326
Foreign Exchange Revenue 175 169 93 344 233
Debt Instruments and Other 263 243 248 506 478
---- ---- ----- ------ -------
Total $655 $595 $ 521 $1,250 $ 1,037
==== ==== ===== ====== =======
OTHER REVENUE:
Residential Mortgage Origination/Sales Activities $ 30 $ 31 $ (2) $ 61 $ 26
Net Losses on Emerging Markets Securities Sales -- -- (30) -- (65)
Gain on Sale of Partially-owned Foreign Investment -- 44 -- 44 --
Loss on Sale of a Building in Japan -- -- -- -- (60)
All Other Revenue 98 107 67 205 170
---- ---- ----- ------ -------
Total $128 $182 $ 35 $ 310 $ 71
==== ==== ===== ====== =======
</TABLE>
(a) Includes net interest income attributable to trading activities.
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
NONINTEREST EXPENSE DETAIL
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, MARCH 31, JUNE 30, JUNE 30,
1997 1997 1996 1997 1996
---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C>
OTHER EXPENSE:
Professional Services $136 $133 $141 $ 269 $ 270
Marketing Expense 107 103 73 210 163
Telecommunications 73 75 82 148 167
Amortization of Intangibles 41 41 42 82 85
Minority Interest 20 (a) 19 (a) 11 39 (a) 20
All Other 308 320 302 628 606
---- ---- ---- ------ ------
Total $685 $691 $651 $1,376 $1,311
==== ==== ==== ====== ======
</TABLE>
(a) Includes minority interest related to the Series A Preferred Shares of $11
million in each of the second and first quarters of 1997.
<PAGE> 9
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Cash and Due from Banks $ 16,879 $ 13,291
Deposits with Banks 4,042 5,805
Federal Funds Sold and Securities
Purchased Under Resale Agreements 39,228 33,039
Trading Assets:
Debt and Equity Instruments 37,567 25,297
Risk Management Instruments 29,949 (a) 26,414
Securities:
Available-for-Sale 39,463 37,855
Held-to-Maturity 3,463 4,125
Loans (Net of Allowance for Loan Losses of $3,446 in 1997 and $3,692 in 1996) 156,511 (a) 147,582
Premises and Equipment 3,676 3,667
Due from Customers on Acceptances 2,102 2,438
Accrued Interest Receivable 3,445 2,534
Other Assets 15,708 19,714
--------- ---------
TOTAL ASSETS $ 352,033 $ 321,761
========= =========
LIABILITIES
Deposits:
Domestic:
Noninterest-Bearing $ 45,396 $ 39,915
Interest-Bearing 67,565 62,726
Foreign:
Noninterest-Bearing 3,698 3,599
Interest-Bearing 67,085 62,103
--------- ---------
Total Deposits 183,744 168,343
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 58,262 54,584
Commercial Paper 4,424 5,024
Other Borrowed Funds 7,874 8,857
Acceptances Outstanding 2,102 2,445
Trading Liabilities 46,706 36,186
Accounts Payable, Accrued Expenses and Other Liabilities 13,053 (a) 13,212
Long-Term Debt 13,135 12,770
Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Deferrable Interest Debentures 1,390 (b) --
--------- ---------
TOTAL LIABILITIES 330,690 301,421
--------- ---------
PREFERRED STOCK OF SUBSIDIARY 550 (c) --
--------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock 1,980 2,650
Common Stock 441 438
Capital Surplus 10,328 10,432
Retained Earnings 9,846 7,534
Net Unrealized Loss on Securities Available-for-Sale, Net of Taxes (155) (640)
Treasury Stock, at Cost (1,647) (74)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 20,793 20,340
--------- ---------
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY
AND STOCKHOLDERS' EQUITY $ 352,033 $ 321,761
========= =========
</TABLE>
(a) At June 30, 1997, in accordance with a recently issued accounting
pronouncement, the allowance for credit losses has been allocated into
three components: a $3,446 million allowance for loan losses, which is
reported net in Loans; an allowance for credit losses on derivative and
foreign exchange financial instruments of $75 million, which is
reported net in Trading Assets - Risk Management Instruments; and an
allowance for credit losses on letters of credit and guarantees of $170
million, which is reported in Other Liabilities. Prior period amounts
have not been reclassified due to immateriality.
