<PAGE> 1
Filed by The Chase Manhattan Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: J.P. Morgan & Co. Incorporated
Commission File No. 1-5885
Date: October 18, 2000
This filing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, statements about the benefits of the merger between Chase
and J.P. Morgan, including future financial and operating results, Chase's
plans, objectives, expectations and intentions and other statements that are not
historical facts. Such statements are based upon the current beliefs and
expectations of J.P. Morgan's and Chase's management and are subject to
significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ from
those set forth in the forward-looking statements: the risk that the businesses
of Chase and J.P. Morgan will not be combined successfully; the risk that the
growth opportunities and cost savings from the merger may not be fully realized
or may take longer to realize than expected; the risk that the integration
process may result in the disruption of ongoing business or the loss of key
employees or may adversely effect relationships with employees and clients; the
risk that stockholder or required regulatory approvals of the merger will not
be obtained or that adverse regulatory conditions will be imposed in connection
with a regulatory approval of the merger, the risk of adverse impacts from an
economic downturn; the risks associated with increased competition, unfavorable
political or other developments in foreign markets, adverse governmental or
regulatory policies, and volatility in securities markets, interest or foreign
exchange rates or indices; or other factors impacting operational plans.
Additional factors that could cause Chase's and J.P. Morgan's results to differ
materially from those described in the forward-looking statements can be found
in the 1999 Annual Reports on Forms 10-K of Chase and J.P. Morgan, filed with
the Securities and Exchange Commission and available at the Securities and
Exchange Commission's internet site (http://www.sec.gov) and in Chase's
Registration Statement on Form S-4 referred to below.
Chase has filed a Registration Statement on Form S-4 with the Securities and
Exchange Commission containing a preliminary joint proxy statement-prospectus
regarding the proposed transaction. Stockholders are urged to read the
definitive joint proxy statement-prospectus when it becomes available because
it will contain important information. The definitive joint proxy
statement-prospectus will be sent to stockholders of Chase and J.P. Morgan
seeking their approval of the proposed transaction. Stockholders also will be
able to obtain a free copy of the definitive joint proxy statement-prospectus,
as well as other filings containing information about Chase and J.P. Morgan,
without charge, at the SEC's internet site (http://www.sec.gov). Copies of the
definitive joint proxy statement-prospectus and the SEC filings that will be
incorporated
<PAGE> 2
by reference in the definitive joint proxy statement-prospectus can also be
obtained, without charge, by directing a request to The Chase Manhattan
Corporation, 270 Park Avenue, New York, NY 10017, Attention: Office of the
Corporate Secretary (212-270-6000), or to J.P. Morgan & Co. Incorporated, 60
Wall Street, New York, NY 10260, Attention: Investor Relations (212-483-2323).
Information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, is contained in the materials filed with the SEC by J.P. Morgan and
Chase on September 13, 2000 and September 14, 2000, respectively.
<PAGE> 3
Investor Contact: John Borden Media Contact: Jon Diat
212-270-7318 212-270-5089
CHASE MANHATTAN REPORTS THIRD QUARTER RESULTS
NEW YORK, OCTOBER 18, 2000 - The Chase Manhattan Corporation (NYSE:CMB) today
announced third quarter results.
Operating earnings: On an operating basis, which excludes special items, diluted
earnings per share for the third quarter of 2000 were $0.68 per share, compared
with $0.92 per share for the same 1999 period. Earnings in the 2000 third
quarter were $905 million, compared with $1.19 billion in the same quarter of
1999. On the same basis, diluted earnings per share were $2.68 per share for the
first nine months of 2000, compared with $2.83 per share for the same period of
the prior year. Earnings in the first nine months of 2000 were $3.48 billion,
compared with $3.71 billion for the first nine months of 1999.
Reported earnings: On a reported basis, which includes special items, diluted
earnings per share for the third quarter of 2000 were $0.66 per share, compared
with $0.92 per share for the same 1999 period. Net income in the 2000 third
quarter was $884 million, compared with $1.19 billion in the same quarter of
1999. On the same basis, diluted earnings per share were $2.57 per share for the
first nine months of 2000, compared with $2.86 per share for the same period of
the prior year. Net income in the first nine months of 2000 was $3.34 billion,
compared with $3.75 billion for the first nine months of 1999.
THIRD QUARTER HIGHLIGHTS:
Earnings for the third quarter of 2000 were lower than last year's third quarter
results and lower than analysts' estimates primarily due to lower income in
Chase Capital Partners and to a lesser extent in the Investment Bank:
- In Chase Capital Partners, unrealized write-downs, primarily due to price
declines in publicly-held securities, more than offset record realized
(cash) gains of $538 million on the sales of investments. (See page 7 for a
comparison of the corporation's key financial measures including and
excluding Chase Capital Partners for the current and previous quarters of
2000 and those of 1999.)
- In the Investment Bank, trading revenues and corporate finance fees were up
from the third quarter of 1999 but down from the second quarter of 2000 due
to lower market volatility and trading volumes and a slowdown in leveraged
finance. The expense growth rate was high because of the buildup of the
investment banking platform.
Strengths during the third quarter of 2000 included:
- Record earnings in Global Services, National Consumer Services and Wealth
Management.
<PAGE> 4
- Sound management of credit and market risk. Credit losses and nonperforming
assets in the quarter were lower than the previous quarter and the year ago
quarter. There were no days in the third quarter in which Chase had a
trading loss.
"While third quarter performance did not meet our expectations, the results do
not diminish the confidence we have in the growth capacity of our businesses,"
said William B. Harrison, Jr., Chairman and Chief Executive Officer. "Though the
value of our private equity investment portfolio may vary from quarter to
quarter, we remain firmly committed to Chase Capital Partners' with its ability
to create substantial long-term cash returns on investments. In addition, we are
focused on achieving a better balance of expense to revenue growth in the
Investment Bank. Across the franchise, our Global Services, National Consumer
Services and Wealth Management businesses achieved record results, underscoring
the importance of a diverse business mix."
MERGER UPDATE:
On September 13, 2000, The Chase Manhattan Corporation and J.P. Morgan & Co.
Incorporated agreed to merge. The merged firm will be named J.P. Morgan Chase &
Co. The merger is expected to be consummated by the first quarter of 2001. Since
the merger was announced, the following progress has been made:
- Over 35 senior positions were named upon the announcement of the merger; an
additional 250 key positions will have been announced by the end of this
week.
- The major U.S. regulatory applications have been filed; the joint proxy
statement was filed with the SEC on October 5.
- Clients are reacting favorably to the proposed merger by inviting Chase and
J.P. Morgan to make joint pitches for business; the two firms have won a
number of joint investment banking mandates as a result.
"Integration efforts have been proceeding swiftly," said Mr. Harrison. "We have
more evidence that the combined and complementary product mix and client base of
the new firm will promote growth opportunities and business synergies ahead. We
will have a broader and more diversified wholesale banking platform, along with
significant opportunities to moderate investment spending and to improve
operating efficiencies."
FINANCIAL INFORMATION:
Third quarter 2000 results reflect the acquisitions of The Beacon Group, LLC, on
July 6, and Robert Fleming Holdings Limited on August 1.
INVESTMENT BANK
Operating revenues in the investment bank were $1.87 billion in the third
quarter of 2000, up 16 percent from $1.62 billion in the third quarter of 1999.
Cash operating earnings in the third quarter of 2000 were $384 million, down
nine percent from $420 million in the third quarter of 1999. A decline in
shareholder value added during the third quarter to $46 million reflected both
the decline in cash operating earnings and the higher equity allocated to the
Investment Bank as a result of the acquisition of Flemings.
2
<PAGE> 5
- Total trading revenues, including related net interest income, were $680
million, compared with $679 million in the third quarter of 1999 and $841
million in the second quarter of 2000. Gains in fixed income trading were
offset by declines in foreign exchange and interest rate derivatives due to
slower trading activity and an overall decline in market volatility, which
adversely affected the flows and spreads of those businesses.
- Investment banking fees were $613 million, up 26 percent from third quarter
1999 levels, and down from $639 million in the second quarter of 2000.
Growth in fees from merger and acquisition advisory services and equity
underwriting was partially offset by lower fees from loan syndication and
high yield bond underwriting due to a slowdown in the leveraged lending
markets.
- Cash expenses of $1.26 billion in the third quarter of 2000 were up 47
percent from the 1999 third quarter, and up from $1.06 billion in the
second quarter of 2000. Increases were driven by acquisitions and spending
to build up the investment banking platform.
