ML17299B301
ML17299B301 | |
Person / Time | |
---|---|
Site: | Palo Verde ![]() |
Issue date: | 06/10/1986 |
From: | ARIZONA PUBLIC SERVICE CO. (FORMERLY ARIZONA NUCLEAR |
To: | |
Shared Package | |
ML17299B300 | List: |
References | |
NUDOCS 8606130106 | |
Download: ML17299B301 (514) | |
Text
PUBLIC SERVICE COMPANY OF NEW MEXICO Sale and Leaseback Transactions with respect to Palo Verde Nuclear Generating Station Units 1 and 2 (Docket Nos. STN-528 and STN-529)
Financial Information with respect to Prospective Equity Investors June 10, 1986 8606130106 860610 PDR ADOCK 05000528 I PDR
(
TABLE OP CONTENTS The Chase Manhattan Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 1985.
Quarterly Report on Form 10-Q for the quarter ended Mar'ch 31, 1986.
Citicorp Annual Report on Form 10-K for the fiscal year ended December 31, 1985.
Quarterly Report on Form 10-Q for the quarter ended March 31, 1986.
Emerson Electric Co.
Annual Report on Form 10-K for the fiscal year ended September 30, 1985.
Quarterly Report on Form 10-Q for the quarter ended December 31, 1985.
Quarterly Report on Form 10-Q for the quarter ended March 31, 1986.
Mellon Bank Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 1985.
Quarterly Report on Form 10-Q for the quarter ended March 31, 1986.
0 Q o rl~~~
SECUfQTIES AWO El{GIAN% COL1ISSIOfl ffaSningtanp O.C. 20549 Q..
FOOl 10-K REPORT PURSUANT TO SECTI(N 13 M L5(d)
'NNUAl.
lF 11IE SECURITIES EXi'IIP4iGE ACT LF 1934
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'.'... For b>e fiscal gear ended O.ce..ger 3Ls L9s)5 TilE ulASE W'mlATTAN COswulATla>
(Exa=t nane Jf registrant as specified in its cnarter)
Comission nuouer L-5945 file lf( par, 7
'~p~i".~>,,
'(State
.incorporatiun Or Otner Q>as ~
JuriSdiCtipn ur organization),
tlannattan Plaza, Of, '
-, 'I.R.S.
'Zip Code)
EnplO/er ~gSSSF 0 Identification
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Na/QX~ ..
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"=~- +p gpss'.,yp) ty
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<>v (Address uf principal executive offices) . .'7 j43 Q 5 @so" Registrant's telephone nusuer, Including area'code:
so"urltles testator 6 pursuant. to'se tlon l2(o) of bre Int:,,
212-552-2222's y wsse'of caen sacnanp '..
67 '.
ffs f;;SO't..
str~~ ' litle of eacn Class' nn <<ntnt tstereo g'.-:i.
l;
'ou
-'~~~"'.SQja 7'l,nut'gQ"~.,,
' Preferred Sts. k, 6 3/4X Series arete:rel Stocu, 7.6ot Series C B 'tf Yore Stock Excnange fora Stec< fstcnanpe Prof'erred Stock,>> 10 1/2X Series 0 . Nev York. Stock Excnange
. Prel'orred Stocase Harmattan Bank, N.A.
Assgned ug Feglstrant the Yorw Stocx Excnange t 6 I/2X ConvertCoLe 5&ordinated $4 Oeoenttures Oue 1996 Ne~ York Stock Exc>fuge Floating Rate SuJordinated &tes Oue 1995 N'~ York Stock Excnal)oe a
Floating 64te Notes Ihe 1999 Floa irg Rat Wotes Oue 2009 Ne~ Yore Suww Ex'~)e Neo Yore Stock Excnautt)e I>> r Floating'Rate Suuordinated Notes Que 1996 f8~ York St+:x Excna~e '"
j7 ExtenJaolo Nates Oue 1997 W'~ York Stock Excnaitje S'=urlties registered pursuit to Sectioi 12(J) Jf'n A".t: None.
1>>dicate ug cnecw .sark vtictner tn registrant (1) nas filed all roports reg~lred to ue fileJ ug Section L3 or 15(J) of t >e Se"urities Excnange Act uf
&34 brin) toe precedlnd 12.iontns {or for suan snorter period tnat tne registrant ~as required to file suan reports), and (2) nas ueen su>Ject to suan filing requireaentS far tne paSt 90 days. Yes 2 th Tne nailer of squares mtstaedintd of tne registrant s Co~~on Stock ($ 12.50 Par Value) vas 70,73',L23 snares at February 27, 1906 Toe aggregate market value of toe votin~d stock neld og non-affiliates of tne registrant afsounted to
$ 3,323,0037000 at February 2/, 1986.
GOCLklENTS INCORPORATED BY HEFEREf FACE>>
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Cucumnts Part of Fern 10-K Inca orated into Tse Crease 7%aiattan Corporati.m AnnJaL seaport 1935 l aC't I, Part II, Part IV Tne Q>ase .4aruattan Corporation Proxy State~t. fcr itS 1936 sAnnual sloetin3 Part III
'uan documents are incorporated nerein onlg to tice extent specificallg set fortn in response to an 1:ea ner in.
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'PART
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Item l. Business.
)~gk:~, General Infarnation " ~
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ihe Oiase Manhattan corporation (the "company") is a bank holding company
'i)ich was incorporated in 1969 and whose principal subsidiary is Tne Qiase '
~J.-,:.~4i> ',,','o ,
Harmattan Banc, N.A. Tnraugnout this docunent the term "Corporation" refers
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-~~gF ., Tne (hase Harmattan Corporation and its subsidiaries and the term "Bank"
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- refers to Tne (hase Harmattan Bank, N.A. and its subsidiaries. Tne Lung 1
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., whicn naintains its need office in k<<York City, pravides a full range of
~hV~~>".. ','; commercial banking and trust services. Heasured by total assets at ~ember third largest in the Lhited States.,
31, 1985, tne Bank was one of'ne largest camercial banks in the world and
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'he I
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lhe Corporaticn has a number of other banking subsidiaries wnicn also"
- . ':;.;engage in a range of coaaercial banking activities. In addition, nanbanking
>>'subsidiaries of the Company engage in mortgage banking, coemrc'ial and.
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" consenter financing, discount brokerage, investment advisory and other
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financial services..
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I Tne
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Bank's domestic branch oCfices provide a wide variety oC services wnicn are designed to assist individuals and small businesses, as well as
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serve large domestic and multinational corporations. Constr and small '.,p~
.business services include numercus types of savings accounts, cre king accounts and honey market deposit accounts, as'ell as installment loans,
-.;vf'a lines of creditaccou, nts receivable and other aseatukssed ftnarcing services,
- ?V<<p'.. ~ Bansukf-thon-, electronic hcce banning and safe deposit facilities. Bve .
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ttcpany offers otner consuner services including the issuance of Ovate
~~arnattan VISA Travelers'heques. A subsidiary oC the Company, Tne %ase Hamattan Bank (USA), N.A. ("&9 (USA)"), issues (hase Hanhattan VISA credit caMs and these lfannattan sa tercards Comer ial lending div sions of the Bank, operating on an industry basis, provide Cinancial services to customers in practically all industries. Tne Banc draws on-the skill-and expertise of lending and staff depart sent officers to provide specialized services designed to meet custanersg business needs.
In addition, tne Bank's global cash nanagement system enables corporate and institutional custaners to obtain directly multi-account balance and transaction information, transfer funds and nanage debt and investment Approximately 3,000 ccrrespondent oaracs located tnroughout tne
'incoln maintain deposit accounts with the Bank. In 1986B the Banc and lhasa (biter'tates
,".VQ<. First Banc, N.A. ("%ase Lincoln" ) will begin ta operate an automated I,
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<< ttt >>>>d v,vga ~,t <<~ I<< ~w Mne ~y$ .~n ~vp tu 8~>> ~ ~
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! r clearing nouse (AGH) through a new subsidiary, the (hase Autcmated clearing
- ~.p~: =~~"r House, Inc. Tnis will enable tne Bank and (hase Lincoln to reduce operating costs and eraance the services provided to tneir cust)xners.
Tne Trust Oepartsent of the Bank administers estates, personal trusts I~gc~3, 'ens Ion and prof 1 t-snar ing funds, and provides custody and inves tnent adv services. It acts as trustee and 1 sory
~
of bond issues and unit trusts, semis as
~,transfer agent or registrar for securities, paying agent for dividends and interest and agent for subscriptions and redemptions. It also provides a
~'.,4"',=~4.~ : dividend reinvestment service for stocxnolders of publicly held coroorations.
Other subsidiaries of the Cozporation LncWdingg these LLncoln', provide some or all of the foregoing services.
- Tne Banc or one'or nore of its subsidiaries is active as a dealer in U.S.
+:.ping:,ovssnsent and st",ts snd auniclpat securities and is a na)sr undervrltsr ard,; tf,P'...'+"it
'Frt'o't-j *; -,".;'," distributor of s:.'.e'and'ocal government securities. Tne Corporation's g ",~<~~6>~ .
vorifhtlde cerchsn; ranking activities"are consolidated under'these Manhattan:; -; . ")tt'if,,h!a)
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ll gagltal ihrketa'glcldinga), Zne. ("Ihldinga"), a Strtald)sorer Subsidiaries of Holdings offer merchant banking and investment
",)'rvicos and engage,in certain govornnent and municipal finance activities",. =) )",;.: ..".f)',)!
,.;CHB (USA>"s.'a'wholly'wned banking s'ubsidiary of the Co!zpany,tthat"". >'
thO Sank'.:., V ..:.).it:",">>t-."
banking
'~
- ! c)xz))encod operai. ons Ln'1982, extends credit and offers )zoney mazket depos1ts. ~-)-,p)'-~;,
- ~!
';"'--.'.. and
."'-'..'. 'to consumers nathawide-.free its office in the State of Oolawere; ""(ha Consumer,Services,'nc.!-("CUSCS"), a wholly owned subsidiary of the Company, >'..)".
o,lf.S.:.:;,;:<~):; >")3, its subsidiaries with offices located in eleven states,l also extend.'~. j., <<.."~.:;<.',j '3';.'.)', '-,,.'),',.'<~j~~~,.
Rse'4.'Company g'.a subsidiary of tne Company acquLred in "190K, 'offers','.', f~.!.;jpI'0')., 'g~~,. >>
discount brokerage services.. Other subsidiaries of-the Company, such as.,Qiase1;,.',j<.'-,.h<i '. "~~~+
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...:. 8xne Hortgage Corporation, are engaged in domestic real estate and zxirzg~t, j,~ .".p j;.'. -';-. ".<.
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-. A separate subsidiary of the Companys these Investors Hanage!mt!'."f )~)')',-),'I::.I:"-";~,:;,
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- . Cozporation New York, provides investment-related research and Lnvestmant'j;:'"! -, .~ '
advisory services for employee benefit fund; charitable foundations and,. ;,,'; .
" customers,. !,
- I) '"'oreign
,...,. %ring.the second quarter of 1905, the Tetany acquired six Mo savings'. --.-=*'.
,: and loan institutions wi.th total assets of approximately $ 450 million ard .
and converted tnem into a whole owned correzcial bank raved (hase of (hio. Rring the fourth quarter of 1985 the Oompany acquired three. ~ ..'...
Bank......-"..r
-'erged
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savings and'oan institutions with total assets of approximately ~700') t):6>'Hazyland
)Pg~j million and nerged and converted them into a wholly owned cz!aaezcial barA
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- '-.,g.'y'gled p~ ru' g
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s lh July 1, 1984, (hase i4nnattan National Corporation ("CHNC"), a wnolly o~ed suosidiarg! of tne Company, acquired Lincoln First Bank, N.A., renaned "G>ase Lincoln First Bang N.A." ("Grease Lincoln")g tnroug.. bie g~~~'," nerger of Lts ~ye<
parent company, Lincoln First Banks Inc., into CHNC. (hase Lincoln, a cxnezcial be oased in Rochester, %w Yorz, nad over $ 4 oiLlLon 9> assets at p+~. 'o'ltnstate tne tine of tne acquisition. Subsequent to the merger, chase Uncoln sold Lts ilaw York branch network to tne BaNc ~ At tne same tiae, (hase Lincoln acquired tne Bank's upstate brancn network. At Cecember 31, 1985, the
~
~,
banic and Dase Lincoln nad a cotmined total of 330 domestic brancn of CLces in York State. s
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International'ctivitLes a
~
'-~g International commercial banking activities are conducted by the International Banking Sector of tne Bank, headquartered Ln New York City, and
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foreign subsidiarg! exf associated banks and trust companies. International banking activities are, also conducted througn (hase Bank International an Edge Rt banking subsidiary headquartered in Delaware with
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branches in Atlanta, (hicago, tbuston, Los Angeles, HLamL and San Francisco.,'pss~;
Ihnugh loans, letters of credit, acceptances, collections and foreign
-.g's/K-'t , ' exchange services, tne Bank assists both domestic and foreign customers Ln transacting business worldwide. Tne Ba& maintains a comprenc."eslve network of ~
correspondent relationships with foreign commercial'anks and serves as the principal depository Ln the U.S. Cor nany foreign central banks.
1 aadority oc the!!ank's inuestaents in banking ano rinanoisi 'nstitutions
~gb~'.
- c'.'t'~
- '-" "care and trust companies, wnich conduct tneir businesses outside tne lhited States, nerd tnrougn prese kacnattan gcerseas panning gorporation ("gccag").
', C<CBC is an Edge Act corporation witt> its principal oCfice in Newark f
'cc.~
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! Celaware. In April 1904, CHOBC acquired substantially all (approximately
'~j(Pf
/ 68.5X) of the outStanding mares not already held bg! CHOBC, of thderlandse
.." ~ c Credietbank, N.V. ("N(3")g with headquarters Ln Ansterdam, Tne Netherlands, and witn assets of approxinately $ 4.2 billion, net of intercompany accounts "p~<<4, ', with the Corporation.
In 1985, QAG3C acquired Banco de FLnanzas oC Hadrid, Spain with total y.- assets ot ap~ximately $ 265 million and six branch ofCices.
V During 1905, a subsidiarg! of tne Banc acquired a 29.9X limited partnership interest in Simon Coates and a 5X limited partnership interest in Laurie, f
Ec
~g~y":~nay. ktlbaCSC a Cbnoany. Sinan a Cuatea and Courts, CtibaCCC a COOPany are Cnndan stockbrokers that are members of tne london Stock Excnange. Tne Bank plans to
! increase Lts interest in eacn of tne two Cirms to 10(ÃC Ln 1986, wnen permitted by the london Stock Excnange.
During 1985, the Banc and tne Australian Hutual Provident Society ("AkP"), M '$
Australia's largest insurance company, receiv& approval Crea tne Australian regulatory autnorities and tne lhited States ban< regulatory autnorities and began to operate a full-service bank in AustralLa. CHASE N% Bank, Ltd. Ln c)t~djj",~'~t~~, wnicn QINC nas a 50K interest, conoLnes investment and coraercial banking
- >-!p'L)~~;-"p, witn securities trading, treasury services and consucaer banking services.
.,;vg r, 3 c >epee "F
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vfvvriv$'yt Sv v'
Infornation ultima respect to toe international earnings perfov~ance of tne Corporation is included Ln'"t4anageaent's Discussion and Analysis of Financial
,j:,5..hg Condition and Results of Operations" beginning on page ?2 and in Note 10:
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"International A:tivities", of tne Notes to Financial Statements in Tne &ase Manhattan Corporation Aeual Report 1905, mich is filed nereuitn as Exgilbit Mg p<g.'-"~~6 rp@';~
~,
13 (%e Annual Report or Exhibit 13) and sucn information ls incorporated nerein by referen"e.
Gape tition Tne Company, tne Bank and tneir subsidiaries compete with various fLnancial
'nstitutions, ranging from leading multinational bank holding companies and tneir subsidiaries to local thrift institutions, as ~eLL as securities 'brokers, . A.,~~'.
~,m p . ','nd"xwritersg government agencies and other businesses providing financial services.. 'nc Bank and other baaing subsidiaries of the Corporation cohpete for deposits arith other banks and for otner sources of funds vLth botn bank and nonbarwing institutions vnicn are'not subject to the same regulatorl
- ' restrictions and which have intensified the competition for funds botn p~~ "
domestically and abroad. ~ v ~
'v I
A ccnparison of tne freer of people*employed by the Corporation at thcenber 31g 1905, 1984 and 1905 is included Ln Management's Discussion and Analysis under tne caption "Otner Operating Expenses" on page 29 of tne Annual
~; ',
Report and sucn information is incorpor'ated herein by reference.
".i~;,i+~+:: ' Statistical Information v
't De following otatistical information concerning tne financial condition and operating performance of tne Corporation is included Ln tne Annual Report
$)~~N:-
and sucn information Ls incorporated herein bl reference; page numbers bolo~ P,";.-.;
correspond to page nuaDers ln the Annual Report. .
v
~ ~, i + v s
iy . gi trtooLTon of assets, tiagititias, page: 68 Caption: Ovarag"e n ".~'. and gtoosnoidets'ootty; in'.crest ' gaiavoes, interest and Average Rates and Interest Oifgerential Rates - Taxable Equivalent". ~~j~>
Tne Effect of Q>anges in Average
' Page: 26 CaptLcn: "}ht Interest
, p'--.'g Balances and Average Rates on . ~~erne - Taxable Equivalent Basis Interest Income Increase (Decrease} Ebe to Q>anges "
~g+P/g; ln Average Balances and Rates".
Percentage and of Total Assets Total LiabLlities
'age: 24 Caption:
International "Domestic and iterations-Average
-~"~i~~ '
ty'TvÃ+$ ,sa Attributable to Foreign A sets by Geographic Region".
Activities e
on tne Basis of Averages ~e".d v
j v v i t t giv+ g vv 'r
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QrM (CW'$
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..I I Investment Portfolio Category ',
Statistical Inforna tion Carrying Value of Consolidated
- Oocnc Value by Page: 67 Caption: "Consolidated Sugary of Assets, Liable.ties and Staakhaldera'quity" Page: % Caption: "Invesbnent
'Investnent Securities including '
Securities at Decenber 31".
futurity t5stributions Weighted 'I Average Yields and Estimated r(armlet, . -'f,';: *
~:i, (
~ '."l jar"$+g alues Loan Portfolio - Types of Loans = . I
' Page: 73 Caption: '"Consoli'dated i ' "
,'...',((;, 1,',.",,'. >'"ii.'oan Balances by Typo and Percent-age DLstributian, N j,
ihaturities Sensitivities of ' ": Page:. 72 Caption: ~'Selected'aan '"." (="; '" ("c'-.
=
Loa'ns
.: Risc. Elenents;:
~
and f;,",i;..i-" " "'i to Ranges in Interest Rates;:.> i". Haturities and Sensitivity to i, (",';:,';,'.l Page:
Olanges in Interest Rates
. .- .,';;;.f;?.f.i-'
':.:;:; .;"..'"'". 37 Caption: "Ramcrual, '; "-"i 'i'i".i',f:!
'.f'4 i,'";"",i:,."" ': i '.~q>!i'(:,Cross~rder Ktstandings thicn (i" =>>"i":i'
" 'i".",""..i: i'".'; f"i',":i; .~'>"'." .','i~,."Cross~rdor (htstandings Betueei,'-i.-" ~fl i:.' 'P(poli.(g
".,.! (i - "('...",.:;",",",,'i"'75K and 14 of, Total Assets~. i:-~:, ': f(v <!->>
'pfxH+i'c
"'Suenary of Loan Loss Experience .
-.' Page: 71 Caption: . "Consolidated '~,',(;',
i,'- i i Analysis af Loan Loss Gcperionca
'Allocation of the
'i, ',Page: 28 Caption: "Allocation 'af" " t".
~
for Possible Reserve Loan Losses '>>~ (
i the Reserve for Possible Loan "Lasses".
i',, ~
.Coposits .- lypes of'hposits ~ ..:- <<, Page: 6B Caption: "Average,
- 8. , ~,
"i Balances, Interest and Average.
Rates - Taxable Equivalent"..~ ~
(I
- i4atur ty Distribution"ct"Tine Certificates af'oposit
'istribution 'age: 4) Caption: %futurity
. of Tiao 0:posits of
$ 100,009 or t4are".
Return on E'quity and Assets. Page: 74 Caption: "Financial'; 'j" >
Ratios".
Slort- Tean Gorawings Page: 41 Caption: "Selected;Funds
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Supervisian and Rag Jlatian
%ate Companrr Ls a baric nolding co~any uitnin tne neaning oC tne Banc rbiding Company Pct af 1956, as amended (tne "Pct"), and Ls required ta file with tne Board oC Governors oC tne FederaL Reserve System (tne "Federal >>qlg<~c~>>
Reserve Board" ) an annual report and sucn other Lnformation as may be required pursuant. to tne Pct. Tne Company Ls subJect to tne exanlnation pouer of the Federal Reserve Board.
'\
thder tno Pct and Regulation Y ol'ne Federal Reserve Board, as in effect an Cecember 31, 1985, tne Company, uitn certaLn exceptions, nay not acquire direct ar,indirect ownership or control of more tnan 5X af tne voting snares of any barsc witnaut tne prior approval af tne Federal Reserve Board. The Federal Reserve Board Ls not autnorized to approve the acquLsition of any banc unless Lt finds tnat any anticompetitive effects of tne proposed acquisition
'are clearly outueigned bg the probable efCect af. tne transaction ln neeting tne convenience and needs of tne corrrrrunity to be served. Tne Federal Reserve Baard is pranibited fram approving anI application ay a banc nolding caWany to acquire voting snares af any banK Ln another, state unless such acquisiticn
. Ls specifically authorized by tne laus of such state or unless, under certain circumstances, such banK Ls a "failing be". Mile an increasing never of states have adopted laws authorizing certain acquisitions by outmf<<state baec holding comPanies, Cew states Permit unrestricted entry brr barC holding canpanies located Ln tow Yoac.
f
.r f RSrauant tO the Pat, tne Caapanjr nay nat engage Ln any buainaSS Ouer tnan
,nanaging-and controlling banxs or furnisning certain services and may not acquire voting control of nonbaacing corporations except tnase ouslnesses or services unicn the Federal Reserve Board deems to be closely related ta.
oarucing. Suogect to oo:aining tne prior approval oC t>e Federal Reserve tne Company also may acquire voting control of'onoarvxing corporations
'oard,
,engaged Ln suer> activities. In naKirg any su"n determination, tne Federal
,lReserve Board Ls required to consider unetner tne performance of'um
- activities bj an aCCiliate oC tne Cospanj can reasonably be expected to produce benefits to tne public, sucn as greater convenience, increased competition, or gains Ln efficiency, that outueign possible adverse effects,
', ~
sucn as undue concentration af resources, decreased or unCair competition, canflicts of interest or unsound oaa<ing practices. Further, tne Federal Reserve Board Ls enpouered to differentiate between act'vities ccrrereed de novo and activities cadenced bg acquisitions, ln unale ar in part, oC gong concerns.
The Barm, as a national banKLng association and men"er af the'Federal Reserve System and Federal Deposit Insurance CarporatLon, Ls subject to supervision and regulation oy tne Conptroller of tne %rren"y and tne Federal Reserve Board. Sucn supervision and regulation includes periodic examinations oC tne Banx, periodic reporting requirenents, limitations an tne investment and otner pouers of. tne Banc and regulat'on of'ne" estaolisnment and operation of brarms.
See Hate 16 af Hates ta Financial Statements an page 61 af tne Annual Report for a des"ription of tne Banx's, %ase Lincoln's and ccB (UsA's) legal 6
(~sr $
(
w~K~+
f+ ~: ."'y gtt,g, ',>>' .-",~$'M 'v.,'%<<,'....,;-g ','~ jQ$ r '*.,P., ~~
+~"~. -~
I rAI. ~ t I ffnftat'.ons p rtaining to the asounc of dfvfJcrds that can be paid to tha . p@t".-'-"
Qaapany arH the extent to wnich the Bank can finance or otherwise supply funds. -
~~=',g~.
to its afCllfatcs.
The Gx1pany, the Bank and their affiliates are also sub]ect to restriction>6 .
respect to issuing, floating and urderwrftfrq, or publicly selling or
~It;P>-"-'ith
'K~.S wcurftfes ln the United States. 'istributing;
.~~6~ " ~
Aegufatfons faplenentfnrJ the International Lervdfng Supervision Act of 1983
("ILSA") require feJeral banking agencies to Jointly determine when and to...~b:s'~;~:','hat extent bankfnJ institutions arc to establish and naintain special
': >r .'eserves against certain foref>Jn loans or other foreign assets. Reserves aro
- ,"' rerCJfred a+never, in the gudgeaent of the federal banking agencies, tea
~
quality of these loans or assets has boon inpaired by protracted inability of
, public or private borrowers in a foreign country to naMe paynents an th ir
- , external,indebted'1ess or no definite prospects exist for orderly restoration
,,'ill ofdebt service. Such reserves are to be charged against current inca not be considered, as parr of capital and surplus or allowances possible loan'osses for regulatory, supervisory, or disclosure purposes. In
'. aJdltion, no banking institution is allowed to cnaeJe, in connection with the ", 't'," f; for, arrd
"(',
r
"';q.;.~c"'
', +~~~+g restructurfng of an international'loan, any fee cxcecding tshea of restructuring unless lt aaortlzcs such fee over the effective lifo of, administrative',,>.est I >'
gg '",,of'apital fordirected ILSA also thc federal bankinJ agencies to establish >1fnima leVels '....L"";,F~.4 '.
- j>>~.'4 N
'r banking institutions. (Capital requirements of bank rcgufatois;", ~:" " " ~~~<+>"-
discussed on pages 33 anJ 32 of Gefoft 13, under tn caption "Capital Hanagemnt."). lhder regulatfons.of tne Board of (bvernors of the Federal f
~N!, <hserve Syste1, the afni.1+a acceptable ratio of total capital to total gross
.:...'-"+~Q~Y assets for multinational ban< hoLding conpanfes, sucn as the Corporation, ls
' 6X ard the afnfrxn ratio of'otal prf'sary capital to total gross assets
'~,'
hasf af Polictes. ., ". ": !',
- .,pi Cect Government > '. ~ ~
!'. '. <. -. ~ -. Pc~'~:!'~'W>>
~a I 3'a earnings of the Corporation ar significantly influenced by fluctuations.in ecore~fc activity, the general price level ard relative prfms ..
tnrouclrtut tli roric aeon Ay in c>.>stion,'iscal srd : orntomttct-s a>octa> ,st=t.(f by tt1e Uifted Staies and forefgn gsverrrents can have i'1portant conwqu"noes ~
tn financial pcrfor1ance of tna corporatfon. In p1rticular, tho actions 'on anJ POffofeS Of t>1e FeJeral ireSerVe BOa;J and farci Jn Central barWS aXert a
. '..."...AaJor inflJ re.on interest rates, credit conditions> excnanJ" ra:es ard assetAA -. "." .
prices. Recognizing the innerent Jifficultfes of r'orecastfng goiernn.nt benavfor and asset prices, tna Corporation endeavors to accurately assess anJ yQ~!",i>5~<4
,sana'Je these ccono.1ic and oth r risks which it faces fn tne conJuct of its business ~ Yr'At, ~>sun Aygg T It 1 2 Properties ~
Thc Gwpany's Executive Uffic and tne Bank'S rLaJ'Ufffce are located in a sixty-story building
~
owned fn fee
. ',I by tne Bank at 1 Chase Harmattan Plaza, Ik w A
\~ n S = I y
>>a c4 u
ASQQ+~fi~.m n pp+pk,>>'.,>>~~KQW+gnn. >> ~,,ZV >>~AA.,S +>,
,A>a 4
3 I
~
i York, tow Yazk 'mien represents a significant portion of tne value al'aacing PrenLSeS Owned by tne Banc. Of tOtal SPaCe Of aPPraXLnately twa nlllian
- d4;";..<
- > quare feet Ln tnls,buLLding, appraxiutelg cwa-cnirds Ls occupied by, tne Banc .yei!>>"','.-.
and cne Canpang arvt tne renainder t,s leased to tenants. In 1984, tne Ban<
3 pur eased "a 350,000 sq. Ct. CacLLLtg in Late Success, Long island t'or'se as a
" processing center. Tne Bare also owns Ln Cee otner banzai~ pzenlses, principallg Ln overseas locations awe as England, Puerta Rico, '~among, Panaaa and Brazil.
a~~e"",i~
" .'nclude Tile Bank Leases space occupied bg nang of facilities used Ln its its bran"n offices and danestic and foreign operations.,lrtases of prmises a lease, expiring August 31, 2000, witn options to renew to Che,gear 2030, Car approxiaately 1 nLLLLon square feet an 21 I'loars in Cifcg-storg
','~ ~ CMg0 building at 1 t4sw York Plaia, few York, hhw Yanc. Ihe Bank hasa an .,
. purChaSe tne grOund leaSe and the entire buildLng at 1 various dates in tne Cuture. l Tne LLrx:oln First Tower, located,Ln
~ option to Yark PlaZa Cn . a<';..."., ." >:d.'.~
~tr.'r, s t,.;.';;i';. ~@>>>~,.
~ .,A" "~
, =.d. ~, thW YanC-LS the LaaSed headquarterS Of Q!aSe Linaaln.. tt':. ,
3Various actionse and'proceediiwts ara pending against tne Conpang,rene Banyt '.'y,;,'.,)>>'t, i, le ind Certain af 3tneLr.SubSidiarieS in whioh ClaiaS far Subatantial CXmey Q are,ass3erted Hanagenent oC tne Coapany, after'onsulting wicnilrdgsl';".vf'jb ','"..:'anages counsel,; ls.of the opinion that che ultinate effect on the corporation of. alL .'.".,; '<t '!j'>
- iL~.Z actians and 'proceedings would nat be aaterial Ln relation to tne: -4; ..' ',.:":'.i 'endirrg i\0 financial position ot'"the Corporation.Ihese actions ard proceedings Ln"Lude;.). t j,.'":!'.
I)s
'tR 3
Czrioanies Inc. et al.v.- Continental ZLLLnols HaCLa".."L Bam ard--Trust::,'!',.; '!,",,
an a i. Lcaao ec,a ., tz! cod tates wrupccg courcd Soucncrn 0&strict sg 'l'i, C-'.l"" s o exas,, tctuscan v s on, cadenced 0 caber 9,- L483) which Ls an adversary ...".y "<,:,-'>>j'k~ P' Wc)/$$ & Proceeding cormenced bg QR ConPanies, Inc. and affiliated entities ("QtR")>>r,, ! ', "t,:,= '.PP~~ A%'
under rapter 11 ot'ne Barbcruptcy Code against the Bank and otner; Lendezs to -" -'..::
t QtR Ln whim QtR alleges cnat cne Game wrongfuLLg controlled and dcainatcd QN a>~!"'i
- and lss a))ales ind seeks,,Lle dl alley"ance el'lly slain )lied ny sne Banc ln;
'-:,'pi",
tne banktzuptcg pzaceedir@s within>>ici>'nis proceeding was cmaenced;i -sasIyi.)ae equitable subordination cf any sucn clair', avoidance of alleged fraudulent;;,~;r '.
transfers and otner zelief e Otner adversarg proceedings bzQUgllt by GHR
,against tne Bank and otner lenders ta OttR seeking substantially >ne sarx!~ ~ - I"':"-,: '-.
relief are pending Ln cne st Ccr~rc: QtR Cas anies Da. et al. v. Ba. Je.',:.
dP~+ew a<<leg Paribas et al., (U.S. Dist. ct., S.D.N.Y., camenccd ~caber 13, 1983 is,a
'case against cnc'anc and t~ atoner Lenders to G!R "tne Baric violated Federal'antitzusc laws and FederalLnbaacing wnicn Lt,is aLLerddt.that,".-..., .,,;,.... ' -:-'-,:4~
Laws and that the '",,t P~P~
Banc wzongfullg controLled and doninated GiR and 'ts affairs. Actual dmagcs "
"-S4 Pgs tne aaount af SL billion are sougnt and punitive daaages are aLso deaanded. ~
~
ff";'n
<<a cv4y Iten 4. Suhaission ol'atters to a Vote of Securitg Holders... tg-t s;."-.>.-', ) ~
pp<<
3)nay~/sad Tne Coripany did not subnit ang natters to a vote of security nalders: .'. '.
che last quarter of 1985. "'uring
'.t 3 I
, ~,
3
~ 'I
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'~p~:
'3
~
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)33 y'<<C ) 'I ref
,t 30~ ~ 3 3
~ 13 I
PART II Iten 5. market for RegLstrant's Coal Equity and Related Smolder
. ~, Hatters.
Infornation setting forth tne nign and Low sales prices of tne Grnce Sta& for caen quarterly period during tne past two years, tha approxinate nunbar of holders of coanan Stock and tne amounts aC dividends deClared On SuCh Caman SCOCk during tne paSt tva yearS iS preSented Ln tabular Com an pago 75 of Exnibit 13, "Stocxholder Data", and sucn information Ls incorporated nerein by reference. Infornation setting forth restrictions on the ability to pay dividends on tne Coapany's Comon Stoic Ls presented in Nate 14: "Calm Stockholders'quity" and Mte 16: "Regulatory Li!nitations" of tne. t!ates to F'nanciaL Statcncnts on page . !
~, . '.
60 and 61, rcsoectively, of. Exnibit*13, and Ls.incorporated herein by rcfcrenceo>> (
'ten 6., Selectod Financial Data.
Infarction ccncorning tne Corporation's sele"ted C! nancial data Ls =
~ set Corth on pago 23 af Ext<ibit 13 ijndcr the caption "-Ssmary of'~~ted
".': Financial Data" and Ls in"orporated nere~m by reference.
'ten! 7. Hanagment's Discuss'.cn and Analysis of Finamial. Cond'tion and
', of gcrations. 'esults.
j Hanagemaat's discussion and analysis-af tne Corporation's CinanciaL -
condition, re"uLts of operations and cnanges tnercin, Ls set Cortn an pages 22 tnrougn 41 ol'x!>Lait 13, and is in"arpcrated herein by reference.
VIV Iten 8. Financial Statcnents and Supplenentary Cata.
"The cansolidated statcnent oC coalition of Tne (hase Harmattan CarPOratian and SubSLdiarieS, at Oeomber 31, 1905 and 1904 aS wCD aS the.
related baLance sneet uf Tne Hase:wmattan CorParatian (GraPanj! thiy) at
- (hccaaer 31, 1905 and 1984 and tne re~ated statenents of Lnccce, cnangcs in ac~on stmmalders'quity and changes in financial position Car eacn j of tne years Ln tne tate year period ended Occ~er 31, 1985, tag~=acr witn tne related notes and the report of Price Matern<use, indepenaent
/
~
public accountants, tnereon, contained on pages 44 through 50 arrl 55 tnraugn 65 of Exhibit 13, are incorporated herein bg rcCcrence.
Information related ta the inpact of inflation and cnangina prices on'the Corporation's consolidated financial statement,s is contained on cage 79 af Exnibit 13, under tne caption "Financial Reporting a.d Analysis oC toc Effects of Kanging P"icos", and sua in!'or,.ation is Lrx:arporatcd herein by reference. OJarterly financial information fcr tne two years ended Oecenbcr 31, 1935 is set Cortn an pape 70 oC Exnibit 13, and suan Lnfarnation is incorporated nerein 'u, aefercnce.
9
> << ~ I II%>> a.
I) l~g Iten 9. Cfsagreements on %counting and Financial OJ,sclasure.
j~t<<-a
~,r ~
Tfie Canpany ..~ nothing to report under tnls iten.
Patt III
. Iten 10.'irectors and Executive Officers of the Registrant..~ >><<>>>I/k Tne information called for by tni.s ftefs is sei. Cortn in tne Proxy State)sent of tne Company for i.ts 1986 Annual Heating under/no caption "Election of Ofrectors"f and sucn information is ~~wrporatiM nerein oJ reference. See also tne information set forth below, wnfch information>>
fn accordance <<ith tne instructions to Item 401(b) of Regulation S-K, -. /.J I !
shall be deem& to be a portion of Part I of tnis Report an Form 10-K. ~
~ ~
I I
~gil~
~
Executive Officers of tne Campanj I
Tne following fs a list. as af !Arch 1 1906 snowing tne names and,:,J'>> >:.'. "
ra f
,, or oCC Jce with the Company held by eacn of r.ms and tnt date Crom wnfch
'said office has been continuously held. There are no family refatianshfps
,.: between any af tne principal executive ofCicers or directors. Lhdar the *," '.. ~
By-Laws, the chairman af tne Board, the President and tne Vice (haft+ af )/4I M the Board hold office until tne next annual organization meeting af th arjgA Board. All rtner.
~ I ofCicers hold office at tne pleasure of the Board. t t/
,~ Position ~u Offices
'P
~
Pp.
I
~
Wf liard C. Butcner r '
" '9.. ."',,~,. .,'pril
'hairman of tne Board.- -"
21, 1981, Wfef" Executive Offfcer -".,
liamas G. Labrecque
=',
!) .I ",,
47 '"
Oirectar - tanuary President - April >D, 3981
&fef Operating (tffcer
'nd Oirectar - Kine 19,, 1972 t-Ig<<t
.IM IPgC%t,
.'/">>a').P'A-,
25, 1900
~
I 'I ,
. h.. t.R.. OougJ:ass, ....... 54 . Vice Chairman)aC'ne 1, 1905 and Ofrector Board'ufg I I I
Arthur F. Ryan 43 Vice (chairman aC tne Board-I tufl 1, 1905 and Ofrectar .
~ <<a.
Ant>any P. Terracciano 47 Vlcc caiman af'tne Baard-tuf)/ 1, 1905 and Ofrectara
'0.
"P='~~ "4-Wp~~ k~ja, <<1>>r1"a.
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Posltion and Dfficcs IIeld and Date 'row
'IMe Age Mnicn Hald A. Edward Allinson Executive Vice President-April 1, 1903 Janes 1i. Bergford " ~ 59 Executive Vice President - -
51I
. February 17, 1971
~ =
~
- i"g;'= <<i. Donald L. Boudreau 45 Fxecutive Vice President-Oeccnber 1, 1904 Boyle, t c~ 'A'li>
Richard J.
A. 'Mrignt Elliott ~
- . 42
.50 Executive Vice
-AprQ. 1, 1904 Presldcnt-Executive Vice President
'.April 1,, 1903
~ .L
~,
I I michael P. Espasito,. Jr. 'xecutive Vice President >>
AprQ. 1, )903 and
> ~ I g
> i Controller <<February. 1, 1976 I S
~gCC
~ I Joseph J. Nmins 54 Executive Vice President -~ ". (t January 1, PP1906 I
Robert R. Licnten 45 Executive Vice President-Oecchber 1, 1904 Wolfgang Schaellkopf 53 Executive Vice Presidcnt - .
0:tooer 1, 1900
~~0, gr+Ãj L. Edward Scan, Jr. 41 Executive Vic Pr mident '-
January 1, 1906 and General Counsel - Feoru'ary 1, 1983 Francis X. Sta4<ard 54 Executive Vice President-
, De"caber 10, 1974 Michael Uncovitz '
Executive Vice President-Oecereer 1, 1904 Paul T. 'Ialxer 50 E'xecutive Vice President-July 1, 1985 Fxcept as noted oelov, eacn ol'fleer (i) has as nis principal occupation tne r...2,/~p ~ corresponding office ~its tne principal subsijiary af tne Caupany, tne Ba~,
ana (ii) for nore tnan tne last five years nas been enployed in such principal occupation or in other executive positions v! tn tne Banc, or otner subsidiaries of'tne Corpany.
'M. Sea~ nas served as General Counsel of tne Ca~pany and tne Banx since February 1, 1933. Since 1977, Ikr. &a~ nad been a ~ereer aI'ne firn Ailbam, T~eed, Hadley h ihClay, attorneys.ltm ll. i4anagenent P~eration.
yj~.2 ~% ~
11 5;'w 5
~ SM-
.II ..:1)L+ .,
V>> ~a'., Jta P P (,.>>P' . 4 IP4Cl.,tf PPP,+ "9 .~ +~ S*r4~$ %04g C'>>>>j,'>>P' P.. BP . < . 'Vg C
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4A 'Fi .
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Infomation in response to this iten is set forth in the Proxy Stateoent of the Company for its 1986 Annual Heating under the captions "Election of Directors", "Executive Conpensation" "The Retiremnt Plan", "1978 Non-Qualified Stock Option Plan", "1982 Long-Tera Incentive Plan", "The Thrift-Incentive Plan", "Other Incentive Plans", and "Transactions <<Lth Hanaga~ent and Others", and such info@sation is incorporated herein uy reference ..
I 4
'I Iteo 12. Security thrnership of Certain Beneficial Srners and Manag mnt..
Infor~ration concerning beneficial o~rship of equity securities of ttx.'=
~>":.)9":i'>'5 Lapany by banag~~nt is set forth under tne caption "Stock O~nersnip" in the I Proxy Statement of the inforsation is incorporated herein Coapany for its 1986 Annual Heating and such '
by reference. ~5/1 I
Iten 13..Certain Relationships and,Related Transactions. ",
~
r F4
+,ljtL3W t Information in response to this iten is set forth in the Proxy Statement of' the Cospany for its 1986 Annual W:eting under the caption "Transactions <<Lth Manage+ nt and Others", and such Lnforoation Ls incorporated nerein by reference.
( 4P PART IV 1 I Iten 14. Exhibits, Financial Statement Schedules, and Reports on Fozn 8-K. t,
'a)
II ~
(1) Financial statements have been Lncluded in Ites 8 above. 1f~qh (b) The Gnpany filed a report on Foza 8-K during the quarter ended Oeceober 31, 1905.
1 Ite,~s Re arced I
,:F:"'"'+
1985 taws release anncuncLng the Corporation's earnings for 1
the quarter ended, September 30, 1985.
~
4 (c) following exnibits are filed as The a part of this report:
in this 4'ocati'on gQc~+p'f 'oehn 10-K Exhibit 3A - Restated Certificate of Incorporation p. 17 of the Company (including certificates of designation, preferences and rignts of series of
'referred Stock). >$ 4'-
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'ocation
.U<<,.iU.<<y I ln this Foza 10-K i"mrs~>>
Exhibit 39 - Certificates of Change of Address of p. 112
" ~;'. Registered Office and of Registered
'<U',
=
Agent< r<
U Exhibit 3C 'By-Laws of the Company.. ', ~
- p. 115 ~ ',". "~+jc'-,.
~... -
Exhibit 10A The ChaSe Hanhattan Incentive Plan.
1982 Long-Tera ~
r p. 123
- IbnQJalifiad '
.--.g<c,b Exhibit 10B
=.,',"'lan.
1978 Stoa< Option
<<< 1, j <~ C .. '< i U<P -,
'~i4 o,~
Exhibit 100 '- Chase lkanhattan Hariageosnt U "t.'.',j" =' In entive Plan.
i .'++@ '-.:t Exniblt 100-, For~. of Oirector's,Fee .C,.FF~~F4
,:" <<".'~Ceferral A ree~ent ~
. CU<<<UU>> rl
~l(gr hibit loEU- 'S.pplLlental R tlre~nt Plan'or " "'t:"- '~p" 165'"- ': " 'ti"
~
E
'(;",',,-, ',>> ",",',;.Tre.'chase Ha'nhattan Bank, tt.A. ', '
~," I>t(,.,<,,...'i <..-'::l,'.<'"
<<"!i I
(C.((,g rrS~A"
<re VQ<
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Exnibit 10F',-: Sujplemnt Benefit Plan of
~,- ,
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~
<I;:,"p< '167, <<
".,'-""'.; .', Il.~",<',".;;,r
",;, ' '.: (~
AU,g. ,The (hase Hanhattan BanX, N.A. ~';<U".'r.'.