(b) Reflects issuances, by subsidiaries of the Corporation, in the fourth
quarter 1996 and first quarter 1997 of Capital Securities which qualify
as Tier l Capital for the Corporation.
(c) Reflects the issuance in September 1996 of Series A Preferred Shares, which
qualify as Tier I Capital for the Corporation.
<PAGE> 10
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
------- -------
<S> <C> <C>
PREFERRED STOCK:
Balance at Beginning of Year $ 2,650 $ 2,650
Redemption of Stock (670) --
------- -------
Balance at End of Period $ 1,980 $ 2,650
------- -------
COMMON STOCK:
Balance at Beginning of Year $ 441 $ 458
Retirement of Treasury Stock -- (20)
------- -------
Balance at End of Period $ 441 $ 438
------- -------
CAPITAL SURPLUS:
Balance at Beginning of Year $10,459 $11,075
Retirement of Treasury Stock -- (433)
Shares Issued for Employee Stock-Based
Awards and Certain Related Tax Benefits (131) (210)
------- -------
Balance at End of Period $10,328 $10,432
------- -------
RETAINED EARNINGS:
Balance at Beginning of Year $ 8,627 $ 7,997
Net Income 1,852 767
Retirement of Treasury Stock -- (557)
Cash Dividends Declared:
Preferred Stock (106) (109)
Common Stock (528) (572)(a)
Accumulated Translation Adjustment 1 8
------- -------
Balance at End of Period $ 9,846 $ 7,534
------- -------
NET UNREALIZED LOSS ON SECURITIES AVAILABLE-FOR-SALE:
Balance at Beginning of Year $ (288) $ (237)
Net Change in Fair Value of Securities Available-for-Sale,
Net of Taxes 133 (403)
------- -------
Balance at End of Period $ (155) $ (640)
------- -------
COMMON STOCK IN TREASURY, AT COST:
Balance at Beginning of Year $ (895) $(1,107)
Retirement of Treasury Stock -- 1,010
Purchase of Treasury Stock (1,242) (885)
Reissuance of Treasury Stock 490 908
------- -------
Balance at End of Period $(1,647) $ (74)
------- -------
TOTAL STOCKHOLDERS' EQUITY $20,793 $20,340
======= =======
</TABLE>
(a) Includes fourth quarter 1995 common stock dividends of $80 million
declared and paid by old Chase in the 1996 first quarter.
<PAGE> 11
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
CREDIT RELATED INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
LOANS OUTSTANDING NONPERFORMING ASSETS
----------------------- --------------------
JUNE 30, JUNE 30,
1997 1996 1997 1996
-------- -------- ------ ------
<S> <C> <C> <C> <C>
Domestic Commercial:
Commercial Real Estate $ 5,679 $ 6,556 $ 176 $ 439
Other Commercial 42,133 38,170 345 514
-------- -------- ------ ------
Total Commercial Loans 47,812 44,726 521 953
-------- -------- ------ ------
Domestic Consumer:
Residential Mortgage 37,425 35,388 292 241
Credit Card 12,597 11,447 -- --
Other Consumer 20,886 21,936 32 39
-------- -------- ------ ------
Total Consumer Loans 70,908 68,771 324 280
-------- -------- ------ ------
Total Domestic Loans 118,720 113,497 845 1,233
Foreign 41,237 37,777 124 265
-------- -------- ------ ------
Total Loans $159,957 $151,274 969 1,498
======== ========
Assets Acquired as Loan Satisfactions 137 141
------ ------
Total Nonperforming Assets $1,106 $1,639
====== ======
Assets Held For Accelerated Disposition $ 181 $ 170
====== ======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Charge-Offs:
Domestic Commercial:
Commercial Real Estate $ (6) $ 30 $(10) $ 26
Other Commercial 4 46 18 94
---- ---- ---- ----
Total Commercial (2) 76 8 120
---- ---- ---- ----
Domestic Consumer:
Residential Mortgage 6 7 13 15
Credit Card 121 145 271 310
Other Consumer 63 40 115 77
---- ---- ---- ----
Total Consumer 190 192 399 402
---- ---- ---- ----
Total Domestic Net Charge-offs 188 268 407 522
Foreign 1 (18) 2 (27)
---- ---- ---- ----
Subtotal Net Charge-offs 189 250 409 495
Charge Related to Conforming Credit Card Charge-off Policies -- -- -- 102
---- ---- ---- ----
Total Net Charge-offs $189 $250 $409 $597
==== ==== ==== ====
</TABLE>
<PAGE> 12
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
CREDIT CARD RELATED INFORMATION
(IN MILLIONS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
AS OF OR FOR THE AS OF OR FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
MANAGED CREDIT CARD PORTFOLIO:
Average Managed Credit Card Receivables $25,567 $23,348 $25,443 $23,296
Past Due 90 Days & Over and Accruing $ 520 $ 461 $ 520 $ 461
As a Percentage of Average Credit Card Receivables 2.03% 1.97% 2.04% 1.98%
Net Charge-offs (a) $ 383 $ 279 $ 741 $ 549
As a Percentage of Average Credit Card Receivables 5.99% 4.78% 5.83% 4.71%
</TABLE>
(a) Excludes charges related to conforming credit card charge-off policies.