CHASE CAPITAL PARTNERS
Private equity gains in the third quarter of 2000 were negative $25 million,
compared with gains of $377 million in the same 1999 quarter and $298 million in
the second quarter of 2000. Gains included cash realized from the sale of both
private and public securities that were held in the portfolio and the unrealized
change in the value of investments held in the portfolio, primarily publicly
traded securities. Realized (cash) gains on the sale of securities in the third
quarter of 2000 were $538 million, more than double the amount of cash gains
realized in the third quarter of 1999. These gains were more than offset by
declines in the carrying values of investments (primarily in telecommunications)
in the publicly held portion of the portfolio. Despite these declines, the
current carrying value of the investments in the publicly traded portfolio is
approximately 2.6 times their original cost. Approximately 80 percent of the
carrying value of the Chase Capital Partners' portfolio consist of
privately-held securities.
GLOBAL SERVICES
In the third quarter of 2000, Global Services' operating revenues increased nine
percent over the third quarter of 1999 to $875 million, reflecting increased
activity in its securities businesses. Cash operating earnings for Global
Services for the third quarter of 2000 were up 24 percent compared with the
third quarter of 1999. Shareholder value added increased to $93 million, an 82
percent increase over the prior-year quarter.
Operating revenues in Global Investor Services (custody) increased 14 percent
from last year, reflecting net asset growth and higher transaction volume and
net interest income, partially offset by a decline in foreign exchange revenue.
Capital Markets Fiduciary Services' (institutional trust) operating revenues
increased 20 percent from last year primarily in structured finance in the U.S.
and U.K. Chase Treasury Solutions' (cash management) operating revenues
increased two percent over the 1999 third quarter, driven by higher product
revenues across all products and higher balances, partially offset by the
repositioning of the trade finance business. Operating leverage continues to
improve, with expenses growing at a slower rate than revenues.
3
<PAGE> 6
WEALTH MANAGEMENT
Chase's wealth management businesses include private banking and asset
management.
- Revenues from the Global Private Bank increased to $305 million, up 36
percent from the third quarter of 1999. These results reflect broad-based
global growth. Cash operating earnings grew 16 percent compared with the
prior year. As of September 30, the Global Private Bank had over $180
billion in client assets.
- Revenues from Asset Management increased to $165 million, compared with $43
million in the third quarter of 1999. Results include revenues from
Flemings. As of September 30, assets under management were $182 billion.
NATIONAL CONSUMER SERVICES
Operating revenues for National Consumer Services increased to $2.6 billion, an
increase of three percent over the third quarter of 1999. Cash operating
earnings of $492 million increased by 13 percent over the third quarter of 1999.
All five businesses reported double-digit earnings growth.
- Cash operating earnings for cardmember services for the third quarter of
2000 were up 14 percent compared with the third quarter of 1999, reflecting
significantly improved credit quality. Operating revenues were essentially
flat from the prior year and up six percent from the second quarter of
2000, as higher consumer purchase volume and higher fee-based revenues
offset the impact of higher interest rates and a lower level of late fees.
Expenses were up reflecting the impact of higher marketing spending. New
account acquisitions were significantly higher, and credit card
outstandings were up over $1 billion from the second quarter of this year.
- Home finance cash operating earnings were up 21 percent, and revenues
increased 13 percent, from the third quarter of 1999. The improved results
were due to growth in servicing fee income and gains on securities to hedge
mortgage servicing, partially offset by declines in residential mortgage
warehouse activity.
- Regional banking group cash operating earnings grew 36 percent, and
revenues rose seven percent, from the third quarter of 1999, reflecting
higher deposit levels in the consumer and small business sector, higher
banking, debit card, and brokerage fee income and disciplined expense
management.
- Diversified consumer services cash operating earnings were up 24 percent,
and revenues increased five percent from the same 1999 quarter. Income
growth was positively affected by a change in internal cost allocation as
well as improving auto origination volumes and growth in the discount
brokerage business, which was partially offset by the effect of higher
interest rates. Brown & Co., Chase's online trading business, averaged over
41,000 trades per day during the third quarter of 2000 versus 32,000 trades
per day during the same period of 1999.
- Middle markets cash operating earnings were up 13 percent and revenues
increased four percent from the third quarter of 1999. These results
reflect new business and disciplined expense management.
4
<PAGE> 7
ADDITIONAL FINANCIAL INFORMATION
- The merger agreement between Chase and J.P. Morgan & Co. Incorporated,
which has been approved by the boards of directors of both companies,
provides that 3.7 shares of Chase common stock will be exchanged for each
share of J.P. Morgan common stock. Each series of preferred stock of J.P.
Morgan will be exchanged for a similar series of preferred stock of Chase,
the surviving corporation of the merger. The transaction is expected to be
accounted for as a pooling of interests and to be tax-free to J.P. Morgan
and Chase stockholders and is subject to approval by stockholders of both
companies, as well as by the U.S. Federal and state and foreign regulatory
authorities.
- Chase's operating revenues, excluding the impact of Flemings and Chase
Capital Partners, were up five percent compared with the third quarter of
1999. Cash expenses, on the same basis, were up nine percent compared with
the third quarter of 1999. Amortization of goodwill, a non-cash charge to
earnings, amounted to $0.11 per share, or $149 million, in the third
quarter of 2000, compared with $0.05 per share, or $70 million, in the
third quarter of 1999. Similarly, the non-cash charge for the first nine
months of 2000 was $0.25 per share, or $318 million, compared with $0.17
per share, or $219 million, for the first nine months of 1999.
- On September 1, Chase announced it had agreed to sell its Hong Kong-based
retail banking business, including Chase Manhattan Card Company Limited, to
Standard Chartered PLC for approximately $1.3 billion in cash. Subject to
regulatory approvals and satisfaction of certain conditions, the sale is
expected to be completed by December 2000.
- On October 16, Chase agreed to sell its interest in ChaseMellon Shareholder
Services, currently a 50-50 joint venture between Chase and Mellon
Financial Corporation. The transaction, the terms of which were not
disclosed, is expected to be completed during the fourth quarter of this
year, pending regulatory approvals.
- Total assets at September 30, 2000 were $426 billion, compared with $396
billion at June 30, 2000 and $371 billion at September 30, 1999. Chase's
Tier One capital ratio was 7.9 percent at September 30, 2000, compared with
8.7 percent on June 30, 2000. The decline is due to the acquisition of
Flemings. There were no repurchases of Chase common stock during the third
quarter of 2000.
- On a managed basis, including securitizations, net credit losses were $541
million in the third quarter of 2000, down from $574 million in the second
quarter of 2000 and down from $633 million in the third quarter of 1999.
Consumer net charge-offs on a managed basis were $476 million, down from
$482 million in the second quarter of 2000 and $531 million in the third
quarter of 1999, primarily reflecting a decline in the credit card net
charge-off ratio to 4.97 percent. Commercial net charge-offs in the third
quarter of 2000 were $65 million, compared with $92 million in the second
quarter of 2000 and $102 million in the third quarter of 1999. For the
third quarter of 2000, total net charge-offs on a reported basis were $305
million, and the provision for loan losses was $305 million. The allowance
for loan losses was $3.49 billion at the end of the third quarter of 2000,
compared with $3.46 billion at the end of the second quarter of 2000.
Nonperforming assets at September 30, 2000 were $1.82 billion, compared
with $1.90 billion at June 30, 2000 and $2.02 billion at September 30,
1999.
5
<PAGE> 8
- Operating results (revenues, expenses and earnings) exclude the impact of
credit card securitizations, restructuring costs and special items. In the
third quarter of 2000, special items included a gain of $53 million
(after-tax) from the sale of a business in Panama, a loss of $23 million
(after-tax) resulting from the economic hedge of the purchase price of
Robert Fleming Holdings Limited prior to its acquisition, and the
restructuring costs of $51 million (after-tax) associated with previously
announced relocation initiatives. There were no special items in the third
quarter of 1999. For the first nine months of 2000, special items included
a loss of $115 million (after-tax) resulting from the economic hedge of the
purchase price of Flemings prior to its acquisition, $83 million
(after-tax) of restructuring costs associated with previously announced
relocation initiatives, and the $53 million (after-tax) gain from the sale
of a business in Panama. For the first nine months of 1999, special items
included a $61 million (after-tax) gain on the sale of a building, a $46
million (after-tax) gain on the sale of branches in Texas, and a $65
million (after-tax) special contribution to The Chase Manhattan Foundation.