Exhibit 10GI-'..Chase Lincoln First Ban(, l<.A. 1982 ~ '> p.. 169 ';i;,,'.<;.)c,'.,'.
Per, U
U-U
. 'Exhibit"!11:,-"...', Ca~tat'ion of Earnings
~,', '
'p.', 187"'c- ',-",t,,'" .'~-.',
U U r
~ Cocoon Square.
Exhibit 13 "- Tne. Rase t(ararat tan Corporation
' " ".',-:, p.. 188 <% i;'f U i r A~~Jal R p>rt 1985 (except'as to " -":,':" 'I""'f'"-"- ' ' ~
expressly inca~orated ~
'>'.-.') i;.. <:>>: -. < ',portions 1'.. <herein, said Annual Report is ~,. "~i:,'.qj.(:r: '-
UCj$<
, t lncluded only for the lnforiatlon of
'<> ~
.:. ",(r'>;-.~~>>
.<~+I <<+UUU ~
Exhibit; 22 - Subsidiaries of the Cospany. 'p. 276';,<;!:
24 - Consent of A".countants.: p.".277; .";;," .' 'xhibit Exhibit 25 - Power of Attorn y; p< 278,<
tk..ither the Company nor any of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed are party to an instnnent with respect to long-terra debt where the securities author-ized thereunder exceed 10X of the total assets of the Coporatlon., ',, ',,',!."-
In accordance with subsection (b)(4)(ill) of Ite~ 601 of Regulation S-K, . *-,.
the Conpany hereby agrees to furnish to tha Comission, on request, a"canopy-of all lnstrua nts defining the rights of holders of long-term debt of the Cospany or any of its subsidiaries for which consolidated or
(
(PA UUU 2'<<U<'U'U
~,,
g<U statements nust be filed.
unconsolidated.'inancial r,<,f<<; ~
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P~~~ '~~ '.. '-<<~w~~~~,'.y"
'p~i'-~~j: '~~'-~~.=, =. ~~ ~j~ ". ~~h,~~
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l All scnedules nomally required bi fora 10-K are olaitted oecause tney are eitner not appllcaole, tne data is not significant or tne required infvrnation is set fortn in tne financial statenents or in tne notes related tnereto.
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V Signatures I'i: CCTC<'i<<
Pursuant to the requirerents of the Securities Exchang Act of 1934, tne
~ . Banc nas duly caused tnis annual report to be signed on its benalf by the undersigned, tnereunto duly authorized.
'I
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<I'M ~ r THE QIASE HAt4EATTAN OAt(K, N,A " . ", ",c 3",-' "f;",:,i>>"
(L3333e or'8ana) '
1<<CX C II
<or r<
,. 8y 3 )
I (Ex utive Vice'.Presidentiand Controll )':, . 5="-~3>>s 4{ ., 3
- ,PurSuant tO tne require333entS Of theCSeC)uritieS EXChange ACt af,'1954; thiS,;;;~;.;;3-,.;3;,'",',<!~~,";-,.
': ~,report,has'been signedbelch by.tne folloccfng persons on behalf of'the.Gars <..' ".4j'~,~g,'"
",c"','.'nd in,,tne. capactfesand!on the dates indicated. ,,3 .".."
jc, *.'.c>', f .Ic(3'".'c ,; '.<'. c'. ~,< 3", -'ace ~I'c".
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' i'" t "~ ':: 'Oirector',. Chaiman.; '4arcn'-19 ",l&'5 '<.",",~:.Ice'c';c
',c'ive
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3
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r Oirector C.
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~iG Director Artnur F n 4~>>-gl" -&fly, Oirector thony P. erracmano ~
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tnc<eosa 'Crc<eosa< $g+str<or 10SS vs. <084 vs. <~'i<Y~~~
<085 1084 p<< '~, Forthe Year<Smhlo<<sonata 52 748 730 52.308 401 5'2.169 CSS:0tt btt 'v~w'g'e.
Prons<onfot Poss4tfetoon losses 35.CCO 365 000 2S5,CCO 10 S t<<r~
'<t, A,- Other Cpe<otrtg tncome 1.31$ .731 029,554 "
864 211 2.731.878 2.244.526 2.045.561 22 IC Od ar Cperot<ng Erpenses <<
cue f<<c
'64 S IS 30 c Per Common Earrangs Share'n<nory 5 6.39 5 4.$ 1 $ 5,48 42aa I I Stat 6.1$ 4.32 $ .22 42 1171 .~<'<< s"n 1.90
- ,9 <ar CoshiindanedsecdorecLOMo:>edy .47'r .45ss Common Stocfhofders'tsr ty at Year end 23
~a htortet src<tre at Year and Shores 0 tstondna frt t oMsondsl '1.153 68.748 6 3
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~
<tt<arogo Teal ~ets .48IL .$ 4at 1 3$ !L ~
13.6 10.1 ~ 13.1 i 35 1231 '<a@j~w'<
,Cosh Ofrtdends Paid on Consnon Stoct as o Percentage of
. Net Income <Loolcahfa to Common Sect 29.6 40.3 t.'A! Yoar end 15 at rn<aonsl
't¹re<<8aang Oapo<<ts ILaced ~th Sonts 5 4 671 5 4,35$ 5 8 6$ 9 -
<nt't ~ ISOLA<
Sect<at<as and Trod<ng scca<tnt <Lasers 61.931
~ 6.600 62.003
- ~ '$ 3.698
.894 13 78 'q's)~r,
&,~~')s'trestment Total ~ 87.68$ 86.8S3 81.921 .I
' ~P<P.',
',~V 1,353592.320 680 $ 6 CO f376 . 21'9 3 6 2.806 62 62 150 . 1591 ftedeamohfa Prefaned 5 tact F Nonredeemable Prafened Stoct 602 602 37$ ~ bl 3.705 3.359 3.051 13 10
'1
+~+fr"Yes, 1'Co<rrron Stocthocfers'o<<<ty 6.9LL 6.4sa 5.4tft Sta Iona 'n~P'~q t Pre<tory Cap tof os o Percentage of Tote Gross <assets 02 i-,'c
'AmoMnn restorea to re<tact res.tor one stoc\ spat tfactored Ion<<ory lb. 1086.
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Le! ter, to Stockholde~
To Our Stockhdders:
xl 1985-a yeor of subtler>d prep ess. profItobfe U S. crecht COIdmoriel, We etn. tt ~ed a That is the woy we woukf choloaerize the per- Chxtse h~overCordto complement Choto V15A.
fonnance ol The Chose Monhot cfn CorporatIon ced ot year encl Chose ranked os the tt'rro ~est fast year. lmponontly, tixs progress reluhed from bank aeckt cord issuer'n the Urx led States.
sofKf achievement in each motorxbonkhg group. tntematenaT y we launched a mOlOr e t tatrve ta h Tght of ovr camey, the Board of Directors expond our comumer bankeg bvseess. We pur.
h January 1986 ixreased the regvktr qvorerly chased Bcek ol Amenco'5 aedil ccxd operation in r$ Panama, lor example, ghring Chase the dcmeom cash dividend to $ 1.025 per shora At tho same share ol that xlpcrtant consumer market IflAsio, . ' ~>>'rQ>>
time, principally nresponse to the increcse in the
- ' . I morketpriceofovrcommonstock,the Board we estobkthed a standalone Chose cretkt cold "dedared a 2 for.l spit of the conxnon stock n opetoticnh Hong Kong. Ano in Europe,we stated
'",q:.
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' the form d o 100frr stock drridenc up a constxnor fhcnca bvshess n ftdtt CI>>~>P<9, I5~~rr>>:.
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"' 1, ofter the sdJt h 1985,the Corporotron earned $ 565 f5.'I vp391$ ftomthe$ 406mQoneamedhf984.
'.," - fl:!-"l -'ttceutdh 1984.Both totdcxxf pe ~shces spl ( of $ 6 39 vp frortt the $ Ik51 our
. The year wos OLO D mca QA7A5$
htortgogo Corporation,ond otx operaticn.gothtxitstvmedhptoftxk4pcr-formcncesastheyhaeasedthstrrokssinthe,
~ 9 baking sthddksry, Chcae Hone One far.
finance '
"=
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~ "I I 1," I >.1 earnrtgs werotecord5 fcC lha CcNpolatkÃl. natlonwkfe~fcnditgmarkek; 1 Ir ci,
~~%
1'ou 1! < .. ',The year'5 financiol g 'hhKJfvs hdvdedr may reccT thot wvaelyeorsogo we setout P.,
f Qi>>(IW+
'I II
,;I ' ."", r,'. Ii'Rctvm cNl ovetoge assets for Ihe year wo5.6 roI o Qtonud
~
fx 'obtxT4de Ir
- .T>>xc~or 1',", 'conpored with rfSk a yeor earhtc buSiXtsS.We Ora t)at tfr'5 bus'nets hc S, t"1' I
rr~i>>8 become prdItobks one <<e pfcn to ccntnve to-' ~
develop tfis'gfy
'; fcr the year wos l3.8Ãi, p flam 1Ql% in 1984. ~;,','h
'-Net htentst income on a taxable echxvdent Globd Bonkeg, under Anthony P.Tortocciato', ', ~
- basis<<as dmost $ 3 Mcn,up ftom $25 bruno wemodfied our structure to furthttrhtegrcmttour
~. :," "' yeoreo&sc
-'Operating income,induding fees fnm products senricm. foreign exchange ttodeg income.
'ndgahson the sde olhvestmert securitie. I 1
~
whdesdebonkng resourcesand vestment banking emphasis alavnd the by oxpond verfck'nd ovr secu'riries ttodeg operotktn with ovr ccqxrote feonce internationd.corporate.
ourn ~ %IV
,,;q$ '. "- -
haeosed to $1.3 b4ee,vp from the $
"".earned h 1984. -"-;-
930mQen
~:, r;" >
ondnstitutionol bus'eesses.we bekeve we have created o'forrridobfeondunkltxsworfdwidewhde
-Primcuy coplQ os defnodby the Federd 'de bark.h 1985.hvestment baIking ocrivities Reserve Board, ecreosed ta $6 bIticn. At year~ rcpntsenM o motor compotItlve strength cnd o
't'"
Oul'Primary CapItal to gross assets lotto stead of "-"'signieKCet Saurce of profit grawlh.t",
~j'g>>r.".P~;>>
687%, vp from 6.37% ot year~ 1984I
-Total capt tdinaeosed to $ 8 MKe year~
ovr told copitd to gnm asses ratio stood ot At r~ At the some by t'cne, opeIing we e+Knccd ovr hutmotioM our Chase AMP Bark M.n Avstraha.n wfxch we have o 50ri'eterest with that t4>>fr notice'5 largest insurance ompaary. Chose dso 9Z%,up hom S.flirt ot year end 8 ane~Hlgt ffgh,s 1984.
~medri ~d develop Chases presence e the consumer and o~eaof ovr feanciol perfolmar a was thot it res/ted from sold eomegstmprovementheach of our three
~~lkekMtede'. Vbenk0ctxxass '
- we ocq~ nee troubled sovegs ced loon asso'--
bd Bankeg and NotIond ~Ths ~ 5 aatees n Olio ondMaryfo'nd and onvelted
'nnvd report more Vydescnbes ourcccom.
5 vg ~
phhments h these three core busses.
d~ a Oese ~ol gP
'e~ C~ Also dvnng the year we agreed
~ Consumer Bankeg.under Arthvr F. Ryan, I 8 of Auonola h'ghosty estitv
~
' I expanded sigrxficanrfy ovr penclrorion of the 1M> ~>>pp II
~ iw .-'<<ii ~o v txtn with assets of SSOO mKcn And n febntaty Conrnerce.We svicerefy oocteaote the efforts kl N86.we opened Chase Berk of Ronda.beccm. benef of Chose cibeh incividuds cnd wis'n ti.em kig the fiat money center bank with o ftxf.tetvice weil in their new rates.
ccmmerctdbcnk n rhe desirable Rondo market Tho Challenge Ahead We hove launched tfos nationwide expansion Loci oig forward ftr86 otonvses to be o yecr oi effort despite contnued Ccngress cnct lear.
ccnnnung chefenge fcr The Chcse Mcnhctxm
&cggng cn the nteatate bcniting issue.fortu.
nateiy. the natcn'5 forwed.tacking states have Ccrpeot~ Att~ we expea mocest ecc begun to open their botdea to cutoff state bcnk holding cenponieL Cha50 hos thu5 b ceil cde to chance-abtttt ~-tcwed our god of cre-n much ol the ~
netoc growth to contnue n rhe Utvted Stctes cnd the impca of o t5sinibtievsty nnvxotvttent wot conme to hove both positive and 4
negative offeas cn the woricfs eccnonvc sttuaunL e
atng a nationwide con vntitctd banking fnsnchtstL Web e5eve Chase is n a pat icukttfy strong post.
kt theateadleosing,vkerewehave become a
~
tion today ro ded w:th such cn enwronment ftxx5ngvendorfeoiingbcnk,weinaeased our fn tfos regcrti v~ have pkxed txtnsidercbfe tde n new and used citaoft and smaf.ticket feas-emphasis cn cnd nssoutces cgainst the cfxsvenge through oatuisirions during the yeac of inpraring the quc5ty ol our fenc5ng pcrtfo5O- .
Board of Obectore .beh the whdesofe and consumer components.This We wefcened four new membea to Chase'5 4 on ~continuing chdfenge for us in 1986.
Board of Oitectoa durin 1985 fn'Apnk At the same tirile,we wi5 continue Io invest this year fktcuiance Fu5ec president of Amoco
~
in the oteos of our future gro th-kvvestment Carpotatktn.ickted tho Boar5L fn tune.Massa. bcn4ng, featonic bcnbng, domestic ond inter.
~Ryan. OndTemxciona were elected viat nattcnd consumer naticnd expansion
~
dusktnen of the Board. ond the Iko-and ensure that these ktvestments. i ~
. Abo n tunet,John A Hocper retked as vice heip susenombtiousgrawthkvta the lgg05.
dtakman oi the Boed and Chose's atx5t po5cy executive. Jodt Hooper cotaibuted oncntxiusfy to Cho5e 5 success during we ore ndebted to hkn.
37'ca of 5ervictL and We cho occepted the resignatktns af flap we lock lorwed to ~
The substantial pnsgress that Chose
'n 1985 positions us weil lor 1986-a yeor n whch scfxf performanctL C~ vko resigned ofter ttvee yeaa as a Btxxd member to become sener managing vvttont C ttvittior.COoioon tvvs Ovot 5xocvo<<o Ot tioor t5reaor cl Sheoaon. lehmon Btothea. ond 5 Bruce Smart Jr. who rot~ after n'ne yeoa of senrice to Chase to become Under Seaetoty ttitxoot G Obtxooaue Piotvtoiv ixvs 0<<of OOiorenv<<5 Ott~
for ktternotktnd Tnxle for the UZ Deportment f
8 Match 3. lg86 i
tP ~L<<W+g+kv, +g ~$ M/~ $
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OnSUmer ankfng Chaso's consumer businoss spans thty globe. ln 1985, Consumer Banking managed consumer lending, resldontiol mortgage banking, and discount broke~
ago businessos in $ 0 tf.5. officosi a direct
~,
'r'fsr'l~t - moil bustnessfncfvdfng credit cords, in stoffmentloans. and deposit gatherings
-'~~i's~C~~ student loan, auto,ondboatflnancfng ~ ~ '.P' j~.g~~.
y operatfonst home banking servlcest u~',g~s".~~ ond activities lnmore than 2D countries 'y gg~"j'"'
'" ondmore ccntssness find thot drect retpcnse vr.r gj pi'~~4- >>
bcnktryg, by.moil and t~meets their
- >> needs for ccstvenience ond sscvtcsLOurfng KSSi, N>>'ore sent over$ 0 macndrectmaf sc4dtottons and hcncfed over 2m8on tefepfsone cds for its
'hose
' three mojorcbect rcsponso psoductfnesscred'ti:;*
co~Chase Af~soge Csecst ondnccfonwkkt; deposit gothertnff.
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'., hn1oog the woskh idodng credt cord htvert. l' Choso aggressively esponded its bvsnoss n f98$..
tnthe&itsd5sotes.ChcseoddedMosserCcnIto its vs Oasis cno Presncr Vhsfd Cord ytddng over 13 m6onne car6nsmbers n 1985;",'
~
bcyugt.yt total domestic aedit card ovtscndngs to
~
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more than $ 3 b4aaovslseas. Ctyose bunched its'ist fonngn cunency yt$ A ccsd ning Kongs, Chose A4P hk.svsodvccd cn Acwekm cord
' ond, in Ja1ucsy l984Chose ocauised Bank of: ~:
Amoco's credit crtsd pcnfcso n Pcsscmo.
. I>> sjy&~~
A penner in odckng extra benegssto ~ ccsd. s>>
~ ~~8 me+bee tins end money, Chose ctfsrs tsavsf sav- r ngs ct hcssfs end mcrsfs,a computerize shcppng
1 A
"~lN yg4~r
. s.t ssrvyce.cnd a scw ssnrioL '
Chose scfvonsogs Cse6t a s~~e.reve@ .
p >>p fsye of creeks up so $ 25000.is Chase's sscoryd molar direct response product Nationwide mcf. l.
ngs
'nl98$ drew over 200.COG new customers. l s<<
.Sk-yrt ond ovosondilgs topped $ 800 m 8on.
Chose cbo vsed tefsphcrss endmost to attract ccnsusner decossss fscm el rrwsr s'ne cunt so its Cefayvore sutssacsy. Chess Manna."cn Bonk lUSA).
~to <U$ At s Money Monset ~vryt osiers on f>j!~self! 1/ p >>QQj everest cans so ccseumess shet outperforms stye 'cise >.
Ayr 4r average of st s rco SO VZccmmesed balks cnd r - >>fy' silslfss tosf ysocCisose IUSAt b~v ccl7tsnscncll ~
of a raw Csiowose hscdcucncrs fcoiisy ro cccom- ~
rnodoso yss gsowng bvQflsss.
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v~)4I p(ac, Jg9'v IEtlIrc~araig. paar 4>> a aI. q&aca 4.$ p gp% Alc(yacc ar A ~ ... (I IA 0 ~ Ica C3piaago,ti, . I yoIW.~S
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+ 4!.Xs+.< Fincncing Consvfner Needs:
~ . Ft ytt~g~8. Shelter, Edvccticn, Trcnsportaticn homhaNr York ta Scn ~from Boca ~
Mrneopcks. Chcse crtbrs onttntner fnonccl aer.
to
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needs for shefreceducctton. ttonaacrtotcn.ond nntstmere rhrcvgh tta consumer cornpartes.
Chase Homo hlortgage Corpora'rcn ~'rtCf cngnated mare rhcn $ 770 rniaonnrescfent~
mortg'ages n fgBS through os natcnmde nerwcrft d 25 dfces.O+4C aerwced a portkaa d &ax
$ 3 b4cn n ncrdenndmortgoffea ond pacified apprarinatdtr 30 bf fcrent 4+is of mcrtgctges for ade n Iho aecondcrY morfrrtc h fgE5, the Student Qonbnsenbegcn offenng bona sa poreres. new bona for rndn.,rcducw gaacrate. ond prcfea~ auderra dao toned
~ ~ ou~
the product rastec Wrth 24 d frees in ll states. Perscnd fncnc&
PfQ feoae ~ ban fnancnfh red estate bona. boat bans. ond fdcs mare bcn doubted n ~
tnsecaredleos d cred t ta ccnsvmerL tcxn pan dhcua n IWBS Rase C CompcrN Chase's dacaunt atter're~
sutaderY.oapred beac~cf Ne Yce.
bated aaraec Afetcndet C Co.ixcrcorcreck bdaterng rts creacnce on the Em Cocaa kaso C Comcoittr n fnked to cthe'hase fnanod
~~
serwces thraugtt such protects cs Ycfea Broaer. t be securrtet trodng aeghertt of Scours.
Chose'a home bcnang atatem ncawduda ~ menue to can-
~~ C~
Bvsneas on ncrecsnrf ahcnt af C~ s earnnca Qa$ e ra ccrrttnted Its Bcreng pavo ta ser ng rhe fvl aen ea fnanoat needs d via ~~ 'tran
~mcatotw ~ awrw a o Nrartstror nc'r dues craunct tne
'Global 6onfcfng unifies. in one whofesofe bcraness. acase's traditional corp oroto ond instttatforvaf rafotfanthfps, its rapidly growing fnvrestrnent banfcing, foreign exchange, ond securf ties trading operations. its technology based servrfce prachcts, ond o worldwide dfstrfbartfon notworfc.
Redefining the Wholesde Banking Busims h 585 Chose vtnuoiy fedehned the wlfofcscie
~
bonlc'ng buskins by marrying kwesenere ba)keg,
., Cafnvfercicf booking,and Iecfsvcbgvkased service praduas crone enrfry and deRvenng these produas gfcboffy through cxI clrhofod world net)cork.
'kaod product pxerrrrsfLcffvccs ollncre Ihcn
'~mph.,dr.. fPP cssfries. feodsrsfip n efeafanc barksvg, end vafuabfe 4ng-sfcndng refcfnonships posificn Chaseunktuefy fcr the soo change ccuursvg cs rhe An fncicf ~Cfd drunaicns ccfrsnefcid and kwestmere banks)g hove bfuned. fnregfafed gfobcf produa dekvery is fhe
'ew gomfL The rocent safe forTexffanbc of its Acnnafcfn
~
dvnion. Vcfenfrve Sands linrfed, entmpified Chose's
~
strengths kI wfvskvscfe banking.
'cv YffhnnTeman, a US. acncmer of rhe Ccfpcfafe ndusn)et urv't gowt Chose fhe fo seR
)cs drvcs)on. Ccrpcnne )dusfnes mcrshded the mergers and ocauisfncnsecpcnee cf Chase's rvvestfnere bonk)I)g Irvt in New York ond rhe, rococo wocvvocs O)coo )cvcrvtf ~
resccsces of Chose AMP Ud. kI Acrsfrato Io dose Sfy)wsooo)ooovtf wwow o)vvf )of)vvf ow w)vcvtv) c)r ocyv oc vtowovvvo)o fvvvt) fvfv Co))S ofoooc fvoooov of rvvefo)
~
As leod pfoccmefe agent for o 5220 frowsn cffeeng for Ihe Puono Rico HocnifvgPcvcnce Ccfpcfancn. Chose brought Icgefher five cr)sfina Ceo) ~
n)vof)f Iococc cfvwwvv rcvow Cwooo, Qwee~co)
)rccffo) rvcofo ~
wvt) ovc cccvcfo rfvtc Ovvtoruowcca c)vt Irors in New York cnd Puerto Rico: rhe banch. Ihe govenvt)enr ecunnt)es rfadr)g desk a New Yerk.
'he cubic fincnce recrn, rhe interest rare "swcps" crea. CÃo Ihe cvvesf Incr)r bcnfc vI Pueno RicxL As rhe inesberween fcvcfvccf soeacfrfes fade
", ~
cnd f)nonce{ mcrfcefs )r)crecsfngfy beccme more giobct.hfsirhcn dhcr)afuf cf c)snfuf)cns possess such broad produa sfrengrh ond gfcbcfreoch.
Cf)ose fs cf)col Ihe f04' lP 1
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trcefvS roche Sc>>>>cCtvr>>coeh>>cvvese.
~ >>>> o>>cciteh OVt tOr heeecvo HceA Topping Technology to Create New Products cteccior or coeii v>>oooeoo r>>h ~ Chose maved electronic bonkng forword in f985 with OESS, a unique tocfnaksgy.based, risk man" ogemont product The Chose 8ecnanic Swaps pw System-orbal service product-typifies Chasis M~
ducts w'th gksbcf fectran'c dekvory ~ties.
cfrRf'i>
'f ~ ,If for c~
'hase oticoss designed the pracbck tho first of its kincL ."
with ovtsendng short. term d "bt kt of 5200m%nor with sigrificont cash "f&9~t hP reserveL CHESS creates a gfabof data base
~s
~
of kctorest and ecchongo rates thor m'cttots
'fftrtivefar short tenn hedgng.trsrmbcod n
.ec
~
hier York, Hong Konck ond Tokyo, makes pricing ond tradng passkfe 24 hcr.vs o 0 ~
dcrtsoround tho world,Tho ccce6ont iiv'tiofresponse to CHESS ~ tostntony to Chase's tocbeog'cd copabkties n the nvostmont banbsg area 47'~gf P Chase oddod other now products n i%85, lg
~e ~rcosng
'ncbdng on electronic letter of crock t axl o tool to i ~
to s
moro than 40 Chose's eccraric tracery. trade.
i
~ ~
casft management seantuts.osd paymests prod.
ucts. hn efoctrccvc Snk between Qxse eel some 3.000 ustomees in 25 cavntnos cuts across time zones,rodvces costsond pra ~ khrarmotion for hodgkig fcrecp oicchongo invostmonts, mani.
/il. lorng trade agreornorlts. and trading socvrl ties.
New ocstaa6c products Lke CHESS that aass tt'i i tractional ines benveen sorw'co. transaction, ondinvostmont bankng product: are port ond .
parcel of the now world of giobaf whatosofe oktc r ccl+coee rr vlNjw o frarvc bonkng thar Chase:s holang la roaerno.
t fst~s,~myri e
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ttl~gt.-',e e, O' ~~~i 4nswenng the Chollenge of o i obol Rnonciol Morketploce crit A ~
mtc, 0'&ce Im The we{d is ropidfy bocomktg ccmteodccctccmeec emcee'em Chase stands at the forefront of Y/cth mpaatonrt trading operations that ~
cne dectronta8y Acti, kt cities such os
'" Vyg
- Mt y me~
ict ~.e c, W~cr posit tone~bio to trode mcny products rnmony ~ ~
I securt-',."... ")
in london fast yecr. Chase added lairs m
~ C!~
acquisition afheor }
ties taxing ccpcbtiries~ the etc c
Q.a
,:i, socuritics, c: mgetsm and UX. equities too product hne that inckrdos fanncp eccch~e,money, markets. Eunxocuririos.QS. govemrnere lssues,ond "tQ.-c.-
ftncncid futures. *, rccctc tctfee ~P bank'ng urit nIMecm In tn Nrrw York, Chose's ktvestmont V its ccpcbiRlios kl mcrcgors cnd ccstccslt ampkfiod classic ttcns,prtvore ptacemrmrs. syndccticns,cnd year, corporate firance advisory sennces.tost
~'~
I
~
300interest rom
. Chose rrccocutedmcre thon
~
ogroemenrs.alod and cunency ecchcxcge "swaps," exkng S7 beecnin eokrne.
ftcxpcndccg ta the irrportcxlco af rhe.
krvettmenr
~44,. 'r occe',
3apCneSO market. ChOSOOCcpandedirS Chose t banking presence in Tokyo. tn l985, I>>
thon el bIon tn pnvoto ptace- cekec orrongedmcre institutions. '.V.> I/
mono with Japanese finanod ~ I VI~
cnd l5 'u Ourtctcm secunrios tnxbng centers
~
~
in bio. Europe. cM
-'tc P(cvgp krvesrmont baking tacancns ~.reccmcr oec Sencmee ocr lee reeomS iteecc ec uf crees Chose's paeesr t4onh end Scub Amonco enhance 'LIIS Smeneeem ace ee lite meecct leer ec
~~(~~ Pce~
bcn'c-cnvestmenr Qsge eomceeec A+a
~
~
'to place socucrnes end to decncx 'ne pccemonns to futures.
tttettr ~
ng socvces frcm prnare c ~ ~ I IC t Iceer. 'Ir Chose's ~rmenr banbng cnd secun.
rrxkng ccpcbceries knkedby stator ch~
pauncn Chose ro fcco rho chcfcngo
'techncktgy
c,ISI 'Ccttr.
d a cbdmcrkerptaco ~th fecncid snengb. ' ' 'c Vt CI e u encotcndthecc~
4' ~
/ 0
&<gfI~+~ CkN 7700ApOd 00 4I +Wf10 707O IvOO Ooooo70 C~a~
07 Chae
~ IO7+ lee IOIIOO, CIOv70 77701171oI0710 oooecoi IoOIO IO11ol.
07@8000 OI 0 OOWveO LCO7OOOOOat 1 j +~j~gI.
, g~p'W QV~w~+
J c+~+v, QQ v7 Jg')
0'iOI PO ~
~
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~
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e u~M
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~
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Aaacaa e(
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<<<<a C<<a<<a<<e caccia <<Mcaaec( gO aaraaa ~
cia(sad(<<1(~ Cay
<<artcc CfC creraac CAUS crea(crp araraa QAQ tl crra(e<<c d 4~ycr 20~
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National 6 inking Nr.tlonal Banking ls responsiblo tor .'~'rr'~~w~r.
accelerotlng the dovelopmant of Chose's business across the United States. The .",o"~~rppm grouplsmodoup ofregionalbonking, j>'~~~>j .~<
leasing,real ostote flnanco, and trust, ~'~>~r':,~<>x~~
lmrestment, and information servlcos ~~.'.gr>>""r,'usinesses.
In !985, Chase added regional banks In Phlo and Maryland, p).,j'!qt'-'~g:.
~
@kg Sorwroo roo
~ ere or cyeorcoo ~~~ Cooocwr rw no 14urc toro urr, rroor Loower Oooo OoocroCucC rooooIos Clr<<w toceo Swocoos Csca nworoo nooooo L cmd acquired leas'ooks J
two faasklg businesses.
to New Markets orang Cser Acceptance Corpom. ',TggasytP Jl tion The Aircraft Rnanca &aua created os o rtrtrrb,;
of tho ocqverion prcn4dcs borh a pnwstu abel wndortsogram for Pftor A~t I Ccrpcntrrcn o I "
rhett finana rg fcr new andcned generd
'nd I
ovto rico oilcraff af other molv ~'crs and Third Cenrur Ieasrng.oingfr~iuppbx orci~cc ofiincssricfvtr leases.'was aequi ed by GYNIC sr" february IQS.mcaerg Cfrasornro yet cmcrhcr r to qreciohy leasing ~TIwd Century usescost-
'4 effecrive rr4emarkenng to scil its krasorg services ro
- ~ +~~r~JC
! over 500dcders ond dsrrcsvrors of oflice oqvp-menr heated rhreugf rout rho Un red Srores.
Fanned in I974 ra trna Chaso's mrrr'or w lr monv foaunng cusramers.Q.ccC in Nsr II years .
. hos gnowr ra 400 pec4e sontcing
~<7 tp(gr~(<
thon IQQOQO orcrn cfvdboso ussomers from offrcesinl2 ILS. crrres. Iosr year done.rhe.
~a company fvnded moro than $ 900 new eqnornenr krose bvsiess. or year ovrsrandngs rorded op~arly
~ in .
$ 15 b4ori Ieasng wof connnve ro b'a an a~no
~ ~
\
finoncing vehida far ~ry corrparnes sr mony ~
e.h
~r~
~W gWo idussnes. Iodung oheacL GCC wit ccnrorve ro,,
enrer new reasrng manners>>'nAtr ecpcndng rrs exrsrrng heness. (,
206 .
~
~;,'.YW.: ".
I " '" " .'.l1 Z ~"m .:
rs Qr>N~
~~ mo
- 46,F
~ p
~ ~
S@yir!i j~,<<4 <v.v.>
r
\ '
i Regional Banks Break New Gtaund r
~ r ~<
ies~ rc~ p~.
~ r< ~
r 2 <g~(p+gl g Rve y'cat stops hove mowtd usso doser to its goal d csrebksfv'ng a nationale ccrrrnorctd 4<<<<+<<rr< baking netwrok.Chase Bark of Oficsa futf.senrice
- "gvP~Fb".",
comrnorcidbark, opened forhenoss in June.
inNoveebcv,'Chase fanned a second out& state bak,Chose Bak of Ma~rsboin tho fcff;
'~~~M+ Qxae cgreed to acquire Continenrd Bonk, Anzona's sixth fctgmr bonk.
-'-'<rv e~~ p Ad kt Fobnrcty f98@Chase Bonk of Rorida '
opened irs door me first 4l.service cemmercid bonk to be estobrrshed in Rorido by a money urv
""C.
r~ .S.)
'enter bonk. f Rnctf!s Chase brought irs consumer, smcl ,;p<i$~;r busctess banking.and rrvdde maker bus'nesses together in fhemetrepcitanNO<v Yak rncukoc
'-P~+ Tho ne>> crgorv'zotcn mecns thos cortvnorod bcnkeg teans cat meet txxh the busvvess arrl porscnd bonksvg needs of food ccmparv'os cnd ther employees.
Tne restructured Motrepcr ron Corrvnun ty Bcnk prendca customers Chose s okf bonk cdvameges- rsppb>vrn>>or>> vw Hvo< re. rvvt vdA, Of fiaency. cnd tnrerncncnd reach-through iced hw sennce ccrrvrvtrsty banks. tnupstcto New York.
A4jwt fcr~Chaso~rustc~
rts vie as 0 prefr tcHo cccursr ten.
< Q<v<<<<
Bredung new ground in Ctvo,Mcrtkxg An@one.
aid Rondo. Choso has ford+ e foundation fora nctcnwrde network cf bcntrmg offices.
W nerwcrk offers ccpcrturvrres for crhor C~so busrnosses QPcjl cs on es'aor<sned eosrrron <n
~ Bsscte r<ncncrL W<th cnme markers. Red
'~r~'Y< Bsssto $ teat vctvvne cnd ecrn<ngs ecoccod pcrote tagers vt $ 85i. Gong forward.Chose's
~
<<'~~. <C-<<< CCrnarnorrcn Of reg<onai i.qr'+>> OXCernte Cna <rV<OStment-
$ ba trutg ccoot4t es w4 ~once Rect Esvsto . 40r
~ r
.'<<~s<<g'~! - F~o s ccrv ty ro moot cUstcrr4fs needs. r
~ '
1 wats Pew 4+~5~G~~~ j)A".js~Y w ~c~mr ie o P
'I
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W OC'IvWW
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WWOiOOP'N1e htVCWWOt
~
dA vrs ce w Ol ~
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Pg 4
I<>C i(,rP'f sees etaaae r. a eeeccecte ei ssee Iesaress Ieee~ leeeeie 1 qweakw easce I 1 cc Ia<<o<<e taceacea ssecescceeeet lot<<et W C~CI>>eas eel Ooenetc Cit D e>>e 4 Sce>>ccev eeet<<s ee sees eenvoaea Seeress lees r"4f,'"."" '
~'race AXt%
ICCC 2<<>> I f
4
<<>>ea>>
150
%>>'~eq+g
>>.O eg -yCI<
gto04<<ae OI I "I "-
11
, I >> 2>>
e e oe e ' 2,,'::tp I I,.
',,I I,>>'>> 'I- I Ci r,s I ~ ~ Zest
". ~
I
'4 "ICr v
' ej.<
~
I I
~ <<ceeser easr 4sbeee4 Nose leeae tseeeiea See teuwlo Iooss Iaeeee ~ 5, 4,
aer tsae Cctte IS c>> saraes W teresa ios tesaeee loee losses SC5 trereea iae haeeae LOCa Ieaeee i+.'~
4 Q esee eiierec ~
~
I 3, 'I II I)
)
I ' 'I '5 4
~ ~
'~
I, ts I " ~
~ I II I~ ~
CAg,~t,. 1475 cital) 2 I
~ J,,
I r
'I 1250 't'00 I,
~~
250 I>>'
"'-e<Q-S.<< - <
0 I
Kf,~
'22
~ 'O.+et Net W~>>
I }5 200 --<< ---- --- -::;=.k," F.; >>
CCIc,, ~~~4ese>>seee O toeeeeeaea Ieseete eecraes II II 02 45 44 CS
- Tease Cceeace% I ~
I I I<'try gW, re', h:2 22 fkonagensont'sbiscstssion and Anolyds of financial Condition ond lfesufss of Ctperations Vh, I vs 42 Suneaory of Significant Accounting Pot~
W! I
~
The Chase fkanhostan Corporation ond Svbsfdfcufee I V'wit'-~rP 44 Consokdared Srannncnr of Cartdsrsn 4f} Sssssrnsns af 47 Ca sckdared~~
r~
4S ConsoSdosea avssnsrs af income n SrocLhafdcrs'orry 8>'Jf V Nn The Choco fdanhattanCorfsorotfanfCarrrftorry Only}
48 Bdave Rect 4g Saronsreofhccrne
~ I t
5 l Consckdased ~
50 Sceanent af Changes n ftnancrd Past scsn The Cfssee Alon}rattan Bank, fkA.and Svbsfdforfae.
al Canc}son h
54 Coracs'nfossd aaeeneee at SS
~ ~
52 Ccnsoldased Ssasevcrt of fncarne 53 Cansckdascd cd Chcesgcs n Stack}der's Bossy Noteefo Vsaoncfef Sacstasssente '
65 lad cpessdesrt Accounsonts'leport n frenocf bft Report of fkorvsgerneet Suppfensenscay A}none}ofInfarnsasfccs .,rtt
'7 Conscsftdased Vvrntncry af Assea.babknes cssd ~
/ Sroclhafdtrs'csw/
'el Anroge~~m~effonss 'r~
Evncferea r c.
70 "uurrnary~ Seweents of beer+ for }PWlg84 cesd fg83 J
. 71 Cansckdased Analyst: af Locnlass Erssensnco 72 Selected loan hsorvrtrtes cnd Sere stnty ro Cscsnges n .~r~
seeress flores 73 Consckdassd Loan adcesces byfrpe ond Perccrnage Dnsnbv non 73 74 75 7b ~
Cansafdosed Pnrage focss Balances Fnanctaf fLntos Ssocshafder Oats rhe Balance Sheet of Nanb~ Svbstdanes of 77 Cambnod &wcmvrof tncorneol Narbnrkng S,brrdanes ob ..L+
78 ~of~no af the Ccncscnr afCcoef~MBrre.NA The Chcne Mcss1arscn Bark sMALNA.Chcne Berk al t~
cesd Chcse Bark of Qho AC 7g fnancicf Lspanrtrf are} rtcfrtrsof she Ufecss cf rss Chcngng Prtcrrs I
~ 80 The An Cotocscn of The Chase Manhanan Bark. NA trtr" '
J ,V
.r.f J ~
JJ ivt sr its sr fftf 2
p
~ r 2,'0
'-.J:~'r.";.:,
~ ~
r Jt
,1 I I
4 Wr h s<<~~@Mt ~)+<Or~<)4j<< ~j'slK'4~+~~>>4 I4( ' 'J r44 +3 +~ +44'~i+E~~<<I<<44+ '~'~4 ~war cr<<<<++444@ spy~<<<<p 44K+~ +W 44/4/~4' 4q~ +4i~y9~s~
I43 4
<A&kfak8ff~iSCussian an Rnancial Condition and Resvlts of Operations Net tnccyne ~ (
24 aamest4c c>>d SnrernarIonct Coerttrrc>>s 25 Net seeress srcorne axdsre co>>>>siere Sotrs 2T pro>>sion Io Pbssete loon Losses cerd Net 27 ksserw Sor SossJsre loess losses Loon~Is 2P ~i ~r~
43 0+et Operate Inccme 20 CrhetQoemtng &pensee 30 lhsuicsty c>>d Seerrtst Senttt>>ts Manogerttere 30 Cosset h4cnogorrete 33 Cgteettents i~ ."
~Ssst .
~
33 39
~ Concorertsr4xe rtsoer<<e~
~ 40 bteras4ecttng CeposrtsPctcedw&
l he4
~ J, 4
~, ~ t 4'CPii
~$ ~
40 Qepcots 4 lieth~.
,- a ~~mSV<<ms~aene ~ '-
- (ji'+
~
'" ~
'"s.,'*
. .'. ',., .r '; "
44
~
".,', . '( .', ~ ", ~ '. $44 tpp' C<<
<<.Pc;"
<> 4.'4 4
~r+
~ 1 44 I '1, l r 4 I,
4 II 4 mg Ii ~ 4 I
r I 4, 4 f 4
=
44 W~3S+J l ",'...t ,PI 4m.4<<
4.I
~ rrI4 ~ . 4
,.'i' .;,i, " s 4
I I
~ 44 it 1":.:
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".3'SMd':ggau I
,Wsg<-
Pcrj'Q>>
The contnbvtdsn to 108$ gvematfcfnaf eomdfgs from ooefatdsns fngurooe Yiet lntereSt InCorT)e TaX)3bte ECIUiVCtent ~ od
- 54) gruwsdu comoortfd wein Sfi) rfwionn 884 ond 533 m lon fn 1083.
BOSis'ao)
Ngterest Ngcome ona fee.bored sfccome. porgfcutodty duemorcnot bvu.
net)commercial borlfdgg and gcbol custody fees ana nonfee based dr.
Net Nuerest dgragoe cn 4 roseate cauggc'efft boss On NSCreose of )8'S 0 er IC84 mb) of Sq cger IC83
~ $ 2004 dfgfson en lcd c Net dcfefeSt dfCOfr+
COme madffy farrgn egchange tiodng mome.fifcreoted in l985 cfffaored ~eosed over l084 prdffarty*e SO 4 ~M NChdme Ol rarest ecirgng ~)i d W~"I ddrh l084These NSCreoteS were panmtfy offset by INgffer Oaeratdfg esse a ond wider offgeresr rote spreads icQfirdfg from itic dec sndgg Interest egpenses in N8$.resfltfffg fn pan from She consosdotlon al t@2.h )085, rote engdggfefgc h odtdfton,nftt Hveie)t income benefued from Chcsft s
~
eornngs in the Unfed Kifgdoms The Nefhertoifci.'OVest Germontt 8eig'um and Swfcegtaffd and
'cieosedgcsntaored with )084 whfe eorrfdggs from ttofy ecfrgetL
'ncreosed actfgftceS in d:e HN<<ost rate onacuirenCy SwOP mar4t<tn)98$ ,
ageiage interest~ assets were S74 2 from l984. ond up $ 79 bhon. or 12)k compared w fh N83.
&~up Sl9bLoffgor 3ho
~,
Cpgfrctfons h the Western 8<<rrt phtfre (other than the Vfg ted States) gc~MP cons bvted SN)9 mkon to 'ggemcrfonof eomgfggs in )08$ ocompored wffh The b)owing table preserfts oreconckmoft ofnet interest igcoffge on 4
$ 425 mf)onh l084 ond $ 7$ mft)onh f9')08$ ,net ifrerest Ngcome from ratable ectuf'goenr bosa and on 4 f cgfgcgaf statemerft boss.