<TABLE>
<CAPTION>
FAVORABLE (UNFAVORABLE) IMPACT OF CREDIT CARD THREE MONTHS ENDED SIX MONTHS ENDED
SECURITIZATIONS ON REPORTED CONSOLIDATED JUNE 30, JUNE 30,
------------------ ------------------
STATEMENT OF INCOME LINE ITEMS: 1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net Interest Income $(296) $(208) $(594) $(395)
Provision for Credit Losses 267 156 481 261
Credit Card Revenue 26 47 94 122
Other Revenue -- 8 (2) 11
----- ----- ----- -----
Pre-tax Income (Loss) Impact of Securitizations $ (3) $ 3 $ (21) $ (1)
===== ===== ===== =====
</TABLE>
<PAGE> 13
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
CONDENSED AVERAGE CONSOLIDATED BALANCE SHEET, INTEREST AND RATES
(TAXABLE-EQUIVALENT INTEREST AND RATES; IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
------------------------------------ -----------------------------------
AVERAGE RATE AVERAGE RATE
BALANCE INTEREST (ANNUALIZED) BALANCE INTEREST (ANNUALIZED)
------- -------- ------------ ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Liquid Interest-Earning Assets $ 83,258 $1,516 7.30% $ 63,954 $1,058 6.65%
Securities 44,385 739 6.68% 42,540 691 6.53%
Loans 156,459 3,084 7.91% 150,612 3,034 8.09%
-------- ----- -------- ------
Total Interest-Earning Assets 284,102 5,339 7.54% 257,106 4,783 7.48%
Total Noninterest-Earning Assets 64,793 60,473
-------- --------
Total Assets $348,895 $317,579
======== ========
LIABILITIES
Total Interest-Bearing Deposits $134,707 1,568 4.67% $128,117 1,458 4.58%
Total Short-Term and Other Borrowings 92,177 1,510 6.57% 73,373 1,087 5.96%
Long-Term Debt 14,035 273 7.81% 12,916 221 6.86%
-------- ------ -------- ------
Total Interest-Bearing Liabilities 240,919 3,351 5.58% 214,406 2,766 5.19%
------ ------
Noninterest-Bearing Deposits 41,064 39,658
Other Noninterest-Bearing Liabilities 45,641 43,613
-------- --------
Total Liabilities 327,624 297,677
-------- --------
PREFERRED STOCK OF SUBSIDIARY 550 --
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 2,494 2,650
Common Stockholders' Equity 18,227 17,252
-------- --------
Total Stockholders' Equity 20,721 19,902
-------- --------
Total Liabilities and Stockholders' Equity $348,895 $317,579
======== ========
INTEREST RATE SPREAD 1.96% 2.29%
==== ====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $1,988 2.81% $2,017 3.15%
====== ==== ====== ====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS -
MANAGED BASIS (a) $2,284 3.08% $2,225 3.35%
====== ==== ====== ====
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1996
----------------------------------- ------------------------------------
AVERAGE RATE AVERAGE RATE
BALANCE INTEREST (ANNUALIZED) BALANCE INTEREST (ANNUALIZED)
------- -------- ------------ ------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Liquid Interest-Earning Assets $ 78,047 $ 2,807 7.25% $ 63,138 $2,144 6.83%
Securities 43,968 1,465 6.72% 42,623 1,416 6.68%
Loans 154,754 6,198 8.08% 150,123 6,275 8.41%
-------- ------- -------- ------
Total Interest-Earning Assets 276,769 10,470 7.63% 255,884 9,835 7.73%
Total Noninterest-Earning Assets 67,339 59,368
-------- --------
Total Assets $344,108 $315,252
======== ========
LIABILITIES
Total Interest-Bearing Deposits $133,421 3,083 4.66% $130,948 3,102 4.76%
Total Short-Term and Other Borrowings 86,687 2,812 6.54% 70,057 2,113 6.07%