Chase, with $426 billion in assets, is one of the world's premier financial
services institutions, with operations in more than 50 countries around the
world. Chase has top-tier rankings in many areas of investment banking, asset
management, private banking, trading and global markets activities as well as
information and transaction processing. Chase is a leading provider of financial
solutions to large corporations, government entities, commercial banking
clients, small businesses and individuals, and has relationships with more than
30 million consumers across the United States. Chase can be reached on the web
at www.chase.com.
Chase will hold a presentation for the investment community on October 18, 2000
to discuss its third quarter earnings and to update information about its
proposed merger with J.P. Morgan & Co. Incorporated. A live audio webcast of
that presentation will be available through the investor relations site of
www.chase.com at 11 a.m. on October 18. In addition, persons interested in
listening to the presentation by telephone may dial in at (973) 872-3100.
-----------------------
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Those statements are based on
management's current expectations or beliefs and are subject to a number of
factors and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. For a discussion of
certain factors that could cause actual results to differ materially from those
described in the forward-looking statements, please refer to Chase's filings
with the Securities and Exchange Commission, particularly the section entitled
"Important Factors that may Affect Future Results" in Chase's Annual Report on
Form 10-K for the year ended December 31, 1999 and the section entitled "Risk
Factors" in the Registration Statement on Form S-4 filed by Chase on October 5,
2000.
Stockholders of Chase and J.P. Morgan should read the definitive joint proxy
statement/prospectus regarding the proposed merger when it becomes available,
because it will contain important information. Stockholders will be able to
obtain a free copy of the definitive joint proxy statement/prospectus, as well
as other filings containing information about Chase and J.P. Morgan, without
charge, at the SEC's internet site (http://www.sec.gov). Copies of the
definitive joint proxy statement/prospectus and the SEC filings that will be
incorporated by reference in the definitive joint proxy statement/prospectus can
also be obtained, without charge, by directing a request to The Chase Manhattan
Corporation, 270 Park Avenue, New York, NY 10017, Attention: Office of the
Corporate Secretary (212-270-6000) or to J.P. Morgan, 60 Wall Street, New York,
NY 10260, Attention: Investor Relations (212-483-2323). Information regarding
the participants in the proxy solicitation and a description of their direct and
indirect interest, by security holdings or otherwise, is contained in the
materials filed with the SEC by each of J.P. Morgan and Chase on September 13
and 14, 2000, respectively.
# # # #
6
<PAGE> 9
THE CHASE MANHATTAN CORPORATION
SUMMARY OF SELECTED FINANCIAL HIGHLIGHTS - OPERATING BASIS (a)
(in millions, except per share and ratio data)
<TABLE>
<CAPTION>
INCLUDING CHASE CAPITAL PARTNERS
--------------------------------------------------------------------------------------
2000 1999
---------------------------------- -----------------------------------------------
Third Second First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue $5,590 $5,799 $6,179 $6,444 $5,429 $5,696 $5,413
Operating Noninterest Expense 3,656 3,357 3,490 3,179 2,981 2,968 2,945
Operating Earnings 905 1,215 1,360 1,683 1,187 1,351 1,173
Operating Diluted Earnings Per Share 0.68 0.95 1.06 1.31 0.92 1.03 0.88
Return on Average Common Equity (b) 13.5% 21.0% 24.0% 30.2% 21.7% 24.3% 20.6%
Overhead Ratio (c) 65 58 56 49 55 52 54
Cash Operating Earnings $1,054 $1,299 $1,445 $1,761 $1,257 $1,427 $1,246
Cash Diluted Earnings Per Share 0.79 1.02 1.13 1.38 0.97 1.09 0.94
Shareholder Value Added 181 542 701 1,027 539 696 501
Cash Return on Average Common Equity (b) 15.8% 22.5% 25.5% 31.6% 23.0% 25.7% 21.9%
Cash Overhead Ratio (c) 63 56 55 48 53 51 53
</TABLE>
<TABLE>
<CAPTION>
EXCLUDING CHASE CAPITAL PARTNERS
----------------------------------------------------------------------------------------
2000 1999
----------------------------------- -----------------------------------------------
Third Second First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenue $5,678 $5,550 $5,729 $5,134 $5,110 $5,193 $5,108
Operating Noninterest Expense 3,566 3,303 3,410 3,125 2,937 2,929 2,909
Operating Earnings 1,017 1,088 1,121 879 1,011 1,054 1,001
Operating Diluted Earnings Per Share 0.77 0.85 0.88 0.68 0.78 0.80 0.75
Return on Average Common Equity (b) 20.2% 26.0% 27.0% 20.4% 23.2% 23.0% 20.9%
Overhead Ratio (c) 63 59 59 61 57 56 57
Cash Operating Earnings $1,160 $1,169 $1,204 $ 956 $1,081 $1,130 $1,074
Cash Diluted Earnings Per Share 0.88 0.92 0.94 0.74 0.84 0.86 0.81
Shareholder Value Added 501 619 658 391 508 526 446
Cash Return on Average Common Equity (b) 23.2% 28.0% 29.0% 22.2% 24.9% 24.6% 22.5%
Cash Overhead Ratio (c) 60 58 58 59 56 55 56
</TABLE>
<TABLE>
<CAPTION>
INCLUDING CHASE CAPITAL PARTNERS EXCLUDING CHASE CAPITAL PARTNERS
----------------------------------------- -------------------------------------
NINE MONTHS OVER/(UNDER) NINE MONTHS OVER/(UNDER)
----------------------- -------------------
2000 1999 1999 2000 1999 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue $17,568 $16,538 6% $16,957 $15,411 10%
Operating Noninterest Expense 10,503 8,894 18% 10,279 8,775 17%
Operating Earnings 3,480 3,711 (6%) 3,226 3,066 5%
Operating Diluted Earnings Per Share 2.68 2.83 (5%) 2.49 2.34 6%
Return on Average Common Equity (b) 19.2% 22.2% (300)bp 24.1% 22.3% 180bp
Overhead Ratio (c) 60 54 600 60 57 300
Cash Operating Earnings $ 3,798 $ 3,930 (3%) $ 3,533 $ 3,285 8%
Cash Diluted Earnings Per Share 2.93 3.00 (2%) 2.73 2.51 9%
Shareholder Value Added 1,424 1,736 (18%) 1,778 1,480 20%
Cash Return on Average Common Equity (b) 21.0% 23.6% (260)bp 26.5% 23.9% 260bp
Cash Overhead Ratio (c) 58 52 600 59 56 300
</TABLE>
See notes on page 8.
Unaudited
7
<PAGE> 10
THE CHASE MANHATTAN CORPORATION
SUMMARY OF SELECTED FINANCIAL HIGHLIGHTS - REPORTED BASIS (CONTINUED)
(IN MILLIONS, EXCEPT PER SHARE AND RATIO DATA)
<TABLE>
<CAPTION>
% %
AS OF OR FOR THE PERIOD ENDED THIRD QUARTER OVER/(UNDER) NINE MONTHS OVER/(UNDER)
------------------------------ ------------------------------
2000 1999 1999 2000 1999 1999
------------- ------------- ------------ -------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
AS REPORTED BASIS
Revenue $ 5,400 $ 5,191 4% $ 16,741 $ 15,951 5%
Noninterest Expense (Excluding
Restructuring Costs) 3,656 2,981 23% 10,503 8,994 17%
Restructuring Costs 79 -- NM 129 -- NM
Provision for Loan Losses 305 398 (23%) 979 1,167 (16%)
Net Income $ 884 $ 1,187 (26%) $ 3,335 $ 3,753 (11%)
Net Income Per Share:
Basic $ 0.69 $ 0.95 (27%) $ 2.66 $ 2.96 (10%)
Diluted 0.66 0.92 (28%) 2.57 2.86 (10%)
Cash Dividends Declared 0.32 0.27 19% 0.96 0.81 19%
Share Price at Period End 46.19 50.25 (8%)
Book Value at Period End 21.84 17.34 26%
Common Shares Outstanding:
Average Common Shares:
Basic 1,267.3 1,232.3 3% 1,235.4 1,248.9 (1%)
Diluted 1,311.8 1,274.5 3% 1,279.1 1,291.4 (1%)
Common Shares at Period End 1,310.0 1,234.8 6%
Performance Ratios:
Return on Average Total Assets (b) 0.85 % 1.29 % 1.11 % 1.38 %
Return on Average Common Equity (b) 13.2 21.7 18.4 22.5
Selected Balance Sheet Items at
Period End:
Loans $ 191,258 $ 173,458 10%
Total Assets 425,816 371,044 15%
Deposits 229,601 219,623 5%
Total Stockholders' Equity 29,440 22,341 32%
Capital Ratios:
Tier I Capital Ratio 7.9 %(d) 8.2 %
Total Capital Ratio 11.6 (d) 11.8
Tier I Leverage 6.3 (d) 6.7
</TABLE>
NOTES: Share-related data for all periods have been restated to reflect a
3-for-2 common stock split, effective June 12, 2000. On August 1, 2000,
Chase acquired Robert Fleming Holdings Limited ("Flemings") which was
accounted for under the purchase method, and accordingly, results for
Flemings are included from the date of acquisition. On September 13,
2000, Chase and J.P. Morgan & Co. Incorporated ("J.P. Morgan") agreed
to merge. This merger is expected to close by the end of the first
quarter of 2001. The results for J.P. Morgan are not included in these
financials.