Jd ~
ties orea increased ameporgtd wirh N84 pnmonfy dve to wider inortfst rote
)preach and igfpraded cofectens of Nugtiest onnonoccruafloora.)he pro Net tntegegt trgrdgme Toxdfbte Eftuldofedgt rgdivttmeggt gfisfon br bonbaes lor thaorea dec)nedh N8$ aweorea gwth N84 ond
~t
~
IS dg msdunt )085 t054 )083 feekased ggcame hcreosedmodesdy from the N84 fftgof,prgnorfy clue to
~fddcgf.ecdadooadodlocoo c)fg
'lgl ilail: lldff ~
'tet Ho~ace
'13; caaaac ecoocf /
Ngidoc lao I Mlfodgleaoagooadelkdg 'oom .
fadaEdd
'Oaf d
~
0 ~
a ooood gooddogdcdld<<d oaocdod ccoa 'occodoced .. los I Io E '
gnthbsses on svchinoestmentsh 198%The hcred4ehnonfee4tased tfderesrifcoffe, eartrt'gg I
hcadrfe wos pot tbSy offset by a decrecoe h ectuity incone fram Chase's hffestments h cnegseas astociatedborkfng hsnMionL h N8$ , eorniggs ffforsgrdd5ofrfrfngdrEost) S ).7f)l
'ss)ca
.To Sl.4) 3 51,22.
itsfsza I a~ 3 cafd 'H'lgddo fgolo geo afd Eaedd daaod coaooed edd t
'o ocH 'I afgadd~ ...,;,
HNS<ddcocodcafaofoacofadooH sofcaoaadgcd:
~:..
~ Iodaf godaf~ged
~5~~ .
Hd~ ' .; ~,
I'sl.gd 32 3 gfoidi Ng cl, . N
~
Opeiatisns in the)A'dde East ondhfrica corsrkvted 4 bssof Sfhndson ~ Ngt iegigtt sgcore i~
tahrematfonofeomiggsh)98S,~wfrhnethcomeo)$ 4rrg8ort Sl.~. S "'NS 5 0 8
~,,;' 'r, ~ KCRCS'rtfgdsS o SCS%54
~
hN84 and 524mhonh)983.h)08$ ,net httntsthccfmeogdfeekased,, f. r "'
fiomrhaorea ncrfcased cider the )984 hrgef nonfee>> '
Co )soranen(dsngoydfcgred ttgft tidefetr igcddgfe
,8 N ~ yr') P~H
% i dd>4 fgosedhcomen)98$ trrdsf'grfsficantfycoyporeda'th)984ond)083.
hcome in f083 incfudftd $ 2$ mgSon ham Chase's settlement wgfh ffcn. h odgStdsn.o hgher fegef of ner bin charged)fish )08$ ;comscrtgd with )084 '.,
bdgtyefafwdgm8out Toaffbte I AHSffsfffggfe ttffggrfut Sfuorofgfd Sffcnt
'":'~ '
52004'2407" 245 220
$ 2/40'2.3NHI.", 52 ttfo
'tsgfcrage'msast
=
)f2247
)78
')5 STffggobe fsgwyeov agofNNNstfdwe bee Sffsftgf tbycgtftydfgorfbogosd ond !083 conrnbvted to the l985 bss recorded in ths orea. ',;-,
~ fddengt ifoge fugdiggcotdfgdsme sag fofe oi tgotuediigogcy 51%.50t) cnft caffg
~ ~W~~ ~ ~ onae~ ~
~
Op<<arbmm~canngb~ 550~ st N3$ htemctrhmm
~ us~~tmd 4 wm'rmmeNn h)yggugtyef >coigdsr gafaaiedwfrh $ 2) rrwSonh )984 o~ $ 49 ffig)fanhN83.Net ifgriest ~
- p ~ ~y
~
~ ~ ~ ~~ ~4 ~
hcame and lee bated Income inaeoscdmodorasefy compared wgih 1084 a HS )081Nofffeekased scone ecgsasotd h N8$.conoaied th )084 ~ '."' p basa ~
and )083, grfaif)y dve too Corn of 522 mffoon fSIS mfiLon ofter tagfesf fram gp 4 Pi ~ctcgogduf nsm as 4 iesvh of the scfe of svbston bfy at)of Chose's gstmeggt h Oismond lease Com .
m ~~4~~
parry ltd. and a gart of $ 23ifwSonf $ )$ m8oft after taffgrtf on the sole af f7ass interest toongffg assert fbovotedbet ween a bw of ~n5x fy I
4cftobd SI CI4 mfffcn gg N8$ vp Iggg f ~
Net Ngreiest mcon>> on a tagab'dt gtqutdsfere bass fn dommt>> offces
',i andup 3'egin SQ77 ftfdhtn sn )083.)he N85 eeecse was pr rarfty gwfh SfdSI) ndan fn 884, d Ottrbuiotgte ro o twyger Natfdfrfe Cf frtgtrettcnrg tates. par dy car 2Ccbte r
ta the fdgcoh ocauostcn, ro eegefrafy fcNwgr egest r tfts pofd on guftrett.
gv2 fioo beordgg kkdtles ond a hgher hwtf of net ~keaifng &ml Cgw'Ig, deposfa. CcdrCsodgtd with N84.domestic rdn Nutfrett Ngccme br N8$ IH
~ 'gcfuoed o bwer ogfofdgt of cosh ccgbctensof sgfegest onrforfasrbrrrgfgg I,
~
locms The I085 ogeiage go4frfe cf 3)7% fiam $ 240 b4On gg )083.
Net Nfrerest mome on o gasohol ~
ffrereft~
offfct4 wos SX2 b4enua l38 cornered with 5277 bgson dt N84 and up I, o
- assets h domgfsr N:
bass in amis cot offices "
totaled SICK riNSon fn l98$ .ua I comoorea ~gh 5926 m4on fn IC84 r 'e and va I I. i compof ed wofh 5070 fndaan fn ICC3. 0 erteaS neg ncerrrtt.
hcofgdt gcieased fn N8$ . comaored odin l084 cide arNNarfhf ro ~ '.. net
- 2'.,'
fo, clr ordddg OH "SN ffierest roie sar coos. and cggstorea w.in I083 due prrfangy io o hghe lyd
- Imclofnondgferest beonngf vigoeng sosdcfts i
2 "i,. ',2L.4... -, Oi, fg So r'. '
k~ 4 I'HN4 2 I
~ ~ 25 fr 'r. ~
2 ro. -.. ~
~ t
~ ~ ~ ~
'>C Sa av.tc(.
Provision for Possible loan tosses ihe preCedltg OLOCOIKO Ol the pravsuon fOr OOSI415e ban bt tet and Net loon Chorgeaof fs between domestK ond ytretnarKttof oawottes hos been creooredbased p. 0!;,.,
on subtrcttws est mates. Os fvnher aacussed tn Ihe fosbwvtg sec<<on, povtston for posubte btxt tosses lor tg8505creosed to 5435 rryLOSLup
~~ m'~e L~4n t usta'he a
570 nwson from ltte $ 36$ m4on reconied sn f084 and vo 5l50 mLon from p >0 I the~
~
IxKertavtconc5tsons sn cerKen devebovtg countrtes,ondn anttclportel of fvgher levels ol domesIK can%tel chorgeof fs dve to Ihe
'5 ~,
Reserve for Poss t3te A,f loon losses
> bs ~ b ~,. a .."8<
~~i
~
~~ N8 ~~~ ~
'OOSSSiant Ond the rvtonctof expenenCO Of bar rawen.ihe reserve br posu.
bfebtxt bsses.wtvch provtdes for
~ ~ ~ ~~
She nstt o'vvsses sltherese vs Ihe fereSSr 8 4,
~,t.r 00.,04~~'harge&is were $ 234 mison for N85,o $ 72 ftu5onvScreose fram f50584 - ~-.-,-g'r by A cod a $ 70 esson Itcleose from N83, ondrepresenred 73j5. 7555 ond 6f55 gp~p xe-7L
'i".,'n+~+".,,
of Iotof net ban hoogewsf fs for fg85i. N84 ond l083, respecltvett50omestK
~f octtvtttes.woreSI3lmBonforN8$ tvp$ 73rtv5onfroml08 ondvp$ 07 br N855 N83~~~~$ N ofd N85 domestK net bon ~fs ~MtL d ~f*
wos opplotjjoNsfy
~Ab moy be chargedoff on
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tor f~ fg,,
~~by="~2~7
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Sccsrded bed d 4 f084 and $ 83. ~ ~ ~A
~
~t.vr:.~tsv q savate 8onk.feLIL,down fnam $ 43 m4on ond $ 4055wson fb ls< ' ~ted~ofloa n~~~ ~t~~~ g ~~
'I
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'IVAN9'et "' 'bt b fovrtdo poge7f Lass8xpenence.
pre.tOX gatnt Or4SSOS On SeculltteSantlretdeSIOIO propertKrl " A "
r ftg ~
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8
'w ' Ctquired4 SotttbCtiOn Cf debtS preyiOVSfy nstacatd are rot reffeCted4, fncbded'85otfjer'et l10,' -'f lo chorgeKSff
$ l1 m4On from She dsSpotttianof SOCVOIW OctoSWOI ln Sar<OCtb pre tsytuttg eyatuatton Ol the 4an part and off bcdOlce Sheet CISIISI-corxrocrer$ wirh 57 mlfeon'vt 198 and $ 34 ~
st N83.Net gains on She dxposttion afloat estate opopotes
~~mevtanng of bans by ter~ af f fOLO are iderxtfbd os bang of artd clesSI titan occeprobte i'5 I-'Q"N'han fsonosof whech sess aco5red 4 sattsfoctton of bors@.after vabotoan odttotmcnts on tKLS at year nd,were SL2 msson xt f0855 518rtv5antIN84ardnotbssosol50rn4oisINaLGovtsandbsseson 5th net govts af ~
btl the Oedet et05det 0wetjan Of atoso'S Oentuof
~KSrxhfyvtKfctxh~ofbons~preso
~
auaSIII 51 adISIKXLpertoISc Scnttncxtons ore concbcred 4 fendrsg areas vtg dcoorttttertt Ioposubstyofbss.tf.
-."',~ r-'
dlpotvtiOnS Ond ~advrttmerXSof recf OSIO<<ptopeltXISOCCISSyed OSO letdt 4{ Suthmanrttfy ppattajt.oban SS iudgoXf tahe nat arlOCtfate, u P~r -~"~
aiocottan of Ihe pSovtuon br oss4SI554on bsses onl4tvvtbb at ~K, LtackSIKn ta the CSINuvtg veemaeattcssmese Ol W ban portbho. Ihe P~P~z.
~ ~~
artd vvenSoteortd octtvot tes br Ihe ftost fwe years cxe stttarssed ~ atsoLddved fvtrxscgl elrteeres are elomned by Otoses fettcrtdcrsr pubic accatrSarto, wnose ettcrtwto son xtcbdes a revKw of Ihe cdeauoay
~ r~~
of She rewrve far past44e bet bssoLhbaexcltwtautmS af Otose's bcn vs%
'ee Atypic plot Loon ot ts ottot Loott Loll Lxoeftonco Rotter f~ by A fg~ h y+J
<<SP~+~~>> 05NwVKMosvtslwe' I 3l 5 $ 0, $ 3$
M 5 32
'4 When potersrKIf bsscs on specsfK bets are KfettnfteCL the parton daered, ~~-tcwrs
'. -" >P~@~t '
~~~ I 0~ I03 2t t7 unCobcilafe SS chorgedofL Hawevttl IXICS'ascatean Of the reserve hos hven'o 42 '05OWS Ctr en ~wVV jre
$3 OO 7tt id
""'" SS20. 52LS 525$ faX) 5124 aa d aa>> <<aalu toaoet Sc-'00
~
'Pic' " ceo '9ES metdotiup $ 25 mw'Kxt fram year~ f084, ref tocted Ihe con'trtuvtg v~ ersavt 0~ '~~ ~
~
'W '0% 'Q% 'he gbbof economic cortcltwns, porltcubrty sn cene devebp055g ccxsvnes, ond corxyvrvtg fseghbvt senewhat redvced level of rtocctvaf bans.ihe year end N85cdocol ors IodomostK corn".SCICK84ans.wtvchvtcreosedby tw"'r~<~<X" r".4"."vg.
Co 48 44 43 47
.40 .48 .47 .$ 4 Sf0nusorsrefhtctedh'Ktto~rx'sconn~ccyKemcwelihetxSmen 'eo:0ewSIIK,80 Svetttoe terat 27 . t4 32 27 .04 conyomc recovery'll r'ne LStt ted Ssotet.fho aaocat San ta OO SSOSIK Cocutetel a 5050F'Ze.
~,fg Altototten Ot rhe lv85 tn anIKOOIKSn Ol fvgher tevcts of chorgeoils ceymcnt vwth the raovf growth ol the domesIK nsutttee 4on port boo and cottc55torts utteemy I I 55Ã 5 ~ 15 5155 5105 5111
'05 Is'0 tS0 I tv . 50
'ops 545S 5245 5 SS '2aS 52t I
-sgzs~M';esvstctwewsoestcr~e Iettttltrttraoesrvsotvst<frsnvr4 Ivsw ee~
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o oe ceetto2e of avwofe bets. "~
Sstet eetsevtt ts os 9
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'.-'-APj-. Other Operatina Expenses Provision for income Taxes other ooerotng exoeihes <<ere 52 732 miLonn 1085 vo 22.i froinlC84 cp<<otfng ex pcnses wos a specfd iecowtry cf 540 ~i acts 34ts from 1083.os ptownn the fnRO vfg tocle.lecLfdco n Ic84 oit er I 5 "0 madn nvrerin IPBS from 5223 ~
Ihe cra een fcr vfcoew fitias caovcc=e fo eet nccfve ncreoted fo $ 333 in 1084 deft 5273 nvl'ron vf 1083,arm<<sv
- e to anmcrease vs vfcome beio e tofeL poitvsfy ctlset by cnrcreawf n ofier toxesl as a fesuII of Chase'I I et if<<cents vnih cerfovf defendants n Ihe ncome ex<<npr lrcvn feftefcf mome faxes. In 108'ew ycr( Sxtie ard C.rr v.iwf+jern
~
octcn Ihe Borffbrovght ogcxnsf Cfysdcfe secvnties Cofpor of4h Crysdde Goveffvnftet Secvnnes. Lfa ond ob<<s n 1082 ond rhe net recaiery reoLf ed on ceno'neth<< transoafons relafng to the DryscL~e s fvai ion. bcfvclng beth ths IC84 speocl recovery ond ttw Iest six monfth 1085 enpoct of bn tens af Nr3$ ond Ifncolt. 1085 aber op<<afng expenses wov$ 5 have been vp 1etl over 1084 rted vp BSL over 1083.fhe vnooct of the I otements may cfeotit fÃl ~
oxtcofed o new nccme iox Lsw of fecfxfg bcnxxfg nstifvfwnLThe effect cl Hw new law whle Ovffobte was ncx motancf Io Chase'I ICBS net The fynovfe of ncome xsx repected on be fox Lne ol ihe fvffrfcxsi nc~
fepfesvon fhof Chat e h Ivbfecl Io 0 lower ncome Iox bvrden thon ore ofh<< types of bvsness coipofotens.
Pavo4 Chaseand aber corfxnefcal bonLng nsfffvtxses n el fea poy ocqfxtftfore of NCB end tncoLI on dw fest six months ol 1085 ncreased operotng expenses by SIIS fexLOIL- tower ~
odfSffoncf omovnrs wfvch ore tax Nfvcfefe to ncanw faxes by occecfxtg on federoRy tofvex<<epf nxxvcesf4 o~~ oed by verve of be refereed moreenance of fr erest 4ree resefves mih fedeed ReserveBarka Other 0 Rx pensee Hw foRowfng table presenh beth be cxfect and naxect ICBS foxes borne wA t IS ef evsaml IPBS 1084 IC85 by Chase and be ressifvfg effective ncome fax fafef Satanas anft feokttee Benefns 5 1.4S I $ 1.210 $ 1.122 ttaf Occvpfrcy 284 245 ~ 213 OverollRtfetttvetntanw faxes IC$ 5 Ravamefv Renfah. 0epfeocnan
'71 yf<<tax ttef and Morvenance Osier Rxcemes Soecnt ttecfneivf
~
203 704 S 2252 650
$ 2.245 f401 130 572
$ 2.04O
~s i~ovv ~~~
1$ vf evRaee I
5 ie lax Liras 233 ivi0 0
Total Other Opefot inc expenses IefterfS Reserve Sark svSrect 50 S0 fvwncvft5tatementfs aro Iannit SI.I00 $ 42$ $ 5OS i,f sofonesond employee benefns were SII451 fefRcnn IQKvp $ 232 fnyeonhom lrr84 cnd vp $ 320 rnCon from 1083 The increase n 1085 wos Rffectiveyax Rate 5$ '>>
~pmY~c dve to nonnol staff ment ncfeoses and Ixgher profit shanng ond obw Ixffwxta .r .IxM~
'eCarrovfea vsna Chase I o ~ aae cast al saenvfsfc rv<<ev4sang krncs an $ 74ae ncenffve cot ftsereanon exPenSeS. pnnCfPOSy as o resvft Of Svbpoixxsfy mkdn neareaeea Oy Chosen fv<<esi Ii ee ieienes wvh teaerd Resene Rank<<
- " xfCraved eoffxngs. Lt odchton, 1085 pof f expenses reflect r<<<<v ocqxu-Are efchfdng among ofh<<s.be ocavxvtxrfs of bnco$ sNCB and Chere Gfva SIS fswLonn oggregow evensnnce payments mocfe n carton oveisece
'nd Lscatfarr Penson expense for Chose's meor pbn was $ 10misonn 1085, compared wfb 517 fiw'esnn 1084 frd $ 33 rfvConn 1081The ief5xtens ws(vXRRr from 1083 pension expense were prnccxsfy dve to revfvons n dw eyeresf rane assvmpr fons n IC84 Io nero cvfoteey ferxfcl recent expencnce expansion 5'"ci and fvfvre expectotfons.
45 ofher nene of op<<ofrg expensfk ncLfdnqnet occvponcg eave.
meet ceca ond ober expenses. ncreosed by 5 eC5 mfLon, or IC%. vf IPBS to SKI rnhon,cornpaed with SIN'5 madan IC84 and $ 024 efwson n 1083,The ncrease n 1085 ab<<oparatng e*penses pnmonfy ferwcfe corevxfed neesfm<<es n egxpm<<e sysmms Iectfno4gy ond orodvct
. '?'4 'xfncnaten. ond ei exefng andrew marks. pafnoly offs<<by
~
" of Ipendnfh
~ nvmb<<af ~f~
sawngs feaLted fram expense monagenw', pcogicrfe yen fvwd lo redvce vnprodvctfve ond mfrgfnol actfntws cfid oM riser<<xsnmy types ot yearned IPBS was ivdwr by 2 IIS0 <<n-pff" nes.of 7sL. Ihann IPTI4 aiv5 ~D!Laugher bann 1083. Tha mcreose n
. ICI; onnysaredmfh 1083 a svbstcenofy oitrbv fable ro rhe ccovfunore NCB ano IncoSL The Iobhi s<> Ciien' '70 25.830 23 I 50 O.cheat Ctfw lsd e sr0 3,32rr 3 'eve
'rene O.480 O,4 I 0
'race (asf fxvt 4 vco 5'0 000 OL
.yeti<<n rVevvfffVfre n xC0 n 570 '.470 taw C~eas Cities 'n 5$ 0 Io 820 I <<CO
'i7 "sR"f:~+pr-Tafal Rmotayees i0 5s,0 <gs'rgrf~eve
~<<esg arces ecxxte acfxa.mcfwv 4 CC <<nAnees n ice5 era 3450 218 e RRs~feg fesfemeacmnevrhcf Ivcaw Crase CI a ceaadse kffrwfrd erseas at I ces Kvae 2355 evvxavees vi CRS aea 2 330 vf f ICB4 esvveg Ircm
- M acoweeaes ai tvCB arxt Rfnta de ivvsetas.
rxi etc +s+q>if.
~>> . ~S~f'q0 e'rp~ xn ieiv I'Pt Vr'frey tgi&,i:. I7I"v; '
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'rad tccye stscnn ctsanOes I 9 83.
sn ssrrnary Ona color Coo sd dssresa Pl 8'98 Ioloaerl9 scsdie S. OIIS tne sear end cyeaaaN caosae atlcl totcll OCCOvevS!Or tCSS. I 484 Ond 1933.
~ tee Ov.lsd"Ig~'he e~y ot ChanaOsin Coaatot tar 1045.IO$ 4 ond ladl Prsenory and secnnaaay Caostc sse
.S'PSSS '" .
.Irised I'Va
~ Sn~
t~ INOV IV45 Oaa O.v aa nsvnanSS <$ S Pads <<ge ec ~
I 5 55580 54 sea $ 35cd Pnntnl COOne
~ ttsnanp COCSSW Qeesoroted trace C 5 4 I
.I Sssls 55~ 5105I jts , nsoetsat Soeecoo 4eoreedfonaectc~dtsTnstaasae 332 200 248 0~m IAnarer Sveseeto.
I I~C 54 I.a F"..nrNes 0
>
~ G . At's'.t".tlc Net Chcegen4sonc tarrosscce ISG ISO lao u>>ces 111 111 0 I I nttsa
'254 lone Heres Ove ioo5 Toast Ptaasoev Cccaaot evala 545vscee 332 Ptee d secre hnco e70 309 342 rPN
~ tbtnontt ~tee rsnnoroted Irate tiootn9 tav Lecnonaseet tcsernot Soar ceo Aooancs ilose Serve f Srdeerod I Is Itaeoe OVe IOOCS't vu a 3CI2 Iei 394 llf I~5I Pesotvi htr Possctv loon lasses
. d a~c II'ee Iaeat Pnntry Caadat: O On 01 401 5 580 4 44a, tgydv P.stoned Stack I ~ 28 ', Seccsndoy Cocaata I Peoaose eo tcsercao Hoateact toes tvoaeo 4aee Nacsso Pnstened Staci 42 . 150" r~
Ove ICCt~noa os teens tend IonPTnntnsacsonaOeaeeea~ . 2.804 ~ ~ 232l 'W4 <i'r.s IN I d 342 IacaptenoNaeesoadtaed
/ 'SSI!
~
Iloataag tttsto SvboclraotedNoesOve 1994.0
'34I Qtrd ",~ . n Preisarr Cocsssot IT%, '149dt ~
Cooceon Stash hseod Psnnnsee ltoonnct se'e Sdsan5naeod teatco
~,', t;) ',40 ~ -'.
C TOCt SOCOntOy Caadd i . 2.085 I 527 1.034
' Yotol catsitat I 5 8.174 5 P. I OP S 5.5 10 Dve 1994 20 . ~
Acotconond teacasn ,19
&+
~
Conncrs pad OnnteadeNoos 5'.
~,,'aedorot teseeae daont astdanantomoct Mor Psacsoty cacasdaosorJt d old Ooneveoo ca.tenon saocctatsdoss oavaes Seeaovy nearest aa ectetT at cossddastd sdcs' evens 0 d5000 <<4>>
Il I C Casdest Caecatt Ol Sneeea its ocetsncd seOCS osd Scn9 esne daSOC r,"
."jsl 5 Svbuc rance
( Itl 4 Preaaad aseavre teSS aahss d Nee Paencrv Coo ~ Q sacssaon 5 I0
~ sos%Be I .O~
OKsaaa b ld
~ tinaary Cttdeat Ce veer dread y SoccnawCw eascnd~ol yeor $ .52 5, ~ 5 C& sdocted cannel gasses ' ' ~
(sci+
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c eeeaneane ot Scene 6 cps C Poeeneo Ssacl 188I - Oocen$ vr3' G- '.co in Icavl T<<e Oeae ot Acctvred Svbdsaras 114 ot ntaeos and eoennres 442 884 350""-
1~~0 Accreaan an Zone Covoan states tocsloovsosona enenaened Nares
~
Ilail I II Ct tdl 1241 IISI ... 0.05'a." O,an
...5,.'.5 ~;"055 5 015 S Ill .
. TaeedPat~~rctnatnne ', 051'".. 0Ã 544 Teens etoaes fecsdted tnre Isacansea nt I34<l Tosd Ccodes aa Peac oee d.
neny Ca'o sat 13431 tdeeCname ra Iec~r Cocascr col Taste Cnoss Assns" .9 e3 "1.8.11 4 oa Secondory Cocntat at yecaevnd Vac S~
$ 2 AGA 5'I 527 I ', '5.,'55 510 II'"
end Caasan AOOa one 5 P. I OP I Coo 5 5.ddv 1.58P Sn I ~ G I 05, 'I ~ I pp".5 5
" &5 Toeol Conceal at Year~ ls I I I Sssn "" dC
~C 5
INN 'Io PtrceeedCAe ~~a(r."sa
' ': lrIr'
. 1473 '8 l0 10 555115' sy-'I "
4 tnl Assert cee o>> nea os Cents Crass Assets ress C con oct Cea leon Poles nas ITS,Tseasvnr onsteaerai Aatnny Scca tao ~ s . ~
~ vcoao clness Aesea on aetdied astaeco Aston ates w 4soeve io ocsatse Eocn ' SA,V Losses I
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)iv m r) r)r r. jjZ~t Broz)j Mexico H Coc<<reer
~arne)sty 3t. l085 Octo I cross beret cvtsenarrfs n Stot I ~
$ 28 Ibsen) rrkn4>>I osutr)Lens of ciodt io pvbtc ojuf H Ooc<<rtser 3L 1085 ona $ 84 Choses cress ceioor outs)artres nhior.
Ko ogg)ogoi>>d aoo)o) r)>>rory 51 7 ILwnc'rr')jcoort Ing cmoun'rl>>
) r,')
~
gy) gnrnetocunbo ~deatuo.~>>ly $ 17~Cnci$ 10tulcn. * >>st<<tuoru cl creat to gvck ond envoto sector be)tetr<>CO)olg comoaod w In SI 5 oi)d SL2 b)ccrcrosorcinotc et SL3 baon ond 5400mJen,rotcoctnutu Ooc<<leer 3L V%4, Hsprorr)rs>>ty 17yt Ol Chose's Srazkanaoss. Mvtu Year O>>bt Rosnuctving Ofyecmrrrt ho)o boon orr<<rd rro end nj
$ d bo)dor ov tstandr)gs ot Oocomb<<3L 85. wt>> rub>>d ta shc>>t >>nn trade frrrrrtg H be reavest d be C>>trial fhnk of rros)L 'rr<<retend o)vrn<<cef barks agreed to o>>)ond the torm ol II>> $ 0S btLonIChato shore $ 371 lngonf locks 7 lot trade Inc>>re CIcl o>> $ 5,4 brgon IChoso Lhuio 5118 b)8cn pnnceol or)evtuiCheso shorn 530 d
~
s)gtod fot Morco and <<compass) ol cn ornoirknonr the IOS3 $ 5D btcnnow money Crockt H7)comet>> mrh Musca cr)d o pi>>coy>>)otu of 5L2 boned lt)<<ovno<<bt n>>
mvttt~ nssivcNNO motvnt>>s ol Moscan pvbgc s oct)>> debt Io corn me)crt bc>>kg fenny duo n 1085 II>>ov>>tl 1000 I~nercty 5ZLI bJ>>snL inS)or)f ol rrorbcrk doooun, wfrch wore port d be '084 tncncng pock. cf the Int<<ursn of the 1987 ttrov3h $ 90 matvntru feg)pros>>ieioty S 236 ogo. It>>ough January 17. $ 8thlho Contrd Sark ot &rod obo odnsod tugcnf Mrforthe osutng Iesnvave ofyeomo)rs nogotetod n f082 end dl ruemotenot co)nn<<eel banked rrcnmm<<>>vres it plc.od n Oil>>et w)b ustnssns>> d >>retest rates on the restructured debs 1 ho et tea of!he oobt tespoa a const)<<c)d bonk crass.herd<<mochrlut>>im debt matunng d toy tonuory L f085) vp to and nc4dng January 17. $ 86.&ontnmrs nsuvctrd sad>>pout beaucoup otsmofom ol pnnccsct payln<<>>S farmy due dvntg shot pened nbe Coned Scrk d &rock Svbt>>ct lo payment
'ong made, be C<<>>ict 8ak hos opened ru>>rest boomg.US decor
~
~
Regtnrtunng woutdbe ta r>>C4CO AS aleut>>S Of nrtunt)OS fosr)y C4e durng $ 85 1900 and to escuksh o nero mcnogoebto enemtoren sched.
tv'e bognnny n 1986 ond ondnqn 1908 The doctrn<<>>orcn necessary ra the Oobt Rostructulny wt>>
becon>> effect)ra end vgnod but hos not yot II
~
dencmnae4dopout occcrsus nbe atevr>> d the prr)opdmoNnty n hMcrch $85, prepaytnont was Inodo of 52Ac nuTon Chase shont $ 6 foyer of be bndor and csjoian>>od by bo god>>ref Ropvbkc ol boaL Tho Sork rkfr)tory Conrnttoe for Sic>>sf and be Slacken ovbonnos so tfucvts the posubto terna pononng ro bo iostrvcturng of be Ayeasrnt ~
nuke>>)f of be cmovi>> boned under tte br&3 $ 50 bbonno irerrry Crot5t Musca I>> unended il $ 85, kt Caobor $ 85. ot tho rocsrea of she Motuccn Go)ernmonc poymor>> d tho Irrnornry $ 050 rtukon
'-"'t'.4
>>~yr' 198S netunt>>s as wo4 as new tnsdo end r>>orbcrk faakt)oLyyttto pioryess has boonnedtkogreomom wt>> nc>> teoched behsre II>> orpratcn ol It>>
bckuce ghc>>e shore $24 nuwsrf The ruoirut to>>
~ osutndod fer s s mania.
ocku~whch ore te be ef fectne roircaalvo sa p yj)'g ita 6o))go n be kuorost rote on Cncuo's <
- Con>>nitro) d ~O>>>>eis o mrnbor.svcccris beans>>>>Kneed spvsod d approsrletofy 'Ss % Cnor bo Ionctcnkr<<berk Cff<<ea Rcro RRIC<<L Fofo~ bo rostiucunny.bo ostrle>>d
- ~u .gg-'.rvn vastmeru secwines were pre tos gorts antis.rreaswy secwuias ot Arerage battncas, raciest mome ond avenge vitar est rates earned for
- 0. I ISL '.$ ~ 4 6IL 1.007 0.73SI
- ~~If>p~
- .-'"kÃ~;. 'TraCT>>39 ACCOunt ASSatS 1,07$ ,023 870.$ 80 1,827.097 loons,Before Charge.OHs 344,970 6.388.392 691.138 258 474 3$ 0 814 111.867 enCN r A ~dh ~~r~C~b 1.054.824 118.979 527.095 Rh' federcf fvnds Pvrchosed ond Secvnnes Sofd Under R~ Ag!aemanrs 348.497 925.365 298.300 831.S72 ..- frig<.h s
>rks jfr> .'. UST!easury Secvnties Borkers'Acepttances Notes CecjibQs fram Nonbotking Subs38$ anes " '46.802 ",r"-X+M;" I S0.688 I I I.726 Subordnated ebenwnsre Rece98abki from Tht Chase Manhattan Bark. NA 'hher~ Totcf SScome 720.924 . 828.185 722931 ~ ' 'lj<<73!6417 pal tsee ttcrttst Espenset v Otijer uo565ttd Money
- "Iong.Tenn Notes tmd OjtbetNrtts Fees fe'd ta-The Chase barf!at tan Cork. NA Nonbctrk'itg Subshkones ther Exrtenses Tofoi Expenses 521992 ', 017 ~ 67 ...'41,1105 Sr6!~S'.;
- .frvi. 8 5
- 6 '
- 9
- 7 ~
- 58. I 2
- 5 In shaSnaFIcs5 :CB4 TSN1
- I ts Capitol Stock 8aksnce a'~ of Year 9cves tssved Vvsvoolt ta fbat~ Rate Svcorona'ed Ccberxvre Cve i904
- 8' .*s'/ I
- )pi h 2s2 i5>~.r ,9
- and 1083 ol 5418 m4on and 5457 nr5>on> IcspactrvvtS gcvas a%et Iho. e Tha eami gs >sar comnon shara. Ccth dwdands pc<< corn>I, shore and Ilncoh hand Nv3 ac~I>ons os if thev hod been consummated on fonuocy
- 4ti V il Sr r+SI I "~
> Oeoot >> Tosol Totof Coeneos COoces Oeoos>> I 501.3S3OI ~ ISoelootl '1" ,S '3850 340.137 1085 1084 5'7,110'984ondl983orere53977QQQQQQL530845IQQOQQcnd 310.520 cn 2ennnnnnn res t deccntorsledcrtosstcolhccsotOecomber ', 31.10853 51 ~ n,'. !'Ag~@" ~~g';. '~s cora c<l ~ " 4" I '8.'520 042 153 '8.58L 205.005 osuoe I 54.058 80.'322 01 'l stere tp.Other Borrowed Money' A svtrncry of Other 44 ~ Money ct Oec<<>>see 'andS33.3CO ~ I 3.12D ~&eooooonsesolooenkleonopmooSSH I.""<<.Drl OConl~~&l 533<<oecekwSI.ISSC I '3<<~ 'c n ~ ~ops~,..."'I" ' I 0<<+ " ..' ~ ... "'Sysor ~ ...' ISSDOC "t i 225cco '.:, 'Dl C"cco
- 3. I985 cmdI984 ~
~:.lnslrre~l>>3~dc512044tCOCSIDSCIOCM~ I I~~ cl Ottces2 ". 'I III2 8 22jlll I52 015:I, 5,. 25.805 221110 n5801 '~'l~" . Other Assets A Snetsncry of Other Assets ot QecertSber 31, IP85 cnd 1984 iofthes2 1084 LOce 19921 !S n eenoeS 1985 t toorng tore 8 ~ Senocb!e scores Accows Recenottte 51,138.I CO 5 722 004 Ore tor Secvo<<sotd 801.435 24C.PQQ t;.24.118, .'" 2S075 .I r>>congRcretroses083410001 tteot csSOse Pooeesoes Acorrod 08 Sot>>Ion>>n of Loons I 11 Oomarlc Oft>>as I . 4 IC I cocle 22 002 I wo~ ..I Orto>> o>>t Crser Arse>> s 013 '80 Slo'0 S n5 344.188 "r 329.404 3.~ J Ooerseos Off>>es <~l domsrsg Votes>>>>5 of ConcocSrr ~ Srsroent toon Morse<Cog ~ Ortoor AssOC>>2>>n donrw<<>>s 42.044 . 4 'O7 0- py; Tcnstf Cm>> Meme 2 r ~ 1 ~ .c48 ~ ~ '8 <
- NA Deoeool ~oowlow oloowel~eowoooio
t 0 ~ ~ <<r rt . 57 oe 0 ~ t ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~~ P ~ ~ 4~ ~ ~ ~ ~ ~ ~ ~I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 ~ ~ ~ t ~ ~ ~ ~ F0 ' ~ ~ ~ ~~ ~ 4 4~ ~ ~ ' ~ ~ I 4 , gE)g ',' 544., 'l ~"0d" ,~f".of "'4, v '~L~ '- vc~ LCeoo xc ' RS'f3RO '4 c348vi '. ~ W. '4C.'T l<<1 ~ beta t for the Nates of the Company issvcd with deechoble pnor lo motunly Fqv ty Conrracts. the Ch%4IC 4 i0!S Ccpie(Notes ond ihe NCB Notes The pnnciad ceovnn of motwitics and svitxig fund rcccxrcments for LOS uo'+p ~ and Debentures. OR ol tho (ong Term Notes ond Ctbtnlwts ore long.itrm Notes Ond Debentures dcir rig tOCh ol the hoe yecn Coen'CnC2ng redeemable h 0 holt. or in PrV t Ct ihe opren of inc Corporchon. I (086 folowi Cccxxv Coa 2oi OW2\C>t xtont Stot tr 5*Its 00rtcott 4000t0o t tuo54VO trCvts focrcc OINCS ol Csag ISt.OS 14 o(ya Sccicts 43's Soitas'4uo Noits ones 'kits and IS ol Itovscxodu Cvt IOSdt Cut 0400: Ovt 1003'08 vt 1003'I, Ctotniootv '5ltc43 4310 ov 100 1080 1080 d $ 200.000 0 $ 2.844 4.063 4.063 1.683 I.CS3 10653 '.310 5 4.310 5.968 5 361 361 361 2.S93 STC0.108 10,417 10,417 14.607 ~ w4 1000 '53.833 4.C63 1.083 .8 2 14 221 'I v I ~ t~ 5XOCCO 53.833 510000 10. 15 523.5 0 13.020 5250.810 ll OO OO 58804~OOCOOCO04C0085010<< 1 8 CIO802 04884OOO00N . OICI48 verhbb he cenmon stock of the Cotltpcny was odtustod h 1984 fnvn rcsuhcd h goes of $ '187 thovsoncl 529? I thousand ond $ 294 thovscnvL $ 2%0 e $ 2ll4658The convtnen pnce of tho Convontbb Vborvdncted be(ore cpgkcoMe income exesh lOSS.(984 and 1983.rcspectnt(y (nese t44oxrg Debentures is 52875 per shara(Per shore cmovnn rcseted e re8tct gains are reportedh Other hcoea 'Ko ba two.(or~ sect salt dedored Janvory 158 1986). lhe principd elbe (bating Rata uboortSno ted llotes dve (995 8 to be 0 j Dvrhg (985, farci(FI exchange tronsbten odtvstmces pereemg e the repoid vnth lhe not ploceccb bornbe nsve ol s(xslcs ol corrvticn stoct or Oevtsche Mort Bearer Bonds ond the Swhs franc Boncb were 56884 nonredeomoblo prefened sect of lha Cenpony witch hove been dcpos. 4540C32'~.lsT Sa~: I roaCVC thousand ond 555898 thousoncL rcspectnoltr h ockt sion,5454( thousand bed h c "Note Fund" created pursuant e be 0ndcniwe unde which rhe O principcf enovnr of tho Deutsche Mort Scorer Bonds ond $ 1r49 thousand Nolcs wofe 2ssuccLThe Note Fund is expected lo prcctide 0 sowco of funds prhcipo(amount of the Swiss Franc Bench were rcpwchosed dunng 1985. ~ ftv the payment ol the Note% but docs nol conshtvto st cwlty for tho Notes. ."'ote 12. Redeemable Preferred Stock A sueeory of Redeemable Prefered Seek of tho Cenpony (seted va4e on shores d Sents 8 cnd C ota pcycbb qvancrly ond are $ 100 per shore) outsxtnv(rig ot December 3(, 1985. (984 cvid (983 is os cumubtna Shores of Series 8 cnd C have Sqwdoten preferences ol 5100 'ofovrs0 per shora p4s accrued and unpaid d vkfcnds. Hokbn ol shorts ol 5 ants 8 8 and C geneoSy have oli(y cont xigcnt voting rig'.Thee ore no redemption Stet d votic (S on lhovlandll rcqvilrhtients lor either series of prcfered stock dvnng tha next fno yean. Tit+Ige 610SS Stnts 8(207483 Shores. Bath the Son os 8 cnd the Seies C shores may be rcooomeck os o whore '440"444,, @xi(o(Cot CCI 207883 Shorts and 640.000 I or h port, ot cny tvna. Ot be oaten of be Conssony ot 5100 pcr shore p4s 5804 4 $ 29.758 529758 5 64.000 accrued ond unpcxd dntidcnch.gcynnng on Aprl 15, 1999 cnd on coch , tct215 Ct31820058 Apri 15 thereof ter tho Company 8S tO redeem, through on annual sciiking II 4,41 3t&706 Qxsrts o02d860000 31,110 . 51.88tl,. 00CCO funsL 5.t elbe eoxxnvmnvmbcr of shores ol Scnes 8 ond Scnes C.vntl ol such shores ore redcenod. Ovnng 1984. the Corporotion rot ted lhrovghn Toiol Rtdt tcitobb Prt(tnt d Sect -""(dta370S ~emma m cosh tone(cr dier 342417 shores of Seios 8 and 541.204 shorts ol Sents C Cy . rxidLSOQOCOSharts. (SM nvKon scrod vdue}, rcscitng in o $ 28 rnlion gott thol was credited e RtlatC20 ttvt 561.638 Sdl.638 5150.000 Su@An. 0 3 \ 0' lp4Swosto Note 13. Nonredeemable Preferred Stock A summory"of llonredeemcbb Preferred Sect of lhe Con pony btotcd Onidcnds on shares ol Senes 0, 8 ond f are poycbb qvcncrly cnd vc4o 550 por shore) ovstondtng ot December 3).(r(rrul984 ond (983 0S cs are cumubtiva Shores ol Senes D 8 and F ha ~ Sccxdotcn preferences d loibwsi 5'0 pcr stxvc. p4s accrued cnd vnacx5 dnxfcrtds. Ho(don ol shores of ~ ~P p'r + Iu 4 Series OE ond f genecSy have only coritvigont votvig nghts, gvswl ~, " IS 000hotnoitdst Sents D; The shores of Sents 0 may be r tdccmcd cs a who'e or h part, Svvtc(vcittt 10'yS ftoeeyfoit ~ fteor000toct to0CCIN5204 ol ony tent. ot lhe oar~ ol the Company at $ 50 acr shore p4s o pre-v~jc+ $50 Ptr Shea Stnts0 St os( Strtsf mum of 5395 per there untl Jctfy I, 1986 dccirvng thereofrec ond w rhovt 2500000 5.000,000 4.530737 Pit ttmld Qvvts Qvvt Shrxits Sicct premium on ond ofter July I, 2000 pkn occrucd ond wiocxf d44dcnds. Pnor (bc~e3LI085 5125.000 $ 250.000 5226.087 5601.087 e Jv(y I, 1990. tho shores ol Sents 0 may not be rode encd by vsng rhe Otctciibtr 3L 1984 125.000 250.000 226.087 601.087 d ploccecb ccrtavt rcfvioncing oaerctxsns if the clftctne cost clmoncy to 5L1 Otctcitbe 31 1083 cscttutiebtt Oootdtoid 125 COO 2500 CCO 375 000 the Company a bss bon the'diwdend rate on shores d Sores O. Sents c The shores ol Senes 8 ore not rodcomcbb Cxitl Juno L 1987 bey w4 be redccmcb(o. Os o whde at in Pert, Ct tho cation cf ihe Ccmccny. ~ 04vonivm Roie 7'1's ds at SSLSO per AvaixvlJune I. (992. Ond thereafter ot 550 pcr shoran xro xvncc00 Reit 16'I'S ISN / each cosa p4S accrued cnd vnped txwdtncL Cooxstovs Reit Ptr r Arvtvttiat vtor. R00d Sents P: h corv0eCticrt wib be megcr cl(inCOh citaCJvttvc.4539737 Aves ol Scnes f wee issued in July 1084 The shores of Sents f ore rtov 3 Otctcootr.3LI085 . 10 Sxi 11 NA 075'S ~car fg j>> -44~if CtceH)tr 31 t084 Ctrtcoctr 31 lCB3 10,56 l0 Stl 11 '2 ~ 3.: 5% redecmcbb vnil Jciy L 1989 when may wAbe rodeo(4CR(clos o port at ihe oaten ol ihe Company al SSO pcr sntvc 40s otclucd ond in 48 C84V0 ktr tocnof tht Jvtt four ctwdtrxs tltnodt tOC0520 t ~ ttaitv basta On Ctiioh roatotV man tl retx 5<tai mt 440001 dc cdtndl 010 Sents 3L F08 4 585mttt2 ~ 30 1084 ftfvioary 2 IL 1085 oitd SXov 3t. 1085 4tct Or 2ttt ra i~ Ol 5 3(0 acr sttota f .. ~ The shores ol Sents D. 8 cnd f ore not svbiect lo ony sxikxig fund or other repurchase or retirement cbtgctx(n ol the Compoivtt' 59 os e ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ q, ~ ~ ' ~ ~ ~ ~ I t~ ~ ~ ~ ~ I ~ t ~ ~ ~ Note 16. Regulatory Limitations secwed by USTreosvry or ot<<er SaeafIed coihteralfvni er such secured exrensens of cred t by caen bonk ore Iris ted Bn amount as to II e Ccmcony NOIBondbanxs ore svbtect to Iegai 4rxrarxxBI onme amount of d wdenas or ony svcn a((i ore to 10 ocr cent oi eacnbork'I cao53dand swokrs ond cs IISOI Canbe pox(tother shorehoklea the coprcNO(oftheCon5ptroierof to rheCcmaony end ol svch off!lares anmeaggregOIe ra 20 ocr'cent oi Xg theCvrrencyBsrea5xred5(t<<etordoiold xfer5rssdechredbyonatBond ecchbank'scaoBtdandswpks<< bark Bn any Cdendar year exceeds sue<<bank's net oro(IIS Ias def areal lor thot ye or correx5ed w 0th Bts rerax5ednei pro(Its for rhe precedang rwo ccxendor years less onv rea53red I onslers to svrotvs I'nder It<<sin<<tat!on. ~e~a se( oh~tB~NA~rhea se~'<<8 Carr!a'a NOte 17 ReCOVery Of PaymentS On, and, r."'IBSrll ~'~Q. BL5ALNA Coutd deChre dBXBdends Bn 1986.WBthaut Caaraada( I<<e 'iquidationof,AssumedU.S.Government fit+ 02 frocer II(,he Cwrency a(coprar55arely 5352ggQOQp 574 QQQ QQp and Sec ~ uri tieS ~ POS it ianS P" FSIIBMQOXLrespecsaelv. pkrs on ock$ <<ond amount cavd ra each bank's cca335ed net pro(BII fcr 1986 up lathe date of ony rf505denddec(arotSoru h 1984.the CorporatIonrecovered $ 49 55w(lon i520 mafaon after toxest os 0 result olits selllest5ents wIlh cerroan dcfendorxs Bn rhe octSonu brovgiv .IIB bxla .50 == The pederd Reserre Act BI!poses aonousiegd Irrxtothns bathe extent to 00 ogaxv40rysdde SecwatIes Corpororxxruprysdde GrwerrrrSerx SecwBIIc<< or otherwise supp(y funds Io Certait Of IheN a((Bores, h porticu(or each ha and oti>>rs to recoaer 9 SpeCBd loss(xBCWredby the Corporaten Bn banks subject racer<<shrestrBctSons on ony ex>>ndons of creckt ra brother 982 rotted to the IOSxdarSon ol secwStses posltxsns assumed from coaered transoctens.svch'os certam purchases of assen.w Ih the Com. Orysdde Gorernrnent Secvn<<es ha and per(om5ance by the Bonk of oblgatSons re(ared to Ihose pos510ons( ond of She net recoBsery reek ed by pants or such oHB ate<<such ntstrtctBons prtwent each bank from Iencfr5g Ia c-xp~g~r> ccepey 9 d such of(8atesur5(ess such extenssans of credt are Ihe carporotcn on certcxn other tsonsactSonsrefateg ro the orysdde . SSIVOIBOu 9 Note 18. International Activities hternotlona(octmtieS inCktde the business onnductedbyoverseas of(SCes. OBISO( Cast Of funds concepc os wel os hternateno(bvshess conduc<<N( frOm dames<<c offBCes. prin -AIoco<<on of expenses iICurredby e>> eoggop(xc area onbehdl of cfpssly She Head Office h New Yorf<<Becovse of the dose hregrotion of 11>> anoihec mclrdng generof ond 2555strotrae costs. Corporation's foreign ond damesric actirities, 1t h d( ficv(t to est xnote the ~ -Prorhlon for Pass@(e Lorxt Losses based on charge& i ex penence ondnat'+no(oct(riries. Such amounts ore based onivemcl 08ocotBons and Reserve for Pos<<bfe Loon Losses to irxernatlonol oct0wtes. f, OIc<<wsncas.w(xch ore necessori(y subtectix>> Svch 08ocotiohs of assets.. -A8owonce far the d(ferences between (creep ondunael StateS tax and expenses ro geographic areas are based an the domicSfes of rates. ob8gors The prSncpd htemaf OSacatSons and 08owor5ces used toes<<The (08awkBg tob(e sets forth estr25atedTotc(Assets at oecerrSber 31.1985. "40S the assets. income arSd expenses reloted Io htemationd octmties are lg84 and Igak respectiveht ond Gross hcome, Gross Bxpenses'hcome /~f9 Wyg~y -ASoco<<on of the cost of funcb bosed subsxsntia8y on o co5pvted nxsr. ~ + '98S -r:+ B.I tnctxaax ($ rB 0005cnrt ford Anets $ 40.800 I .200 ah $ 4.170 8ekxe fcaes 5 5.'0 Orxwrsrac Wemc<<03504 Aua 9.070 glS " 842 83 , (vrcce 1$ .550 1.045 I.S70 75 41 tauskf45 Last cnd A(<<co 2.080 197 208 (I I) tbt W453400510rto<<eae 14.1311 2.257 2.04S 21l 109 ford wx035mxxld 4Q.83Q 5.02 4.005 3 9 5 02 a00 50.231 55.835 550B '984 I Wcrle 0 fcadAIISSI Gamsklc00054 G ms(aoxnses 835tcaefcaes $ 44.140 $ 4.409 53.914 $ 49$ A<<o 10.910 1.055 (.02$ 21 Ib It~ Tuaeae 14.8QO 1.004 I.OS4 10 A<<ride (Intend At<<co '2.090 260 204 2 4 I ~ .3 0 2. 32 2.30S 9'2 60 Weuersl fcSd W050c<<oad ~ 2.2 0 S. 22 5.338 134 rfoad '4100'r $ 80.580 $9 881 59.252 5029 y183 ~ ISSCCsxe .<<"ry~'I fcad Assert GSOIIIBcc05>> Gams trees!tet tdorefeaxs 535.570 55..'30 53.145 5435 A 12.400 lb. I 5Q 958 1,514 885 1.473 258 41 3.54Q 288 255 WeISS025 I040005CI ., ~ I .250 '2.183 2.C02 40.3$ 0 .0 3 4.075 208 181 505 020 SI! '.23 57 520 5703 s ' tt' ~ ~ ~~ ~ l ~, lhe current ona deferred tox pro ear(s for the yean ended Oecen4ter The prxeca838 Items>>men cc 7sea me t89(x90 est(<<ences res(485990 en 3(. 1085. 1084 ona 1083,respect <<y.>><<e os ic)mn deferred ta8es a One yean endea Cecerrber 3(. i08$ . IO84 ond F08 2 10> ~ eSCeCtlr<<y CPO n>>t OOX et'eCt Of eCCn fe/C '4896 ~ >> $ ~ meertc>>xv "s3$ ')4 ' 63 Ccrr<<98'xaxntt Saic<<atoctx S<<<<OQ 8Cr)WtCVoeeresmtetoheroeo 540.006' 2O.72$ . S 5$ !3. 'ro>> Cet<<oea, 8 oot>O93ret olee AS5(trleoea cec<<oe 1$ .818 0.181 4.$ 1S Stcte enosecot S(39<<(tn I exeoo 25.I 0 33224 Tempts<<rea 49. 0 9 loe loe . I ~ I".oeol 22.248 39 552. Teso(sl Prmm83n t(38 Oot(tlloe TO8 et .82$ 5452372 5201054 (2A'1 I 8.20b ~ 2.311 Ct(her~ v Ahhovgh not olfectxtg the tcNS tcx prot sxsrs current tcx paymennmay Ts(9ct pot>>mcntor oe'<<9<<t Te es s OO 2 0 $ 104 'os 5 I c(3 270 use .3+ '",'T&s-'- 55(fer from the amounts treoted obore os current penthog the fxeol 8 dteem8895tans os to the totxng of cern xtcomedec4cnce ond crechth 7 Taxes. Other thon exes on xtcome.omov>97ed to 5($ 1 m8$ on. 5(32 914cn o @ 'he elf(tCtS.I( ants of these detenrxnatoonS Ore regpcted et the (060>>89g yeas ond SI(8 9(xenon(or rhe yean (08$ e (084 and (083,respect>>>tttt( The promans for xtcome taxes for each of me yecxs ended December 31. (085. (084 and 1083.resaectntttttyory fro(n the cxnour(n compu'edbyocpy890 ~ >~s~ifv the opptecab(e IIS. Fed<