Long-Term Debt 13,780 530 7.75% 12,946 448 6.95%
-------- ------- -------- ------
Total Interest-Bearing Liabilities 233,888 6,425 5.54% 213,951 5,663 5.32%
------- ------
Noninterest-Bearing Deposits 40,981 39,203
Other Noninterest-Bearing Liabilities 47,759 41,728
-------- --------
Total Liabilities 322,628 294,882
-------- --------
PREFERRED STOCK OF SUBSIDIARY 550 --
-------- --------
STOCKHOLDERS' EQUITY
Preferred Stock 2,571 2,650
Common Stockholders' Equity 18,359 17,720
-------- --------
Total Stockholders' Equity 20,930 20,370
-------- --------
Total Liabilities and Stockholders' Equity $344,108 $315,252
======== ========
INTEREST RATE SPREAD 2.09% 2.41%
==== ====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 4,045 2.95% $4,172 3.28%
======= ==== ====== ====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS -
MANAGED BASIS (a) $ 4,639 3.22% $4,567 3.47%
======= ==== ====== ====
</TABLE>
(a) Excludes the impact of the credit card securitizations.
<PAGE> 14
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
LINES OF BUSINESS RESULTS
(IN MILLIONS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
GLOBAL REGIONAL AND NATIONWIDE
WHOLESALE BANKING CONSUMER BANKING TOTAL (a)
THREE MONTHS ENDED --------------------- ------------------------ ------------------------
JUNE 30, 1997 1996 1997 1996 1997 1996
- ------------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ 2,331 $ 2,149 $ 2,182 $ 2,017 $ 4,140 $ 3,954
OPERATING NET INCOME 685 552 330 346 969 870
AVERAGE COMMON EQUITY 9,465 9,619 6,570 6,455 18,227 17,252
AVERAGE ASSETS 240,563 219,432 119,494 112,141 348,895 317,579
RETURN ON COMMON EQUITY (ROCE) 27.9% 21.8% 19.0% 20.3% 20.2% 19.0%
EFFICIENCY RATIO 51% 55% 53% 55% 58% 58%
</TABLE>
GLOBAL WHOLESALE BANKING
KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
1997 1996
------------------------------------------------ ----------------------------------------------
THREE MONTHS ENDED NET EFFICIENCY NET EFFICIENCY
JUNE 30, REVENUE INCOME ROCE RATIO REVENUE INCOME ROCE RATIO
- -------------------------- ------- ------ ---- ---------- ------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GLOBAL INVESTMENT BANKING
AND CORPORATE LENDING $560 $180 20.2% 36% $556 $172 19.1% 38%
GLOBAL MARKETS 840 296 55.0 47 683 204 35.1 54
CHASE CAPITAL PARTNERS 178 99 34.4 12 212 122 44.8 8
GLOBAL ASSET MANAGEMENT
AND PRIVATE BANKING 178 33 26.9 69 169 32 25.7 66
GLOBAL SERVICES 522 80 28.7 75 483 62 22.3 79
TERMINAL BUSINESSES (b) 24 (2) NM NM 18 (12) NM NM
</TABLE>
REGIONAL AND NATIONWIDE CONSUMER BANKING
KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
1997 1996
------------------------------------------ -------------------------------------------
THREE MONTHS ENDED NET EFFICIENCY NET EFFICIENCY
JUNE 30, REVENUE INCOME ROCE RATIO REVENUE INCOME ROCE RATIO
- ------------------------- ------- ------ ---- ---------- ------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CREDIT CARDS $720 $39 9.9% 38% $640 $81 21.8% 37%
RETAIL PAYMENTS AND
INVESTMENTS (c) 526 80 29.7 73 508 81 30.3 72
MIDDLE MARKET 214 56 21.0 47 199 44 16.0 54
MORTGAGE BANKING 186 47 15.1 54 159 27 8.2 67
NATIONAL CONSUMER FINANCE 162 29 25.3 39 153 37 32.1 43
INTERNATIONAL CONSUMER 64 14 72.5 62 63 15 76.2 59
TEXAS COMMERCE 325 72 19.2 61 302 65 18.2 64
</TABLE>
(a) Total column includes Corporate results.