(a) Excludes the impact of credit card securitizations, restructuring costs and
special items. For a reconciliation of Reported Results as shown on the
Consolidated Statement of Income to results on an Operating Basis, see page 13.
(b) Based on annualized amounts.
(c) Noninterest expense as a percentage of the total of net interest income and
noninterest revenue (excluding restructuring costs, special items and costs
associated with the REIT). The cash overhead ratio excludes the impact of
amortization of goodwill and certain other intangibles.
(d) Estimated
NM - Not meaningful
Unaudited
8
<PAGE> 11
THE CHASE MANHATTAN CORPORATION
LINES OF BUSINESS RESULTS
(in millions, except ratios)
<TABLE>
<CAPTION>
INVESTMENT BANK (a) CHASE CAPITAL PARTNERS GLOBAL SERVICES
----------------------------- ---------------------------- ---------------------------
THIRD QUARTER 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999
--------------------------------- -------- ------------------ -------- ------------------ -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE $ 1,870 $ 251 16% $ (88) $ (407) NM $ 875 $ 75 9%
OPERATING EARNINGS 349 (60) (15) (112) (288) NM 167 34 26
CASH OPERATING EARNINGS 384 (36) (9) (106) (282) NM 183 35 24
AVERAGE COMMON EQUITY 10,204 1,840 22 6,472 2,177 51% 2,706 (199) (7)
AVERAGE MANAGED ASSETS (b) 230,598 20,827 10 12,377 3,811 44 16,230 (212) (1)
SHAREHOLDER VALUE ADDED (SVA) (c) 46 (93) (67) (320) (352) NM 93 42 82
CASH RETURN ON COMMON EQUITY 14.8% (480)bp NM NM 26.7% 680bp
CASH OVERHEAD RATIO 67 1,400 NM NM 67 (400)
</TABLE>
<TABLE>
<CAPTION>
WEALTH MANAGEMENT (a) NATIONAL CONSUMER SERVICES TOTAL (d)
---------------------------- ------------------------------ ------------------------------
THIRD QUARTER 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999
--------------------------------- -------- ----------------- ---------- ------------------ --------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE $ 470 $ 203 76% $ 2,587 $ 73 3% $ 5,590 $ 161 3%
OPERATING EARNINGS 53 9 20 455 56 14 905 (282) (24)
CASH OPERATING EARNINGS 95 51 116 492 57 13 1,054 (203) (16)
AVERAGE COMMON EQUITY 3,582 2,720 316 8,033 298 4 26,290 4,962 23
AVERAGE MANAGED ASSETS (b) 21,845 8,447 63 148,165 17,119 13 432,853 50,759 13
SHAREHOLDER VALUE ADDED (SVA) (c) (23) (38) NM 227 52 30 181 (358) (66)
CASH RETURN ON COMMON EQUITY 10.4% (950)bp 24.2% 220bp 15.8% (720)bp
CASH OVERHEAD RATIO 72 -- 50 (100) 63 1,000
</TABLE>
--------------------------------------------------------------------------------
INVESTMENT BANK - KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
THIRD QUARTER 2000 OVER/(UNDER) 1999
--------------------------------- ---------------------------------
CASH CASH CASH CASH
OPERATING OPERATING OVERHEAD OPERATING OPERATING OVERHEAD
REVENUES EARNINGS RATIO REVENUES EARNINGS RATIO
---------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
GLOBAL MARKETS $ 880 $ 170 73% (4%) (35%) 1,700bp
GLOBAL INVESTMENT BANKING 623 74 80 54 (15) 1,600
CORPORATE LENDING & PORTFOLIO MANAGEMENT 389 143 26 1 4 (200)
OTHER INVESTMENT BANK (22) (3) NM NM NM NM
------- -----
TOTALS $ 1,870 $ 384 67% 16% (9%) 1,400bp
======= =====
</TABLE>
--------------------------------------------------------------------------------
NATIONAL CONSUMER SERVICES - KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
THIRD QUARTER 2000 OVER/(UNDER) 1999
----------------------------------- ------------------------------------------
CASH CASH CASH CASH
OPERATING OPERATING OVERHEAD OPERATING OPERATING OVERHEAD
REVENUES EARNINGS RATIO REVENUES EARNINGS RATIO
--------- --------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CHASE CARDMEMBER SERVICES $ 943 $ 141 36% -- % 14% 200bp
REGIONAL BANKING GROUP 771 139 64 7 36 (600)
CHASE HOME FINANCE 354 94 56 13 21 -
DIVERSIFIED CONSUMER SERVICES 160 36 49 5 24 (700)
MIDDLE MARKETS 274 70 52 4 13 (200)
OTHER NCS 85 12 NM NM NM NM
-------- -----
TOTALS $ 2,587 $ 492 50% 3 % 13% (100)bp
======= =====
</TABLE>
--------------------------------------------------------------------------------
(a) Prior periods have been restated to reflect refinements in management
reporting policies or changes to the management organization. For example,
commencing with the third quarter of 2000, Chase's previously reported
Global Bank has been reorganized into Investment Bank (Global Markets,
Investment Banking and Corporate Lending) and Wealth Management (Global
Private Bank and Asset Management).
(b) Excludes the impact of credit card securitizations.
(c) SVA is Chase's primary measure of business unit performance. SVA represents
operating earnings excluding the amortization of goodwill and certain other
intangibles (i.e., cash operating earnings), minus preferred dividends and
an explicit charge for capital.
(d) Total column includes Support Units and the effects remaining at the
Corporate level after the implementation of management accounting policies.