- - arBlcvAI of assets,kobkties.hcome ond xpofllos attributable Io htcra risk choroctenstics ol Ihe port(0$ 05hcksdng cxl 08oco<<on ol Ihe toto(
>fxcft rett)t rn O Io>>er el fect99e SOx rOte. (5hso998 '95 ~ ~ 9 ~ I, 106$ 8 1064 t 1063 1$ 88 b toroy(sst . 0, Amew. 6etrtre TO8et Anew 6ef(toe(o9et 'Am(tv998 6 el(sre sexes '~4'r .Tt fetf<<d (otooeee TOX tto9e, '4(2 '" 666 ~ 40.00SS ) 4 5260,133 'I 4b.OOIS o 5323.244. ~ t '91 ~ 46.0(P4 (64.'1011 '($ 0,37(1 (1.(SI, ',91 ($ 271$ ( ' 8 't830(;I .,'(38006( '8ti",$ 411 ' ~, " ",j (4 .0 ':44 ~, ~~+~ryfyf',~',(pS 1(7,13( " 7 Toxgreooxtt trorerett~O8X98 ~ 1 4 (S.all ~ (. (44,637( It (34.3351 60( T<<ftrct Secomefox 6)998(es I 2(.6$ 8 ' 23.714;, 3.77 "'. " 21.730, ' '9 ' '-. 3.00 '~m'+~40)fblv ~ ~ . . Chher~ 12.561 1.30 ooeu(390 Attttscotse to Qttl srcome I 9 332.70$ 37.07, 222231 . I 3$ .44,, 273.006 .:. - ~ . NA0 P,;,'97>pg . $ Nrcshotct<<t'(ov ry 'ootPro 1548988orer(teootto es - 133.6401 52T>0 12$ . " 32 30! 34 77ee 20 b41 52$ 2. 72 '.60 36 13 S ' '8.65b""' $ 01.0$ 4 '08
-g-=-~~- Note 2L Earnings per Common Shore 'ote'23.Commitments oncl: ".': I+~~ -';:;."'I" ' ' . ~ ~ Pnmory eornxtgs per ccmmcm share omovrxs ore computed by bndng Net htcc899e cfter dedvcteon ol pre orred stoct 85yedenc4 by the ayerage nvmbero common shares ovtston8$ ng dvtong the he pence( P er common 4 th ~ c~ ~ ol 6>> C~ct~ ~sm ~ c~t. ,8~st'7s '9 I, shore amounts ssvutxng fvb dfvtan gn e effect to the asst)ned ccnrenan of O6 ovstoncSng convert(bee copetcl notes ond Efebenfvfes ond the assumed - exerc5so of ovtstcndng 64ttoe stoc(8 opt9ons cnd corets(on ol restnct ti ~ $ ~ (h ~ ~ I 108$ ~ > 67'176~>>866. ed stocf(vn Aerage co(rxnon shores on 0 fer(y 854 ted basIs for the Ieool085.1084~1083 ~">>0 '<< ' 7855311CO74835CMc673646MQ 4 '3cm "5~i 1689'>> 0th<< I<<9<<s ot Cretht I Oil 9 " I '250 2.400.MO 44 "c5 Tor<<T)263chongeC<<erects-Pure(eot<< 60.000.000 f<<<<cwl f~dC~n, ~ 22.PleClgedASSetS and Required ReSerVeS ""!~g)~~>'Ote C83m ~OOPI)chose C1349999xoonors 8(3 58(s P(edged assets cons6sted ol ceraxt x>>epm<<x and trochng account sec vn. 969@~
- 40.048S 4
~ toes end other ossen cggregcro(eg cpcroxxnotefy Sb I b4son ot Oecember ctedged to secure c ",3 P<<'ecve cvosc cnd tnnt deposots cna for ether purposes. 'st oad txsrs the 8cnx ond cencenborj(99g svcsaanes of we Company Porc( t)cncby 1<<ten o(cred t a(ea (or<<gn of free guarantees 158'Cst have been rec4ced by approx rnotehr 52( b8$ on for 58(Cs oortcxscted tc crt er ore rec(xrea to mac38en areroge rete >eS On Cecoslt>>4(h federal Peterytt (99onCel eresntvnons or coPaterc( ted by ccsn or morse~ secuntm has 8anxs ogcx2st ovtsttx9axog comesnc cecosn ace>>nes. Ihe rescryes.>>r>>1 st are v(ch(ced on Cosh and Cve (rom 8crxs, me 5383 m'lon cnd 5300 from 9~ 58(Cs ore recogn sect ormceoofy ores me cenotitd f(eotun(y (ossehrf ony cre cna(geo to rtee Resenoe for pasta(eshc>> T(uses These 9>>eVO,,g mkonot Oecember 3(, l08$ ond 1084resoectoo<<e A eroge reo)red reserves avnrg 108$ ond 1084>>ere 5740 mohan cna 5$0$ rreSSon 58(Cs hare an arerOgerISx prO(fe Comaoroovt tax(9%S(949(re obsgatxsns (P,Ode -, 9 )QS~~0'(erg(: Kg-~4 I.s respcct99<<s( ) 3 03 ~, >>3 ~ ~~ 0 ~ ~ t~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ I~ I ~ 0 t ~ ~ ~ 0 ~ ~ ~ ~ ~ . ~ ~ . ~ ~ ~ ~ 1 ~ ~ . ~ J ~ ~ ~ t ~ e ~ ~ ~ ~ ~ ~ eo ~ 1 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ; ~ . ~ . ~0 ~~ I ~ ~ ~ ~ ~ . ~ t +4 4~~Q+p "i~&i t5t!'i" c I s~lj'w'Cg'>>~'ri)'9, ~~+~ +y'+.. V@~<@)~ ~rstr'tt:rh~~~+~p~tw~Qvy~~~~~'tr"'<';"'c+~, 4 p'pi~. h tndependent Ace< intcfnts'eport lthet3hhnetucrtor perh Ctpreereran esfS Step>>eorm >C'hr Price Vaterhouze 4/V f53 Eat 5M Street New Yort. New Yorij IO022 To Ihe 8oard ol Ohreoors ond Saclhatders of h Tlw Chcne Monhot ttnCorporothcn ' asr opnon, the occonhporryng corooLdc'.ed tetehere pl condtan of Tlw Chose Morhat IolCorporotfon old SubsrrkÃles. Ilw balance sheer of P~p ~ ~ Tlw Chase JAvbatan Coroorotan fCornpony Onfyf tref ttw consosdated sestenwre of condf(anal The Chose Morfnonon 8osfj. NA osd Stjbsfcsanes . P '54 p ,PS% I and the retotedreenentl of ncome. Changes n oocfhofders'qhsIY I h ond changes n fnonoaf pos tan presere forfyAe fnosocf poynon ol The Chose Monhottcn Copporotan cnd Sptbspdhcries.fhe Chose Monhcnlon ~ ~ I ~ 'I = I >> ~ ! ', ~ .. Corporatpon fConhpany asfsf osdflw Chose Mashatt<<I 8onk.NA osd r Sbtpdarws at ecenmhber 3l, f985 ond lQKosd dw reojfts of ther ooero- ~~p I' ('hp,,' ll p . tans andre chosges n ther fnonoaf posnan for each of dw three ~9 h I r' r r y ~~~~a e~~a years nhe penod ended Oec<<nber 3l, Ig85, n wpth 'h 'l&P r these sat<<rants were rsode n accordance wrh gen<<cfIY occepted ovdt-t h Ing pondotds end cccordngIY nckdetf svch IestS Of Ihe occoMperhg records r Ph. ' ond sech orh<<alp@log ppocedjres os Ire cotoKfered ecessotY n the ~ .- . P p OCVIOlancee I ~ 'h
- ~n<, y'o pg;Th 3(. (085. Of mesc. Occrcxxnate(y 5( 3 Ix6on mcvrctocse ogre emenn cna occrox892ot<<y 5 8 c Tan wre poedged hs
.. ~ h I ~,::, P ~ Ik~p ~ ~ h I I I h l-Whar>>"'~',
- ~ . Sh
'P 2 1 'f I P PPP1 r hare.I P I P I h+ ~ $=c4g-lh r ~ r C~C-'~ 4+pijfcpf, eporr or anagement ttte Cbaae MofthtulatlCcrottnthott ara ~ yo Ihe ghtctthaitelS ~ ,.r"~~A: 1,~ Careeftt Of Itte4nnoaf occountrtg pftlc tates ~ Moftogement ts fetocnsote fcf the cf the fflonclcfQshhnena rh Mcmagement ~ c4cws tn Ihaoffsfcs recaft cna therlnxmancn cttlarled tn other secf~ of lhts onfstct feoofc Ttflch lllonnchcNl ts be@cled to tse nstsht.nt lrllh Ihe salef ~ lta hche teefnffeoofed tn colvoITIltywlftlgenenhfy occeoled aust mefmanoaf cccfacf Iote the ofcumt tcslces Io feRecs tn atf mote tn naf letpectc Ihe Jt5tonce of efents ond hcsltoclons that tnoufd be ~ them on o soteowa @ms to Iaien cutstcus cna trtltIMoftagemettt Io ~I~ CccavttICÃlrt Ihe TCCOe Cf Iftee CuClt Ona thee fnangs pnstytyn ona the performance trna ftndftgs oA he fuentot auot staff ono orf achcn to be loran cv Management fhe maeoeftcenr ouch cccclfth ofss and the fuefnat auctnsfs hche flee occess ta Ihe Canrnthte cvat Iecofn cna mesIS rttn lt Oaa Iten, Ihe QQTIllI tee n'ee IS teaara terr trtIh me tffefnCS me recce of me ruentof auott ~~ cchcn ta ce ~ ilcfudeiihe fiICsloaf taemmentt Of necetttty teRect Mcflagemele'S tudg- Manogelhent bemg pfetenc as lhe Cenlsnee deems nttccs~ mena and ettfhotesos ta the elfectsof elentsontf trtsttoctuhlt that ore 'lhe Inde pendenr puftSC OCcthfeanrt are engaged nlhee tslnucf aud t occchsecd fcf af dscfatecL funchon, to etcfess an oosuon on Ihe Corpcrancn's fmcnocf t ahtmenfc Monogemele hos fang recogntzed 8>> FISsortctlce of d>> ~hon nobfeothftmc nfsch aoftcn a bcaed on thee perfonnance of enneftsfy occsthed ttucfhng procedures bfte'fed hy Iheln IO be svf ftoete to proftdereaso-of as ochots.~kg the pfeponshon and dtsemnohcnof tnemenfs <<utt Ihe fnannaf ceemsnts mduded tn ltfs annvcf fatty presetting Itwftnonoof cond tiht of the Cafpcsahors ST tha lcgccL it report ore nat motencdy nafeodng and da hN eamon mtcencf enon. ~ has deletooed a ststent of internal OCCOufsrlg Conmaf hfscft Pfoft on e btaatant tote it asttstmg Mcnoyelefe flfdfufngl>> rtttpOnsft4heS st t lt Et tt I preponng the Corpamran'S filanafd aromereafhe Cofparahafl'S Systatn 1 of inemof occchslhng cared a designed to pfofide reosanoftfe that assets tee Mbgvofded and Ot tlc&ioctxlnstsa ctecutedil accord CSTCOTrith Monogemele'S tstthortsattcra end roccrded pfcPcffy to pernSt I ~; ;j,f ccpted occtsNettg ~ffis the pntparatlcrt af finondof stemants 4 occctdance hlth ponens oc. system is aufyhefcedby Trntten pckctes Cannon tnd Chef &emthte Officer gfttlfg~t bclattes HHt tfIS Ccp&ohonS Es etna a Ounnng CCIESICf ttstsm PFOFIC4s boso and corrected st the nonhcf ceno of busses. auede 0'ectooa,has resthhhkkty fofIeCCftsnendtlg the mdependele ~ " y I;' ~ I ~ ~ t f ". ' 'I,',, ' ')t 'ufstcoccavfuontsfnftheGvpamhcnnhocseocoorsadbytheSootd, l 'r ut 6~ ~ t ~ ~ I t ~ t I 'Ast n ~ w ~ LN J il .t.+r';4 4 1 It ~ W' ~r A" ~ tt t I I <~~tfi . t.> r1t, tt'Iit>3 l I j-"I t' i t t f t ~ C:Dry t t", 't A'l <J't - ~ 0'2 ' . ' ~ vgt~~r ' ~ asc ~ Srr ~ 8 // !~ ~ 257'wt W 'rr 'o'820tt ~ . O F ,1 4'0 Consolidated Summary of Assets, Liabilities arid Stockholders'quity 5 lao Ctase ~~roeCcrac orre cta ms mres Cv.~c ." $ 00 C v Set!OS '.3: ". 3
- I,'hfh t 'rh h I
~8~I 5 5,574 C$ 5 O1'48 355; ~ I 5 4440 0$ 5 5!3.-4$ 5 45'1 rl4 'eae ca ISvas Soa 442oeM~ ~ eaeenfaateawae!cree Secsvees tvn:tasea 4 I.; 4 lvil ) ee S.toe '1oaraO k Secvr'Ses 5/rv 422ea 74,37',344.405 '$0) I 4 071 70 $ 48 I Co 0 4CO too 'rares!raaese '$$)04 ~ U S.tnosrte Secsro 1.830.201 1.134 Ae) IC 2.0ol 084 70$ I$ 34)8 I 00d)$ ),r 0 Ieasera2 40etce Secaea!Ns 3)0.2$ 0 0'1).240 4 $ 42N erato ecu Stsce ear! Sec!4 aes 2.410.373 2.I 02.755 I, 032.01d 1.103 05t I.)5o.517 Coact Bo!aoLtsores oeo /505m!!es 1.408,541 1.070 034 S37 021 d44 480 045 742 feaeraa teserve Sere ota Cater Saocs 012 :52 taa ~ 10 15!.'32 .!.OI1 'oaa es80eeie Secerees O. I 22.302 a. 3.4:B.ICO e,i )0 372 3.5 "0.370 Iosoas Ms42Se coo!a losses d1.0)0.527 002 02'2'. 5.1').CG).)Sd t)0 S5.80).5i8 '0 5$ .531.541 I.
- ssess toactaGve mW Se!eea
!$ 3 2'7 I -'.2 os,G22.855 O 1.241.047 $5 0410 c 13:a C 7C'5 2(0 Ces2orten'e!0402 oe kceoSoeces ~ .8 0.471 5.250.d)1 ~ 0.571.41o 3,813.382 ).SS2.i20 VtI kcreea scores! 4ceeyo 1.028.053 1.101.040 I:Cri070 I )sQ 5d7 I tr0 $ 25 Oreerses or!a Sarceee!e 013.530 703.S4d $ 44,742 514.127 4) I.COS - 3 053.550 50! ~ !as 1,4)l 27Q 2 ~7024 100 ~ tsseas I ~ 105. 2 !50 553 0 ~ $ 81 021.440 ~ 530 'o2 CV) 577 3)o 3)3 .4" Uob4!slee OSOa SeociJsocaecs $ 2455027 I' 3 GOSSSWSC Qlkee
- 51. 3l I 0 I less leserae IOO 7dl I
tete ~ ess 5402450 $ I ).409.8)8 511.140.045 $ 0.0 8.372 $ 10.101.118 0.70d.s47 10.130323 17.73).OC 4 I 3 270.504 l!.74d.)8$ 14.012,40) areneas CI hcea 5 tier.r. 84055050 1,030,120 1.423.014 1.)03,1)0 1,440 17$ l,d 1 7 531 ! Seerea Beat . 28.!as.ae 20 ) 73 208 35,591 52 10!00 20.0o3: CO }v lasso Gowk!s fseas Stctaseaa252$ 0~ SOSa O I .)53.040 4.131,703 SO.OBO.O I I 4.480. 200 50, 0"00.557 M'40.00) 4,ti!.0 S.055844 1 SS.200 070 4 554 +47 eooer ).433 501 t.tsA.Sdd 4.2$ 0 4SB 3.) Id.017 4 20d 208, p ase M ~ 4.071,004 32 $ 44d s.S)4 d)4 4.)dd I.Soo I td "57 eoSosac es Cr!sooa8$ 050 2.523.dod '5 )d2.800 o.o42 711 ) SOS.)ol ~.oG) 432 /PP,S kc~ kcnrefoe2cre kcrsed f2~ aesGree eovooe seotres COB Cd I 3.i52.17$ 50).730 2.501 OO5 I 250 ." d75 013 '35 503
- ~
'01! ~ R.'- I SG.4iG. I OO 4 eGO 30,540 l)3 7d COO.S) 4 rosa. 52 t."1 "3 lot!a.fera!a No!40 aaa er!saatn 400 15 0 I s 0 Ca) I 2851 I! celao42 es 53." a!.:4 330 IS3 S. I '1 cede~st ere errea Sms SI.S'8 0 !8 0 0 .." oe gQi.j'ire 'eserei~cee Ccreaece5 Saocs2acsen rn'~ SSO<<$ 1 aarre oQ I.OS7 o01.081 375.00 375.CCG Nrf ~2 ~$8 )td 434 202 423.051 4la old 218.2SS d18 342 $ C4,IOS do 5)o CSQ etaeeieS 22 24AI l18.7)Q' ,22,3401 013.0210 IO540578 8 OCO<<eaOO a SSSSOeae 2 1/0 05 I!4 2 044 n0 I 783 I I1 c'ca 0oveacra Saccatocen I oar00 !: 3 2~ 4$ 7 3 CIC $ 25 / 3 'ra an ares m!aecaaaen! ~ar !l.'::8!i-' 0 Os ~ 41, Sel Oss 4tC ! .'0 '.. 2 17. S)C )'5 SIP~ S 5 1 'I .0. >el t :w wi+C:8202SSO seO '0~+5 lsd asaw Xg'<<>"~:g C7 0 Crs ~r fg,' .- QSQ TS'2r . .04 v
- 5!:0! 0 I 5)57 144
'form 'ances, neresran X t.,". tpv P..... t tt . verage ates axa erps! C the Chme nVxvvtro)n Coraaatcm ona SCcnnxatss e quivaent sc ~ 5 ro ttttsottx +ossa cn c err merce est Assets Intern a. Earning A stets) were)I.docmK(Oeccs nr ccea P to cams 5 5 !sacra !Ores c cta CPO 5ecvr tr es evrc. oseo ytcer tote o Aoreentsttn ~ r CC roong kcovrtr Aston t 04 ~ ~ )ttestmenl Socvrtnost DonesrK C(fKesr t(S.treo)vrv 5scvnres I 520 I 0l 0 43 4cfsrat Ayency Socvnrns 240 25 IO 54 Stae ond taL<KOI )dttotcn Secvrtoes I.OCS 202 I S. I I Other Secvnres s7 IO 41 , tctcS Dome)IK OlhCOS Otenocn Ol(KOC 4,3 0 '05 tt "7 I 2 I7 .02 lo.57 tcool testment Soar)not 5.5CCr r 07 ~ I 2.74 Loonsr Domestic Of(KOC 25.202 3.004'2.IO Otenoas Of(KOC 30 334 4.2 I 0 "5 I: ol Toal (octa Ot~rs 7. 53 I I 83 t4 V+0. toss Resene for Acoado toan 533 tosses'oans.test ':.r.)A' OOZ03 ~ 7.283 II d3 Total Interest. Earnhra AssetLP Not 73.305 8.003 t) I:.cd Summa~ross lntotoa.darning Assetl /t ,,. Doroesoc O((Kes '3I,247) '714'"'l,dd Chersocn Ot(Kes 42.0SI '.040 I l.52 )t:)s,'<gtsc; Torte Gn)ss Worett 8 Nonlntorost Corning Aseotst Aston t t 74.I08 I S~ I I 08 ~ Co)hand Ove fran Satin Cvstomen'totwty on Accoaratces .C402$ ~ f I!t ~ Ghor Assets total Assets t ~ Uahititios and Stac5dwlderd dqv'y Interest Scoring Uxtt'test Werest deanng Depovnr Oomeshc Of (Kest Soprtgs ond Csdsr ot W tchcstK4 Doooon ".-5 f.got.c'; 'os td') Scrttngs Cert hcaes cmd Neo egg Accotrv Deacon 303',S '35; S 8C4 '. f 501 ~ Mortey Mortet Ooooun ,7.003 7 "0 I ~ Negcnahte Con@cores ci Ort)cntt t G her pre Doaosrn 7248'I ' 07o e.i tarot Dome)In Oi(KOC t,. I 8.243 ", I.447 j')e ~ ce Cheneos Ol(KOC 30'JOSt-', 2'520 02t 4 x tomt Woresr 8eonng Oeoaon tIr 48,048 ~ 4,2io 5.74 ~ ~ 4den)f fvnds tvchosect avJ Secvnt res Sot( Uoaer So)vvchaso gresmonn 4.804, 402 0 0I ~ Gher donawed Mono!a Oamesoc Cl(KOC '* Ovsrseos C(IKpt '.224'IS $ .300 470 8 50 !7 50 ~t'ttst5 .ford Other Oorcmect Moner .. .Ool-t, , 0303 IO 48- ~ tong term Notes and ! .52S 240 0 SI Toro( Interest.dearhpciiaatlnms *02.570 $ 000 0 2 Svmrnac7-Interest-Seormg uotxt(tmsc OomostK Cf(K)n ChenoosCifKcs ,22240I, -Ag 030"'- I,C00, 3'500 5,:0 0'52 Nonmtereshdoanng 't ~ ei Oeooon rt Oorrestn Ct(KOC 0.822,;' . Qpvs Oeoos nn Cher)eat C((Kes !.438 Acceaoncos Centre(rtg mX~ 4.008 intacta ttccrvea srctttces cnaCmttr IKOAres 3.000 ;p,P Toral Noninterest Seonna tfoattinos ~h(o Terai tiotniiHes em(orred Stadt Nonredoerno bio referred Stodc ~ ~ 02 002 'I 't, ' tsgc:,. Common Stockhoh(ors'avitv toro( ciaatgrtos and 5taotchotctors'avinr ) 0 Ta so ofo tow ttot eat Ner I nr ere st Income o no Aperaae Interest care 5 oreacs Net Interest tncomo os a itercenraae Ot Gross Inrerett.tarntna A'rs 4 trtpt'4 crcolsoo cott cars srtc ro'sn orms tr potccootcllors)~totrsmmcpcotto &to Ec cpt ttotrtts pcttoe pottcn crIKr cra trcxtcre 'ee ecrts m ocoKa)tx ~ )CO t ~ p+I~A' t OB "C~C ,~
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.j~7 ~ ~ +de~ ~ ~ et't<<t it<<>>rt>> 8 +~~ ~P <<A~<<r, ' ~ << e '4+e>>~>> . << '+, g~4 t 4<<<< ~,'<<* '>>'<<Q g.,egj ce jta <<6>>gg 'c %<<o<<N<<r<<rg,'C.e $ <<o <<g~, pp" t! '+g Qrt 4Lgf ~ .%+at'yg> ctro>>>> >>8' f ">>>>kP g <<g +p De@,
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><<>>C24 1>>J,t- it 4<<t<<CCe do ce <<<e<<eif t e'~to>>e ~ye ?cc"ce 4.<<coe <<c'>> 4 e oqe ?oo<<te wet<< >.e cqe 4 e<<o ~ Soc ce <<5!)P 8 $ 7 "i5 /<< i<<5 ~ ,5 ~ 74 77 Si I<<C) I '0 05 12 67 '10 S 7~ 521 5 7 57 52 9 OI 10 06 i]tt 5 5Ci. 14CS 877 5 t:'6 4 o!c~ i012 I I 02 $ 4 <<) 0 566 1.480 201 I7 I 21 I I tib I0.48 1,662 163 '08Ib ' l,td 0.55 1.743 311 ii 7 0 08 0 36 I 556 257 4$ 7 i.SCS 222 i]01 i.iob i)7 1].I4 2040 67 1287 1.008 73 14 41 '1~~'j~PP)~~ t, N (5 11] I ] 6.24 161 Ib lb.16 243 6 06$ 270 4 5.406 427 12.21 3.<<02 387 12.10 4.337 124 11,28 4 071 129 i 2.61 Sil 94 I I Id 612 I OO 17 71 I.il8 50 I 6 43 I 059 ]S 13.32 4.539 Sl I 11.01 ].8 14 i06 ~ 13.00 5.755 183 12.$ $ $ .130 Ibi 12 Jb 22.060 ~ S.0 12 I].11 10.513 2.567 12.13 26.455 808 Il.I] 24.C58 d21 13 Cd ]6.741 i,til 12 01 34 074 i.l]3 i2.13 )5 048 I 02$ II 60 $ 7.5)$ I 248 13.2$ teF~%1 .. 50JIO 7754 1209 53.567 6500 12.IS Ol.483 1.8]3 11.83 O2403 20OO 1$ .17 650 560 002 757 <<>><<lg 50 051 7 75i 12.00 5).018 6 500 12.13 60 581 I 833 12 0 I '1.756 1 COC 15.17 71.601 0.180 Il70 6$ .764 7.8$ 7 di 7].663 2.IC7 1..69 7),409 '.412 12.94 ";i~w 11 27.667 44.504 3~ 5.612 " 12.90 12.58 '3.9Sl 42.]dl ~ - 2.871 4 966 11.08 11.72 32428 <<2 0$ 7 ' 067 1.230 11.80 II 6I '3.64130.$ 2$ "'.424 088 12.80 12.98 51 e'. "CC'~6~~'; e+P~i<< 72261 O.i do i 270 66))$ 7 837 i i.d i " ti W< 2.107>>.60 ti.ibb 2412 i) pi 4.3 $ 4 4~1 5 J37$ 70.071 ~ $ 86.540, . ~ $ 66.838 >>~WI .' '59 . S ~ ee S l,b I I t S 82 5.00% $ '.440 5 73 $ .03% $ I.KO $ 2S 5.125 5 I.S53 $ 24'.1411 36 0,48 1.293 18 0 10 9 9,2i 4 lb 0 8,84 )xi,'?r:"lg 382t 4.004 460 030 3.742 ~ 333 6.01 8.368 iit 6.00 $ .06S I. I! i 135 903 I,Sbi 143 10.50 2.66$ 247 9 28 Ol I ~ Id 7.03 )I 10 62 ~~&4'i'r '1~>>r 7.067 703 11 2S 3.111 336 10 80 7.340 162 6 tb 8 303 24$ i 1.7 I 1$ .418 1.513 0 88 lb.5I 12.251 31.268 1.107 2.9dl 003 0.$ 3 lb.887 "0.0"0 3161 645 7.58 8.56 '17 604 )),I!6 iii 850 9 Cd IO 30 )t~~! 33.057 3.473 = io]i i].Sio 059 id.diO d,id, io 10 id.i?$ S.204 '48 4.996 10.52 6.116 4.068 55S 0.07, 4.823 1.056 125 lb.32 ~ 50.852 5.258 1.30$ 13$ lb.2C 6.164 6S3 'O.SO S.835 $ 42 0.28 5.061 I I] d 90 5.277 136 lb.20 Fij'>f~
- 4.90S 5 J43 3.184 4.727 3.641 3.010 4.707 4.250 13 J30 13.307 12. Sdb 13.420 Sd5.341 I
)0, g' 7.401 CCS " 'Vg <<Jr<<'>> << >>1.79$ ICi 10 81 I.C83 ICS OCS 2 600 62 0 10 2 051 !6 10 27 ga ~~~4 >>~4+ 62 575 o 643:C $7 57 5$ 1 5.400 0 53 62574 I )C8 8 $2 64639 1.626:0 P 10,$ 02
- l. 237 252 20. 3S I 028 107 10 22 t,484 02 14 $ $ 1,101 12.22 6.663 730 10 77 6.545205 12.44 6.468 104 I I Ct
lb.$ 4C 41.041 1.404 3.00O 003 0 74 23.200 30.66$ 454 044 '?7 0 44 12.161 42.4td 556 I.l]2 0 00 IC 60 '>>:.r~"r.i l I 0.562 0.508 8.8 ~ 3 8.731 1.250 1,22$ 1.614 1,251 5.866 5.70S 3.220 4.C61 2 7'5 1.342 3.025 1.844 1$ 714 18.C91 10.321 '8.264 Sl 'SO 75.672 82.19S 82.003 05 150 62 62 489 375 602 602 3 '68 2.e?4 S 690 3.271 $ 25 li: $ 70 )71 Seb!40 $ 86 2)S $ 1.! '7 $ 10 ?711 $ 7 4 ..5!1 55:a 1 <<ig 5'I ~<< CQ. 't$ fjed'~
- 4) ]S] iI 057 666 .10 099>>6]
~ mP rt rf <<>>4+i. 4 I~ p~vtt ,t>>4~~ imp+~ ~ . %P 't, 1<<>><<<<o'r>>wotNe t g>>> ~Hi< v 4 R Qt,<<F)>w'e 5 +>>g+, +>> Q, rpr,+;gp>>>> ~ <<<<<<>><<IgV> <<~ y+ I t <<4 <<1' O,- ? r '<<, > g y 't g>'1 t + <<>>4>> .. 5 .v tt+w <<o* >~,>t II>>>> '>> P V ~ ~ ~ ~ ~, ~ ~ 0 ~ - ~ - - ~ ~ - ~ ~ ~~ ' ~ ~ t ~ t4 ~~4 ~~~ ~ ~ ~ P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ - ~ - - ~ ~ ~ ~~ 4~ ~ ~ ~ ~ 4 Wjcc+ -::Y'9, 97r O7~.8977. Consolidated Analysis of Loan Loss Experience The Chase htanhat ran Corporotan and VbsKLonm Ytor fndedgecembeo 31. ~ v83 ic82 Loons 8$ e mssoiist -Ouniondeg 8atance of loons 61.931 62.C03 S 55.894 55.532 5 51.331 -x~e Sconce of loans S 81.5-5 S 59710 53,37 S 52057 '7.. 2 is Reserve for Potable Loan Losses cn beginning of Year gg5$ $ M >.51 IS e thavtondtf 5761.439 . 5564,110 SS58.277 5541.082 5467.807 Charge Off u Oomeetk Loonss '45.520 52mnelcSd ona hdvs mal loons loces ro feixioat hsti rut Kns loons for Pvichaseg or Conyeg Secvnhes 125.909 11.000 127.929 700 164.437 2492 '.0CO ~ 2.690 78.862 5.383 1,918 Reef fpote loans 14,5$ 1 2.$ 96 1.070 2.802 11.296 Lo~ loans ra hchw'ducts far Personal Sspend turns Lease fecxvcegs Other loans 149.974 1,175 1.204 '16 73 755 1.075 '7 47,671 44470 4,102 529 37.998 457 'sw IRdrss~. SOW>re@ 303.b13 o 206.871 215.807 204.213 13$ .914
- t,'
International Loonst O52vninchsf ondhdvstnoi Loans f Real store Loons Loons ta hdmdvois 4r Penonoi Rs pencltvres Locxvs sa farego Covenvhenss ond Offscicf hall@hans 67+17 1,404 I3.947 8', $ 2893, 4430 'I '8- 82.106 '. ITAOT 90 12j00 '/ '24MI 62~ 4+00;. t ..=- ~ 7 21 F995', 2.372 4,997,r, Other Loons Taint hsemCVIonat lOanS ~ ~, Tarot is 417.829 278.534 " 329.151, 317.917'f, . 165.649 t2,, ~ Recoverfeu and Inrstrhi hans 4",Is II,947 '.>;5',!, iSAOi -r08'~~ h .I ~:. Iooros to Feahciol hshtur4m Igni ', 7909 I;"'ll;297"v , 4 f i: .~ . OR%~-f'. ', Laces for Purchaseg or COOTYhg Secvrihes Roof Lstate Loons loons ra hchwcfuds 4r Peitand RSIPendituree 18496 '14959 ' 13156 1;9 8 10340! .C.t" ~t~.b!74 'I ~ Loose fecechgs Other loons LL Terat DamettK LOanS 69312 ', 44.871 ' 60&4 ., ~ 53.622' 27.i 24 ~ rIO~SWC 4 International Loanst ondhdvsmaf loces Reef Istate Loons 4 ~ 1195160 .-., 12619 f'; 7967: ',.'I' 28LI03;f': 'I c"'..I b~g., loons ta hcSvidvab for Peisonol Sspenckrvres Loons to faregn Ocneirvhents ced Ofhdoihshtuhons 660' 'v 179.;- 5,'. '. ~,I 1,182 Other Loans ' t~ 1.583 . 7$ '4.298 ~ ~ Toiat tivematusnot loons 27.963 .. lb.301 34219 I 12.024 ~ = ~ 63.172 74.642 i, '7.941 39.748 + Tosat Recovenes '7.475 'et Charge .wc;:,<." h.i Offs Provision Chorged to Rxpenses Reserves of Acctvtred Svbddiorles 435.01O 24.120 ~ 215.352 355.000 64.932 2S ~ .SW W.COO ~ ~ 229.97d, 251COO: ', '25.WI. 211.000 '20.35 foreign Rxcha ~ Trons4tion Adfvstments 7.487 . '17.2151 114 dell 115.$ 291'! Ill 8241: Reserve for Possible Loan Losses ot Lad of Year NOS d72 57dl. 39 5541,110 ,. $ 558.277, ' '- 55 1,082 (SOI~+mwj Ratiou Teel Recsnenes ta Taiaf ChoigeKSI fs ttet ChoigeOffs taS SSOII .'2711 22.711. .. il.l 2770 Sc '4 011 .. ~eOvntondeg 8cfonce of Loons A2 'vi 8otarKe of Loces Reserve for Postdate loon Losses Pranhon 4r Possftte loon losses Reserve 4r Post@to loon losses so: 353 73.6 283 $ 9.0, 451 89.3 '- 'P'1'2 4 )587,4.'>>.. p' 59wv 711. I AT Outstandng 8o4nce of O.pons ~one 8otance of loons Ii 1.23 12,8 10$ : '1,07 .'" - l,l ~ Mt Summary of Net Charge-Of fu I~ ~ Oainettlc LOOM 5234.301 $ 162.000 $ 15$ .463 Sl c0391 -' 5108 190 1718emahanat loons SL053 SS.WS WO 9 '9.385 17 TotalNetCharge.Offs 53 0.35 5215.342 52.'5~ .509 5229 978 '. 5.125.WI
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I I 'I 89 4P?/gal ~ . ~ ~ ~ pgc>>)5402>> c ltd t dl 01 tyyyp dpThoChosen~tenCorpeaenondt 0 Dtttt 54,sdents -0 u ccroobcr>>1. .sy"=."-:in5+ . 2~+9(>>pl !5 doooosonsl SOBS ~ ic63 ~82 I%BI Oomealc Officers Real hero taanu ConstnlcnonandtondOmetoylocnt S 2.427 5 3.0ts 5 25500 32'.S S 1.55'2 2.8 I S 1.$ bb 2.841 5 1.107 2.3's Secured by I 4 fotnty Rcndennol PSoosr net 2.bb9 4.3 1.712 2.7 I.X7 2.3 1.237 2.2 1,280 2.5 Other Rcol he!cleans 1,244 2.0 1.0$ 2 1,7. 821 1.$ 62b I.S 78S I.S loons e fcoancel hsntuncmo ~ tortgo9e Canpanes 2dO ~ 0.4 ~ Xd 03 132 '.2 132 0.2 I I8 0.2 ~>bs,'t.,>> Oamestu; Coonynercc48ants 141 LI f Sents In ale094 Coorotnet 327 03 3$ 3 .O.b X0 O.b 35b O.b 41d 0.8 Other Pototeory Insntutusns b 7 2 ~m Other Coon(oat SottlNnons tasSS far Ptschassoa or Contnn9$ ecunnes e hbrduoh tease frooncrogs I m to for Person(46spe<<htsces ~ 028, 503 SZ$ $ 7407 1.464 19 O.S 14'0 11,8 2.3 1.163, IO.MS 543 $ 313 1,013 1.0 0.9 Ib'.0 85 I.b 1.12b 0~ 718 360$ 308 2.0 1.3 17'3 bA 0.7 1.261 1.200 0'.838 3 085 304 2.2 2.2 17.'b. 5S 0.7 1.083 10 422 b07 2,72b 38$ 2.1 1.2 20'.I 53 -;;.-55,";+'esos a7;,'utr~~/Fo","q Tos<scottpt teens 1.693 2J 1.178 0.9 b87 1,2 752 1.4 884 1.7 'i+~-'~j~>dtnn 'b5$ '502 0'8 I'.4 1.'$764 ~ Other Locus y>>00~0110>>0 05,0 Toot Ocmeo(Oiftccs . 25500 '500 1.0 ~ SS '>>O SS.IM OO 21322 81$ '351 . lyo 'SOP 21010 854 300'Sn SOPSS 10. 'r5'.; Oversea s Of Asses 0 Retdhtote loons emls 2.8 1 d . 4.S .. 2.279'.8 3>>t43 3,801'.7, 1.204 2.3 1.305 2.S 7.b I.S78 3.547 3.0 6.0 i~~/ '45 ld~ '1,033 $ .9 Lans 2,482 3.9 4,251 ~~~ toons e Other tnonctol tnsntutP'ons 804 1.3 972 L.b SS5 I 8 1,065 1.9 1,136 2.1 Molt 'JSO 2)IO I 0 SO ~0 255I ~ .5 ~'4 I 3.101 SO . 2,23$ . S.3 -yt ~o>>>>>>>> I SI,SM 30$ 25,510 .'I'.o 5$ 5 24523 ~2 2 20.552 30 2 p lease fstooccsds Other loans t I'.255 X7 1.117 35 0 2'o 08 I.B t.'030 237 703 I 2 0.4 1.3 SPS 140 1.147 '.3 2.1 '525 8$ 843 t.'0 O. I 1.$ 'ou 50 701 0 0, I I.S .IQ),~ tuf~ Totol O>>>>srseas Offices, Gross 'est 34.227 . 54.b 37~ 50.8* 35,072 14b 62.2 34.44b 127 61.4 '22 31,040 59.9 0 'dr~>>'p~~> Unearned Oiscount 21b . 210 Teel Overseas Olhces 34.011 I 37.29S ~ 34.026 34.310, 30.01d Total Loons Sbl.931 , 562.003 , SS5.804 , 5S5.532 . 551.331 n Consol'dated Average Loan Balances t 5 Year fnded Oecedptber 3L IS rt mttons. btned on dosy>>eoooett 1085 . 1064 1083 1082 I Oomesdc 0 f A(est Real hete Loans toes a tortdo0e e Other froonocR Soetutusns Cower'aoos 5 S,1$ 7 I b14 ' 5 4.263 '60 I 082 5 3.908 140 1.071 S 3.84I 2.10b ..' 3.613, 2.244 y,'na< ~4"'O '.-'m~jg'ods .0 0( s C~el Icosa ~ torsos Iar PuScfrstro9or Castymd Securones e and Industthtl loons Inchooduah hsr Pessonoi Bs pe<<5Nrcs Tdnocsetnpt Loans Otncr teens TotolOoonesticOffices,Gross 'ocns t582 8 900 0.270 1,10$ 1,182 4oB 25.btN $ 01 lo 444 4,28S 585 775 250 23244 B>>y91 3.181 370 b'Tb 23S 10.804 20.$ b33 2,018 382 783 274 X . 0 04b 2.354 - ",~rs'y>>' (so~go.~ test suocamed 0 scoose 155 3PS 3SI Total OamcsteGIInss 25.202 22 WP 10 513 20.130 105 0 Ouerseos OfOres 3b.527 38.802 34.208 32,333 . 27.cr ~ I tests SOeorned dos(aunt 103 151 134 0 114 TooccChencas Olhccs 35.334 db>>741 ~ 34.074 31.010 ~ 27.704 . 3>> LS>> 00 Totol A>>croon Loans 561.53b 550 710 553.567 552.057 547 034 sr'ILyz e .'. f, )sp r Pyu ~ r Q 6P 4 I 5 0 I ~ 5 ~ f ~ f ~0 / C 4 v. lp 1 C t I e 1 f Mr .C. sf Stockholder Data Ihe Chose McvttlatSan Corporation and SvasKsanes Corn>>an Srasa Preferred Ssasi P>> r>>a<<g f oatrvt "<<sri>> tctaf CO>>V>>an OA 76tyS tO'MS SC:I Rate 4'd ."P:fj+frr 0.. 5 03 nhrsvtanas CSceor aer ccr Pmd Stlore Sewer I Scf etC I>> cs cst>>etf ce?>>sf Qvortorly Cosh Oividends 1985 " '<< "4+"' ' fu Qvaner $ 34.838 5 .4& 5 $ 02 5 606 5 3.081 $ 7626 $ 140r3 S OCSS 2nd Qvarter 3$ ,194 .47'S 502 OOO 3.251 7.515 14.013 26.337 3nl Qvorrer 35924 475 $ 02 606 3 281 6 875 - 6 101 17 365 Q>>s ha'v>>?$ 36.316 502 OOO 3.281 7 COS $ .847 17 301 'tr.'CH teel 5141.272 $ 1.90 52.COS 52.414 $ 13.124 5 9?441 540.CC4 187.091 'p~',+ %A=.'". 'f(i>> f984 , kt Qvaner 5 3IPIO 5 .45II $ 1.080 $ 1.634 $ 3.281 5 yb4S ' $ SI3.840 'i~ri>'~m 2nd Qvoner 31.8OS .4$ SI 1.080 1.634 3.28I S.OOS 14,060 3rd Qvatt>> 32446 .45si $02 606 3.2S I 8.721 14.013 27, I 83 ~ 45h Qvarter 33.047 .45ss 502 OOs 3.2SI 8.221 14 073 2o.cbb ford 5129.16a I 5 82IS 53.164 54.480 5I3.124 ! 32.852 SSS.I ~ ! SI.766 Qtooterly Cortlftrm'son of ISSarhot prfceerr Stock-' ... ~ ~ Common 1985 low Qoso tech Iaw Qoso tsah Io Qose 26'll teach low Qaso <<ah 24'Itc low 'ase>>, 22'l ~",.Sv;7>> c. ktQvanerw 27li 2311 25IS 26IS 22!i 24sss 27ISC 23fi 30ttr 26'4 21h 20ss '3ett, 26 lgtftc 3III 25'Ite 26'Itc 2fntc 19'St>> 20'tts 29ss 22II ',M" 'A,'i 2ndQvartor 30C 34'lh 24>> Ssll 2>> 2$ SI 3016M 2llh 34>> 23>> 2~ I?lh'lll ISICC IIII r 22II N>> 2lll 23 2N4 24 220 2llh 20'I'0II ISI 2lll, ts>> 2?ll 2? 0 24'!'I 2 ~I 2685 259>>.'>>Q,'4.'*Q 5:,Ih Preferred Stock 'kts Senna 8 16045eries C 10'W Ser>>s 0 'ones ftoctrhg Rom f leah ls>>r Qase ISan Iow Qose tech lo Case ~' ISOh lo Qose tech lo Cote, 4"" k,acwr)i, v I2,' , 1985 >>0 C 50 62 '$ 58 5?<<' Oils'4 40>> 64 44 . 73li'8fi 0! 40ll 42II !20. 4741 Ss, 5."'I 514 5?l S4 55>> 55514 S2:34 52tf i'c5~5'~-".4>>ff'.I 59 OS'311 72II 72II'8II 45ti '6II Sbss Sbsl $ 351 541i'bsf . 51 525s ssg r Sthg~ I Q OS 69 >>Ill Mll 25 22>> 20>> M>> I>> Irl SI 52 53>> 54>> 50 3 sl xg~'2>>'A N84 r, ~. I 2<<>>M CCQ C 0 $7 63 50 5311 53ttt 5l Mll S2 \ 5 II $S $ 6'0'h SSII'2>> 64 hl OIII 61 03>> MI M'l 61st' 68', 400' 44 43% ~ ~ '914 37ss 3$ I 3 I 39!i 37ts Wh Mh $ 7ts $8 SS $ 5'.: 54h 48 IS >>Ih $ 5250 48h S3I?l Slh. $ 52II Sl M I? .'Ivo so!Ct. Sosea on <<e tn>>age dbd and a&ed antes tho trgfahsw ond Cta5009 SOtet PnCeS far Sacr>>ena repaned on the camoov>> tcoa C st'IIDSrtts restatod to rehect t>>o4orwsno sect sais dedored @rory 15!1986 Ihe ~ tfvmboe of Common S tochhdderr. Preferred TeOrS CIOCaseds '0 5 toe khatdors ond Converrlb4 Secant tob4 sets Ionh tr>> opproa mote r>>4<<ber dhasd>>s el record of eoch stats ~ oct y ond secvnt>>s canren434 vca oasaty secvnt>>s of the Carpcranon co the end tho d d y Holders 9.~ 19ICS 53.800 1984 1983 48.7CO 1982 $ 3.003 $ 7.CCO Common Sect. Por Votre 5'12 Common Ssacl favwv Co>>steers S1 83 82 12 hdenedbtoci.bhcs Ser>>s 8 600 600 2.300 2.$ 00 '.1CO 100 100 500 600 '00 Pr et orff d Sleet, 76171 Set'es C SCO hefened 5toci. 1045s Se os 0 2.100 2.1CO 2.000 '2.COO '2.COO Pffferffd SsOCi. I4atcsg Ram Senea 8 100 100 I CO f'Pgfe'. hef>>red Steel. Aoot049 Ro5 e Senes I 6.7CO 3.400 6.800'.900 Cos>>en4sto coa tot tforesto?0ts ovo 19931 1.2CO 3.800 4.300 ',200 Car>>en4tte Subardrsotc 6 OCDCIvvres:6'. I 'ale0 the pnncsscf mats>> n>>t>>Cn me ~'I s C re Iccbf Comman Stan a noded n 4>> tee f Tora Stack actcsnge. I,CCO I 3CO I.7CO 2.500 Ii!IR5)E;-ff ~. St' r 0 CP rc '...+>> r v St:ch~~wj; S,S P ',>>c,r,, ? " I;5 ~iu'." ".*' ~~ ~ ~ ~ ~ ' ~ ~~ ~ ~ ~ ~ I ~ ~ 'sg ~ r Combined Statement of Income ' flo Csxsse i<scot<sissn Ca< pa<aeon '<area<one $ 4nnxocvs a< me C ~any A~Yr.cn'r. ';Snig2> ! 'ro'!"m deem<<? I '. J< 5 <<mcvSanOSI 2< Income w<<essa<<flees an coons I 51 t1 3 5210 347 S I 7S?03 51! 0 075 I r7. ~ ms<os'n n<t Otoov<s Pasta n 'n I an<I 2.583 I 733 I 021 .'45 '8 ~ n<crts< an I t<cx III<as St<a ana oct<22>>s As< cnasea CA<a<< Itscxe402tt <<<I 3.402 2.370 400 <<Is<tss one< tvnvonv 5 <tax<2(Stcv<<>>s bi ~ "00 2 IO 'I 74 tss an Con<n2<<c'a Faa<<as 222 ~ C 4<2<0 any 511 !od 501 '.000 38.404,, ~