(b) Represents discontinued portfolios, primarily the remaining refinancing
country debt and commercial real estate problem asset and nonperforming
portfolio.
(c) Insurance products managed within Retail Payments and Investments, but
included for reporting purposes in Credit Cards, Mortgage Banking, and
National Consumer Finance, generated revenues of $25 million and $16
million in 1997 and 1996, respectively.
NM - Not meaningful
<PAGE> 15
THE CHASE MANHATTAN CORPORATION AND SUBSIDIARIES
LINES OF BUSINESS RESULTS
(IN MILLIONS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
GLOBAL REGIONAL AND NATIONWIDE
WHOLESALE BANKING CONSUMER BANKING TOTAL (a)
SIX MONTHS ENDED ------------------------ ------------------------ ------------------------
JUNE 30, 1997 1996 1997 1996 1997 1996
- ------------------------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ 4,642 $ 4,353 $ 4,336 $ 4,043 $ 8,290 $ 7,995
OPERATING NET INCOME 1,339 1,166 668 670 1,915 1,737
AVERAGE COMMON EQUITY 9,454 9,683 6,575 6,415 18,359 17,720
AVERAGE ASSETS 236,658 214,926 118,791 111,179 344,108 315,252
RETURN ON COMMON EQUITY (ROCE) 27.4% 23.0% 19.3% 19.8% 19.9% 18.5%
EFFICIENCY RATIO 51% 54% 53% 56% 58% 59%
</TABLE>
GLOBAL WHOLESALE BANKING
KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
1997 1996
---------------------------------------- ------------------------------------------------
SIX MONTHS ENDED NET EFFICIENCY NET EFFICIENCY
JUNE 30, REVENUE INCOME ROCE RATIO REVENUE INCOME ROCE RATIO
- -------------------------- ------- ------ ---- ---------- ------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GLOBAL INVESTMENT BANKING
AND CORPORATE LENDING $1,040 $315 17.6% 39% $1,099 $352 19.6% 36%
GLOBAL MARKETS 1,721 610 56.5 45 1,307 380 31.8 56
CHASE CAPITAL PARTNERS 314 170 29.8 14 460 268 50.7 7
GLOBAL ASSET MANAGEMENT
AND PRIVATE BANKING 355 66 26.7 69 336 60 24.1 67
GLOBAL SERVICES 1,035 156 28.3 76 963 125 22.5 79
TERMINAL BUSINESSES (b) 25 (20) NM NM 29 (21) NM NM
</TABLE>
REGIONAL AND NATIONWIDE CONSUMER BANKING
KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
1997 1996
---------------------------------------------- -----------------------------------------------
SIX MONTHS ENDED NET EFFICIENCY NET EFFICIENCY
JUNE 30, REVENUE INCOME ROCE RATIO REVENUE INCOME ROCE RATIO
- -------------------------- ------ ------ ---- ---------- ------- ------ ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CREDIT CARDS $1,450 $ 94 12.3% 39% $1,275 $153 20.6% 38%
RETAIL PAYMENTS AND
INVESTMENTS (c) 1,028 157 28.9 73 1,005 142 26.8 75
MIDDLE MARKET 423 111 21.1 47 416 97 18.0 52
MORTGAGE BANKING 373 93 14.9 55 324 49 7.4 70
NATIONAL CONSUMER FINANCE 317 56 24.1 41 303 70 31.2 42
INTERNATIONAL CONSUMER 129 29 76.6 60 124 29 76.5 59
TEXAS COMMERCE 645 138 18.5 62 611 133 18.8 63
</TABLE>
(a) Total column includes Corporate results.
(b) Represents discontinued portfolios, primarily the remaining refinancing
country debt and commercial real estate problem asset and nonperforming
portfolio.
(c) Insurance products managed within Retail Payments and Investments, but
included for reporting purposes in Credit Cards, Mortgage Banking, and
National Consumer Finance, generated revenues of $49 million and $35
million in 1997 and 1996, respectively.
NM - Not meaningful
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