NM - Not meaningful
bp - basis points
Unaudited
9
<PAGE> 12
THE CHASE MANHATTAN CORPORATION
LINES OF BUSINESS RESULTS
(IN MILLIONS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
INVESTMENT BANK (a) CHASE CAPITAL PARTNERS GLOBAL SERVICES
----------------------------- ---------------------------- ---------------------------
NINE MONTHS 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999
--------------------------------- --------- ------------------ -------- ------------------ -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE $ 5,989 $ 749 14% $ 611 $ (517) (46%) $ 2,604 $ 304 13%
OPERATING EARNINGS 1,464 (42) (3) 254 (392) (61) 447 100 29
CASH OPERATING EARNINGS 1,531 (8) (1) 265 (381) (59) 495 102 26
AVERAGE COMMON EQUITY 9,127 517 6 6,261 2,373 61 2,703 (197) (7)
AVERAGE MANAGED ASSETS (b) 225,976 15,753 7 11,862 4,024 51 15,912 (721) (4)
SHAREHOLDER VALUE ADDED (SVA) (c) 628 (53) (8) (354) (612) NM 227 123 118
CASH RETURN ON COMMON EQUITY 22.2% (140)bp 5.4% (1,650)bp 24.2% 640bp
CASH OVERHEAD RATIO 58 1,000 34 2,300 70 (300)
</TABLE>
<TABLE>
<CAPTION>
WEALTH MANAGEMENT (a) NATIONAL CONSUMER SERVICES TOTAL (d)
----------------------------- ----------------------------- ----------------------------
NINE MONTHS 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999 2000 OVER/(UNDER) 1999
--------------------------------- --------- ------------------ --------- ------------------ --------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE $ 1,168 $ 401 52% $ 7,487 $ 104 1% $ 17,568 $ 1,030 6%
OPERATING EARNINGS 180 67 59 1,176 51 5 3,480 (231) (6)
CASH OPERATING EARNINGS 225 111 97 1,287 42 3 3,798 (132) (3)
AVERAGE COMMON EQUITY 1,834 986 116 8,084 427 6 23,913 1,916 9
AVERAGE MANAGED ASSETS (b) 17,465 4,651 36 144,650 15,969 12 419,397 37,493 10
SHAREHOLDER VALUE ADDED (SVA) (c) 44 14 47 487 5 1 1,424 (312) (18)
CASH RETURN ON COMMON EQUITY 16.2% (150)bp 21.0% (40)bp 21.0% (260)bp
CASH OVERHEAD RATIO 70 (400) 52 200 58 600
</TABLE>
--------------------------------------------------------------------------------
INVESTMENT BANK - KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
NINE MONTHS 2000 OVER/(UNDER) 1999
------------------------------ ------------------------------
CASH CASH CASH CASH
OPERATING OPERATING OVERHEAD OPERATING OPERATING OVERHEAD
REVENUES EARNINGS RATIO REVENUES EARNINGS RATIO
--------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
GLOBAL MARKETS $ 3,100 $ 880 57% (3%) (17%) 900bp
GLOBAL INVESTMENT BANKING 1,938 317 72 75 55 400
CORPORATE LENDING & PORTFOLIO MANAGEMENT 1,115 397 28 (2) (1) 100
OTHER INVESTMENT BANK (164) (63) NM NM NM NM
------- --------
TOTALS $ 5,989 $ 1,531 58% 14% (1%) 1,000bp
======= ========
</TABLE>
--------------------------------------------------------------------------------
NATIONAL CONSUMER SERVICES - KEY FINANCIAL MEASURES
<TABLE>
<CAPTION>
NINE MONTHS 2000 OVER/(UNDER) 1999
------------------------------ ------------------------------
CASH CASH CASH CASH
OPERATING OPERATING OVERHEAD OPERATING OPERATING OVERHEAD
REVENUES EARNINGS RATIO REVENUES EARNINGS RATIO
--------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
CHASE CARDMEMBER SERVICES $ 2,719 $ 348 35% (4%) 1% 200bp
REGIONAL BANKING GROUP 2,277 390 65 8 29 (400)
CHASE HOME FINANCE 997 239 59 13 10 200
DIVERSIFIED CONSUMER SERVICES 404 53 62 (11) (44) 1,000
MIDDLE MARKETS 811 196 53 6 15 (300)
OTHER NCS 279 61 NM NM NM NM
------- -------
TOTALS $ 7,487 $ 1,287 52% 1% 3% 200bp
======= =======
</TABLE>
--------------------------------------------------------------------------------
(a) Prior periods have been restated to reflect refinements in management
reporting policies or changes to the management organization. For example,
commencing with the third quarter of 2000, Chase's previously reported
Global Bank has been reorganized into Investment Bank (Global Markets,
Investment Banking and Corporate Lending) and Wealth Management (Global
Private Bank and Asset Management).
(b) Excludes the impact of credit card securitizations.
(c) SVA is Chase's primary measure of business unit performance. SVA
represents operating earnings excluding the amortization of goodwill and
certain other intangibles (i.e., cash operating earnings), minus preferred
dividends and an explicit charge for capital.
(d) Total column includes Support Units and the effects remaining at the
Corporate level after the implementation of management accounting
policies.
NM - Not meaningful
bp - basis points
Unaudited
10
<PAGE> 13
THE CHASE MANHATTAN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
% %
THIRD QUARTER OVER/(UNDER) NINE MONTHS OVER/(UNDER)
------------- -----------
2000 1999 1999 2000 1999 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 3,997 $ 3,288 $ 11,108 $ 9,662
Securities 994 762 2,879 2,344
Trading Assets 530 399 1,425 1,228
Federal Funds Sold and Securities
Purchased Under Resale Agreements 452 352 1,349 1,122
Deposits with Banks 96 195 331 540
-------- -------- -------- --------
Total Interest Income 6,069 4,996 17,092 14,896
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 2,251 1,650 6,302 4,806
Short-Term and Other Borrowings 1,333 870 3,678 2,635
Long-Term Debt 492 306 1,243 936
-------- -------- -------- --------
Total Interest Expense 4,076 2,826 11,223 8,377
-------- -------- -------- --------
NET INTEREST INCOME 1,993 2,170 (8%) 5,869 6,519 (10%)
Provision for Loan Losses 305 398 (23%) 979 1,167 (16%)
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,688 1,772 (5%) 4,890 5,352 (9%)
-------- -------- -------- --------
NONINTEREST REVENUE
Investment Banking Fees 613 486 26% 1,900 1,388 37%
Trust, Custody and Investment Management Fees 664 457 45% 1,718 1,332 29%
Credit Card Revenue 471 441 7% 1,311 1,258 4%
Fees for Other Financial Services 775 637 22% 2,201 1,777 24%
Trading Revenue 603 462 31% 2,448 1,606 52%
Securities Gains (Losses) 96 (1) NM 167 160 4%
Private Equity Gains (Losses) (25) 377 NM 773 1,215 (36%)
Other Revenue 210 162 30% 354 696 (49%)
-------- -------- -------- --------
Total Noninterest Revenue 3,407 3,021 13% 10,872 9,432 15%
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries 1,761 1,417 24% 5,128 4,217 22%
Employee Benefits 256 238 8% 795 731 9%
Occupancy Expense 247 218 13% 689 642 7%
Equipment Expense 297 255 16% 856 737 16%
Other Expense 1,095 853 28% 3,035 2,667 14%
-------- -------- -------- --------
Total Noninterest Expense
Before Restructuring Costs 3,656 2,981 23% 10,503 8,994 17%
Restructuring Costs 79 -- NM 129 -- NM
-------- -------- -------- --------
Total Noninterest Expense 3,735 2,981 25% 10,632 8,994 18%
-------- -------- -------- --------
INCOME BEFORE INCOME TAX EXPENSE 1,360 1,812 (25%) 5,130 5,790 (11%)
Income Tax Expense 476 625 (24%) 1,795 2,037 (12%)
======== ======= ======== ========
NET INCOME $ 884 $ 1,187 (26%) $ 3,335 $ 3,753 (11%)
======== ======= ======== ========
NET INCOME APPLICABLE TO COMMON STOCK $ 871 $ 1,168 (25%) $ 3,289 $ 3,698 (11%)
======== ======= ======== ========
NET INCOME PER COMMON SHARE:
Basic $ 0.69 $ 0.95 (27%) $ 2.66 $ 2.96 (10%)
Diluted $ 0.66 $ 0.92 (28%) $ 2.57 $ 2.86 (10%)
</TABLE>
NM - Not meaningful
Unaudited
11
<PAGE> 14
THE CHASE MANHATTAN CORPORATION
NONINTEREST REVENUE AND NONINTEREST EXPENSE DETAIL
(IN MILLIONS)
<TABLE>
<CAPTION>
THIRD QUARTER % NINE MONTHS %
---------------- OVER/(UNDER) ---------------- OVER/(UNDER)
NONINTEREST REVENUE 2000 1999 1999 2000 1999 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FEES FOR OTHER FINANCIAL SERVICES:
Mortgage Servicing Fees $ 140 $ 96 46% $ 421 $ 238 77%
Brokerage and Investment Services 150 43 249% 333 136 145%
Service Charges on Deposit Accounts 103 104 (1%) 305 289 6%
Fees in Lieu of Compensating Balances 81 106 (24%) 256 287 (11%)
Commissions on Letters of Credit and
Acceptances 51 69 (26%) 179 207 (14%)
Insurance Fees 58 44 32% 154 124 24%
Loan Commitment Fees 36 44 (18%) 108 111 (3%)
Other Fees 156 131 19% 445 385 16%
------- ------- ------- -------
Total $ 775 $ 637 22% $ 2,201 $ 1,777 24%
======= ======= ======= =======
TRADING-RELATED REVENUE: (a)
Interest Rate Contracts $ 117 $ 223 (48%) $ 654 $ 805 (19%)
Foreign Exchange Revenue 207 199 4% 744 616 21%
Equities and Commodities 167 129 29% 574 303 89%
Debt Instruments and Other 189 128 48% 594 525 13%
------- ------- ------- -------
Total $ 680 $ 679 -- $ 2,566 $ 2,249 14%
======= ======= ======= =======
OTHER REVENUE:
Residential Mortgage Origination/Sales
Activities $ 50 $ 95 (47%) $ 135 $ 275 (51%)
Loss on Economic Hedge of the Flemings
Purchase (b) (35) -- NM (176) -- NM
Gains on Sales of Nonstrategic Assets (c) 81 -- NM 81 166 (51%)
All Other Revenue 114 67 70% 314 255 23%
------- ------- ------- -------
Total $ 210 $ 162 30% $ 354 $ 696 (49%)
======= ======= ======= =======
---------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
OTHER EXPENSE:
Professional Services $ 212 $ 170 25% $ 569 $ 510 12%
Marketing Expense 146 128 14% 367 356 3%
Amortization of Intangibles 149 70 113% 318 219 45%
Telecommunications 112 96 17% 316 284 11%
Travel and Entertainment 86 54 59% 229 163 40%
Minority Interest (d) 12 12 -- 42 37 14%
Foreclosed Property Expense 1 6 (83%) (2) 14 NM
Special Contribution to the Foundation (e) -- -- -- -- 100 NM
All Other 377 317 19% 1,196 984 22%
------- ------- ------- -------
Total $ 1,095 $ 853 28% $ 3,035 $ 2,667 14%
======= ======= ======= =======
</TABLE>
(a) Trading-related revenue includes net interest income attributable to
trading activities.