- 4~
~ ~ 'l 30.~ '2.051 Z.T I 5 '3n I.l 0070 3b F"'-" ytv~fn v'~<4 8 x pensee wNesso No>>CFasabsexsil>>C~ Is*I- ols Sar<nas Acco<tes ana fr<<a Ctrl<foe>>s WC2ess f~ s'w<<ass an Oo>>r dcx<mmb fnoney Fsaronsn loc Fossa>>I loan Iosses Sobnto cxxs dtntfos feeS 02CX0ea by AIfAO<esf Camasyyet fsa<<>>e ol Ital Isxs<e haptcees Acotms414ts af tosasecf I<co<no 1 $ 0.888, Ib.b. 75.428 ' fi17b 70 $ .207 i780I 2 ', ~ 140.802 12702 50.850 242 4.30$ b 104 12.4241 111.72b:, Filo.bf7 '; i 2n 107.02b lb.b47 ' '0.221,. ', CI781 ~ Oilny fsotnses 74.740 00 531 Pi..'~, %el f2 atnSCS 335.228 Income <loss'. 8tfcye fo<tS <denefnsf
- I '28 n< fttS aha Canynie<X>> 82.$ 34 $ 1 JOb f8.837 . 15038 22, Ianiy rs fcynmos iiassta of A<<ocxs>><f Comaamss 054 ,317 20 On SCXe Ol ASSOC nS>>a ftts fiom Alflo<eaCampanes Csi>>2 income It<co ~arne Camaantt 20.505 0 I.S13 2.122 48,13b 35.508 I 0 I8 251.0! 8
JJ 'pscobst Cumw s>>omo Iosos sdentfosf .:,::::,';;:.'::;.":,.'";::. ":44-: Deft<It<I Co<Os AnoScasye I<came fa2eS 28eneoni ~ I lgllo ' '042,.'j< '3Q+'I- TV-.~ r Iceilnco IIossf 5 0000 I < 5 C50SI '-r' ~ Sa 470! ~ .V C~..". .I jgs2jt'I ~,y+<<.,ggf y~k. n g '3~~~. s< ~ .( f ,'I ~ "I 'I i nor;SAC. ~ jt,'I,'..",j) I '<I . ':,l'; ~g, ~ '.26 'b o 'l i', s s" 2 ~ ~ 5 ~ ~ ~ I A ""8 E ~< . - '- - '- iA.';-~";"'g "';,' ~,8.',."-~P;;~ I q ,;;'".q'~.'A..N'~ ..-..",,~;~~~2..~ j'.sc-, RnancIal Reporting and P.~alysis of the Effects of Chonain g Prices reO<steMa<v<2t<< trldcjes<u<'cYIer 4 rev<sc<t ss f, ll ' f nancxtt s otenutnn crnemns n occensoxe ~m 9erwab accetxea ~too ~ etfecn ot c~ anccs "~~ cenaunta cil vriatanvscsusteo ~ tsre <e<~ a tn es ~ acc=wn9 ~sxes rene tnxsnentslv n nnvxea< consra<e ac<<or olnavn<s nno enuE<no uvt <pane ~ aa<txs ~snout rat n9 ne orcthr<t <no etfscn et vvtanan State<no<It ul catarcoebvlheLIS.C<<survtrfvvences'er 44L < . uw.m Cy fnancxe Accau<<tr<95 tx<ceros <snces' tra 33 ent tteo 'v<ancce m ei'on e report a<e eileen ei ct<an0n9 pnces Teaorrna cna <v<hanont TIss soied25t tsetcnv <s a tne.year camper<san d co<tan rvse<<cd <4 rot ect c~f d tact <<A use tne Ctt <<Eay net De ~to n 9er<enst au uxts<n9 pe2vec It aev55 tse no<ecs I a<re 'er vt tnar>> coos nar necos servv reenanstrp <a 04 at me stssen, secsstns, s<actndders' defer fr<anod d m and eaten stcptemenery ooe cxsusteo for me " o<<<ttc nccn<o or cvnonses ol I r<anc<d nst<~ 'I r Tre< IVeen eEtr<C<er Q 15 n vxnen<ts oncet aer share 4evst x<65 < 84 tc 83 ~ vdl. Iedl Net sve<est sxe<ne tester<cat Oaten 52.748230 52WS.401 51.100055 $ 2.023.561 . $ l,tt1.031 Cent<ere Oatenl'ff 2248230 '.25S.405 Year'" 2.500.654 2.341.057 I 2.005.664 Nn 124e<ne lt ltsercel Ckkn 504.818 405,618 429.401 3u7.483 411.1<0 Ill <l<<.<< 400 v10 C C <El 'E - 302.433 ',451 437.225 312.005 I ' '~<'r;j', l '20: tet<oned Dolan 4.30 5.44 5 84 5.74 n.@~ Censte<u oesen Cl 5.00, 5.55 3 64 '; 4.45 ConareOodcn searser fr<co ter lessened Oescn Ca<stare Ooksn ~ Cash Vevtencts Oedered Oetan -Nst Aston el frvtd yetx ter e<<<<<en Sh<xe Shoe'stcncat et led d 1.00 1.90 34E51'4 ", ~ . I.diss I.d0 23 STSI 24.344 '.40 . 1.1$ 12.75 24.15h ~ ~ < I 402S 24 50 24.00h ~ ~ I * '20.03ts ~ c5 IJQIS 50.45 IS ., - ISsrencd Oaten ~ .307.130 '.001.044 3.425.d25 3.130.415 '.717 400 '.420 212 ~ Csnstanr Oe4an 4.405.008 3.950.570 3.748.208 ~ 5.474311 "n~i~'~'--- Aonrp nent<ery Astcn Hsstencet Ocean de 0230CO LvJQI;000 '7031 000 <r 5.603000 75034040 'Il ur I ConsaxvOeoan Oecsno n stet stcnsvxy Ane<s 131 'C~Meueet wG rrv 44.023.000 40.150 l2 2 W~.C " 'i< 17.841, 64.701.000 I 'EI 83.820.000 04 001 2<l ~,l<I 44462.000 31014 87.45 1.CO 68.634 22 ~ ~ Il WEE - C ,121 antes for <no yeju sr<<tea oec~ ~ Ihe co<<start oesor c<vsu<vs v<ctae en sc<2<t ~ e <a otsvecvt<vsn e<Ea A<n22nEto<vsn 5 2 t<vnse ove le Ae 2<4<ver ~ ed ~ 34 tcf4<tvs rxsvs<nsrv <vtu<vee <eeacro~<etr 530 15t Thececsns n stet e<vr<s<v Assen au<ctvssn0 testt lee e'en <ne e<ttct sn 22Es Ceracvelrsnd~ ~ me <Easnyn0 eun>> tel e<e et sect el cho<20n0 <a ttet Mene<cry Asse<st<a<titessentns<<en<nsv ~y , eSSe<S e<t Sea4<nt antt reeeem<Xre nnenea S<0CCS I heCeee<enen S Assrxvs<ctt Cevaanesen<s tee< I 2<a<etvee<n<<<econ<can 'A<<<srj<vs roue<ca ta <sheet tvo4er~ sect taSt seccanta ~ Sntectvmdlesr24
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r52% sxer tt<o f~ Onbe Haencd Oofar bow.Net Aston at (nd of year ncreosedby per xxL On be Cans<are Cesar bauhNet Assen ce fr<jOl Year ncteosod by epprovvt<attfy 3W tner be pened 'QIftr<g~ Nn t<ea<ne shcnndbe scsne 9en<<d trendnbeth ttstancd Doden cr<d %engr htaneiary Assets onbe Hcsancd Casor bmo v<Cnxtsed ther v444>g n+gs. . ~stare Dotya fa the f<nnyotxperad. Set Income n Cansscre Ookxs ~ durn9 be pervso fram Irdi so 1985 ond be Consere Oolar cr<eurts rehect bn pattens .Ccan Dectareo on the Hnscncd Oolor bosahavo noeasod ~ iso fnoyear pencxL On be Cant m Oc@v bosn. Ansnspo ann<<ary ncreased by aaprorvna<dy 17th 5 amn9s Tet Ccrrn<cn 9rve t<<<ctuated, Assen oecrea edby 4+ bergen 1981 ond t0852<ctcctn9 tnot n<e cnera chal<no nme Ctsfess been 57eater tt<anrhe erov thn Assen. The Oeclne nNet A<ene<ory Assen vs Contrary Dolars retttcrs the fact ~ htar<etaty from $ 155 per co<man snare n ICSI e $ 90 n 1085 On tho Conse24 1 st<at os n roost txsntn2 nstltutnns, be Colporatnns ~2<sly cssen Oadar bcus'.avdcnds dedansd ronyed flam 51831s n 1081 e SL00 vl evceed os monetary tccr<2soL T22ct n, be e<asvsn cf nvt p<s hasn9 txnntr of <285<r<cscatn9 mot tho nctease n sv<dencis dedared has been ss9hity nanetury aston esceedcd tt<o bend t at<ached e me baser -ntd'uraen .Fj>qif2 r 9nsater then me ncreoso n the CPL of nanetery Sabk net. >e ectuct <nixset pnce d me Cerpcranan'I ca<tvnen sect tcsuated cs<rv29 <ne per cia ttom 1981 sa f085 and tne Consent Oatiar arnaunn rettect I Lr'E.!fjj+pd St/ rcrj rrvt patterrS I I E f -n;R ','%'P> r r<<. I;( Ir (~ E 79 'A P~@QPCrn4!'-.St~~~~~~ .!,'~ Ag"~~'~+,".Cj~PJ~'r@'~:i ~ 4 E,<tr<ryt ~ vl A ~ ~ ~ 0 ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ 0 ~ ~ 0 4 ~ ~ . ~ . ~ ~ ~ ~ 0 ~ ~ ~ . ~ ~ ~ ~ ~. ,., . Board of Directors
- 15. Icdtk n<2rnene<e<y OSWS nCSCSV Inta<VI 4CCaure ACS r<S. Cna Itrrenne tluet<nnn n js 1981 Onbe stssarM Oatarboc, Net 5<revest ttcnme ncreosod 5554 fron e 1985, for be sane fnrnyerx penocL honevec Net n<<tretr tsatmo n Canstcre Oo<tsrs ncroased by 3W.
t Euv. I ..,vl ~rg' I Board of O(factors Wi((afd C. Svtcher P.Terracciano Robert K. P(owelree James E.O(son Charmcn and Chal Executive Vba Choirman o(The Chose Retrad Chovmon of the Soord oi Prasv(afa ond Oxaf Coaf olÃ9 v xf."I, Pi'j Ol fear oi The Chaw Monhol en Monhol Iofl Cofoofo hen Gaofya Fcchc Cofporahoh Ofhcer ol Amancon'fafaonona ~AS Corporahcn and('na Chose OOCi (he Chape P,IOnhOten H. Louranca fuller asdf eye& CoffeCny Monhxen Son(4NA Bonk. N,A. hastdant of Amoco Cofpofoltoh Ednwnd T.Pratt, Jr. Thomas G Lobrecqw A(exonder LHargrave Howard CKau( (mann Chovmon ond Chal Execvfne heltdarx ond Chef Opanxng Chavmon of Chose Ratvad havdanf of Exxon OSKar of Pf teer tnc. s II'nthany Of(ear dlhe Chase Monhotlon xxahcn ond The Chase Monhxxxt Bcm(4NA (vco(n fvv Bonk. NA Wg(lamT.CO(amon, Jr. Sax'or Panner m Iha bw Pvm d ~ Corporation Oav(dy Kearns Henry LSchocht Chovmoh ond Chef Executive t pg+\ ChcNmcm and Chef Executive Of(Kar of Cvmfnns Kngve Robert ILDoug(ass CTMa(nmy(k Myms Of(Kar of Xerox Coqxlohoh Company. Svo J tsttPI Vice Choffron o(The Chase Joan Gonz Cooney = R(chard W.Lyman Scfxsrd P Shfnn Manhatxxs Cofpofohon hestdmu d h ffsidatu ol lhe Roche(at former Oxsvmoh fxxlChef and The Chose Mfxfxxton Ch(chen's Ta(avtsbn Worbhop Xacuuti ve O((bar of Malropoi lon Sank,NA ~ found ohon
- r. its, tt rip ~
!x WtPm7$ Arthur P. Ryan John AMocamber nt~tg Chainnon cnd Chief Exacuhve of Chovman and Chef Executive 0onold H.Trout fain VKe Oovmfxt dlhe Chase Gehans(foocb Coqxvatbn Cha'rmon and Chd Execu the
- Jomos LFerguson life (nsufance CoflSsany
John H.MCArt(wr Oeon of IhaHofvafd Gradvota Rolph K.Word Edward S.Rn(us(~ School of Bvskvass Adnvxshalen Chonnan ond Chal Executive ~f+vifh WC'.4,,S hhcinnon and Chal Kxecvtne of Chesabfovgh x ~~'xr ~ Oaufd T.MCLovgh((n Poncfs Inc. 'fficer Officer dRH.Mocy 8 Co.bo, Kay (LWhitmore t PCOSK(afa of Dartmouth Colaga 1 Pnedalu o( Eastman Kodak ' Committaesof the guard " Kxecuthe Committee Compensation Committee commtlfaa la(acts Ihe mdapandafc Ths comm ft~ hrmoorsJJO for y' ~~~~<AIP4 sP ' Mc fhhchac Mc Kouf fmcnlc oudhxs lor oppovumefa by the favewng the general concivct of chovmcxt the@man Booni Iha business d Chose lvvastsrs ~j~,PP yu tprrt Prus. Coonay Mc fafguscm Employee Benefits Review tvtanogamaia Corpofoten New yah t Mr. fvkatseft Mc Kearns Comm(ttee york.o wholy owned substdofy ol v,ut +,~+M$ 4+ Cofpofatxxl wtlh xvvaVment 'he Mc Kcxfffmofxs Mc hots ~ %~ i Or. (ymca , MCMchttbg dlofmas I'cxlogaffent and odvffcxy McObon ~ - McObon lunchons. Mc Cotaman Ths commit ea favews andmokas Mr. ((Chert au 'omfnattng Committee Mc Shnn ~ facanxnandohons to Ihe Board Mr. Md augean t , Mc Shfxs PPP ~c Mc WanL concafnmg nxljcs'ompansohon Mc Schocht chovmcn ~ .<<Afy, .~C Ieftsnx mttIKefs 1 g( po(Kias ond compermhcn of MCTfauitevt Mr. Ferguson Mc Obfacqve d(Kaf~ Mc Mocoffbar, lhs comnxl ee renews rapons of Iha Bonk's anpbyae benefit plans erode by Ihe ncxhad 4$ fctonas Mc Kovlfmonn MCMocombar 'r.Obon i78~-'" PP OCaana oppovuhd pvfsfxxu Io Ihe MchoIS Empbyae Ref vamatu income egubr members Sacunty Act'of (g74, Mr. Cotanxm Mr. Kearns Investment Cofnmittee mtmbtre cfbo ~ MC fanxfson Mc Mdavghfth Mr. Co(anxx4 Tfxs ccmnil tee hrasponsJxla hk Mr. Mgoffbar. Mr. Shnn br consfdafrtg ond mot tng f osamcnt mtmbtrs * 'r.Tnxlliein Mfs. Coonay ~ Iaccffvhendohons lo 40 Board This convninae Is anth(ad lo Ths conmxnaa h fasoonubfa for Mc fbwamw nomnaas br macttoh e Iha Boofd.Board cxrflvftae t'4,~'ti j ' rev e mg Ihe fvxxlce(conti hanoi . Mr.fvfar (cfw,o( lha pcmels of Ihe Boold 'l Or. (yman osvgnfl>>nls. ond svcccssvxt ih the tfaclofs wnah Iha Board Is not Mr. MCAnhvr. ol!Kas of Chovmon o( Ihe Board. vga',(ll vl sassxxs parbfnxxtce and fthdngs of the havdenc and VKe Chavman inferno(ovdt vail. Ond ony ochcn Mc Bvxdfat d the Boafck to be ekan fhanxxt Ml.(Obfacave . Mahagamens n favews Oudt IXX( axonxnohon faooffs of Mc Oovgbss 2"P Mc Rytxt govanvnatuof oganocs ond of the Mc Tanacciono. adapendatu ovdfors (ha maneafs aedfao -."i~~j'v ., ~ ivan'hr). ~ Sl rgb'~ , v'~s./ I>e Pok<<y ond Fkxv>x>g Comm>t tee Arthur 8 Ryan execvt>vaHeossumedh>5 present I Edvvard Shaw Jr. ,4 y '~p ~45' o forum brooch> reoresen>at>ve is v>ce choinnon >n charge ol poutionin l984 l5 cxecutr/e v>ce pre5>dent ond 5 n "~r>>r Consumer Banking. He to>ned Richard J. Soyle General Counsel Pncr to tovvng >+ o4s jig" fvnct>ons lor the chief execvt>ve vase in l972 in the cfata 0 execUt>ve v>ce pres>dent >n Chase in f983. Mr. J>ow was a OffiCer raabtos>>r>puts penOd CO>fy. prace55>ng d >5>>5>X He was named Charge Of the COrpOrate k>dustneS expkxe knplcotsxn,ondbvkla grovp executive for the owner ~ Sectcc Snce Icxning Chase in f9>SSi, pg<'>.,;q~e'; - common pe>spective concenvng secunties handing dvisionin'978 .,<<-.</>Ills'>>"
- fttxaav ' Manhaten Cofporahon Ol(iCar Ol Cn(anate CafpofohOn ond Vice Choifmcm and Oifactor . OffKar ol BCINah<<n Seel Corp ox((he Chow Manhattan d PhTp Mono Comptmes (hc.
~ key bonkw/ide management issues tn 5982 he bocome heod ol finance>IIS,Notional ~ Corporate Operations cnd anckmcctrecenrlytheConvnetdol FrandsX.Stankord ~ ~ Sytt>xnLHO was named 'a xxecutive vice president tx xf ~ ~ sttategieS kt T>ght of oticipated mmcunve in f984 sxxf'wtS A IftfrighrRff~ts Choirman of Chase Marf>at ton g I~ elected ta the 8oo>d >n I98S> nest~Co>nnulxcationLhicr ~ ~~ for COPitol MorketLMc Slot'told 'j$n/ ~ Anthony I>Terrtsccfano,, ~ xf vs@+!~$ in foined Chase in I9SS>served as x~/yf -k is vice choirman lt cha>ge of to Fskxng the gorget>> f974 MCGTxttt area executive OI Asia.the g~ hx4$ tAOL 8onkktg,ond Chase Manhattan ~loncf ~~~ chktf adrnr>itttatl>e officerof the of to assvmr>g his p>eset>t po5itian in f984,wca hood elk>tert>ottonol ~If~/54'~ grig~) ~ bonkwide perfolmsx>ce WilktrtfCBvtchec .. ' ~"-'" Rotnmg gu>dance cxlcl areas of ~ ';'f OIRcer ks Igtf3.He become head Gfobof 8CE>kklg f984 ond wo5 elected to the 8oatdkt ',ftf (]9 '. ~ f985.. I'(),",;,5 ~ I98I ~ ~~~ ~~ h~ ~. g k f974 ~~ ~ and Systems He vsr>ed Chase, >tg(~ ~ k,97IkH tsentorviciPrcsldet>tktl98fkf>tsar lf c* Ap' .t ~ next>ed se>vcr vicC nntskfe>v and, >5 '= Charge of the k>stttvticnof Trust 9 5 ~ ~ ~ g~ 's > IBsk Monofystt>ere '" ~ bvsincss for the New Yorkttxdto>>m', orttsLHn~nomedmuto tint. wee pnedemktchatgeofthe ~SectocFrlcr Chase I977he t.vtcepreddentoftheS>ateStteer alcxnng "> ~ M ~~Ch .~ ~~heb ~<~5 d ~~ +I9S4. , '.I = I>OUITWalkttr, 'so>ocuttve>4ceptmidentcxtd i'tCQ ~ jets>ditpoicy'officecHeisofso ~ /w g 'ts>d>tmCX>d Chief Opelatr>g officcrktl972.ondwcoektcted mmsvdy/he++ 'ghknck>dingoyearasoSIoan ' ~~~~(~, ~ofkv~~ ". '- Mat>og&lent(Xsrtrt>ittee> MCWoker[oincdCI>asektl9S7
- MC8oyte hca headed Reci Gtate
'jQ ~>of Markea on/I exeo~ for ave>of wa5 tlalntld cfvef ~ 4,. tespcx>5458ty lor Ca>vt>clad Bank'rtg.ktstitvtlonal ~Reta4 8onkinlkT>U5t ond >ducksry /. >5 R ~ executne oificer in l984, ser>ior vice eskfk>>> ond tkrector CJ.MCGQI d sen>or v>ce prt>stdent and general ~ x C 8onkxvis 8e fore toxvng group I> rector of k>formation M~~ he w 0 5NwY audit -@gm~~tss. Chase n l97>S os execut>ve pass>dere and General Counsekhe v>ce ~ systems ol i8M's data o>acess>ng complex kt vrhite F>o>nL ~ pnor ta ossutnng h>5 curn>nt +cr/78>> wosoacrtnerv>M>ksonk,Tweed, Potu idl g Hoaiey andMCCkty ond served os 8 execut>ve ~ ~~>n . a executive vice Pres>derv vs of New Yo>55 Stat>x He He to>ned Chase x> igal.~ >n 1984 cod was elected to the in I97S ~m 5989 b~~ ~ exd>ange.secunt>et ondbvison k . >'> ~ ~ -. I' .'- Pg~zg$
- " I
~ ' 4 >/54 1 i> / ,~ti(
- -'82 ~
Domestic Locations ItvtOutgo Mgmg>>g gun Cogoovorugvg cuvo II r Octo gvgogv>>g ggug Borvg. Nh. g Commordal Banking ChaseHomehlortgageCorp. Chose ManhattanOuerseas CompvterPower inc. ?- ~~ k (j> ~ ~v'Subsidianes Morsvdo.Nf.(201( 573.5QQQ Banking Corp. .~4 J .8 lg041350.14CQ The Chase Manhatton Bonk, Type dBugress: -- N~ ~(3 13~ ~ Typed gusvvtgL ~"rv"!~vw> Nr York.NY.I2)2(5522222 Offers: Edge Act Company . Computer Srngceslcr Rod fggogo. Now York Store e. se an n Oronge Pork, Orkgnda Tampa . Corp. Chase Trans. Info. Inc. V%mggonvOoL(302(gkSI 7500 Annopokr. Bcfrinore. Rockvgte, McLg Wofghoggc Mass.g ScfoggcNtt ' E~ NY(2I21 223.700(g N Y~ NY(3 N Ym~.w~ Mongon, Momsgowa NLg Bvfbb. Ch Leaseg hvgomoged Tree(gg (k4Poymere, Servvces for Slv'ppers ~>~is WoynrsPogvsg Gear (eke,0dka New York, NY. (2(2(55243g5 Grond Patrie. Houston,Tesagg San rancisco.COL Agugondcfe. Ya Type of Businrsv ~ ~(Rm4nnkgn oiTreasvrY Rose 8 Compony Investment .. '.Ek rc.. tv, Bethesda.Md.(301(6524800 (3 Branch Ogk inMorybnd Typed Burg(gem vesgmonthdvic ond Asset Monogomont n Ngnvork Qot (302( 3dg5 I(g$ 5 . New York, NY (2(2( 552.4372 NowYork.NY(2)2( g07 g$ 455 Wcshingtotl 0< Typed Busgvtcv Typed Bug(tea: Chose Avta Leasing Corp ~A'~~a, . (SQ( OIKcev los Ange(es. Son Troncisca Coktg . tos Angeles.Scnhgondsco Ca((g hugo toaskvg Mksnl, flag Agbnga Gag 'iomg.t tag Chkaga N.g Bosgonv SgombrcLConrcg Boca Rogon, fksg, RL, HovsgoaToxas MosLg W(ugo Pbins. NYgg - Atkmra Gag Bog'on Moss.g '(owood Ckifs. NJ Now York, NY(212( 432.8075 S,C,.LES.Y~~ T d8 West gbomf~kt tvsch Ponens. ok onvvrch Const Boca Rogon. Card Gobfos. Com ony of Cagfo ',RA. Type of Burners: ~v45~g+g, L>>v + (hm + Jockscm e. M< mLTomPa8ag Morketng.Qrggnbvgkgn ond '415( 4334430 'i~~+ p:, ~ 'e>> Shonng. Secvnt>>s l ~ kd~ bSeannHPr ~~ ~5 km Chase Manhattan Government Socggnties, lnc. ~ Chose Econometrics, Inc. Bob CyggvvycL Pocus (2(5(g$ (g7~ The Chase MonhattanTnas Pokn Beach, fga (3M( gkSg 8704 Now York. NY(2I2( 5524842 OITcos: Type of Busngsv gp<~ Los Angdes. Son TrovciscaCottg Typed Bvgncga Econorgvc forocasggng ~;.~. l Honford.Stamford,Corvsg LIS.Government Tnnt Services F~~cv . AF~'F/~: A4orgga Gag Chicago. Il.g SocvnggosTrodna Boston, Combndga Wobum, Chase Manhattan of Son froncgscaCo(L. (3vc ctg Boca Rogon. Nodes. Ra ,-gyt<<E'v"~'>> ~gD+~LQchg~eoao(s ColifomlaThrilt roa(LC. Hovse. Inc.. Chose Monhottcm Incfvstrial ,~ Chose Access Senncas Corp. Mass. Id(7( Bg0 (234 Type of Bugrvtrv Now York NY(2121 67b~207 Type d Bugrvogv ~ Chase Manhottonof Utah CmhMorgogomoreSorvgces Qsnvec Cot(3031 759 1411 Sdt toke City.tfgoh (8011 363 0750 ';. ', '3 Tyceofgusntsa . Typoofgusnorg: 5onfoncrgcaCo(fNow York. Veorgcgcf Sorvgces ~ NYg Cbvebnct'Ctvog Qcsbs.fesos wNQi ~ ~ ~Vp~ 4 h 'I ~ 'M 4ssF 4'=-:-- 5ubsfrfiaty and Assed ate Asia ond Auttrofosia Sub&Dory and Assoaote ~ v s'g~,~') <'a".;~k~y-'zerfoncLTurfuty ~ f~ Branches G hofy. Monaco. PorrugoL Spsnn. G ~ Companies frtonciere CAtrestserhnenrs et de Germany r Branches h a~ IIII The K~~~ Pd Guam. Hong Kong. fndoneua. Phgpp~~~wT~ t Banks Chose MorholtonTrocfrng The~ SA '+, y'jyi '4y.'P'-" j O;flees Corporonon Linrted Austrafia. Chins.india Brast4 Subsidiary and Assodate &Klltftetc4$pA ~~ Ganks ~ WK~ AhrP~V W Lf . Ch f';.')ted@""",~' Austtfof AG. Chase B.usque de ~ ~e, SA ,,'fddfe East and Afrfca Ch R ~ Chase fnonftotten Asfo Littted o~~n ',Chase Mcrhottan Trust Carman ssf. @t,".."$c,
- (/,.--
Chose L stones~ '.fCLLLtrL 'ebanon,tiberfa RepreeentatfwOfffc Sevfces fHong Kongf LtcL ChaseMcmteenTnntC~ Chose MonhattonCapfelMors4te bntmatm ChaseMonh r <<4'Y Bgyplt4Q060 South hfnca ':, Pnsncer ' '. ~ ., Subsfdfary and Assodate ~ Chose ManhottonTnist and Boncotfel~ 'ononor "'" ~ , '.tp-f j r~4w <<~;~~@ '. 'h ~AG " Chase Bark CameroorsSA ~, Ba+ fEgyptf Ban4tg Conpony ffopanf LtsL Amonah Chess MerchaN Bonfr ~ Bonco dcf CorceraofpononaLSA. Puerto fBccn Chose Mcnhotton Coprtof Mmets Corporotion of Puena ae; '+~s~ ~i++'hfti .gq~t~$ : C ~~ PLy C~ Merchcru Bonis Chose Cop'tof Ma4rts4 tetf Subsfrfioty and Assoctote Compo~ &ancesa lar Braseiro, SA L4 Cf y PLChaselecaing 49onee . Chase Manftottonleasing )P~y 4.'>>. c fopanr '1 ~ Guadefoupe. Mornriare. Panama. ~Peru.PweiBco. Representatfw Of ffces flora Bonis Littred WC. t ' " ' 'I ' r ~ / I .rg ~ r ',~rQ~t:tow . 84 - ' ~ k , ~ 8 ~ ~ $ ~ .' ~ e 5 A~ i ' ~5 I i 1 i a e . -, l ae.,ei >. ~ 5~ .L ai) 5+ 5 '5 ' i ~ '" ~ i.'5t ~ a lp~~ pi'~ae4 5 v ~,, I I ~,, q ~ e... ~ '. ~ 1 ~ i I R~ ~ 4z ~~@X cg~>> ), W+~g lI I I \ P ( <<E.. 't ~ >>i" I = Z I l~ ,r 1 r Ss P ECURITIES AND EXCHANGE COh1MT.SSION WASHINGTON, D.C, 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: March 31, 1986 Commission file number: 1-5945 The Chase Manhattan Corporation (Exact name of registrant as specified in its charter) Delaware 13-2633613 ate or other jurisdiction of (I,R,S. Employer corporation or organization) Identification No.) 1 Chase Manhattan Plaza, New York, New York 10081 (Address of principal executive offices) (Zip Code) 212-552-2222 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of the registrant's common stock (par value $ 12.50 per share) was 78,903,826 at March 31, 1986. 0800T:2 2. TABLE OF CONTENTS Pacae PART I FINANCIAL INFORMATION Item 1. Financial Statements The Chase Manhattan Corporation and Subsidiaries: Consolidated Statement of Condition Consolidated Statement of Income Statement of Changes in Common Stockholders'quity Consolidated Statement of Changes in Financial Position Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Comparative Financial Information: Stockholder Data 19 The Chase Manhattan Corporation (Company Only) Balance Sheet 20 The Chase Manhattan Bank, N.A. and Subsidiaries Consolidated Statement of Condition 21 Average Balances, Interest and Average Rates - Taxable Equivalent 22 Consolidated Average Loan Balances 24 Consolidated Analysis of Loan Loss Experience 24 Funds Borrowed 25 Long-Term Notes and Debentures 26 Consolidated Statement of Income (Five Quarters) 27 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 28 SIGNATURE 29 EXHIBITS ~0 ~ PART I- FINANCIAL INFORMATION Item 1. Financial Statemanta The Consolidated Statement of Condition of The Chase Manhattan Corporation and its subsidiaries (the "Corporation" ) as of March 31, 1986, December 31, 1985 and March 31, 1985, the Consolidated Statement of Income for the quarters ended March 31, 1986 and 1985, the Statement of Changes in Common Stockholders'quity for the quarters ended March 31, 1986 and 1985, and the Consolidated Statement of Changes in Financial Position for the quarters ended March 31, 1986 and 1985, are set forth on the following pages. The interim consolidated financial statements are unaudited. However, in the opinion of Management, all adjustments, consisting only of normal recurring accruals, necessary for the fair presentation of the financial position, results of operations and changes in financial position for such periods have been made. Prior periods'inancial statements have been reclassified to conform with the current financial statement presentations. The Chase Manhattan Corporation and Subsidiaries CONSOLIDATED STATEHENT OF CONDITION March 31, December 31, Harch 31, ($ in th ousand s) 1986 1985 19 Assets Cash and Due from Banks $ 4,996,637 $ 5,574,055 $ 4,3 Interest-Bearing Deposits Placed with Banks 5,081,633 4,671,048 5, 183,958 Federal Funds Sold and Securities Purchased Under Resale Agreements 1,008,969 1,174,371 1,131,931 Trading Account Assets 1>375,36S 1,344,495 1,09S,028 Investment Securities: U.S. Treasury Securities 1,825,899 1,839,207 1,959,539 Federal Agency Securities 294,931 330 >259 134.537 State and Political Subdivision Securities 2,360,05'1 2,410,373 1,821,659 Other Bonds, Hotes and Debentures 1 >470,232 1,40S,541 1 079 786 Federal Reserve Bank and Other Stock Investments 143,208 134,012 145,568 Total Investment Securities (Estimated Harket Value of $ 6,257,000, $ 6,09S,OOO and $ 4,902,000, Respectively) 6,094,321 6, 122,392 5,141,089 Loans 61,948,918 61,930,527 60,524,568 Less: Reserve for Possible Loan Losses 934,835 907,672 779,362 Loans, Net 61,014,083 61,022,855 59,745,206 Customers'iability on Acceptances 3>275>663 2,820,471 4,706,956 Accrued Interest Receivable 1>010>528 1 >028 >986 1, 104,087 Premises and Equipment 959 >225 913,580 eos,7es Other Assets 3,436,515 3,013, 189 3,114,062 Total Assets 8 252,942 87 685,442 6,429,814 Liabilities and Stockholders'quity Deposits: Domestic Offices: Noninterest-Bearing $ 12,165,834 $ 13>499>638 $ 9,7 Interest-Bearing 19,455,555 19, 130,323 17,686, 7 Over seas Offices: Noninterest-Bearing 2,046,010 1,939,120 1,460,489 Interest-Bearing 27 >795 >731 26,783,96S 30,081,280 Total Deposits 61>463>130 61>353>049 58>948>609 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 3,982,785 4.13 l,793 4,27 5,580 Commercial Paper 3,242,501 3 >483>501 4,156,609 Other Borrowed Honey 4, 136, 116 4,671,994 3,265,622 Acceptances Outstanding 3,283,083 2,828,696 4,718,652 Accrued Interest Payable 686,949 668 >961 792,028 Accounts Payable, Accrued Expenses and Other Liabilities 3,813,329 3,282,175 3,844,325 80,607,893 S0,420,169 80,001,425 'otal Long-Term Notes and Debentures 3,047,072 2,806,499 2,315,925 Liabilities S3,654,965 e3,226,66e 82 ~ 317,350 Preferred Stock (Nithout Par Value-20,000,000 Shares Authorized): Redeemable Preferred Stock: 616,379 Shares Outstanding 61,638 6'I >638 61,638 Nonredeemable Preferred Stock: 12,039,737 Shares Outstanding 601,987 601>987 601,987 Common Stockholders'quity: Common Stock (Par Value $ 12.50 Per Share): 3/31/86 12/31/85 3/31/85 Authorized Shares 125,000,000 12 5,000,000 125,000,000 Outstanding Shares 78,903,826 7 7 > 157 >724 37,033,691 986,298 964,472 4 Surplus 307 >946 276,288 6 Foreign Exchange Translation Adjustments (23,921) (22,265) (21, 9) Retained Ear nings 2,664,029 2,576,654 2,314,172 Total Common Stockholders'quity 3 >934 >352 3,795, 149 3>448>s 9' Total Liabilities and Stockholders' uit 88 252 942 87 685 442 429 814 OSOOT'2 1 'Chase Manhattan Cor oration and Subsidiaries '60LIDATED STATEMENT OF INCOME Quarter Ehded March 31 in ands except er common share data) 906 905
- ,g>-;
- eres ome
- crest and Fees on Loans $ 1,808,867 $ 1,812, 209
- crest on Bank Deposit Placings 115,318 115,800
Interest on-U.S. Treasury Securities 40,072 47,557 Federal Agency Securities 9,050 5,554 State and Fblitical Subdivision Securities E'xempt from Federal Income Taxes 43,232 36,730 Other Bonds, hbtes and D bentures 70,742 51,687 )ividends on Federal Reserve Bank and Other Stock Investments 2 416 1 557 165,512 143,085 ,crest on Federal Funds Sold and Securities Krchased Lhder
- crest and Dividends on Investment 'Securities:
Recount assets 28 171 20 664 o a terest Income 6 4 crest Expense osits 959,723 1, 124, 151 eral Funds Purchased and Securities Sold Lhder Repurchase reements 161,119 115, 594 ercial,Mper 56,844 72,370 er Borrowed Money 177,545 99,776 -Term hbtes and Debentures 63 421 50 367 ta terest Ex ense 418 652 470 266 ome vis or Possible Loan Losses 130 000 95 000 terest Income After Provisxon for Possible Loan Losses 618 452 550 798 r ra ing come and Commissions 241,580 199,610 ign Exchange Trading I'ncome 60,277 35,543 Account Profits (Losses) 'ng 22~ 173 (5,415) stment Securities Kins (lasses) 40,204 20, 165 r Income 9 085 33 496 tal ther Operating Income 373 319 283 399 r Operating Expenses ries and Hnployee Benefits: slaries 319,065 254,451 ofit Daring 20,502 16,484 her Emplo ee Benefits 84 063 70 452 424,430 341,387 Occupancy 71,182 56, 145 'pment Rentals, Depreciation and Maintenance 67, 867 54, 581 ~r Ex enses 209 978 170 114 ital Other eratin E'x enses 773 457 622 227 ,me Before Taxes 218,314 1,970 Licable Income Taxes 74 624 70 071 Income 143 690 133 099 Income licable to Common Stock 127 408 107 011 .age ares u s an xng 8, 56 f 253 737 735/222 iings r Gbmmon Rare: .ima sed on Average Shares Outstanding 1.63 1.46 j sum ull Dilutmon 1 59 1.41 'i Dividends Declared Per Cbmmon %are .51 1/4 .47 1/2 The Chase Manhattan Corporation and Subsidiaries and Th Ch M nhattan Co oration (Com an Onl ) STATEMENT OF CHANGES IN COMMON STOCKHOLDERS'QUITY Quarter Ended March 31 ($ in thousands) Co+non Stock Balance at Beginning of Period (77,157,724 Shares and 36,659,653 Shares, Respectively) $ 964,472 $ 458,246 Conversion of Capital Notes and Debentures (1,110,621 Shares and 29,051 Shares, Respectively) 13,883 Exercise of Stock Options (88,591 Shares and 4,026 Shares, Respectively) 1,107 50 Shares Issued Pursuant to Dividend Reinvestment Plan (305,064 Shares and 169,076 Shares, Respectively) 3,813 2,113 Shares Issued Pursuant to Floating Rate Subordinated Notes Due 1996 (241 826 and 171 885 Shares Res ectivel ) 3 023 2 149 Ba ance at End of erzod 8, ,82 Shares and 37 033 691 Shares Res ectivel ) 986 298 462 921 Surplus Balance at Beginning of Period 276,288 678,342 Conversion of Capital Notes and Debentures 18,019 1,244 Exercise of Stock Options 1,029 Shares Issued Pursuant to Dividend Reinvestment Plan 6,944 Shares Issued Pursuant to Floating Rate Subordinated Notes Due 1996 5 666 6 540 Ba ance at End of erxod Foreign Exchange Translation Adjustments "Balance at Beginning of 'Period (22,265) (18,730) Aggregate Translation Gain (Loss) After Applicable Income Taxes (Benefit) of ($ 10,474) and $ 2 626 Res ectivel (1 656) (2 419) Balance at End of Peraod 23 921 2 ,149) Retained Earnings Balance at Beginning of Period 2,576, 654 2,241,199 Net Income 143,690 133,899 Cash Dividends Declared: Redeemable Preferred Stock (1,108) (1, 108) Nonredeemable Preferred Stock (15,345) (24,980) Common Stock (39 862) (34 838) Balance at End of Period 2 664 029 2 314 172 al C on Stoc o ers'u 48 0800T:2 7. Chase Manhattan Co oration and Subsidiaries S 0 STATEMENT OF CHANGES IN FINANCIAL POSITION Quarter Ended March 31 in thousands) 1 86 19 ds Provided Income $ 143)690 $ 133, 899 (Deduct) Noncash Items Included in Net Income: epreciation and Amortization of Premises- and Equipment 39,390 311337 rovision for Possible Loan Losses 130,000 95,000 mortization of Discount on Long-Term Notes and Other Borrowed Money 2,680 2,310 eferred Income Taxes 19 472 5 217 Funds Provided from Operations 335 232 267,763 vance of: ommon Stock 53,484 19,228 1/2X Notes Due 1996 248,998 reases in: eposits 110,081 ther Borrowed Money 29,148 ccrued Interest Payable 17,988 ccounts Payable, Accrued Expenses and Other Liabilities 511,682 1,271, 113 reases in: ash and Due from Banks 577,418 ederal Funds Sold and Securities Purchased Under Re Agreements 165,402 161,274 ra ccount Assets 256,543 nve . nt Securities 28,071 104,717 oans, Before Charge-Off s 1,386,221 ccrued Interest Receivable 18,458 87,862 er-Net 59 262 a Funds r v d ds Used h Dividends Declared: Redeemable Preferred Stock $ 1, 108 1, 108 onredeemable Pref erred Stock 15,345 241980 common Stock, 39,862 34,838 nversion of Capital Notes and Subordinated Debentures nto Common Stock 31,907 1,609 reign Exchange Translation Adjustments 1,656 2,419 creases in: Cash and Due from Banks 197,908 Interest-Bearing Deposits Placed With Banks 410,585 828,767 Trading Account Assets 30,873 I oans, Before Charge-Offs 160,434 Premises and Equipment 85,035 46,579 Other Assets 423,326 ,155,697 creases in: Deposits 731,402 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 149,008 204,710 Com 'al Paper 241,000 252 $ 257 0th ~ rowed Money 535,937 cru terest Payable 11,702 .her-Net 89 893 i alFun s Us 26 07 58 869 Item 2. Mana ament's Discussion and anal sis or manor Co s ron a s s o erations Consolidated net income for the first quarter of 1906 was $143.7 / million, or $ 1.63 per common share, compared with consolidated net income of $ 133.9 million, or $ 1.46 per coreon share, for the first quarter of 1985. lhe net income per common share amount for the first quarter of 1906 reflects the impact of a lower level of preferred stock dividend requirements, partially offset by an increased number of common shares outstanding. Earnings Summary First Quarter ($ in millions) 1986 985 N.t Interest Income $748 $ 646 Provision for Possible Lean Losses 130 95 Other Operating Income: Fee-Based 242 200 hbnfee-Based 131 83 Other Operatin Expenses 773 622 come Before Taxes 218 212 licable Income Taxes 74 70 N t Income 144 134 Profitability ratios based on net income and the period-end book value per common share for the first quarters of 1986 and 1985 were as follows: First Quarter 986 985 Profitabilit Ratios e urn on verage Assets .67K .63 Return on Average Cbmmon Stockholders'quity 13.