(b) Loss is the result of the economic hedge of the purchase price of
Flemings prior to its acquisition.
(c) Third quarter and nine months 2000 includes an $81 million gain on the
sale of a business in Panama. Nine months 1999 includes a $95 million
gain on the sale of One New York Plaza and a $71 million gain on the
sale of branches in Beaumont, Texas.
(d) Includes REIT minority interest of $11 million in each quarter and $33
million in each nine months.
(e) Represents a $100 million special contribution to The Chase Manhattan
Foundation.
NM - Not meaningful
Unaudited
12
<PAGE> 15
THE CHASE MANHATTAN CORPORATION
OPERATING INCOME RECONCILIATION
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THIRD QUARTER 2000 THIRD QUARTER 1999
------------------------------------------ ----------------------------------------
REPORTED CREDIT SPECIAL OPERATING REPORTED CREDIT SPECIAL OPERATING
RESULTS CARD ITEMS BASIS RESULTS CARD ITEMS BASIS
(a) (b) (c) (a) (b) (c)
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
Market-Sensitive Revenue $1,364 $ -- $ -- $1,364 $1,541 $ -- $ -- $1,541
Less Market-Sensitive Revenue 4,036 236 (46) 4,226 3,650 238 -- 3,888
------ ------ ------ ------ ------ ------ ------ ------
Total Revenue 5,400 236 (46) 5,590 5,191 238 -- 5,429
Noninterest Expense 3,656 -- -- 3,656 2,981 -- -- 2,981
------ ------ ------ ------ ------ ------ ------ ------
Operating Margin 1,744 236 (46) 1,934 2,210 238 -- 2,448
Credit Costs 305 236 -- 541 398 238 -- 636
------ ------ ------ ------ ------ ------ ------ ------
Income Before Restructuring Costs 1,439 -- (46) 1,393 1,812 -- -- 1,812
Restructuring Costs 79 -- (79) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Income Before Income Tax Expense 1,360 -- 33 1,393 1,812 -- -- 1,812
Tax Expense 476 -- 12 488 625 -- -- 625
------ ------ ------ ------ ------ ------ ------ ------
Net Income $ 884 $ -- $ 21 $ 905 $1,187 $ -- $ -- $1,187
------ ------ ------ ------ ------ ------ ------ ------
NET INCOME PER COMMON SHARE
Basic $ 0.69 $ 0.70 $ 0.95 $ 0.95
Diluted $ 0.66 $ 0.68 $ 0.92 $ 0.92
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS 2000 NINE MONTHS 1999
---------------------------------------------- ---------------------------------------------
REPORTED CREDIT SPECIAL OPERATING REPORTED CREDIT SPECIAL OPERATING
RESULTS CARD ITEMS BASIS RESULTS CARD ITEMS BASIS
(a) (b) (c) (a) (b) (c)
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
Market-Sensitive Revenue $ 5,406 $ -- $ -- $ 5,406 $ 5,012 $ -- $ -- $ 5,012
Less Market-Sensitive Revenue 11,335 732 95 12,162 10,939 753 (166) 11,526
------- ------- ------- ------- ------- ------- ------- -------
Total Revenue 16,741 732 95 17,568 15,951 753 (166) 16,538
Noninterest Expense 10,503 -- -- 10,503 8,994 -- (100) 8,894
------- ------- ------- ------- ------- ------- ------- -------
Operating Margin 6,238 732 95 7,065 6,957 753 (66) 7,644
Credit Costs 979 732 -- 1,711 1,167 753 -- 1,920
------- ------- ------- ------- ------- ------- ------- -------
Income Before Restructuring Costs 5,259 -- 95 5,354 5,790 -- (66) 5,724
Restructuring Costs 129 -- (129) -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Income Before Income Tax Expense 5,130 -- 224 5,354 5,790 -- (66) 5,724
Tax Expense 1,795 -- 79 1,874 2,037 -- (24) 2,013
------- ------- ------- ------- ------- ------- ------- -------
Net Income $ 3,335 $ -- $ 145 $ 3,480 $ 3,753 $ -- $ (42) $ 3,711
------- ------- ------- ------- ------- ------- ------- -------
NET INCOME PER COMMON SHARE
Basic $ 2.66 $ 2.78 $ 2.96 $ 2.93
Diluted $ 2.57 $ 2.68 $ 2.86 $ 2.83
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represent results as reported in Chase's financial statements. The only
exception is that revenues are categorized between market-sensitive and less
market-sensitive revenues. Market-sensitive revenue includes investment banking
fees, trading-related revenue (including trading-related net interest income),
securities gains and private equity gains.
(b) This column excludes the impact of credit card securitizations. For
securitized receivables, amounts that previously would have been reported as net
interest income and as provision for loan losses are instead reported as
components of noninterest revenue.
(c) Includes restructuring costs and special items. The 2000 third quarter
includes an $81 million gain (the same for the nine months) from the sale of a
business in Panama, a $35 million loss ($176 million loss in the nine months)
resulting from the economic hedge of the purchase price of Flemings prior to its
acquisition, and $79 million ($129 million for the nine months) of restructuring
costs associated with previously announced relocation initiatives. The 1999 nine
months included $166 million in gains from sales of nonstrategic assets, of
which $95 million was from the sale of a building and $71 million was from the
sale of branches in Texas, and a special contribution to The Chase Manhattan
Foundation of $100 million.
Unaudited
13
<PAGE> 16
THE CHASE MANHATTAN CORPORATION
CONSOLIDATED BALANCE SHEET
(IN MILLIONS)
<TABLE>
<CAPTION>
SEPTEMBER 30, %
------------- OVER/(UNDER)
2000 1999 1999
---- ---- ----
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks $ 19,403 $ 16,490 18%
Deposits with Banks 3,513 5,856 (40%)
Federal Funds Sold and Securities
Purchased Under Resale Agreements 27,175 28,368 (4%)
Trading Assets:
Debt and Equity Instruments 36,113 26,069 39%
Risk Management Instruments 31,479 31,123 1%
Securities 66,232 55,113 20%
Loans (Net of Allowance for Loan Losses of $3,491 in 2000
and $3,555 in 1999) 187,767 169,903 11%
Other Assets 54,134 38,122 42%
--------- ---------
TOTAL ASSETS $ 425,816 $ 371,044 15%
========= =========
LIABILITIES
Deposits:
Domestic:
Noninterest-Bearing $ 47,067 $ 49,722 (5%)
Interest-Bearing 81,003 78,993 3%
Foreign:
Noninterest-Bearing 6,054 6,363 (5%)
Interest-Bearing 95,477 84,545 13%
--------- ---------
Total Deposits 229,601 219,623 5%
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 61,943 43,879 41%
Commercial Paper 7,338 5,996 22%
Other Borrowed Funds 7,252 7,046 3%
Trading Liabilities 40,688 37,084 10%
Accounts Payable, Accrued Expenses and Other Liabilities, Including
the Allowance for Credit Losses of $170 in 2000 and 1999 22,058 15,343 44%
Long-Term Debt 24,157 16,644 45%
Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Deferrable Interest Debentures 2,789 2,538 10%
--------- ---------
TOTAL LIABILITIES 395,826 348,153 14%
--------- ---------
PREFERRED STOCK OF SUBSIDIARY 550 550 --
--------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock 828 928 (11%)
Common Stock 1,323 882 50%
Capital Surplus 9,300 9,635 (3%)
Retained Earnings 19,626 16,210 21%
Accumulated Other Comprehensive Loss (1,005) (1,038) (3%)
Treasury Stock, at Cost (632) (4,276) (85%)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 29,440 22,341 32%
--------- ---------
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY
AND STOCKHOLDERS' EQUITY $ 425,816 $ 371,044 15%
========= =========
Unaudited
</TABLE>
14
<PAGE> 17
THE CHASE MANHATTAN CORPORATION
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS
---------------------
2000 1999
-------- --------
<S> <C> <C>
PREFERRED STOCK
Balance at Beginning of Year $ 928 $ 1,028
Redemption of Stock (100) (100)
-------- --------
Balance at End of Period $ 828 $ 928
-------- --------
COMMON STOCK
Balance at Beginning of Year $ 882 $ 882
Issuance of Common Stock for a Three-for-Two Stock Split 441 --
-------- --------
Balance at End of Period $ 1,323 $ 882
-------- --------
CAPITAL SURPLUS
Balance at Beginning of Year $ 9,714 $ 9,836
Issuance of Common Stock for a Three-for-Two Stock Split (441) --
Issuance of Common Stock for (Purchase Accounting) Acquisitions (a) 136 --
Shares Issued and Commitments to Issue Common Stock for
Employee Stock-Based Awards and Related Tax Effects (109) (201)
-------- --------
Balance at End of Period $ 9,300 $ 9,635
-------- --------
RETAINED EARNINGS
Balance at Beginning of Year $ 17,547 $ 13,544
Net Income 3,335 3,753
Cash Dividends Declared:
Preferred Stock (46) (55)
Common Stock (1,210) (1,032)
-------- --------
Balance at End of Period $ 19,626 $ 16,210
-------- --------
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at Beginning of Year $ (1,454) $ 392
Other Comprehensive Income (Loss) 449 (1,430)
-------- --------
Balance at End of Period $ (1,005) $ (1,038)
-------- --------
TREASURY STOCK, AT COST
Balance at Beginning of Year $ (4,000) $ (1,844)
Purchase of Treasury Stock (1,072) (4,172)
Reissuance of Treasury Stock 1,025 1,740
Reissuance of Treasury Stock for (Purchase Accounting) Acquisitions (a) 3,415 --
-------- --------
Balance at End of Period $ (632) $ (4,276)
-------- --------
TOTAL STOCKHOLDERS' EQUITY $ 29,440 $ 22,341
======== ========
----------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME
Net Income $ 3,335 $ 3,753
Other Comprehensive Income (Loss) 449 (1,430)
-------- --------
Comprehensive Income $ 3,784 $ 2,323
======== ========
</TABLE>
(a) In the 2000 third quarter, Chase acquired Robert Fleming Holdings Limited,
The Beacon Group LLC and Goldman, Lichtenberg, Wasserman & Grossman. These
transactions were accounted for under the purchase method.
Unaudited
15
<PAGE> 18
THE CHASE MANHATTAN CORPORATION
CREDIT RELATED INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
% %
CREDIT-RELATED ASSETS OVER/(UNDER) NONPERFORMING ASSETS OVER/(UNDER)
--------------------- ----------- -------------------- ----------
SEPTEMBER 30, 2000 1999 1999 2000 1999 1999
------------------------------------- -------- -------- ---- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
CONSUMER LOANS
Domestic Consumer:
1-4 Family Residential Mortgages $ 48,858 $ 42,134 16% $ 273 $ 308 (11%)
Credit Card - Reported 14,981 14,246 5% 30 (a) -- NM
Credit Card Securitizations (b) 18,022 18,028 -- -- -- NM
-------- -------- -------- --------
Credit Card - Managed 33,003 32,274 2% 30 -- NM
Auto Financings 19,921 18,429 8% 80 73 10%
Other Consumer 6,931 6,536 6% 4 5 (20%)
-------- -------- -------- --------
Total Domestic Consumer 108,713 99,373 9% 387 386 --
Total Foreign Consumer 2,551 2,822 (10%) 9 30 (70%)
-------- -------- -------- --------
TOTAL CONSUMER LOANS 111,264 102,195 9% 396 416 (5%)
-------- -------- -------- --------
COMMERCIAL LOANS
Domestic Commercial:
Commercial and Industrial 55,668 51,994 7% 581 458 27%
Commercial Real Estate 3,151 3,363 (6%) 64 50 28%
-------- -------- -------- --------
Total Domestic Commercial 58,819 55,357 6% 645 508 27%
Total Foreign Commercial 39,197 33,934 16% 642 950 (32%)
-------- -------- -------- --------
TOTAL COMMERCIAL LOANS 98,016 89,291 10% 1,287 1,458 (12%)
DERIVATIVE AND FX CONTRACTS (c) 31,926 31,408 2% 52 36 44%
-------- -------- -------- --------
TOTAL COMMERCIAL CREDIT-RELATED 129,942 120,699 8% 1,339 1,494 (10%)
-------- -------- -------- --------
TOTAL MANAGED CREDIT-RELATED $241,206 $222,894 8% 1,735 1,910 (9%)
======== ======== -------- --------
Assets Acquired as Loan Satisfactions 81 105 (23%)
-------- --------
TOTAL NONPERFORMING ASSETS $ 1,816 $ 2,015 (10%)
======== ========
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% %
THIRD QUARTER OVER/(UNDER) NINE MONTHS OVER/(UNDER)
NET CHARGE-OFFS 2000 1999 1999 2000 1999 1999
--------------- ------- ------- ------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CONSUMER LOANS Domestic Consumer:
1-4 Family Residential Mortgages $ 7 $ 9 (22%) $ 26 $ 19 37%
Credit Card - Reported 167 207 (19%) 521 641 (19%)
Credit Card Securitizations (b) 236 238 (1%) 732 753 (3%)
------- ------- ------- -------
Credit Card - Managed (d) 403 445 (9%) 1,253 1,394 (10%)
Auto Financings 20 19 5% 63 57 11%
Other Consumer 38 49 (22%) 113 144 (22%)
------- ------- ------- -------
Total Domestic Consumer 468 522 (10%) 1,455 1,614 (10%)
Total Foreign Consumer 8 9 (11%) 27 27 --
------- ------- ------- -------
TOTAL CONSUMER LOANS 476 531 (10%) 1,482 1,641 (10%)
------- ------- ------- -------
COMMERCIAL LOANS
Domestic Commercial:
Commercial and Industrial 65 68 (4%) 184 145 27%
Commercial Real Estate (3) (2) NM (6) (13) NM
------- ------- ------- -------
Total Domestic Commercial 62 66 (6%) 178 132 35%
Total Foreign Commercial 3 36 (92%) 51 143 (64%)
------- ------- ------- -------
TOTAL COMMERCIAL LOANS 65 102 (36%) 229 275 (17%)
------- ------- ------- -------
TOTAL MANAGED NET CHARGE-OFFS $ 541 $ 633 (15%) $ 1,711 $ 1,916 (11%)
======= ======= ======= =======
</TABLE>
(a) Includes currently performing loans placed on a cash basis because of
concerns as to collectibility.
(b) Represents the portion of Chase's credit card receivables that have been
securitized.
(c) Charge-offs for risk management instruments are included in trading revenue.
(d) Including domestic and international consumer and commercial credit card
activity, net charge-offs as a percentage of average managed credit card
receivables for the third quarter of 2000 and 1999 and first nine months of 2000
and 1999 were 4.97%, 5.53%, 5.16% and 5.81%, respectively.