% 13. OX Book Value Common Stockholders'quity per Common Share $ 49.06 $ 46.56 N t Interest Income - Taxable uivalent Basis+ N t interest income on a taxable equivalent basis for the first quarter of 1986 was $ 027 million, up 17K compared with $ 705 million for the first quarter of last year. t zn crest income on a taxable equz.va ent basis was higher by 9 million and $59 million for the first quarter of 1986 and the first quarter of 1985, respectively, than comparable net interest income amounts reported on a financial statement basis. Tnese taxable equivalent amounts have been adjusted (by applying a combined U.S. federal, state and local income tax rate of approximately 51'or both 1986 and 1985) to recognize the differential between interest income that is exempt from income taxes and interest income that is full taxable. 9. On a taxable equivalent basis, the spread between the average rate earned on interest-earning assets and the average rate paid to fund such assets, including the effect of noninterest-bearing sources, was 4.49K for ~ the first quarter of 1986, compared with 3.88K for the first quarter of ~ 1985. Domestic net interest income on a taxable equivalent basis for the first quarter of 1986 was $ 535 million, up 20X compared with $ 446 million for the first quarter of last year. The increase in domestic net interest income was attributable to a higher volume of interest-earning assets and to generally lower rates paid on interest-bearing liabilities. First quarter 1986 domestic gross interest-earning assets increased approximately $3.2 billion over the $ 30.4 billion reported for the first quarter of 1985. First quarter 1986 overseas net interest income on a taxable equivalent basis was $ 292 million, up 13X compared with $ 259 million for the first quarter of last year. Overseas net interest income increased due to a wider net interest rate spread partially offset by a decline of $2.1 billion in interest earning assets. Average loans recorded in domestic offices increased approximately $3.4 billion, or 14K, over the first quarter of 1985. Average loans recorded in overseas offices included approximately $ 5.1 billion and $ 5.6 billion of loans to U.S. commercial borrowers for the 'irst quarters of 1986 and 1985, respectively. Net Interest Income and Interest Rate Spreads - Taxable Equivalent Basis First Quarter ($ in millions) 198 1985 Domestic Of fices Interest Earned $ 990 $ 917 Interest Paid(1) 455 471 Ne In r s In as a X of Gross Interest-Earn'ss s Overseas Offices Interest Earned $ 1,256 $ 1,258 Interest Paid(1) 964 999 N n r s n as a X of Gross Interest-Earn Ass s 288 4g Corporation Consolidated Interest Earned $ 2,246 $ 2,175 Interest Paid 1 419 1 470 Ne ners n m as a X of Gross Interest-Earn'ss 4 49 (1) Includes appropriate allocations for the cost of time deposits ~ received by overseas offices for domestic use and the cost of domestic ~ monies raised for use in overseas offices. ~ ~ ~ nanna.v Ca ital and Liquidit Mana ement Discussions regarding both capital management and liquidity management are set forth on pages 30, 31 and 32 of The Chase Manhattan Cor oration Annual Re ort 1985 filed as Exhibit 13 to e regis rant s Report on Form -K for t e year ended December 31, 1985, portions of which were incor-porated by reference in said Report on Form 10-K (the "1985 Annual Report" ) . During the first three months of 1986, there were no material changes from the capital and liquidity positions disclosed in the 1985 Annual Report. In March of 1986, the Corporation issued $250 million of 8 1/2X Notes Due 1996. These notes come within the guidelines of the bank regulatory authorit.~~s for secondary capital. Primary and Secondary Capital+ Mare ($ in millions) Primary Capital: Common Stockholders'quity $ 3,934 g,449 Minority Interest in Consolidated Subsidiaries 3 3 Mandatory Convertible Securities (Net of Note Fund) 765 839 Reserve for Possible Loan Losses 935 Nonredeemable Preferred Stock 602 ota rimar a ita 2 9 econ ary apita: Redeemable Preferred Stock 62 62 Lon Term Notes and Debentures 2 282 1 477 o a econ ar a ita Tota Ca 858 72 End of Period Capital as X of Gross Assets: Primary Capital 7,00K 6,50K Total Ca 9 62X 8 27X +Based on Federal Reserve Board definition. Gross assets consist of Total Assets and the Reserve for Possible Loan Losses. 11. Provision and Reserve for Possible Loan Losses The provision for possible loan losses for the first quarter of 1986 was $ 130 million, up $ 35 million from $ 95 million for the first quarter of 1985. The increase in the provision was made principally in recognition of continuing uncertain conditions in certain developing countries and in anticipation of higher levels of domestic consumer loan charge-offs due to the rapid growth of the domestic consumer loan portfolio. First quarter 1986 net loan charge-offs totaled $ 114 million, compared with $ 74 million for the first quarter a year ago. Domestic net loan charge-offs for the first quarter of 1986 increased $23 million over the first quarter of 1985, to $76 million. This increase was the result of domestic consumer net loan charge-offs which increased $ 41 million over the first quarter of 1985, partially offset by a decrease in commercial and other net charge-offs of $ 18 million from first quarter 1985. En March 1986, the Corporation recorded an $ 11.9 million net recovery in respect of the previously di.sclosed settlement of a derivative action, in the Court of Chancery of the State of Delaware in and for New Castle County, relating to the previously reported Drysdale and Penn Square. matters. The terms of the settlement included a payment of $32.5 million to the Corporation by certain former officers of the Corporation and The Chase Manhattan Bank, N.A. (the. "Bank" ) funded by officers and directors'iability insurance. As previously reported, the amount of the recovery was substantially offset by expenses associated with the settlement. First quarter 1986 international net loan charge-offs were $ 38 million, an increase of $ 17 million over the first quarter of last year. Analysis of Loan Loss Experience First Quarter ($ in millions) 198 1 Loan Charge-Offs $ 142 $ 93 Less: Loan Recoveries 28 19 Ne L h fs Prov~ si n f P ss'bl Loan L ss s 130 95 Reserve for Possible Loan Losses ($ in millions) At End of Period $ 935 $ 779 As a T Lon 1 5 29% nanna a, 12, Net Loan Charge-Off s and Loan Loss Experience Ratios First Quarter ($ in millions) 1986 1985 Net Loan Charge-Offs Domestic Consumer (2) $ 64 $ 23 - Commercial and Other 12 30 Total Domestic 7 International 38 21 o a Loan Loss Experience Ratios (Annualized) (3) Domestic Consumer (2) 2,56K 1.32% - Commercial and Other .22 .53 Total Domestic .94 .72 International .53 .26 (2) Loans to Individuals for Personal Expenditures and 1-4 family residential properties. (3) Net Loan Charge-offs as a percentage of average loans. Nonaccrual Reduced Rate and Past Due Loans Nonaccrual and reduced rate loans were approximately $2 .1 billion at March 31, 1986, compared with approximately $ 2.0 billion at year-end 1985 and approximately $2.4 billion at March 31, 1985. Nonaccrual and reduced rate loans equaled 3.4X of total loans at March 31, 1986. At December 31, 1985 and March 31, 1985, the comparable ratios were 3.3X and 3.9X, respectively. Included in March 31, 1986 nonaccrual loan balances were cross-border loans to Argentine and Brazilian borrowers of approximately $ 62 million and $ 18 million, respectively. Nonaccrual loan balances at March 31, 1986 also included approximately $ 208 million and $98 million of cross-border private sector loans to Venezuelan and Mexican borrowers, respectively. Accruing loans past due 90 days or more were $331 million at March 31, 1986, compared with $ 211 million and $ 179 million at year-end 1985 and March 31, 1985, respectively. The increase since year end 1985 is principally due to real estate loans which are both well secured or guaranteed by financially responsible third parties and are in the process of collection. The negative impact on first quarter 1986 earnings from nonaccrual and reduced rate loans was approximately $20 million after taxes, compared with $ 27 million after taxes for the first quarter of 1985 nanna c hbnaccrual and Reduced Rate Loans Mar. 31, De c. 31, Mar. 31) ($ in millions) 1986 1905 1985 hbnaccrual Loans: Real Estate Loans $ 319 $ 250 $ 233 Loans to Banks and Other Financial Institutions 134 111 104 Gommercial and Industrial Loans 1 ~490 1 ~500 1 ~814 Other Loans 139 144 205 otal hbnaccrual Loans 2 082 2 005 2 356 e uc a e ans: Real Estate Loans 12 loans to Banks and Other Financial Institutions 6 7 Gommercial and Industrial Loans 16 19 Total Reduced Rate Loans 26 30 2 Total hbnaccrual and Reduced Rate leans 2 108 2 035 2 37 R.stribution of bbnaccrual and uced Rate Loans: Domestic Loans $ 890 $ 804 $ 791 International Loans 1 218 1 231 1 586 ota hbnaccrua and uce te Loans 2 08 2 035 2 7 Real estate properties acquired in satisfaction of'oans totaled $ 92 million at March 31, 1986, compared with $ 100 million and $98 million at yearwnd 1985 and March 31, 1985, respectively. Countr Risk During the first quarter of'986, progress was made on debt restructuring programs of certain Latin Anerican countries in which Chase has large cross-border outstandings. Chase continues to cooperate with the international financial community in addressing issues relating to the debt obligations of these countries as well as others in Latin Anerica and elsewhere yhich are experiencing liquidity problems In light of the difficulties affecting borrowers in these countries, it is possible that the amount of Chase's cross<order outstandings in nonaccrual status may increase in the future. The approximate amounts of Chase's extensions of credit outstanding at March 31, 1986 to public and private sector borrowers included in cross<order outstandings and the approximate principal amounts of nonaccrual loans included in such extensions of credit at March 31, 1986 are shown in the table below for the principal rescheduling countries in which Chase has cross-border exceeding 1X of its total assets. 'utstandings Total Extensions of Credit Cross-Border Nonaccrual ($ Brazil 2,760 1,710 930 18 Mexico 1,640 1,250 370 98 Venezuela 1,230 860 350 208 Argentina 920 670 220 62 At March 31, 1986, the Corporation had cross-border outstandings in Chile aggregating approximately $ 695 million or .79K of Total Assets. These included extensions of credit to public sector borrowers of $ 420 million. At March 31, 1986, the corporation had approximately $ 2 million of cross-border nonaccrual loans to Chilean borrowers. Brazil In March 1986, the Bank Advisory Committee and the Government of Brazil reached agreement on the terms of a 1985-1986 Financing Plan which has been sent to the international banking community. The 1985 maturities of cross-border medium term debt (Chase share. '$250 million) deposited in the Central Bank of Brazil in accordance with the interim measures for 1985 described in the 1985 Annual Report will be available for re-lending at interest rates of London Interbank Offered Rate (LIBOR) plus 1 1/8X for the ublic sector and LIBOR plus 1 1/4X for the private sector. Interim measures ave been put in place for 1986 maturities which are to be deposited in the Central Bank with no re lending. The interest rate on the deposits will be LIBOR plus 1 1/8X retroactive to January 18, 1986. It is intended that these deposits will be included in a multi-year rescheduling agreement to be negotiated later this year. , The $ 9.8 billion (Chase share: $ 371 million) facility for trade finance and 'the $ 5.4 billion (Chase share: $ 118 million) of interbank deposits, formally 'extended to January 17, 1986, are continuing on an informal basis until the Financing Plan is signed at which time it is anticipated that they will be extended to March 31, 1987. In the first quarter of 1986, Chase reported total income on cross-border outstandings to public and private sector borrowers in Brazil of $ 84 million and approximately $ 86 million in interest payments were received in cash. No material principal payments were received other than approximately $ 87 million with respect to 1986 maturities pursuant to the interim deposit arrangements. The impact of Chase's nonaccrual cross-border loans to Brazilian borrowers on Chase's net income for the first quarter of 1986 was not material. In light of the difficulties affecting borrowers in Brazil, it is possible that the amount of Chase's cross-border outstandings in nonaccrual status may increase in the future; Mexico The Multi-Year Debt Restructuring Agreements described in the 1985 Annual Report became effective in the first quarter of 1986. Payment of the remaining $950 million (Chase share: $24 million) balance of the $ 1.2 billio rincipal (Chase share: $ 30 million) due in 1985 under the amendment of the 983 $ 5.0 billion new money credit agreement with Mexico was further postpon to October 1986. I Under the terms of the restructuring, interest rates were adjusted retroactive to January 1, 1985. Approximately $ 665 million of Chase's approximately $ 930 million share (after the estimated remaining payment of approximately $24 ion) in the Multi-Year Debt Restructuring carried a weighted average rate 9/16 over the prevailing prime rate and approximately $ 265 million ied a weighted average rate of approximately ll/16X over LIBOR. Following the restructuring, the estimated weighted average rate on Chase's $ 930 million share is 15/16K over LIBOR. Under the terms of the restructuring this estimated weighted average rate is scheduled to increase over time to 1 1/4X over LIBOR in 1992 through 1998. At March 31, 1986, Chase's'ross-border outstandings to public sector borrowers in Mexico were substantially current as to payment of principal and interest. Chase reported approximately $33 million as income on such outstandings in the first quarter of 1986 and approximately $ 34 million in, interest was received in cash. During the first quarter of 1986, Chase received minimal principal repayments on cross-border outstandings to Mexican public sector borrowers. At March 31, 1986, $ 98 million of Chase's cross-border outstandings to Mexican private sector borrowers were in nonaccrual status. The negative impact of these loans to private sector borrowers on Chase's net income for the first quarter of 1986 was approximately $ 1 million after taxes. In light of continuing uncertainties regarding the Mexican economy and conditions currently prevailing in world petroleum markets, it is possible that additional amounts of Chase's cross-border outstandings to borrowers in Mexico could be placed in nonaccrual status. ezuela In the first quarter of 1986, agreements covering a substantial portion of the proposed restructuring of $ 21.2 billion (Chase share: approximately $ 800 million) of Venezuelan public sector debt described in the 1985 Annual Report were signed but are not yet effective to restructure such debt. However, Venezuela has requested that the international banking community renegotiate the terms of the restructuring. The restructured principal (after the prepayment of approximately $26 million) will be repriced on the effective date of the restructuring and the effect on Chase will be approximately as follows: Bef ore Restructurin After Restructurin Principal Principal $ in Millions Avera e Interest Rate (a) $ in Millions Interest Rate 00 Prime 00 Domestic ref erence rate (b) plus 1.l25X $200 LIBOR plus 1.39K $ 400 LIBOR plus 1.125K (a) At March 31, 1986, weighted by principal outstanding. (b) As defined in the agreements. 16. The following table compares the amount of interest income reported in the first quarter of 1986 related to the principal to be restructured with been that which would have been reported on a pro forma basis had that principal restructured as of January 1, 1986: ($ in Millions) Actual Interest Pro Forma Interest Principal to be Income Income-Accrual Basis Restructured Re orted After Restructurin $ 800 $ 19 $ 18 At March 31, 1986, Chase's cross-border outstanding to Venezuela public sector borrowers were current as to payment of principal and interest. Chase reported approximately $26 million as income on all cross-border outstandings in the first quarter of 1986 and approximately $24 million in interest was received in cash. Minimal principal payments were received. The negative impact of these loans to Venezuelan private sector borrowers on Chase's net income for the first quarter of 1986 was immaterial. In light of continuing uncertainties regarding Venezuela, including conditions currently prevailing in the world petroleum markets, it is possible that additional amounts of Chase's cross-border outstandings to borrowers in Venezuela could be placed in nonaccrual status. ~Az entina During the first quarter of 1986, Chase received minimal principal payments on cross-border outstandings to Argentine public and private sector borrowers. On April 18, 1986, $ 600 million (Chase share: $21 million) of the $ 3.7 billion (Chase share: $ million) 129 new ten-year term credit facility which was part of the Argentine Republic 1984-1985 Refinancing Plan described in the 1985 Annual Report was disbursed. At March 31, 1986, Chase's cross-border Argentine public sector loans were substantially current as to payment of principal and interest although delays are being experienced in the payment of interest on some loans. In the first quarter of 1986, Chase reported total income on cross-border outstandings to public and private sector borrowers in Argentina of $ 39 million. Interest payments of $ 39 million were received in cash on such cross-border outstandings during the first quarter of 1986. The amount of Chase's cross-border nonaccrual loans to Argentine private sector borrowers was approximately $ 62 million at March 31, 1986. The negative impact of such nonaccrual loans on Chase's net income for the first quarter of 1986 was immaterial. In light of continuing uncertainties regarding Argentina, it is possible tha in additional amounts of Chase's cross-border outstandings to borrowers Argentina could be placed in nonaccrual status. Other Operatin Income First quarter 1986 other operating income totaled $ 373 million, compared with $ 283 million for the first quarter of 1985. Fee-based income in the first quarter of 1986 was up 21X to $ 242 million and included increases in investment banking fee income, up 88X; consumer banking fee income, up 9X; trust and fiduciary fee income, up 30X and, commercial banking fee income, up 30X. Foreign exchange trading income was $ 60 million, up $ 25 million from the first quarter of 1985. Dealer trading account profits were $22 million, compared with a net loss of $ 5 million for the first quarter of 1985. Included in first quarter 1985 other income was a gain of $22 million from the sale of nearly all of Chase's minority equity interest in a leasing company in Japan. Net foreign exchange translation losses on Chase's investments in overseas branches, subsidiaries and associated companies for the first quarter of 1986 were approximately $ 3 million, compared with gains of approximately $5 million for the first quarter of 1985. On an after-tax basis, net foreign exchange translation losses in the first quarter of 1986 were approximately $2 million compared with $ 1 million in the first quarter of 1985. Net gains, before applicable income taxes, from investment securities transactions were $ 40 million for the first quarter of 1986 compared with $ 20 million for the first quarter of 1985. Income taxes applicable to investment securities gains were $20 million compared with $ 11 million for the first quarter of 1985. Other Operating Income erst uarter ($ in millions) 98 19 Fee-Based Income: International Business Fees $ 43 $ 41 Trust and Fiduciary Investment Fees 58 45 Consumer Banking Fees 52 47 Other Fee-Based Income 89 67 Total Fee-Based Income 242 Non ee-Base ncome: Foreign Exchange Trading Income 60 35 Trading Account Profits (Losses) 22 (5) Investment Securities Gains (Losses) 40 20 Other Nonfee-Based Income 9 33 Total Nonf ee-Based Income a er era xn ncome 0800T:2 Other 0 eratin Ex enses Total other operating expenses for the first quarter of 1986 were $ 773 million, compared with $ 622 million for the first qu'arter of. 1985. The quarter-to-quarter increase in operating expenses is mainly the result of substantial incremental expenses related to strategic areas of emphasis such as nationwide expansion, investment banking and domestic and international consumer activities. Also included in the increase, was approximately $20 million applicable to new acquisitions, and performance-related compensation expenses and approximately $21 million due to the impact of exchange rates on expenses of overseas offices. Other Operating Expenses (4) First uarter ($ in millions) 1986 1985 Salaries and Employee Benef its $ 424 $ 341 Net Occupancy 71 56 Equipment Rentals, Depreciation and Maintenance 68 55 Other Expenses 21O 170 ota h r r n n s (4) First Quarter 1985 restated for comparability with current period classif ications. Provision for Income Taxes The provision for income taxes was $74 million for the first quarter of 1986, compared with $ 78 million for the first quarter of 1985. The decrease is primarily due to an increase in income which is exempt from federal income taxes, partially offset by a higher level of pre-tax income. nanna v The chase Harmattan co ration and subsidiaries Stockholder Data 1986 1985 ($ in thousands, except per coxmon share data) ~se tr. 4tn tr, tr. ra no tz. st tr. Quarterly Cash Dividends Stock: Per Stere $ .51 I/4 $ .47 I/2 $ .47 I/2 $ .47 1/2 $ .47 1/2 Aggregate $ 39e862 $ 36 y316 $ 35 ~924 $ 35 ~ 194 $ 34 ~838 Preferred Stock: 6 3/4X Series 8 502 502 502 502 7.60X Series C 606 606 606 606 606 10 1/2X Seties 0 3,281 3,281 3,281 3 F281 3,281 Floating Rate Series E Floating Rate Series F Total Pref erred Stock 6,f30 5 f34 7,065 f 847 T~T'02 6,S75 6 101 7,875 14 073 TOtal Cash Dividends T~TK Cash Dividends Paid on Comen Stock as a Percentage of Net Income Applicable to Common Stock 31.29X 27.21X 27e19X 32.85X 32.31X Total Cash Dividends Paid as a Percentage of Net Income 39.19 35.58 35,66 47,04 4f,50 Earnings Ratios %ttncaxe as 4 Percents verage ota nterest am Assctsg Net .79X .BIX .BOX .72X .75X Average Total Assets .67 ,69 ,68 ,61 .63 Average Comxon Stockholders'verage Equity(I) D.fl 14.35 14,65 12,44 12,98 Demon Eouity and Nonredeemable Stockholders'referred Stock 0.06 13.83 14.08 IZ.83 13.$ 7 Average Comon Stockholders' Eouity and Total Preferred Stock 12,98 D,73 13.98 12.74 13.47 Based on Net Incase, ad)usted as applicable. Levers e Ratios-Avera onmon tocxno Loans, Net oers't as a Percents e of: 6,29X 6.09X 5, 87X 5.70X 5,56X Total Interest-Earning assets, Net 5.18 5.01 4.83 4,74 4,62 Total Assets 4,26 4,12 4.02 3.93 Comen Stockholders'quity, Total Preferred Stock and Long-Term Notes and Debentures 52.01 52.39 52.26 52.30 f3.09 Comxon Stockholders' lt and Nonredeemable Preferred toc as a ezcenta e o: oans, Net 7.28X 7.08X 6,86X 6. 69X 6,5fX Total Intezest&arning Assets, Net 6,00 5,83 5.6$ 5.56 f,if Total assets 5.11 4,96 4,81 4 ~ 72 4.63 Common Stockholders'ouit and Total Preferred Stock as a ezcenta e o: cans, Net 7.38X 7.19X 6,96X 6.79X 6.65X Total Interest&arning Assets, Nct 6.08 5.91 5,73 $ .65 f.54 Total Assets 5.18 f.03 4,8S 4.79 4.70 Comen Stockholders'rity Per Comen Share $ 49,86 $ 49.19 $ 48,10 $ 47.24 $ 46.56 Ca ital Ratios - at Quarter End Primary Capital as a Percentage of Total Cross Assets 7.00X 6,87X 6. 71X 6.64X 6. 50X Total Capital. (2) as a Percentage of Total Cross Assets 9.62 9.23 8. 82 8.75 8.27 Thc Chase Nanhattan Bank, H.A. and SAeidlarles Primary Capital as a Percentage of Total Cross Assets 7.21 7.05 6.88 6.80 6.73 Total Capital (3) as a Percentage of Total Cross Assets 7 64 7,46 7.25 7.17 7,08 Nazket Prices of Preferred and Coemon Stock re aztec 'toc X cr es High $ 93 $ 69 $ 65 62 5 f9 Lov 63 1/2 59 58 55 Close 75 68 V2 61 I/8 f7 3/4 'referred Stock, 7.6OX Series C High 100 75 73 3/4 74 68 Lov 69 72 1/2 72 I/2 64 60 1/Z Close 80 72 V2 72 VB ~ 73 I/2 ~ 64 ~ Preferred Stock, 10 V2X Series 0 H}gh 56 I/2 50 3/8 48 I/2 48 I/2 l6 Lov Close 49 1/4 54 45 7/8 49 I/O lf I/2 46 3/8 42 47 I/8 I/2 lg 3/4 42 I/4 Pref erzed Stock, Floating Rate Series E High 55 1/4 56 3/8 56 V4 56 I/4 56 Lov 52 3/8 52 53 I/2 52 I/4 52 3/8 Close 53 V2 53 I/8 54 I/O ~ 54 f3 3/4 Preferred Stock, Floating Rate Scrics F High 54 1/2 54 VB 56 f/S 55 55 7/8 Lov 51 I/2 50 I/2 52. fl 3/43/4 52 Close 52 51 3/4 fZ 1/2 52 53 I/8 Camen Stock '8 High 36 5/8 31 15/16 30 I/2 27 5/8 Lov 34 24 I/2 24 I/2 25 5/8 23 I/4 CloIse 46 3/4 36 5/16 24 9/16 30 3/16 25 3/4 ~ NO Sales, based on avctagc of bid and asked prices. <<The high, lov and closing sales prices for transactions reported Based on Federal Reserve Board deflnltion Based on Office of the Comptroller of the Currency definition. The Chase Manhattan Corporation (Company Only) Z BALANCE SHEET March 31, December 31, Hare ($ fn thousands) 1986 1985 1 Assets Cash fn Banks-Demand Deposits: The Ch ase Manhattan Bank, N.A. 8,664 $ 6,013 $ 4,641 Other Banks 2,730 4,778 5,420 Short-Term Honey Harket Instruments: Time Deposits with Banks: The Chase Hanhattan Bank, N.A. 2,483,313 2,7 48,369 3>339,193 Other Banks 136 >506 66,216 6 '1,48 7 U<<S. Treasury Securities Total Short-Term Honey Market Instruments 2,619,819 2,814,585 3 '00,680 Notes Receivable from Nonbankfng Subsidiaries 1,997,609 1,849,793 1 >450 >189 Accounts Receivable from The Chase Manhattan Bank, N.A. 66,650 51,937 67 >427 Other Stock Investments 48,390 41,360 55 >330 Subordinated Debenture Receivable from The Chase Hanhattan Bank, K.A 400,000 400>000 400,000 Investments fn Subsfdfarfes {at Equity fn Net Assets): Banking Subsidiaries: The Chase Manhattan Bank, N.A. 4,518,594 4,454,7 25 4>267 >689 Other Banking Subsidiaries 828,084 705,971 486,624 Nonbankfng Subsidiaries 354 > 150 343,571 309,652 Accrued Interest Receivable: Time Deposits with Banking Subsidiaries 20>694 26 >865 26,462 Notes Receivable from Nonbankfng Subsidiaries 16 >997 21,643 16,544 Other Interest Receivable 1>426 1,822 2,197 Other Assets 84,980 94,149 Total Assets 10,968<<787 10<<817 <<212 $ 10, 8 Liabilities and Stockholders'quity Commercial Paper $ 3 >127 >040 $ 3,351 >756 $ 4<<114>863 Other Borrowed Honey 573>706 573 >648 325 >675 Accounts Payable, Accrued Expenses and Other Liabilities 308,000 290,683 286,718 4,008,746 4,216,087 4,727,256 long-Term Notes and Debentures 2,362,064 2,142,351 1,735,028 Total Liabilities 6,370,810 6,358,438 6,462,284 Preferred Stock (Mfthout Par Value-20,000,000 Shares Authorized): Redeemable Preferred Stock: 616,379, Shares Outstanding 61,638 61,638 61,638 Nonredeemable Preferred Stock: 12,039,737, Shares Outstanding 601,987 601,987 601 >987 Common Stockholders'quity: Common Stock (Par Value $ 12.50 Per Share): 3/31/86 12/31/85 3/31/85 Authorized Shares 125,000,000 125, 000,000 125,000,000 Outstanding 5hares 78,903,826 77, 157>724 37,033>691 986>298 964,472 462,9 21 Surplus 307 >946 276,288 692,895 Foreign Exchange Translation Adjustments (23,921) (22,265 ) (21, 149 ) Retained Earnings 2,664,029 2 >576 >654 2,314, 172 Total Common Stockholders'quity 3,934,352 3,795>149 3>448,839 Total Lfabilfties and Stockholders' uft 10,968,787 10,817 <<212 $ 10 <<574 <<748 nnnOT:2 The Chase Hanhattan Bank, N.A. and Subsidiaries CON DATED STATEMENT OF CONDITION Harch 31, December 31, March 31, ($ fn thousands) 1986 1985 1985 Assets Cash and Due from Banks $ 4,648,573 $ 5,208,200 $ 4,094, 109 Interest-Bearing Deposits Placed with Banks 4,885,461 4.566 >219 5,114,789 Federal Funds Sold and Securities Purchased Under Resale Agreements 2,253,935 2,458,090 1,07 6,262 Trading Account Assets 1,360,058 1>331 >638 1>091 >839 Investment Securities: U.S. Treasury Securities 1,622,231 1>721,697 1,8S3,272 Federal Agency Securities 253,302 29 0,3 91 81,267 State and Political Subdivision Securities 2, 122,708 2,185,7 9S 1,570,897 Other Bonds, Notes and Debentures 1,436,841 1,357,862 l,000,94 l Federal Reserve Bank and Other Stock Investments 83,022 82,509 82,212 Total Investment Securities (Estimated Harket Yalue of $ 5,657 .000, $ 5,596,000 and $ 4,357,000, Respectively) 5 ~ 518 > 104 5 >63 8 >257 4 >618 >589 Loans 51,798,680 52,176,137 54,323,0l4 Less: Reserve for Possible Loan Losses 710>903 699>054 667>250 Loans, Net 51,087,777 51,477,083 53,655,764 Customers'iability on Acceptances 3 265>245 2,810, 159 4,691,142 Accrued Interest Receivable 942,279 1,002,649 1,053,527 Premises and Equipment 780 >273 753>834 674,787 0 ssets 2,797,987 2.474,067 2,812,906 77>539,692 77>720>l 6 78,883 >ll Lfa ftfes and Stockholder's Equity Deposits: Domestic Offices: Nonfnterest-Bearing $ 1 1 >302 >401 $ 12 >677 ~ 180 $ 9 ~ 102 >738 Interest-Bear fng 14 >497 >851 14 >629 >437 14 >297 >892 Overseas Offices: Noninterest-Bearing 2,046,010 1,939,120 1,460,490 Interest-Bearing 30,262,955 29,500,685 33,390,350 Total Deposits 58 ~ 109 >217 58>746 >422 58 >25 'l >470 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 4 > 148 >092 3,972,397 4, 12 2,760 Other Borrowed Funds 2,377, 134 3, 160,191 2,362,890 Acceptances Outstanding 3,272,665 2 >818 >384 4,702,837 Accrued Interest Payable 573,199 611>150 732,048 Accounts Payable. Accrued Expenses and Other Lfabflftfes 3,488,097 2>925 >095 3,495,799 7 1 >96S >404 72 >233 >639 73 >667 >804 Long-Term Notes and Debentures 1>052>694 1>031,832 948,221 Total Liabilities 73 021>098 73 >265 >471 74,616,025 Stockholder's Equity: Capital Stock (Par Value $ 15.00 Per Share): 3/31/86 12/31/85 3/31/85 Authorized Shares 61,744,445 61,7 44,445 61,744,445 Outstanding Shares 50, 145,351 50,0 09,247 49,511,444 752 ~ 180 750,139 742 672 Surplus 1>780 >235 1,772.407 1 >7 51,482 f gn Exchange Translation Adjustments (24>065 ) (22,345 ) (21,047 ) v e 2,010,244 1,954,524 'l,794,582 otal Stockho}der's Equfty 4>518>5944 ~ 54>24 Total Liabilities and Stockholder's E uft 77 ~ 539 >692 77 >720 ~ 196 $ 7 S >S83 >7 14 Member Federal Deposit Insurance Corporation OSOOT: 2 'Tae CS ~ se Sssaettaa Cofferattoe aai 5esst ~ tories Avoral ~ lalsscss, Iatetest aai Averele Rates 'Tasasl ~ Revlveleat ftrst ieerter Iffa fevrta Oearter 1tl5 Tatri Ovarter N45 ATeret ~ ATtNff Averete Avetol ~ Averate Averale 11 I ~ ~ Illtoas) 50 Naca Iatel'ost Rat ~ telaace laterest tata lalaaco 1 'Cersat RIC0 Assets Ihtetest Ratsfat learlsl oeloatts rtscei sits lasts. ~ ,......... Asseta'ceresc ....i...,.. ~ $ 404 tf $ 11$ 1051$ $ 5,042 $ 121 I,iii $ S,NI $ 110 1,455 feoetel fsaia Sal ~ sai Secertttos Iercsasoi osier tesal ~ Aoreeoeots... ~ , ~ Il 41 ZRORI Oo 10404 14 10012 10051 21 F 004 Treitat Acceeat Assets. I ~ Ill 50 10.5 ~ ~ TT 24 11.02 1~I 20 1,11 Iaffatseat 5ecsttttecl Oooesttc Offtces: 0050 Tresavry Secsrlttes, I ~ 4$ 4 40 ~ 05'I TOTCT 44 to'I ~ I ~ 'Iio it I,t4 foOROI Atsocf 50csrttt ~ s. 540 t 10,TI $ 11 1,14 Rli 1 10 11 5Cete ~ ei rolttIC~ I Sescfvlsfoa 50CRIR1040 ~ ~ ~0~ ~ ~ ~ ~ oooo 20141 1'I 1$ $ 2 2 040 41 12041 1 ~ 'Its N 12,11 Otter Sacer t stoa ~ ~ ~~ 0~ 0 ~0 ~ ~~ 0 224 5 ~,1 ~ 145 4 1,4$ 14'I 11 00 Total Deeostlc Offtees. i,el ~ 121 110$ 0 4,111 114 11,2 ~ 40441 110 I '1. 50 Ovetaeea Off Icos ~ ~ I 0444 Tl 11 ~ 10 1,4N St 140N 1024$ 44 14 ~ 11 Total Isvestseat Seer 1t les. ~ 0041 20$ 11,44 IOTN IN 1201$ 10144 11 ~ 12 ~ tt Leeast 0000 ~ CIC OfftCO40 ~ ~~~ ~ ~~~~~~~~~~~~~ ~0~~~~~~ 21 F 140 ITS 'IR ~ I'I 14 0411 104 12rl1 25,151 141 11.42 Overseas Offices. ~ ~ ~ ~ ~ ~0~0 N,141 10014 12011 11 roil 'I 0021 11,10 110441 10011 I I.RT Total Loess, ~~~ ~ ~ 00 ~ 0 ~ ~ I ~ 104 I,sao 12,14 ~404N 1041$ 11,11 ,~1~ ~l ~ 11 11.42 Leael Raaetva fef IOSSI11 ~ Laos Leaaaeeeoooo ~0~ ~ ~~~ 000 ~~ 0000 ~ ~~ ~ 21 '102 ~ 41 Loess, Ret. ~ a,f fv 1044V 12014 aoel ~ 'I 10411 12,0'I Sa,sf I I ~ 11 ~ 11.41 Total Taterest Rarst ~ Assets, ~ Rot. ~ ~ 1501st 20144 120 11 15 0441 Z ~ IVT 11,4I 140014 Z,124 11021 Semerr Ctoss IOCONSS Caravel Assets Deoeatss OTTTC ~ S ~0~~ ~ 00 ~ 0 ~ ~ 0 ~ \~0~ N,421 Ilo 1101$ $ 20521 11010 s04 '11,11 I 0254 I Ovetsees Off tc04 Total trots Teteteat 4tatff ASSONO ~ ~ ~ ~ 0 ~0 ~~ 0 ~ ~ ~~0~0~ 410014 ~far 20204 It 051 12 ~ 11 xiii Z,OTT I '1.41 '11011 1,220 ~20 1 ~ 11 ~ 11.11 15 ~ eotototast Corslet Aswtel Casalaao Ose froo tessar 40141 I otoi 4,101 Cos'teosts>> LISSI1ttf ea Accfftaacea ~ ~ ~0F 000 2,101 $ 0152 Ot10I',Assetso ~ ~ ~ \~ ~0 ~ ~0~ ~ 00 ~ 0 ~ ~ 10122 ~ 0111 4 cite Total Roetatereet Retold Assets ~0 ~ 120NZ 12 0444 12 0451 I ~ tet Assets ~ ~0~0~~0~0~~~~~~ $ ti 401 ~ $S ~ ~ lal $ 44,411 LIS1lllties ssi Ttect1oliers'et tf I ~ sorest seaf tal t.ta ~ tt tet ~ ST I ~ CRost seartal Dvloa'INK Doaesttc Off tcess 50V tata eai R010C'IS11 ~ Drier Of Ottscraval'eraatts ~~~~ 0000000000 $ 10t24 $ 25 I~ 11$ $ 1,IOI $ 21 I 125 $ 1,t12 1 11 5 '45 Lactate CeftlftCSC ~ a aei ROCC $ 15 ACCOSOC DffleeIC4 ~ 00 ~~ 000000 ~ r ~ 'll ~ .N Tit t024 144 I I ~ 10 '00007 4rtot 00SOSIC40 ~ ~ ~ oooooereoo ~ rooo ~ ~ ~ ~~ ~ ~ 0 ~ ~ 0 ~ 00 ~ re ~ $ ,1$ t 141 4,11 ~ 0144 41 4,11 1 ONI 114 4,4$ ~ Offt411 ~ Ceft'If'ICSCOS ef Dffeatto ~ 00000 ~ ~ ~ ~ 0000000 0000 ~ 0 ~ 0 11 Toil ~ 11 N 101$ ~ 14 11 T,tt Otser Ttse DOSostts, ~~ ~ ~~ ~~ ~0~ 10141 No ~,TI 1,540 142 ~ 014 1,51R 151 4.$ 1 'otal Deoestfc offfces. It,041 111 1,if ll0441 141 tell 140541 141 1,15 Ofefaeea Off ICOSO ~ ~ ~ 0000 ~ 0 ~ ~ 000 ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ oooorooe ~ 0000 ~0~ Rs,ftf F 01 ~ 054 2'IOIZI 445 0,11 500144 ~ tl I 04 TOCSI ISCOTOSCMeftat DffeSN400 ~ 0 ~ 10412 tao 4015 44041 ~ I oooo ~ ON a404 ~ I 10012 1.41 feioral rosie Ivrcseaoi esi Secvrtttea 5011 004R Reosrsteae Atraffoatao 4044I 14'I 14,0100 40421 12$ 10052 lolls 114 I ~ 1$ Otaer Sottoooc Dosef: Doeosttc Offfcea ~ ~ 40414 110 ~,It $ 004'I 111 ~ O'10 I ~ lft 1'll ~ .10 OTRSOOS Offtces ~~0 ~0 ~ ~0 0~ ~~ ~ oro ~ 0 ~ ~ 0 ~ ~ 0 ~ 0 ~ 0 10101 ~ 114 tfeot oo 1,444 12 24,N 1,205 51 11.44 1otal Otter tetteosi Resef ~ I~ I~ 2 2$ 4 12.11 ~ 04 al 201 12 44 ~ ,aii II0 I,'lo Leal Ters Rates aai Oooeoteres. R,lii 44 iotl Trito 12 1010 20405 41 I.RO Total TatRest lurlal Lfaitllt104 ~ ~ 2,111 I,aff t.'11 &0414 101st ~ ,IR ~at 001 1~ 14I 4,4 Semarfrlatereat teartol Ltaitlltfet Deoesttc Offices ~ 210I 10 ili 101$ RT,ROI 414 1011 22 0204 421 1 '2 Ofefeeee OfffCO4 ~ ~ 0~0~0~ 00000000000 ~~ ~ 0000 ~ SD,NT tii 10001 110444 144 I 44 400411 151 1,12 Total Taterest lear tat Lla1tlttfeae, F0 ~1 ~ 141 I ~ alt tetf ~ te414 ~IIte ~ 012 ~ 10011 101st 4,11 leartst Llaslltttesl trito 'eotaterest Dele'Stt ~ I ~ DOOOSMC Off tCOSO ~ 10,4 14 100142 Deleatts I ~ Ovsfffes Off ICOS 0000 ~ ~ ~ 0~0 ~0~~0~ ~0~~ ~ \~~ 1,141 l,ill 1 ~ 410 Accfftaacea Oststasctal ~ ~ ~ ~~~~ 2,114 10220 1,140 ACCeeata fefa114 ACR001 Rareaaaa eei Otter LISHIICIO40000 ~ 0 00000000 ~,Ni 1,111 4051 ~ Total Realataeat lear ts LISHtltlos, N0140 tt ~ 111 I ~ 044 1etal Ltestltffeaeeoe ~ ~ 0 ~ 0 ~ ~ ~its 11 lt Ill ~ ~ 2,11 ~ Roaeeffsl ~ rtofeftec Steat ~ ~ ~ 00000000000 ~ ~0 ~0~ 0 42 12 ~2 rtefeftea 5tsC40000000000 402 402 Sosf Seseoaol ~ ~ ~ Ce~ ttestaoliets>> tavltfe 10024 S,ito $ ,514 Saa,aos 5440411 loNI Liest 1 'Ittoa eai Stovtt ~ Toots Zeal'tfooor ~ 0 ~ 000000000 ~ $ 44 0404 2,115 TaaaSIO Ee ~ stalest Set I ~ CONat Ioaffa eoc Arete'le Tatetest RS4 I agio 5 etf $ 0025 STOT 20415 $ 141 ~ et I ~ Ceres'C IOCOOO Se ~ tafsesta ~ Of area'S Iateteat Carol ~ 'I Aaae't40 ~ i,it5 40255 4.015 ~ Casern fer Ionflle Toes leases I ~ esclooso tree calcs1attess ef arersto 1alascea eai overate rates, es allrolttato. ~0 tef loess tao OSRaektsetity RII1 level ef local I(sorest rates Irevatlts ~ Is ceftsta SOOCR AORIcao csooRIos ~ ROTCT Loca aoaeata taaloie OOOSCROCI esi feieaei fete leaser ea elt11CSDIOO 0400'll 2 OIOONR The Chase Hanhattan Co oration and Subsidiaries Avera e anceS Interest and Avera Rates-Taxable E uivalent Second Quarter 1985 First Quarter 1985 verage Average verage ($ in millions) Balance Interest Rate Balance Interest vetage Rate Assets nterest-Earni Assetsl ntetest- eartng OOS CS Placed vith Banks.. S 5,010 S 119 9.51X 4,987 Federal Flxlds Sold and Securities Purchased Under Resale Agreements..... S S 116 9.42X 1,266 24 7.60 1,210 24 8.12 Tra rading ACCOIllt A55CCS ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 557 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~ 16 11.74 829 22 10.87 InvcsCment Securities: Domestic Offices: UeSo Treasury SCNILCLeso ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~ ~o~~~~~~~ ~~ ~ ~~ ~~ o~ ~ ~ 1,903 10.54 1,746 48 11.05 171 6 14.07 192 5 11.67 State and Political Subdivision Securities.......................... 1,954 65 13.34 1,945 64 13.34 Other SCCurlCieso ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~~ ~~~~~ ~ 273 8 11.75 '270 5 7.51 To'Cal Dome5'tiC OVCrSCSS OffiCC5 ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ OffiCCSo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~ ~~~~~ ooo ~o~~ ~ I 145 12,03 15.54 1 038 m 52 11.91 20.23 ~4 ~ ~~ Total Investment Securities.....ooeoo ~ oooo ~ ~ ~ ~ ~ .oooo ~ ~ o ~ .oo..oooo. e 12.74 13.59 cans: Domeatic OffiCCSoo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ 24,641 760 12.37 24,357 754 ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ o ~ o ~ ~ ~ ~ ~ ~ ~~ ~~~~~~ 12.55 OVeraeaS Officeao ~ ~ .,oo ~ ~ o ~ ~ ~ ~ ~ o.o ~ ~ ~ o ~ oooeoo. ~e ~~ ooooee ~ ~~ ooeooo.o ~ oo ~36 820 ~1072 11.68 11.89 To'Cal'oans ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~ ~ ~~~~~~~~~ ~ ~ ~~ ~~~ ~ ~ ~~ ~~ ~~ 11.96 12.15 Less: Reserve for Possible Loan Losses+. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ .~~ LOanS, KCC ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ SLema Total ross Interest~tni nterest ~o ~~ Assets tnin ssets ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ Net.. ~ . ~ .... .. ~ ~ ~ ........ ~~o~ ~~~ ~ . ~ .... 7M 11,96 11.96 T~Tf L2.15 11.99 omest c CC5o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ooooe ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~~ 12.10 917 12.24 OVCrsCSS OffiCeso ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ o ~ ~ ~~~~~~~~ 11,54 11.81 Tatal GrOS5 Inteteatkarning A55C'C5o ~ ~ ~ o ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~~~~ ~ 11.77 11.99 Noninterest&s Assets: aan and GUC rcm Bankse ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ 4 e295 4,280 CustomersLabiiity on Acceptancesooo.ooo ~ ~ o ~ ooo ~ ~ ~ oo ~ ~ eoooo ~ ~ eo ~ o ~ ~~ oo 4,432 Other Asaetse ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ oooe ~e~~~ ~ oe ~ ooooooo ~ ~~ ~ to ~ oo ~ o ~ ~ 4 310 Total Noninterest-Earni Assets..oooo.o.eoooooooo o . ota SSCC5 ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~~ ~ ~ ~ ~~~ ~ ~ ~ ~ ~ ~ ~ ~~ oeoo ~ ~ ~ ~ iabi Stockholderse E it nte ao es: nteres r ng s s: Domestic Offices: Savings and Hegotiable Order of Withdraval Depositso ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 1,917 25 5.22X S 1e854 S 23 5.10X Saving5 Ccr'CificaCC5 and NO5C Egg Accol/It DcP05itso ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ 404 8 7. 94 423 10 9.11 Honey Harket DCPosit5o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ 7,427 139 7.52 7e074 138 7.95 HCgotiablC" CerCifiCS'te5 Of DCP051'Coe ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 972 20 8.53 876 20 9.05 OUler Time"DCPOSLtso ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ 174 9,56 To'tal Overseas OIXIICSCLC Officeso OffiCCSo ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~o~~ oo ~~~ ~~~~~~~o~~o~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ o ~ ~~~ ~~~~ ~ ~ ~ ~~~ ~ IRK 31 246 m747 8.17 9.59 ?7+3'1 378 188 37'45 10.22 8,69 9.63 To'Cal In'tCrCS't BCarillg DCPOSL't5o ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ oo ~ eoa ~ ~ ~ o ~ ~ ~ ~ ~ 9.07 I~TV 9.29 'ederal Funds Purchased and Securities Sold Under Repurchase Agremmvlta, 4,266 105 9o81 9.25 Ither Botroved Honey: Domestic OffiCC5 ~ o ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ oeeo ~ ~ ~ e ~ ~ ~ oooeeo ~ ~ ~ ooeeoooeeoe ~ ~ ooooo ~ ~ 5,572 8.94 5 e369 124 9.34 Ovetaeas OffiCCSo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ o ~ ~ ~ ~ ~ oo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ o ~ ~ ~ ~ ~ o'o ~ ~ ~ ~ ~ ~ ~ 14,44 48 17,90 Total 0'thCr Borroved Honey ~ ~ ~ ~ ~ ~ ~ ~ ooo ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ o ~ ~ ~ ~ ~ .Cng-Term Hates and Debentureso ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~o~~ ~~~~ ~~~ ~ ~~~~~ ~ ~~~ ~~ 2 487 9.85 9.61 m 58 10.79 10.24 Total Interest-Beari Llabilitiesoo ~ ~ ~ ~ . ~ ~ ~ .ooo ~ ~ e ~ ~ .o . ~ ~ ...... ~. ~~leo'. 9.22 T~T5 9.48 kmma nterest eat a t es 5't C Off CC5 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ oo ~ ~ o ~ ~ ~ oo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 454 8.32 471 8.83 Overaeaa Ofliees ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ eo ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ 988 9.71 999 9.82 Total Interest-Bearing Liabilities................................ T~TY 9.22 T~T5 9.48 kxlintercst&eari Liabilities: kpos Cs st C CCSo ~ ~~ ~ ~o ~ ~ ~ ~ ~ ~ o ~ oo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ o ~~~~~~ 9e478 9,384 kPOsitS ill Ovetaeas OfiiCCso ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ o ~ ~ ~ o ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ 1,390 LI272 ICCCP'tanCC5 Ou'C5'tandingo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~~ 4,467 4,642 keounts Payable, ACCrued ExPenSeS and Other Liabiliticaeo.ee.o...ee.... ~3840 3 514 LiabilLtiesoo ~ ~ ... . . ~ ~ ... ..... Total Noninterest-Beat ota L C C5o ~ ~ ~ ~ o ~ ~ ~ oo ~ ~ ~ ~ ooo ~ ~ ~ ~ ~ ~ ~ o ~ ~ o ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ o ~ o ~ ~ o ~ ~ ~ ~~~ ~ ~ ~ oo ~~o~ ~ ~ ~ ~ oooe ~ ~ ~ oooo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ oo ~ o ~ ~ ~ ~ o ~ ~ ~ ~ l~l' kxlteoeema e Ct COCkoooo ~ ~ ~ ~ ~ ~ ~ ooo ~ ~ o ~ ~ o ~ ooo ~ ~ ooooo ~~ ooaoo ~~~~~ AÃmcA t 5 t ~ ooo ~ oo ~ ~ ~ oe ~ o ~ ~ ~ ~ o ota L SO C5 o ~ oo ~ ~ ~ ~ o ~ o ~ ~ ~ ~ ~ o ~ o ~ ~ ~ oooo and StOCkhalderS' it .oooooooo ~ oeo ~ ~ o ~ ~ ~ ~ ~ ~ 'axablc v ent t nterest nccme a vera Interest Rate S ad. 2,55X 2.51X Ict nterest r>>cd as a ezcenta 0 ross nteresc a 55Ctso ~o~ 3o93X 3.88X )' 'eserve for possible loan losses is excluded from calculations of average balances and average rates, as appropriate. STET n SIIxxxlts include nonacctual and reduced rate loans, as applicable. The Chase Hanhattan Corporation and Subsidiaries Consolidated Average Loan Balances>>>> 1986 1985 ($ in millions) 1st 0tr. 4th Qtr. 3rd Qtr. 2nd Qtr. t Qtr Domestic Offices: Real Estate Loans: Secured by 1-4 Family Residential Properties 2 >717 $ 2,649 2,218 1,875 1,72 Other Real Estate Loans 4,065 3,362 2,974 2,873 2,93 337 347 300 295 25 Loans to Hortgage Companies Loans to Other Financial Institutions 1,317 1,430 1,548 1,808 1,67 Loans for Purchasing or Carrying Securities 579 600 608 614 50 Commercial and Industrial Loans 8,208 8,584 8 >799 8,961 9,63 Loans to Individuals for Personal Expenditures 7,417 7,012 6,548 6,046 5,45 1,313 >277 1,167 984 98 Lease Financings 1 Tax-Exempt Loans 1,659 1,277 1, 189 1.113 1,14 562 402 504 474 48 Other Loans Total Domestic Offices. Gross 28, 174 26,940 25 >855 25,043 24 980 Less: Unearned Discount 414 505 504 402 45 Total Domestic Offices 27,760 26,435 25,351 24,641 24935 Overseas Offices>> 34,160 35,238 36,661 37,003 37,22 214 190 194 183 20 Less: Unearned Discount Total Overseas Offices 33,946 35,048 36,467 36,820 37,02 Total Average Loans $ 61 706 $ 61 403 $ 61 818 ~61 461 ~6) 37 >>Loans in overseas offices includes loans to U.S. commercial borrowers ~5050 $ 5 262 $ 5 777 5 57
- sale Agreements 49,236 24, 226 crest on Tradi .
Consolidated Analysis of Loan Loss Experience 1986 1985 ($ in thousands) 1st Qtr. 4th 0tr. 3rd Qtr. 2nd Qtr. 1st Qtr Reserve for Possible Loan Losses at Beginning of Period $ 907,672 $ 872,399 $ 820,690 $ 779,362 $ 761,43 Het Loan Charge-Offs: Domestic Loans: Commercia'1 and Industrial Loans 5,640 20,639 24,236 18,219 29,74 Loans to Financial Institutions P5) 456 (67) 659 (76 Loans for Purchasing or Carrying Securities (81) (3) Real Estate Loans 6 >166 8,739 (542) (622) 67 Loans to Individuals for Personal Expenditures 63,940 48,768 33,881 25 ~ 518 23,31 Lease Financings 733 931 103 . (32). ( Other Loans (9) 650 (314) (16 ) 13 Total Domestic Het Loan Charge-Offs 76,314 80,183 57,297 43,7 23 53,09 International Loans: Commercial and Industrial Loans 25 >055 22,195 11>385 2,733 1 1 >94 140 (221) (529) 205 68 Real Estate Loans 49 Loans to Individuals for Personal Expenditures 2 >923 2,241 2>992 1,887 Loans to Foreign Governments and Official Institutions 9,6 31 79 1.309 21,385 7,25 Other Loans 122 ()3) 538 (631 ) 12 Total International Het Loan Charge-Offs 37,871 24,281 15,695 25,57 0,49 Total Het Loan Charge-Offs 114,185 104,464 72.992 69,30 3,59 Provision Charged to Expenses 13o,ooo 125,000 110>000 105,000 95 >00 Reserves of Acquired Subsidiaries 5,489 7,337 9,923 6,860 Foreign Exchange Translation Adjustments 5,859 7,400 4.778 (1,230) (3 >4 Reserve for Possible Loan Losses at End of Period ~934 835 $ 907 672 ~572 399 ~820 690 779 36 0800T:2 e Chase Hanhattan Corporation and Subsidiaries unds Borrowed 1986 1985 $ in thousands) Harch 31. Dec. 31, Sept. 30. June 30, Harch 31, ederal Funds Purchased $ 2 >662 >949 $ 2>585 >402 $ 1 >863>036 $ 2 >029 >21 I $ 2 >042>552 ecurities Sold Under Repurchase Agreements 1,319,836 I >546 391 2>280>031 I >491 8029 2 233 >028 . Total 3 >982>785 4,131,793 4, 143,067 3,520,240 4,275,580 ommercial Paper: ,Company 3, 116,410 3,337.981 3,567 >949 4,081,902 4,098,316 Subsidiaries of Bank 126 >091 145 >520 120 >346 85,492 58,293 3,242,501 ' Total 3,48 3 >501 >688 >295 4 > 167 >394 4 > 156 06 09 ther Borrowed Honey: Haturing within One Year: Banking Subsidiaries of Company I 086 >008 > 904>793 504 ~ 017 549,983 478,122 Nonbanking Subsidiaries of Company I IS,489 100,678 83,329 78,847 72,268 Bank: Domestic Offices 1,276,361 1>129>833 1,442,555 1,049,099 Overseas Offices . 1,268;296 1,389,786 1,013,239 61 2 >635 750 >535 Ha After One Year: y'ting Rate Extendable Notes (Due 1992) 299 >813 299,784 299,756 299,728 299,700 Floating Rate Extendable Notes (Due 1997) 249,775 249,746 249,717 249,694 Floating Rate Notes (Due 1999) 24, 118 24 ~ I 18 25,147 25 >147 25,975 Banking Subsidiaries of Company 109,790 81,694 88 >107 88,007 91,391 Nonbanking Subsidiary of Company 7,269 Bank: Domestic Offices 869 866 2,654 128,485 125,883 Overseas Offices 427,7 23 344,168 398,863 377,631 372,649 Total 4 0136, 116 4>671,994 3>794>662 3,8528712 30265,622 l'otal Funds Borrowed $ 11 361 402 $ 12,287,288 $ 11,626,024 $ 11,840,346 $ 11 697,811 )BOOT: 2 26, The Chase Manhattan Co oration and Subsidiaries Lon Term Notes and Debentures ($ in thousands) 888 1986 8>t. 1985 Ma rc Company .'onvertible Capital Notes (4 7/BX Oue 1993) $ 6>759 7,245 $ 7>626 $ 8>207 8,907 Convertible Subordinated Debenture's (6 1/2x Due 1996) 25>862 57 >282 57,374 79,522 80,627 Notes (15 1/2X Due 1992) Issued with Detachable Equity Contracts 150,000 150,000 150,000 150,000 150,000 Notes (8 1/2X Oue 1996) 249,006 Zero Coupon Notes (Oue 1992) 75>515 72,964 70,499 68, 119 65,821 Floating Rate Notes (Oue 2009) 282,385 282,385 282,385 282,385 282>385 Floating Rate Subordinated Notes (Due 1995) 348,872 348>843 348>814 348,785 348,756 Floating Rate Subordinated N'otes (Oue 1996) 398>665 398,632 398>598 398,565 398,532 Floating Rate Subordinated Notes (Oue 1997) 175 >000 175,000 Floating Rate Subordinated Notes (Due 2000) 250 >000 250>000 250>000 Floating Rate Subordinated Notes (Due 2009) 400 000 400 000 400 000 Total red*>3 TOIP. %3 Chase Manhattan National Corporation: Debentures (6 1/4X Oue 1992) 7,250 7,250 7,250 7,250 7,250 Debentures (8 1/2X Oue 1996)w 21>090 21>090 21>090 21,090 21,090 Chase Lincoln First Bank N.A. Capital Notes (4.70X Oue 1989) 3 994 3 976 3 44 Total Bank: 200,000 200 >000 200 >000 200,000 200 >000 Capital Notes (8 3/4X Oue 1986) 4,153 4,183 Capital Notes (4.60X Oue 1990) 3 >768 3,833 3 >886 Floating Rate Notes (Oue l993)~w 150,000 150,000 150,000 150,000 150,000 OeutSChe Mark Bearer BOndS (6X Oue 1993)ww 31,284 32,300 29 >297 25,863 27>896 French Franc Floating Rate Bonds (Due 1992)~~~ 105>152 97,485 90>744 80,057 69 French Franc Floating Rate Bonds (Oue l993)'~~ 491071 45>493 42>347 37,359 S~iss franc Bonds (4X Due 31>594 30,288 28>750 25,839 4 Nptes and Debentures 1993)w'ong-Term 65,998 631987 5>839 of NCB i~"i (various Maturities) 81>825 400 000 72,433 400 000 400 000 4M 000 400 MO Floating Rate Subordinated Debenture (Oue 1996) Total ~84 832 llttl 022 989 238 9 8 224 Less: Investment by the Company in floating Rate 400 000 Subordinated Debenture of the Bank (Oue 1996) Total Long-Term Notes and Debentures ~ Guaranteed by the Company. ~~issued by the Chase Manhattan Overseas Banking Corporation, a wholly owned subsidiary of the Bank, and guaranteed by the Company, w'~ISSued by ChaSe Manhattan S,A a WhOlly OWned SubSidiary Of the Bank, and guaranteed by the Ccmpany. (1) Nederlandse Credietbank N.V. 0800T:2 T Manhattan co ration and subsidiaries Consolidated Statement of Income 1986 1985 ($ in thousands, except per common share data) st tr. 7 n r. Interest Income m)assess ano ees on Loans $ 1,808,867 Sl>802)486 $ 1)755)003 $ 1)804)216 $ 1>812 209 Interest on Bank Deposit Placings 115,318 121 >OD 130 > 551 118 >786 115 > 880 Interest and Dividends on Investment Securicies: Interest on-U.S. Treasury Securities 40,072 43)857 49,044 50,988 47,557 Federal Agency Securities 9,050 7>356 7,310 5,151 5,554 State and Political subdivision Securities Exeapt from Federal Income Taxes 43,232 38)509 37,876 36s987 36,730 Other Bonds, Notes and Debentures 70,742 45,153 43,972 51>687 Dividends on Federal Reserve Bank and Other Stock Investments Interest on F)',~eral Funds Sold and Securities Purchased Under 2 416 I6&1Y 1E~o 3 293 3 018 IK&1Y ~8Y 1 557 Resale Agreements 49s236 35,919 21,300 25,559 24,226 Interest on Trading Acco)a)t Assets 28 171 22 704 18 611 14 939 20 664 Total Interest Income TIEAUa F1~68 la ~03 6T) 7111 Ka Interest Expense 959,723 1>006s231 1)031>908 1>113)405 ls124>151 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 161,119 125,090 116,825 105>873 115s594 Coag)ercial Pa per 56>844 60,547 63,346 69,326 72,378 Other Borrowed Noney 177,545 144,668 86,585 94>615 99>776 Long-Tern Notes and Debentures Total Interest Expense ~a)s 63 421 ~98 61 703 239 60 407 ~359 071 59 567 162 786 I 58 367 670 266 Net Interest Income 748,452 733s032 709)070 660>830 645>798 Provision 'for Possible Loan Losses 125 000 110 000 95 000 Net Interest Income After Provision for Possible Loan Losses Bslh!73 ~AV0 ~0&W erat Income ssions 241 s 580 262,220 2288404 199,610 F n Exchange Trading Income 60 8277 46,470 48s231 43,141 35,543 Trading Acco)x)t Profits (Losses) 22,173 11,460 3>022 22,349 (5>415 Investment Securicies Gains (Losses) 20,021 28,776 29,143 20,165 Other Inccme 41 138 12 848 16 538 33 496 Total Other Operating income SS&0> mM>r ~2&)I 2IPAS> Other 0 rati Expenses arses mp oyee enefits: Salaries 3191065 311,613 280,038 2671219 254,451 Profit Sharing 20,M2 22,489 S~~~K'18,571 22,351 22,108 16,484 Other Employee Benefits Net Occupancy ~&3(I84 863 71,182 63 641 68,055 72 336 3'7,869 66~485 64, 536 3~70 452 56>145 Equipment Rentals, Depreciation and Haintenance 67,867 54,700 59>456 57>031 548581 Other Expenses 209 978 223 718 196 327 189 679 170 114 Total Other Operating Expenses .EW> ~67 IW ~22 SSS 7644'45,125 Income Before Taxes 218>314 221,974 218>514 211,970 Applicable Income Taxes 74 624 72 550 78 071 Sm Inotnn S~E>T $ Avp Net income A bl o C $ ~~40 $~3"i~44 $~3'~43 S~OI~5 Average Shares Outstanding 78 s 156 8253 76 >789 )784 75 )898 >388 74 >497 s 664 73,735,222 Earnings Per Common Share: Primary, Based on Average Shares Outstanding 1.63 S 1.74 $ l. /4 1.68 $ 1.44 1,38 S 1.46 Ass)a)sing Full Dilution $ 1.59 $ 1.68 $ $ $ 1,41 Cash Dividends Declared Per Coan)cn Share $ .51 1/4 S .47 1/2 $ .47 1/2 $ .47 1/2 S ,47 I/2 0800T:2 28. PART II - OTHER INFORMATION Item 6. Exhibits and Re orts on Form 8-K (a) Exhibits ~Pa e Exhibit ll Statement re: Computation of Earnings Per Common Share for the quarters ended March 31, 1986 and 1985 Exhibit 28 Summarized Financial Information - Chase Manhattan National Corporation (b) Re orts on Form 8-K The registrant filed the following Reports on Form 8-K during the quarter ended March 31, 1986. Date of 1/13/86 - News release announcing the Corporation's earnings for the full year and the quarter ended December 31, 1985. On January 15, 1986, The Chase Manhattan Corporation issued a news release announcing a 2-for-1 split of its common stock in the form of a lOOX stock dividend. 3/3/86 - On March 3, 1986 The Chase Manhattan Corporation entered into an underwriting agreement covering the issue and sale of $ 250,000,000 aggregate principal amount of 8 1/2X Notes Due 1996. 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 thereunto duly authorized. THE CHASE MANHATTAN CORPORATION egistrant) By (M chael P. Esposito, Dr.) (Executive Vice President and Controller) May I4 1986 EXHIBIT 1 The Chase Manhattan Cor oration and Subsidiaries Com utation of Earnin s Per Common S are Quarter Ended March 31 ($ in thousands, except per share amounts) ~Primar Net Income $ 143,690 $ 133,899 Less: Preferred Stock Dividend Requirements 16 282 26 088 Net Income Applicable to Common Stock Average Common Shares Outstanding Primary Earnings Per Common Share $ 1 63 5 1 46 Assumin Full Dilution Net Income Applicable to Common Stock - as adjusted+ Shares of Common Stock Outstanding During the Period, retroactively adjusted for conver-sions of capital notes and subordinated debentures and exercises of stock options 0 78,654,444 73,764,472 Add: Shares Issuable upon Conversion of Convertible Capital Notes and Debentures 1,148,338 3,132,290 Shares Issuable upon Exercise of Stock Options and Conversion of Restricted Stock Units 630 446 384 424 Shares of Common Stock Outstanding - as adjusted Earnings Per Common Share Assuming Full Dilution 1.59 1.41 +Adjusted for interest expense on convertible notes and debentures after applicable income taxes. EXHIBIT 28 Summarized Financial Information - Chase Manhattan National Cor oration In connection with the merger of Lincoln First Banks Inc. ("Lincoln" ) into Chase Manhattan National Corporation ("CMNC") on July 1, 1984, CMNC assumed, and subsequently the Company guaranteed, Lincoln's 8 1/2X Debentures Due 1996. Set forth below is summarized consolidated financial information for CNIC for the periods indicated. Statement of Income Information Three Months Ended March 31 ($ in millions) et Interest Income After Provision For Possible Loan Losses $ 39 $ 38 Net Income 8 Statement of Condition Information March 31, December 31, March 31, ($ in millions) 1986 1985 1985 Loans $ 2,995 $2,986 $ 2,725 Total Assets 4, 122 4,164 4,010 Deposits 3,290 3,319 3, 176 Total Liabilities 3,742 3,792 3,669 Stockholder's Equity 380 372 341 Total Liabilities and Stockholder's Equity 4, 122 4,164 4,010 h g C' ~ I f:~-" 'k~c ~ '~ M...M.;XP'< a ~, ~ R"~E-= %'. ck.-" R4 w o e s 8 e 'X.~'i5!R- aa.m 46 L>> l 271 RECD 8.E,Q. -:.=, '..~!'jP 0- FE8>am 'lg jyO I,I PEE 6 I I !';'.,i 5i":7' ,'lPF, 0.. p.. ~ .0-'X 3~~ ~0~%I!~ t i. '- l gQ>> >a~'iC er.icez Ganher~ydr r agytggy ~ ~ ~ ~ Pl 2-~$.474 4 ~p'j>> lP ifSyi. 'jM gE'-~ ~~4~~ g;e .1. W I '\ . < 4>>g>> L 'I l ca+ F I N A N C I A 4 H I G'H 4 I G H T 8 ~ r 1 >NMIttloMsorooltAAs sxcf err>srrsnsns AMQU>rrs RKSVLTS - In1985,fullydilutedeamlngspershare andnet Income roso12% from 1984. Ieee IFuttyatutcdI.... .'90 .tee4, Eamegs Per Sha e S 7.11 $ 6.36 Net Income. 990 Return on Common Stockholders'qu'ty.....:... 15.1% 15.0'ECTOR EARNINOS tees test -". Earn>'n9s ol Three Coe Busrnesses (Not >notus>g >tems retarned at the corporate terctI. $ 1,1 57 $ 1.019 COMMON DIVIDENDS , DIVIdenda rOSe $ .20 per Share, Or 10%, In1985r Ieee 'eer . Cash O>>ridcnds Declared.....,...,.... Cash ON>dends OrrctaredPer Share...,...... S 290 2r26 $ 259 2.06 TOTAI.CAPITAL Tbtalcapitalincreased35%fromayearago. goes tsa: Total Cap>tat Pecentageol Total Assets YEAR.KNDSALANCKS O>scour>I. ~ S 15,948 9.12% $ 11,805 7.79% Totrti assets rose 15% from 1984, primarily reflecting growth in the consumer loan portfolio. sees tee< Tctat Assets 6173,597 $ 150.586 Con>rnercraILoans. Net ol Unearned Drscount . 58>172 58.799 Consigner Loans. Net ol Unea ned 55>518 42.661 Total Dcpos ts . 104,959 90.349 TolalStcJ holders'quly 7,765 6.426 Common Stoctrhordcrs'qurty Per Share . 50.63 45.82 ~r ~rr NET INCOME ar>lplA EARffINOS AND DIVIDENDS PER SHARK >050 e.tS 'Lse ~ 4 44>2 ~~r r -> 2.0$ ~ / 80 r p 7 0 C I 7 I C 0 R P I N V E S T 0 R S ggggjg~>~ 3: t .* '"~.'-.t ~ARRKKR55555 ~v~wg~>>' e i. ~ ~ i 'j' " nmany way~ 1985 was a year of important accomplishment for Citlcorp and f also) it's a year that reflected tho continued tensions associated with a changing global economy. Ql During 1985, the Corporation earned $ 711 (fullydiluted) per share, an lncroaso of 12%> or 0 74 over 1984. Over the last 6ve years, the compound growth rate'of EPS was 13.2%. ~ i ' I 8 As of December 31, the Corporation's total ca pltal was @58 bllllon, an increase of 35%, or 4q<w P 441 billion,sincethesametimein1984....,, >,", =i'! ..'.; ".; .'~ i':irj.,>-..:, ',
- Prior period amounts have been reclassified for comparative purposes.
't~~"tp'A l5 The rate of return earned on your equity was 15.1~ essentially the same as last year. ~ y ., ~, 0 During the year, Citlcorp common stock sold in a range of $ 36%a to $ 51 ~/>>, closing the year at $ 49%, and a p proaching our book value of 550.63. Your dividend was increased 10% to @2.28 per I during the year. f,'hare s.'q I. 1 ~ ' ~ ~ ~ k Ne remal'a committed to the long-term goal of building value for shareholde~ customers, and staff by developing a truly unique global financial services business which willrecord superior per-formance. Our work during the year 1985 continues to suggest that this goal ls realistic and wQ j.. achievable. The markets in which we work are large and fullof new opportunities. The legal and regulatory restrictions which have historically limited your Com pany's activi tie are visibly eroding. I~ As was announced in 1985, we reorganized our three core businesses.'\Ve moved our money a market and foreign exchange trading activities into the Investment Bank, improving the inter-action between the institutional Banking officers and their investment Banking colleagues and I creating a truly global force to serve our customers. Ne also structured our individual Bank 1 ~
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>> ~ ~ "I gf".~ to integrate our UN. branching and card products activities within z,.L>~P kkt~g rkr,l~Ogki commonunits and formed a global Private Banking business which we 'JIlllrLIIJLL JOIIN IIKJO TOII I~ IHJOO JLO IlICIIOOJOOOCK believe willbe of future importance. Even at this early data it appears that this reorganization I ~ which puts Messrs. Theobald, Braddock, and Small in charge of tho throe coro businesses of the Corporation, has o pened u p new op portunities, brought now strengths to our customers, and willbe of important longer term significance in the evolution of Citicorp.
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We continue to manage the balance sheet conservatively. Our capital is strengthening relative to our ov eral I activities. We also have continuod to manage our interest rate exposure on a conservative basis. We have seen considerable progress in the percentage of total deposits which come from customer sources, having developed deposit businesses in important markets within the United States and around the world. We manage our liquidityand funding in such a way as tn insure access to the world's money markets and to insure important long-term stability for your Company. We have grown our loan loss reserves more ra;. idly. We ex pect, ~I YOUR I MANAGEMENT DIRECTORS
- More immediately, the Corporation is pursuing parallel goals. On the one hand, we are making good progress building each of the three core businesses, and on the other, strengthening the Corporation's balance sheet. Eac.h one of the Sector Loxecutlves makes his report on the following pages. We feel that the core business efforts are strong and promising. Within each, wo continue to balance the o p portunit los to invest and build against the need to pace our growth. We are enthusiastic about our progress.