NM - Not meaningful
Unaudited
16
<PAGE> 19
THE CHASE MANHATTAN CORPORATION
CONDENSED AVERAGE CONSOLIDATED BALANCE SHEET, INTEREST AND RATES
(TAXABLE-EQUIVALENT INTEREST AND RATES; IN MILLIONS)
<TABLE>
<CAPTION>
THIRD QUARTER 2000
------------------------------------------------------
AVERAGE RATE
BALANCE INTEREST (ANNUALIZED)
------- -------- ------------
ASSETS
<S> <C> <C> <C>
Liquid Interest-Earning Assets $ 70,002 $ 1,078 6.12%
Securities 64,740 1,000 6.15%
Loans 187,210 3,997 8.50%
--------- -------
Total Interest-Earning Assets 321,952 6,075 7.51%
Noninterest-Earning Assets 91,908
---------
Total Assets $ 413,860
=========
LIABILITIES
Interest-Bearing Deposits $ 173,940 2,251 5.15%
Short-Term and Long-Term Debt 113,923 1,825 6.38%
--------- -------
Total Interest-Bearing Liabilities 287,863 4,076 5.63%
-------
Noninterest-Bearing Deposits 50,731
Other Noninterest-Bearing Liabilities 47,598
---------
Total Liabilities 386,192
---------
PREFERRED STOCK OF SUBSIDIARY 550
---------
STOCKHOLDERS' EQUITY
Preferred Stock 828
Common Stockholders' Equity 26,290
---------
Total Stockholders' Equity 27,118
---------
Total Liabilities, Preferred Stock of Subsidiary
and Stockholders' Equity $ 413,860
=========
INTEREST RATE SPREAD 1.88%
=====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 1,999 2.47%
======= =====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS (a) $ 2,352 2.75%
======= =====
</TABLE>
<TABLE>
<CAPTION>
THIRD QUARTER 1999
---------------------------------------------------------
AVERAGE RATE
BALANCE INTEREST (ANNUALIZED)
------- -------- ------------
ASSETS
<S> <C> <C> <C>
Liquid Interest-Earning Assets $ 63,983 $ 946 5.86%
Securities 53,016 767 5.74%
Loans 173,246 3,289 7.53%
-------- ------
Total Interest-Earning Assets 290,245 5,002 6.84%
Noninterest-Earning Assets 74,600
--------
Total Assets $364,845
========
LIABILITIES
Interest-Bearing Deposits $160,820 1,650 4.07%
Short-Term and Long-Term Debt 90,399 1,176 5.16%
-------- ------
Total Interest-Bearing Liabilities 251,219 2,826 4.46%
------
Noninterest-Bearing Deposits 48,636
Other Noninterest-Bearing Liabilities 42,086
--------
Total Liabilities 341,941
--------
PREFERRED STOCK OF SUBSIDIARY 550
--------
STOCKHOLDERS' EQUITY
Preferred Stock 1,026
Common Stockholders' Equity 21,328
--------
Total Stockholders' Equity 22,354
--------
Total Liabilities, Preferred Stock of Subsidiary
and Stockholders' Equity $364,845
========
INTEREST RATE SPREAD 2.38%
=====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 2,176 2.97%
======== =====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS (a) $ 2,508 3.24%
======= =====
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS 2000
---------------------------------------------
AVERAGE RATE
BALANCE INTEREST (ANNUALIZED)
------- -------- ------------
<S> <C> <C> <C>
ASSETS
Liquid Interest-Earning Assets $ 68,505 $ 3,105 6.05%
Securities 63,409 2,898 6.11%
Loans 181,111 11,111 8.20%
-------- -------
Total Interest-Earning Assets 313,025 17,114 7.30%
Noninterest-Earning Assets 87,385
--------
Total Assets $400,410
========
LIABILITIES
Interest-Bearing Deposits $172,514 6,302 4.88%
Short-Term and Long-Term Debt 108,135 4,921 6.08%
-------- -------
Total Interest-Bearing Liabilities 280,649 11,223 5.34%
-------
Noninterest-Bearing Deposits 50,796
Other Noninterest-Bearing Liabilities 43,608
--------
Total Liabilities 375,053
--------
PREFERRED STOCK OF SUBSIDIARY 550
--------
STOCKHOLDERS' EQUITY
Preferred Stock 894
Common Stockholders' Equity 23,913
--------
Total Stockholders' Equity 24,807
--------
Total Liabilities, Preferred Stock of Subsidiary
and Stockholders' Equity $400,410
========
INTEREST RATE SPREAD 1.96%
=====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $ 5,891 2.51%
======= =====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS (a) $ 6,921 2.78%
======= =====
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS 1999
-----------------------------------------------
AVERAGE RATE
BALANCE INTEREST (ANNUALIZED)
------- -------- ------------
<S> <C> <C> <C>
ASSETS
Liquid Interest-Earning Assets $ 61,997 $ 2,890 6.23%
Securities 54,948 2,355 5.73%
Loans 173,078 9,666 7.47%
-------- -------
Total Interest-Earning Assets 290,023 14,911 6.87%
Noninterest-Earning Assets 74,246
--------
Total Assets $364,269
-=======
LIABILITIES
Interest-Bearing Deposits $160,809 4,806 4.00%
Short-Term and Long-Term Debt 89,729 3,571 5.32%
-------- ------
Total Interest-Bearing Liabilities 250,538 8,377 4.47%
-------
Noninterest-Bearing Deposits 48,091
Other Noninterest-Bearing Liabilities 42,066
--------
Total Liabilities 340,695
--------
PREFERRED STOCK OF SUBSIDIARY 550
--------
STOCKHOLDERS' EQUITY
Preferred Stock 1,027
Common Stockholders' Equity 21,997
--------
Total Stockholders' Equity 23,024
--------
Total Liabilities, Preferred Stock of Subsidiary
and Stockholders' Equity $364,269
========
INTEREST RATE SPREAD 2.40%
=====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS $6,534 3.01%
======= =====
NET INTEREST INCOME AND NET YIELD
ON INTEREST-EARNING ASSETS (a) $7,534 3.27%
======= =====
</TABLE>
(a) Excludes the impact of the credit card securitizations.
Unaudited
17
<PAGE> 20
THE CHASE MANHATTAN CORPORATION
Chase Capital Partners
INVESTMENT PORTFOLIO
(in millions)
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 JUNE 30, 2000
------------------ -------------
CARRYING CARRYING
VALUE COST VALUE COST
----- ---- ----- ----
<S> <C> <C> <C> <C>
Total Public Securities (191 companies) $ 2,103 $ 801 $ 2,778 $ 789
Total Private Direct Investments (822 companies) 5,957 5,879 5,764 5,736
Total Private Fund Investments (381 funds) 2,456 2,469 2,353 2,337
------- ------- ------- -------
Total Investment Portfolio $10,516 $ 9,149 $10,895 $ 8,862
======= ======= ======= =======
</TABLE>
PUBLIC SECURITIES INVESTMENTS AT SEPTEMBER 30, 2000 *
(DOLLARS AND SHARES IN MILLIONS)
<TABLE>
<CAPTION>
QUOTED
PUBLIC
SYMBOL SHARES VALUE COST
------ ------ ----- ----
<S> <C> <C> <C>
TRITON PCS HOLDING, INC TPCS 11.7 $ 321 $ 50
PRAECIS PHARMACEUTICALS INC PRCS 6.1 260 26
TELECORP PCS TLCP 12.4 235 8
ONI SYSTEMS CORP ONIS 2.5 220 2
AMERICAN TOWER CORP AMT 5.8 218 15
DDI CORP DDIC 3.0 135 20
FISHER SCIENTIFIC FSH 3.3 112 27
RESONATE RSNT 2.7 108 6
VIASYSTEMS VG 5.9 101 44
STARMEDIA NETWORK, INC STRM 11.1 83 27
----- ------
TOP TEN PUBLIC SECURITIES $1,793 $ 225
OTHER PUBLIC SECURITIES (181 companies) 1,316 576
----- ------
TOTAL PUBLIC SECURITIES (191 companies) $3,109 $ 801
====== ======
* - Publicly traded positions only.
</TABLE>
POLICY:
Public securities held by Chase Capital Partners are marked-to-market at the
quoted public value less liquidity discounts, with the resulting unrealized
gains/losses included in the income statement. Chase's valuation policy for
public securities incorporates the use of these liquidity discounts and price
averaging methodologies in certain circumstances to take into account the fact
that Chase can not immediately realize such public quoted values due to the
numerous regulatory, corporate and contractual sales restrictions. Private
investments are carried at cost, which is viewed as an approximation of fair
value. The carrying value of private investments is adjusted for holdings in
which a subsequent investment by an unaffiliated party indicates a valuation in
excess of cost and holdings for which evidence of an other-than-temporary
decline in value exists.