~sK ~ gsQ~>-zp ~& zp ' A'I tl ~ MA*COIJSQ I to continue to build those reserves beyond the level normally required by the day-to-day eco-nomics of the business, a strengthening which seems a ppro priato given the nature of the risks in the global system and the world's business environment. I A \ Nineteen eighty.five was n year of progress in terms of the global debt situation. A specific restructuring report on this is found on page 18 in this report. From a purely Mnancial point of view, the impact of countries on this year's results was small and we have seen reductions of cash basis loans. Many countries have made im pressivo progress both in managing their t . external accounts and in resuming growth. However, the country debt problem continues to be an important one, and it is quite predictable that in the years ahead we twillsee both good and bad news. The absolute level of indebtedness of these dovelo ping nations is still very high compared to the activity of the globo>>l econcmy. As reflected later in this report thoro are any number of cross ciirrents which make the role of your Corporation in these matters both- ;.---- important and challenging. ' As shown ln our Gnancial results, our loan write-offs during 1985 were high. This ls a trend that has been with the banking industry for a number of years and is likely to continue. The global financial system is the conduit through which much economic change and volatilityare transmitted. Any number of our customers around the world have experienced and continuo to experience difficultyin managing the economics nf their businesses in this changing environ. ment. We feei strongly that one of our res ponsibiH ties is to provide our good customers time to make appropriate business'ad Justments. ln doing so, we reflect some of the underlying economic risk on our own balance sheet. WhIle, as'indicated, these write-offs are substantial, I r ~ ~ 'L 4 >> Y$ ~ i W'4N!~mr ( ~ ~ <~~~MC5CR~~ fRSg~P~ JJREO O fasts!Y ~O,OISO ...;~ I ~~~ ( r they are well within the risk-tatctng capacity of your Company, as evidenced by the 198S perfor-I mance which reportedincreased earnings and write-oNs, and the buildup of reserves. We 1 are quito proud of the professional tending officers tn alt of our business sectors and of the processes that we have tn place to manage our many risks in a way that insures the soundness of your business enterprise while still providing appropriate support for our customers... '( During the year, your Corporatlonlost tho services of Mr. Peter Grace and Mr. irving Shapiro,. 'ho retired as Directors afterhaving served on your Board tormany years. Mr. Grace isan, outstanding American and outstanding business leader. H'e'joined the Board in 4948. Ltko his father before him, he served the National City Bank and mor w recently Citicorp with vfgor, ', wisdom, and enthusiasm. We willmiss his contributions. Mr. Shapiro is also a unique ( businessman and public person who brought his many skills to bear on your Company's prob tems and oppartunitfes with dedicat ton and insight. We wish bath of them walL ln para f! el J with their new responsibilities Messrs. Braddock, Smalt, and Collins were elected to the Boarcl. As we took to 4986 and beyond, we anticipate continuing hard work and consistent accom-ptishmont in building superior vaiue for stockholders, customers, and staff. We recognize that our optimism with respect to aur plans and aspirations simply roffr ts the dedtcation and capability of your Board and the unique professionalism and energy of the 8$ ,000 Cittcorpers who work for your Company around the worfct. V @ONE L Ill CO
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L 5 c C 0 N T E N T S 'Ib Cltlcorp Investors ' Core Business Results 7 Indlvtdual Bank 10 ~tutlonal Relationships 14 Investmont Bank 24 Regulatory Review 28 Risk Management 30 Rnanclal Infonnatlon index 37 Citlcnrp ln Brief 38 Summary of Flnnnclal Results Statement of income Analysis 44 Resort of Independent Auditors 47 Rnanclal Statements 48 Statement of Accounting Policies 53 Notes to financial Statements 55 form 10.K Cros~ference index 71 CItlcorp and Cltlbank Senior Management 70 Cltlcorp and Citlbank Directors 82 Boards of Directors'ommittoes 83 Stockholder Information 84 C 0 R E B U S I N E S S R 'I E .S U L T S ibcorp confeucs lobe organized into the theo core, previously beenhekf at the corporate leveL The atlocabon ol these bUQAess scclofs of IndNduaL IAstibflioAal,a Ad lflvcst taxes lo the buseesses more app~tefy recccts sector per for. sectors has been di~ ment Barking. The breakdown of tho earnings of these snce 1983 to present abet tcr undcfstandeg of Gticorp's core businesses. Inlee maACe andis nccesststcdby the inacasng knpact of these laxes on the Corpora.'ioe. As a resuN of the above changes, the anounls hekl at Ihe corporate vnth the objecbve, wo have made three changes in our pcscnlabon of ~ Icvcl wiN contaia sector results ior 1985. These changes rePcct Ihe recent rcorgariza . bon, Ihe treatment Of the arawance tor possbfe acdit tosses, and the 0 The cred t loss povisen that represents lhe buikf up ol the acdlt aNowanco beyond thai charged to the busecsses. beatment ol ecome taxes. Tl a fkSI chango rcfle=ts the reorganization that was made e 0 Unabocated corporate staff costs. late 1985. in whch No bcastxy functen was Irarislerred from the Instltutenai Bank to the lnvestmenl Bank and the Irternatonal Pfiva! e d Other Cofporate items induding cer tan start up acbnbes. ~ The sectors are not charged Ior these IICAISwhchrebecl corporate Banking acbnties woo moved from Ihe Invests Bank to the level dcascns and whch, if attocatefL wodd direct born anunder. Indfvkfual Bank. standeg of how the cac buseesses ale pef fofmeg The second chango that has oeen made is to the allocaten Of the The foaovnng two tables re beet the changes to core buseess IOlal crcd;I loss allowarm to reflect IPanagcmcnt'S philosophy of how leper teg. Tho remaineg tables e ths secten show Gtcorps man ils busnessc. sleutdbc charged vnlh the acdit losses vfhch may agcment ol ils busecsses along the Iwo mafor dknenSOAS d cus be ex pCCted OVef 0 potracted penod Of bflle. GtCOrp AOWChages Its toner rcfationshps and geographc eamegs The th'kdmafor sectors vnth a aedit loss pollson that rnaetaes an acowanco at a dknCASOA Of management, by poduct. fs d~ssedby the sector ICVCI Ihat pondeS a meaSurement Of COSIS agaeSI revenue genera. cxccubves, begeneg on page 16 Each sector execubve also dis tion COASStent vnth the manner e which Gbcorp merges ils busi ~ CUSSCS CUStomef fcfatxXlshps A dISCUSQon OI ihe gcographc dfstn. nesses andmakcs ecfcmental buseess dcasons bl any tknc bubon ol camegs canbe found on page 46. penod. the lotal attowancc rccturcd to present thc total loan por Ifotio e - accordancevnth galcrally acccptcd accounteg pnnaPIes may be than tha:, afecatcd to lhe busnesses. Thc additenat amount 'ore with its related pronson is rccofdcd at the corporate level. 'long The total allowance tor posstyc crcd t tosses was SQ35 rffzilen. or LORNA of total loans and lease feancng out starxfeg al Oe:ember 31. 1985. Of the lolaL $ 278 mdlen has now been altouated to the tndfvkf ual Bank. rrprescnteg 504 of thc consunm loan port fofkx Thc Insti ~ tutcnaf Baf NI has been alkcatcd 5349m<<ten of the aaowancc, or 60Yo of cofnmefaal toare. The remaefng $ 608rfxttionhas been fcpor ted at the corporate tcvcL The tt cd chango concerns certain tax expenses. whch tied 7 ~ 9) C V 4 ~, 5 4 a <<v c '<<7 I .WQC<<n )Irarnrr at ~ I ~ rar5 ~ '.,a ~ ~i 9 'a>>r -.E rt) ' ~ / 4* E,C~ M <<9 t ~ CM<< ,rr 1 I I ~ --.'i 9 ~ I ~ 44<< Scr<< I REVjSED CORE EUSNESS REPORTINC 74ET(HCOME FULL YEAR I ~ ~ I ~ AE)))CVAKC 945lrlVfrr)EEAC 949CSf VC)at ~ Eltffc))45C)404$ 5$ $ 5 " ~ '. ~ ' ~ E ~ ~ ~ '005 t)Aarcrarxt 1984 94 9$ )cv45)495 1085 1984 1085 SA)I<<SCI 1984 1505 1984 1055 1985 Provlous Besjs, ....,, ~...I ..': l:,It,'. -...>>: $20S $212 $733 $ 742 $ 160 $ 153 $ 681) l $ (217) 09S8 ~A% 55 I IF.. <<is) Btsfness Reorganization 3 36 (345) (265) 30T, 229,.:,
- ~ I (j
107,,',,' '.",,'ax (42) (39) ~ 116; ~ F ."" EC.QA. .Otter. Expense Reattocatfon . (30) (27) (e) (5) (44) (41) (13) (12); -" .:.-'. 19 17 I IIEVISEDCOIIE eusINESS HKTIHCOME 4 (MEMEGEIEEM)Baal))',...,.....,, I349 4'@~~ . 3)93 $ 39$ $ 494 MSS $333443 3Q4499) 4 r)9) SSSS 890 'pc~ c4 Pit a IHvesTMEHT ease NET INco ME ATTwsu TAeLE TO 94 W TDTALIHsTITVTIDNAL4ELATIONSHIP NET IHcoME... = '. ~55 743 i'-' I I m t~~a~d IXI5~m 9 ssta)$ )csa crsatr 9)$ 449 49 93$ $ 3544t 9$ a)Act cr)aa rarrns$ $ a)SM95 n)$ 9$ )+art Mna esra)49)at Accscrrv)ccxnrny Erccc)rrc tctac949) tfs<<snft wlrfvsalmxr ass)vxt Cr;'/rrncrstsMSvrrs<<44<<r 44<<AX 5)4) sv>>)s 99 rifts.atccr>>dr vat onraaf 9<<xttStt scxcnss ttttt rrfr)lcdtsnxratcvrttrtd~ss) ccrc')sfsvfn9499$ ~ "I 4'sb rr<<f944<<cars) tt53 rat fts<<9)r 94)159449 I'5isrct tOXXES)r rflft, !. a frn prrn <<sera) rr rrrf5 M>>t prfrrrrasn<<rr) rrtrft rf tr)trt)rrrcr s)9 9344r 4999<<449 ifa<<949trarr ncr)rssd $ 45 9vrcr) rsr tt45 sr)rt $ )4) rrarrcr) 994 fr)tt$ Err)Sr) 4$ srsaafttc)w fo tsccASxt Sr)rt 944 I csc rar)r 4) SIS a)rara<<rat 9) 9)V444 4$ a)r 44)lnna)rat)9 ~ I I I : I EJ 4'1 )si~ I M4 --t ~ ~ 4) Er<< 4 ~ . l C~ I 4, 'Pi' 4 r aa&b A~ ~ ~ 4 4 . ttlf~ ~ rc+)1 '~ Qs ~ 4 wa "-',CIL>) '>><> I 4 -PV)44 4 g ~ 8, 'W l rr, V 4 hhA(r ., P+g1gl+TP(hg hI+hR .~yOI - tq, ~+I 'Gh,,@y gt.I -. YrGI+J I ka G\'tSQf. +~)'4 ~I 'wg+4, '.EI+ r Q/ CPv ri' II.h T ~ kfa ~gg' IEI EE LI SECTOR EARNINGS AND OTHER ITEMS ~ GEOGRAPHIC DISTRIBUTION ~ IIRIEEXEtVCKXEERh 1085 6SI 4 ERE LCR CE OOLE ERS 1055 lsS4 gQ 5KCTORRARNINO5....:... '$1I157 '1.019 North Ameica. 6463 46% $ 367, 41%. Corporate Items (alter tax) Canbbean. Centrals South Cred'4Losspevisen........ (103) (36) Ameca 24525177 20 Cor poratc StaN Othe tlcfudeg Costs...... Start upActnnles... (67) 11 ~ (76) (17) Europe. Mxfdie East Asia/Paefc 6 Africa . 191 89 19 10 208 138 23 16 1FI Total Corporate Items S (1 591 $ (129) TOTALCmCORP $ 896 1001o $ 890 100'/o ALCITICORP.....,'... S 996 $ 890 5ARNINOSP!RSNARR.....'. 6 7I11 $ 6.36 rvr '(QIA RT E'.. GIIETG GER REIATI GREE I IS ~ E ~ ~ I IhlI CAS T/ MX&JIB ~, 1985 ISSI Indnndua'ReiatenshIps.... InstautenalRelatenslxpS........ ~... $ 340 755 $ 222 743 ,II;~~+ .r = TOTAL MarIEet Eradxtg 8 Other Otter Iten ClTICORP......... Actnntxta...., . (159) 5996 62 54 (129) $ 890 ~
- art rt . Ged)t LossPro)nsfonReattocation'.'
'4 h h <<FsEfh-'tt. l%p ~ vt C ~&4'&~ h" ~ '?- ~h h I AI~R l,et+pe I I N K I N D V D U A L B ~t e(eiei dsrte.t ~~e' 4 r I SEI TQR PERFORMANCE AVERAGE QAC.ANCE SHEET " ~ t rSteees Or nestkks DECCMbCR 1045~ ~ eht teceescd retxckhs 104 0 tssI vhn. Customer Net Revenue .. S4e120 Assata ' '. S12.S S3.107 S1.013, S3 ', Rovotvirg Loans. ~ , ~ Expense Shefte Loans 25.7 - Crcd4 Cycle Expense... BM 586 403 69 Delivery RtafExpenses Expense.... ........ 2e625 2,149 $ 3,514 S2.735 .S 476 879 ~ 22. "32 Other Otter L~ Student Loans . Assels... .~ ~ . 1.7 15.6 6.2 Other income(E",kense) 100 - (12) 114 S6(.5 Income Before Taxes...: 608 360 248 69. Lfablffttes Nttrttteossa..... S 340 S 222 S 1ansacten Account ~lsd. . S 8.0 I Average Assets Sttions)ht . 55 44 118 11 53 25 Savirtgs~s Other (tncfudes Aft~ted Eqtxty) . ~..., 45.8 7.7 Rettxn on A .sets ('4 ~ I61 .51 .10 Return onEqtxty(V 15% 12.7, 2.6 S6I.5 ~ ~ i e'he rlr rekI ed ddeeieiere pr keeekge rrr Iveceeeer re keetl tenderer lehceh Ice ~ Ceeeee:eS kx the eeteeh tet tceeeldte teetlevk end eehf kekrd re J eec tetes dtiieerer deredkex eeeeitik check ehd Iieet r tedee sector per kxmance summary presents tndhriduat Bankeg marttS e a format uSfng tennS CtOS~ related to the.xfhriduat Banking buseess. Customer nel revenue embraces all net revenue pnr anfy generated through customer telalenstvps. Cred4 cycle expense XtatudeS Credet .V lc OtfS. the pOr ten Ol the prOVtSen far paSSebte cred4 losses attocate$ to ttfo sect> e excess ot wnte otfs, fraud bms. and the expense assocfated wtth credtt apprarsal and tho praaeSS Ot COll. teg paS: duC Cr Wnt ten Olf ear r~S. OettVery expense ectudos all non-creCkt related coals rA dettvhnrn our . producls and sevfces to the consumer Other ecomo(expense) primanfy includes interest costs ot carr yeg non customer assets, aNdt to earnngs, and eamegs an at!coated eqt ttty. sf' I x 1 he lndlvklual Bank ls committed to satisfying Rom a number of pespoctrvos. 1985 was a noteworthy year for the tha broadest range of financial service needs tndrvrduat Bank. We earned $ 340 aNcn. up $ 118nittan. or RY4 fiom of consumers ln the United States and 32 other 1984-an accomptchnvvtt made more meanngtut by tre tact that 4 countrfes around the world. While the services our effort first bocame protsabte only three yearS aga Our earnrngs we can offer are sometimes I hn lted by local growthrs drectty at tnbutabkt to our customer rr.~ momentum. up regulatory constraints, our intent ls that they include banking, insurance, and investment productr sold both indlvkluallyand ln convenient, consumer-thrs rr ~ $ t013rnrtton or 33K veurs a yeas ago As tho tabte below rndcstes. momentum rs broadly based across our domestic and inlematcnal actrvrtes and suggests that we ara bu kfing market share ,orfanted packagos. inmost ol our actNLfios. During the pastyeaq ourstrategic direction was f enhanced by a reorganization that Incorporated our Customer Net Revenue Trends , i worldwide high net worth banking activities with our rMCRCAsrf ! other consumer efforts. With the Inclusion of these wv.;~%0rwwsas t04s tosclrsAss)t~ initiatives, we can now pursue activities against tho DomesUc. entire worQwldeconsumermarketplace and offer our customers a range of more sophisticated asset Not tnteest Revenue.. Non tnteest Revenue.... ~ .. $ 1,980 970 $ 606 234 44ss 32 management products TOTAL $ 2,050 $ 840 40% We recognise that, ultimately, our success will International be directly attributable to our ability to offor our consumers wohdwfde preeminent service for each of Not tntcrest Revenue..... $ 812 $ 116 1 their relationships.with us. Our view ls that by pursu- tnterest Revenue.... 358 57 .19 71'on ing service excellence across all of our effort~ we TOTAL $ 1 of 70 '173 I 7'4 enhance our standing with our customers and Indlvklual Bank thereby the likelihood that they willchoose us fora Net tnteest Revenue..... $ 2I792 $ 722 35'Yo growing share of their financial neods. Non.tnteest Revenue.... 1~328 291 28 . By the end of 1985, the Individual Bank had total TOTAL $ 4s120 $ 1.013 33ss customer assets of $ 5%3 billion, up 30% versus the prior year, and total deposits of $ 53% billion, u p 18% Whto our earnings momentumis hoar twig. we ccntrnue to vow versus the prior year. In the United States, we aro the ourSehos as having ou mstor oppor tun tes ahead of us and have largest Issuer of bank credit cards, the largest thorofore djrocted at ten'ron to rmprovrng our compcfitrvo posrten marketer of studont loans (over $ 1.7 billion), and the across both product and geographe spectrurnS. even where the largest scrvicar of mortgages. We do business with 1L6 million households in the United States and another IL2 millionabroa* /~~pc "ln the Individual Sank, while our current momentum is encouraging, we continue to view ourselves as a business of the future with our major potential ahead of us." Z~">r'. WP I C I required substantial invcstmcnt. As a result. o>> defivcry expenses during the year and continued to bu'kf our mortgage scrv'cing ca pa-ncrcascd to $2525 m'ttion woikfrvidc. up $ 476 irxttcn. a 22k bifittt whch we beleve lo be the largest in thc ndustry To enhance Appoximatcfy Iv,e thirds of ttxs increase is csbmatcd to have been fi>>ther our poduct and relationship orientatcn, wc introduced a vari. spent supporting the revenue momentum ol ovr base businesses, ety of new optens such as the Gti Ore packaged account (in New ,while the rcmandcr repcsents investments n new marketing or 'rbik) and onetinucd to expand and expenmcnt with the Gtibank nfrastruckm actrvitics, or in poysms that had kltle revenue impact Fnancial AccovnL Focus, Dred Access(home banking and the in 685 but are Ndged to be cnbcal n the long term ~ Equity Source Account. Domeslcatftr we contxNe to pursue rx>> market opportunity'n two The clher aspect d our domestic business thrust. full. cSstnct driectrons: theexpansion of ndiMduaf products. such'red4 ing, was again fluStratcdbynactrvify in Washegton. DC and cards and mortgagcs, on a natcnwxfc basis. and tie Selective btxkf. erat opportunbcs arose on a state. by state bass. We announced an ing of brarch.based detnbuten systems n at tractrvc markets that witt agrcemenl to acquirc Great Western Bank 8 lust n Anzona. giving us attorv thc dcfNery d a futl anay d servces lo ovr customer bases. a 36.branch pcsence in Ife second fastest growing state n tfe he poduct emphasis was agan paccdby the steady . country We received fuff bankng privilege n Maryland. ard bought ..Tr expanscnd ovr cardbusrnesses. By year cnd. we had ~ an SEL 'n Nevada. We niade steady poycss manayng tfe ML's we own in Catriorixa. IanciS, and Ronda and had a banner year n terms
- TEE QT)
mate that we now do bvsness with to6 irIffion.or appoxxnatcry one Given or>> substa~ Ixrs'ness yow thin the Urvtcd States. we n five LLx hcuSChokfs, a penetratcn level that is growng morC than have taken steps lo impove tte opefatcns nfrastru tvrc sUppor tng 37% pcr ycuc our customers. As o>> card bus>>esses. partcutariy bankcards. con We also are devcfopng nto a mater factor n the natcnwxfc mort. tnied to expand. we competed our second proccssng center and gage busncss. Wc souiced 575 btkonnncw mortgagc vdume hoke yound toro>> ttxrd. The former is focatcdn The Lakes. Nevada. whee wc rew employ over 509 people Ihe latter is under construe. ten inHagerstown. Maryfand. Employment at our Seux Fall South Dakota pcmiscs has exceeded ZSQ Each d tlese faot4es is a state of.lfe art center wterc we behave we deliver consxfcrabfe cffr. c'enc'es vis avis the ndustry and fxghly effective servcc lor our customers. Wc have also cntcicdnto an agrcemenl allcwng Our CuS tomcrs access to snared ATMdkstrrbuten networks nationwxfe-7 I I ') I I I I ) ~1~ 4 ~ k ," ~ ) t ~ ) approxetatefy t5NO term'eats by Year~ probably the largest (, As mentened / carbo! desp)te the groweg prcMatxhty ol our efbrts, 'omesle shacednetwok capatxbty ol any feanc)af services company we sba pecoeivewe are txxtdeg e buseess Let w@be a yowing Internationally we expanded our presence e a number of market ccntnbutor to Ihe Corporabon over bme. We evaluate ouf progress places dunng l985 wtvte maetaining returns well e excess of corpo. agaest this obyxctrvr) stcateycatty bothin terms cf such indicators as rates))a)ds. Ounng the year we completed significant acq)xs)banS household penetration, etabonshy depth, and revenue momentum. e Italy(Banca Cenbo Sxg Bek)turn(Banque Sud Beige> and Ctxte and also in terms of lhe potent@lot Ihe various business thrusts we (corporac)on Financ)eca Atlas) and also entered the consumer bus). ace pursueg'txte we have abeady proven we can generate sub ress e Cokxnbia. Guam. and tnd)a, bnngeg our total presence to 32 stanbat prof)ts from bankcards and Ihe New York branch systen. we countnes. In add)lion. we aebnJed product intcoducbons e many of see a variety of in t)atives Ihal have lho potenbal br greatly enhanced our loca) n)arketplaces. inctud)ng SuCh new entres as mutual funds amak)am' contnbuten rcrer tune. These include our domestb mortgage actM (Gtinvost) in Brahl, ed)rect auto leanceg in Spae. and a new mort bes, varxxrs insurance rotated acbv)ties generally as a resu!t ol tho gage pogram and bfe esurance e Germany wh)feex pandeg Gb cross sea ol esurancc products to our customer bases. conbnued funds. a mulb product money management accour< to severat mar progress e turning Our S&L's eto)mpor tant local compebtors, our kels. We vie)v our opportun)t)es e the etematenalmacketptaCOaS. h)gh net wor thbank'eg activ)beS both domestcatty and world)vide. substanbal not only because our share tends to be relalrvely smatl e aMour ')vidual buseess cbvtties in each of our three most places. but also because we have the opporturvty to apply kcs. etevlabonaf reg)on% sons learned from markcl to market and to expand altcacbve and By the end of f985. our lndnndva Bankeg activites incbdedmore p)Oven prcduct packages bke those menboned above than 54NOdedcatcd peopb wortdw)da W)tha broad base of ur cesults for Ihe year are not w thout some deagnnt. acbvtt)as and a comm tment to proyew agaest both market seg ments. Our buseesses were under heavy crof)t ments and geoyaphc oppxturvbes, we have begun to Iutf4I the pressure dunng 1985 and. e fact. our toanbsses Corporaten's comm tment to becom)ng the preemeent consumer more than doubled born 1984. Yyh)te the uneven eco feancial services corporabon e the verkt We bebeve we have the nome recovery had some)mpact on these results. a Stra)age d)recten. Ihe markef plaoe momentum. the people. and the largo port)on was due lo our agyess)ve bankcard soletatena whch resources to cont)nue to devebp tlbs pos)bone future years. ahracted over 3 m Ilennew accounts br tce second year e a cow.- but ex posedus lo added pressures because new accounts have cred)l losses a pprox)mately Ihree t)mes the ongong average. Incur vew, ttxs is a cost oi expanscn that is tusbfiabb in terms ol the bus) ness we ace txxkbng We also rete that our returns to tre share. 4)CNA4 4 L 4440OOC4 hokler on sevecal ol our domestic businesses. wh)ce progress ng. I , cemae bebwaxporate hurdles encl as a resuct. cxx overas domestic I returnS are bebW thOSe SlandardS deSIXte the taCt that many Ot Our e)r)atrves, most)mportandy bankcards and the New Ybck branch sys. =I ~ 4 i ~ tem, arri now pecbrm)ng above them ~ i" ~= "' U I 0 N A L R E L A 7 I 0 N S H I P S I N S T T 5 r <<i ~ p~P~ j'.a ~~~r W~< ~rxp4' ~ ~ SECTOR PERFORMANCK, ' INSTAUTIONALRELATIONSHIPPRODUCTS ~>>)rxxisor rxxix))s 'SSS e(M " VAR Core Londfng. Net Income in the product lan.fy rcNeds our morc 'radkbonaflendeg activ)tes. eg workeg cap)tat(cans. long term Tata(Revenue..... $ 3,7T1 $ 3.29'I $ 480 15 . f)nancrng and syndcatcd lend ng (o corporal ens. governments and Froveen for Possbb ~ f)nancial inst)(vienna. Credit Losses... ~ 374 213 161 76 Debt Products/Money Market Sorvlces. Gticorp aslsts Opera(rig Ex pcnses . 2,016 1.705 311 (8 corporalensand f)nancialrnst)tutensinra)s)rsgShart term funds Income Before Taxes . 1P81 1,373 8 I through note esuancc Iac)ktes. Commcrc)af paper and )ntcrba Nay(NcoMs.... S '755 $ 743 $ 12 2 money market instruments. Wc also provdc a varety ol nsk A~ge Assets ment products such as interest rate swaps. (utuics. brwardL a ($ B)t(ens7v.... 91 88 3 . 3 optens (hat protccl cuStOmerS agaxet interest rate vOtalikty Gteoip ~ RcturnonAsscts(%) . OA3 0.85 (0.027 also may take pos)tens w)th)n pre a pprovedkm ts that result in a me. Return on Eqixty (%) 20<<9 21.2 (0.3I match ol interest rale ma tur)tes. lu )w<<x) c>>~~ Forol gn Exchange Services Gteor pe tte workrs largest br. e)gn exchange dealer Wc oh(ac cirrcncy br our customers whose NET INCOME BY PRODUCT bus)ness. )nvcstmcnt or fund ra)s)ng actrv)t)cs reach beyond natenal boundanes, We also help customers hedge thc)r currency erpcsuru <<,v)ivtos<x ())xi@)<<i CoeLendvtg,............ Debt products/Money Market Services. '... 1SSS $ 205 I) rough swaps. FX optens and lorward ralo contracts. Glicorp may aiso lake pos)tens w)thn pre approved gueckncs in antic)paten of . Fore)gn Exchange Services.......... SpccrakzcdF)nance...,, '..... <<! 112 Cha igcs in currency Ir)afkcts. specialized F(nanco.5pccet)zcd Fxiance e the gene.ic tcimbr j L)qudly kisuianc . Feancrai Guarantees 8 Asset . 101 our non traditenal tcndeg. Ior example. Asset Based Len x)g. Cor. poratc Asset Fund)ng and Equ pmcnt I )nance. Actx) tes indudC ihe Intermc(katen,,....,......, ., 66 whde s(c purchase of altar part o(a company's port L(col (xiar)rxat Transactenprocessng 80(hcr..... 99 Tixpmenl rclatcd secured rend)ng and k.accept ee to end Advisory, Trade. ToTAL(NSTTTUT(oNAL(tsLrtrtoNsK(P$ ;...... 5755 asset users: rvvcragcd leas)ng. lax lcas ng and vendor f)nance to ass st the manufadurerS Or SctterSO(Cap tat cqixbment. Uquidlty Insuranco, FInancial Guarantees and Asset AVERAGE BALANCESHEET Intortned (ation. Incbdcd in the category are lees generated on
- 'H appox>>natcfy l75 nxtfcn cardnembcr accounts across tfe United States. up more tlen 3 mitten from f984. Deer of our Ncw Rrk br~ system, where we aganbuitt share and dxrenscns of ovr cardbusness also nceascd ccnsxferabfy achievedrccod pdits that had a matcnaf impact on our overall dunng the yeat ncfuding purchase safes, up 45%, and cardmem. results. Al year cnd. we werc evaluating oppor tunrtes n several other bcr outstarxkngs, up 54'rimanty as a result ol this acuvNy. we cstr. states certes the covntry.
mance byano(her Party: and income from asser rntcrmcd a(enacts. Aaaeis Uab(t tuos tes such as asset Sa(CS, biokcnng and d)rect ptaccmcnts Loans 8 Leases...,$ 59.2 interest Bc+)rig Ocpos)ts .$ 37,9 Advisory, Trade, Transaction Processing, and Other, Oepcsrlsel interest W)th Ncn trZerest Bee~ Gteorpea badxig manager in tre US ot p.nsen funds b. Corpora Banks....: . 11.3 Dcpos)ts..... 8.4 tens. state and local governments. andnon pro(4 orgarxcatenS We Acceptances..... 8.0 Other Borrowed Money.. 18 b have merger and acqu)s)ten spec)ai)ds rn l5 cour)tres to ass)st corn Otter......... 12.9 Acceptances.... 80 panes in fxxl)ng buyers or sc(ters. and in structureg these comptcx Other (pr)mar)ty)ntcrco7x . 18,3 kansadens. Trade)ndudcs dxcct (canc)ng ol trade iclatcd tiansac. p/ A~at~ r)x<<<<<<x<<lr) $ 91.4 orzlsr~ 'll ~ ~ ~x '$91.4 tens; countcrlradc and transacten proces<<~)g such as dccurrvwtary co((eden'(so)ndudcd in th)s catego y arc our Cash Manaocmcnt. Informatenbulnesscs. and earnngs on a(bcatcd cquly wC gPcj~>'+k<<II~ )+ggcgM~M'<<<<<<xswl ~ t H' I n 1985. Gbcorp's retationstdps with corporatcns, fnanaaf sources. so much so that traddcnat lendeg nOw aCCOuntS for less institutens, and govrmvnents conbnued to pnxluce bottom. than hall of our protds. Fur Ihemere. we have become a cfear market 1. bno resu<<s cxceerkng our corporate target for return on ~ leader In vir tuatly all surveys ol North Amenoan basedbusinesses. cqixty Earnings growth, however dxf not take place. Inst tutenal Gbcorp leads bothin market sharc and measurements of cuslomcr ~ Retabonstxps'alter lax proQsxvcie $ 755rrxlbon.up just P/o from satisfactoa Nevertheless. because of L'e huge size ol thc North fast yeac Anericanmarkct, we stdl have only a sma<<share ol the total bus ness: Growth IS <<le prvtery haalenge of IASI<<UIIOAafBantdng. EatnngS For cxamplo, lhcrc afe a Pfxoxxnatcty 3NO comparves in tte US. have been essentially in the $ 725-750 rellenraiige fcr tour yearS . with sabs in the $ 250 mdten plus ange, These companes re present e a row. While much has been done to lay the foundaten for future 'about ha! I of the total corporate banking busvess in the country Yel. earnings. Ihe investmenls made have nol ycl produced croughin the although Gtcoro is tte txggest corporate bank in!te naten. we onty way of resutls to oltscl the cha'lenges ol today's ddfcutt credd quabty do busxess with approxmatety one hall of the 3000 companes. (.~~Qq<<~ cnvvrx~t. In 1985 for example. Institutenal Banking had net loan " 'r"iW Hcfcc. we bc!eve we have lots ot roonl le grow Iflwhat IS <<e woikys Wnte OtfSOI $ 377 mdtXN. BeCauSe Of the SiZe Ot theSe amOuntS. even ~ bggesl and mosl stable txrsxess market, the ISA increase in revenue was unable to brxxg about sgrufcant A srrxtar sikraten exists in many other economes around Ihe earnngs growth over f984. workL tl is rel unusual tor Gbcurp to be <<e largest inter atonal bank Nevertheless, we are very optxtvstic Ihc liat canvngs fxofde is kfa given tcoatea Yek our sharc of most ol tte xIStdutcnalbardvng gong to change substanbatty over the comxxg year andin the ones to nlafkcts atouAd the workl Is extremely sma!L Accordingly we have btknv Our beret is founded one Iaxty traigtd forward prenm We sxgrxfcant growth potential vvtually everywhere we chooSe lo place +c otfer the best and broadest range ol xtstitutenat banking services in the resoxccs to actveve d. <<e workL we are in every sigrxfcant market: and ycl. we have very Growth wiltcome from many sources. In 685, for example. many smart market shares. In essence, we have no stuaten where we even dtustrative xvbatNCS wee xnptcnented approachmarket saturatea to'N 0 We opened addibonaf olfccs IA the United Kxxgdom. Germarvtt "" Cto'sc of our earnings come from tte Unded States. Italy. Portugal. tte People's Republic ot Ctvna. Sweden. and several Canada. Europe. and Japan In the US and Canada alone. our Other CcuAIACS. carrvngs have grown al an annual average rate of I5% over the last IIVC yearS, and we conbnue tO See enOrmOuSOPPor tuivtes ahead N We reccNed a tuHbanking bccnsc xx Austraba. ' or us. Growth in <<vs market has come from a wxfe vanety of new We became a cfeanng bank in <<e Urxted Kingdom 8 We increased the contnbutxNOI local currency actrvdICS tO carnngs IALabn Amerce toe prxnt whee more <<en a ttxid of profits now comes tromnon US. do<<ar bones@ i4~r Int~ growthis convng not Onty from xcreasng <<e number of cbees wdh vfxxm we do busxess. but also from what we do lor A<<tt 4 / ~ . sit; r Rgr 'xx~ Ir v<<ri '~~ ~ ~ ~ >AX'q <<0 . 'I<~g~xr7L A.'Sg 'I '47L< ~i.'-'-x.-.. r' "While the world economy has clearly nof solved all its problems, ffve believe we are close to getting Institutional Banking growing again." b Qf='r .~ 1 j' I senrices I .I As is the casa with the pctcntial kxgrowthin the number d r thorn Our rrxx ol business ac&rity rs now muchmoe diverse than. customers, thee is Sigixficant pOtentialin the yowth of service usage it was years ega hx examfyxx and future customers. In the vast majority ol cases, 'y~ing 8 Earnings frumlnvestnent Banking use by hstitutional customers use only a small pcrcerdage ot the seviCCS we oAx lf Banking custoncis now rcpesent one d our most sigixficant areas each customer simply used one nxxe of our seniiccs in 198~ we ~ d growth This was simpfiI ret the case five to ten years aga Today. might well poduce the largest rate ot grow thin Gticorp's P4 years of Gteorp's Invcstmera Banking activrbCS place uS nOt Only on top of the partic'pationin the instrtutenaf banking market. kt eSsence, oven il we Kstsof the workfs most impo lant foreign exchange traders. but afm dxfn'I add new customers. we would have substanbaf yawN possi. we bgure very porn'ncntly in the rankingS Ol Ihosc who porid txkties fnxn gai6ng boadcr service usage by cxisteg customers QJ rigeQ interest rate and curie swaps. optens. merger and acquisrten or just that reason, a major step takcnkl f985 was the fxtandalrestrudunngs, and hase syndcatens.. re cstabfishmcnt d Gteorp's World Corporaten Group B We have come to burcgardcd as the workfwxfcleader in chctroni ~ Bat in 1973, Gticorp poncered Iho cc rept of managing cally dckvcrcdbanking senriccs to Ile institutenaimarket. We h~ the corporate banking rclatenshps of largo mu5natenal more than tgJXO customers using these scrvees. In the US atone, customers on a dosely coordinate grobai basis. The we established a single dnrision just to do this typo ot business approach was extremely successful After seven years, howcvcz new perities pcvaihd, and the Workl Cor poration Group was absorbed 0 Wc started a joint venture with McGraw Hdl lo povde the first inte. by othe oiganizatenaf eties. The management syslcm appkcdlo yatcd global elect~ trading, inkxmaien. and hnancial services marketplace lor pccohum pctrohtxn poducts. and pctrochcrriicats. decentralized. In atrospect, we pobably ~'I muliinatenal retatenSIVpS WaS kept rn plaCe. but the OrganiZaten WaS have dcccntrakzcd tfx aspect d our busncss as much as we dd. Our expcncnce over ~ 6 We expanded our axcialt hasng services by acqxnng an aviaten ~ ~ the last five years has shown that the complexity of mcccng the chserinrdatenshpmanagemen. spare parts busecss. sophisticated requirements d the workfs hrgcst global corpoatens B We established pesrxecs d Gticorp kitematenal ~ing. 'does, in fact, require very For tv. Company in tS locatenS around the workL .. i 'nateltt we have on the lop of all tie competitive markcl I surveys in Ihe multinatenal segment. Our comm tmcnt lo yowl' convinccdus our onynal approach was bd ter than the exrating One. SOwe went back to what woikcdbest. We are qNte certain this change viitibring about very posicve rcsutls in a rcascn. abty short penod ol tea. Inlhe Cnd, hOWCVCt the Cruoial VanabhinlnStitutenaf Banking rS the quality ol!he loan porthle. Revenues aie srzabh-$ 38 btlea i v r Cjfik ~Et~&". ?<<C "C '"'"."' f (C ,t l 'I t cd> But even withrevenue yewlhrates well in excess of inftaten, and ~, nsfitutenal Bankegis Citicorp's oldest business. Fnxn the eascnabte controt ol operabng costs, nothing is moo inportant than line of our foundeg back in I8Q. we have beenregarded as making sure Gbcorp's $58 bllion commercial loan port foie is a key player in the financral picture of maerinstitutens aeund managed w th the highest degree of pcifess'enalism Pre believe we the world. In view of our signrfioant ate, it iS qAo impobabfe are doing quite wes in that regard...not as weft as we vroukf I ke ta but that we couklhave esca pedrefiecbng some ol the stre~ financial qu'te welt No other financial sbtuticnin the world earns as much and strains Ihe workfs business comnxxvty has fell over the last lew born insbtutional banking as Gbcorp wd no other financral insbNten years. Ouf results have showA that Insbtu'A&81 Banking remain" qtAte has as broadly divers fed a pxtfote el cor porata govemnient, and pofitable even wtxte passnq thrcugh such peiods. Nevertheless, ins.'uten feanoingS aS Gbcorp As a nisult. even with the the StraXe haVe ieSdtedin liat eainrngS. Wtvte tre WOrld eCOnOmy gg g challenges laced by market segments such as energy high technol ~ has dearly not solved aft its pobtems. we beleve we are dose to os and shppng. we have sbll been abte to poduce 9gnifeant getbng tnsbtutionat Banking growing agaaL lfrirSt and kxenest. we returns. Howevecconservabve msnarjemcnt ol our loan por tfote has have been conservative in our hand!ingot customer credit and the causedus to take enough in the way of creckt wnte dfs so as lo racoyxbon of wnte off@ Second. we have penty of nxxn toys lc intxtxt earnings yow th 'oth in customers and in the poducts and ~ervices we deliver to We believe thrS witt Change due lo a number of measures taken them Thid. hundreds ol rnttenS ol ddlars have beeninvesledin err the last few years lo impove upon the already steng processes technology. hurnanresource development. product rnnovabon, kx ciecst quality conbot wheh have existed in Gbcorp kx a long luna and business expansen over CM tast five years. These investments The tnsbtutenat Bank now has a proportenately larger nwnber ot erenow star bng to yiekf substanbal results. expenenced lendeg otfeers than ever before in its history The degree ol rntensrty a pptied to the sautiny ol our internal audit pogiam results is yealer than ever bekxa And the number of highty skrltedmarket t segment specialists is ala~ levels. The xnpovenents have LJWICNMIL llrlLl akeady poduced results As an example, in f985. eairvngs fern ox @~~fr dome. te energy asset based finance. and real estate ~rtmenla %PI M?~ in spic ol sgn feanl cktficuttes in those parteutar marketplaces, Ig more Ihan met our corporate rale ol return targets. In the case ol 'omestic asset based finance andreal estata 1985 was a record yeac Finally ore cannot talk about Instrtutenaf Banking without rnenten. ing the challenges xnprert in the process ol working with countnes that are restructunng their fcreign Currency debts. This actNity iS SO sgn feant. we deete an entire segment of this report lo rt. ISce page I8) It's dear very mearvngfui progress has beenmade. bul a great deal of hard work sbll Iles ahead. What has been shown iS that as iong as epresentabves of the atlectedcountnes and financial rnsbtutens work together in a Cooperabve fashen, as has been the casa the pobabbty cf continued and steady impioverneis witt be Ivgh Cr ,i r-WKYrit,. .x.-'n~,,gp<N .x- "-W~ev t+c, +g.. v ~rx~w -.-:~~~Cava~e @I I N 7 E R N A T I 0 N A L F I N A N C I N G gRSRREPÃv "F'5 ~ c'..~VAKSQ~~ ~ t I, ece the etemabonal debt cnss began in August 1982. Fecign cashreserves now exceed $ 9 btacn. compared to $ 75 bEen we have seen yaduaf rnptovenent. overall e the al year end 1984 and negatrve reserves at year end 1983. In 1985. tie s tuatcn year by year Neeteen eghty.live was. Braztfen economy yew by dose to@~ agan one of No Ixghest rates ". noexceptcn. in the wold, Tho frst year or two wee characterized by emergency On the other hand, Mcxco, whch began an ettiafly successful rescue packages. ncgobatedby the debtor countries and ther adivstmcnt Pogtamin late 1982. had a disa ppoeteg economc per commecel banks under consdcrable pcssutc. These packages fonnance in 1985 exacerbatedby tho dcvastatcn ol cat thquakcs. consstcd of the tcschcdvfeg of kens matvnng e the immedete The sharp drop cad pnccs, tf sustancd over bme. willreduce foreign future and some new bank lendeg to bde the countnes o'er as they cunency eatnegs for Mcxca Of even ycater concenis Nc need for began lo adfvst ther eccwonxcs. the country to xnprove the inlemal evestment cnvronmcnt ceder to IXeg ttel phase. aa ctedkor banks w expected to contnbute revese cap\el Cows. After announceg an ambtcvs austerity budget ther share of Ihe now loans e poporttvn tO ther extsteg exposrc. e Ior t986, Mcxco rxtetcd otscussons wah Nc kxenatcnal Mcnetary a pocess rcterred Ia somewhat eaccuratcly as evotvntaty Icndeg Fund for a new standby agreement. In 1985 we began a second phasa that of mvttrtcar restruclunng packages lor those countnes that hadmade ptoyoss e ther Atgcnbna has made consdcrabfo proyess snce in'ts Austral economc pogram last tuna tnftabon. whch was 3% e tune. economc adfustmenl ptoyams. llicse restructunng packages. has ranged from t9% to 3'n remit months. InNovembcc tho whch cover ttvee or mec yeats of matuntes. postpone peepat government completely c!rnealed all pubic sector eteresl arrear. rcpaymenls unlit the countnes'cononxcs aie gtoweg agan to the ages for Ne frst txne e over Ntce yeats. poet whee ther debt is manageable Overall, countncs vtith debt sevceg pobfcms recency wee By year cnd. Ecuadoc ktexca and lttgostave had sgncd mufttycat yoweg at about 3' yeac Ther curre 4 account defc ts were down ~ tcsttuctuteg agreements. with seveal mote to Iotlow e eely 1986 to under 2% ol yoss domestc prodvcl. whch is behcr thanmany edudeg Venezuela. Uio OonMVCan Repvbfc. a& Uruguay. and with coultnCS whOSC Credit wot thecss has l&llaeed unttvCSboncd others reacheg the ncgobateg stage Fut themOre, many Of the debtor courtics. edvdeg au tho maior Such progress has been possbc because some ol the countncs ones. by year.end wee currenl e pvbtc.sMor interest payments to are makeg cconom c rccovcrics. banks. *'tecktor FOr CxamplO. Of the three tatgCSI. Bra Zd. dCSPtc COnteveg . sa result. elate 1985. we saw the frst sgnsof a thrd 'lpcbtcms vnth etlatcn. had - trade sutpkts e 1985 of $ 125 b lien. onc the wotttfs largest and dose to the 1984 record of $ 131 bi tea ~ ~ S phase e the ettot<<lhe yadual rettrn ol some covntnes t.'othevoktntaryctcdttmatkcts.v,.xchisthegoalwe 'ave been wotkeg toward. In'theyearsaheadttwitt cnactc NeSe ctxttrnes to rOll cxtct tner external debt e the markets. as they c! xf before Ihe cnss began, wtxte ratseg the add trxel captal Ney vvtt need to conbnue Ncr eccnomc development. Lasl Septembec Urugvay and its Bank Advisory Comnxt too reached agreement on a mvlttycar restructunng lransacten and, parallel to tl. on the frst votunlaty loan by commcrctal bankS tO any Labn Amer'ovntty scca the cnss began. Ttxs loan tS a $ 45 m I f 18 P ~ ~ v "-> m&2&CPRI~CKK% 4 i~" I I f.vvIvvI' ~rs jpvrI ll ~ V I P r PP;- ~ y rI) r V ~ VP ~ . l." . ~ I rtv I ~ r=-r'i ton co teanong wkhtho%brtd Bank for an energyprojct. The '.'timulate growth andreduce dependence on foreIgnbonnwings wbraarynature ol the loanISktustratedby the parbcpatcnby banks Both fxxnts are part of theBaker Irxbatrve, and some coutries already Ihat hadmadenopreveus bans to Uruguay., The speoalcaseoICotomtxagNeSuaanOtherpreviewof phase l are taking steps in ttxsdvecbon. ..'sbetortk /, there aremanypotenbalpIObtemsasweneveahead. ~ three AltteughCotomba neverrrvssedaninterest orprinopat The directcn of NtereSt tates. Ol plCeS. ccmmodrty Prices. and 4' <<%~- payment. k nevverthetess encountered the samerekctanceinlhe p~ marketptaceas nabons thathad Last yea<< vnth a unique monkonng, anangonent wrct the kkemabona!MonetaryF~ Cotomtxa exchange rates are altimportant factors. as is Ihe threat of protecbonism Ore'crucial questionrs whether the industnabzedworkl can ~~A >, completed a $ I Ix'ken syndcatcn.maxky for export related txl and maintaxt the steady non inftabonarygrowthk hasenicyed over ttm "coal fxotecls. Srh tendrngISdesgned tosupport tte stnctural pasl few years. Gbbank's coonerrvstspredct that gruvrthkt the <<~t;Vt adtustmenl ol a country' economy industnabzednabons vnll average over 3% in I%6, whch would man. text demand for devetofxng coyntry ex ports. rg' asl Odobet US Treasury Secretary James A. Baker ttl /Ay v<<,k Xj announced the Baker Inrbatrve, a prOPOSal that txxtds on A second cruoat questenis whether the devetofxng counties the accomptmhments to data Under the propoSat. Ihe have the pdItiCal wra tO cantinue the steps necessary lo return ther .'S develofxng countnes woukl comm t to greater structural economies lo health. In Latxt America. many countnes are undertak-adtrstrnerri than e Qe past. the rnuttkaterat developmerk. ing econornc adfustment dunng one of the regen's nest sgrxlcant pobtcal transtormabons vt generabons. vnth ~admovement COmntertXA ~r ~ bak s wax. rend $ 20bktcnnct twer the next ttvee years. and the WOukf prunde apprOXXnatety $ 20 IXIICnVt net neW lOam Over the same peed. The terxbng woukf be on a case by case fromrrxtkary government to democracy. Argerkina m an example ot a newfy elected governmtmt lakeg strong measures to regkve ks .Jlp S~r~ 'vvva.J:p continued bass. Icdlo each cour kry's progress xt attavvng nonInftatcnaty . econofnc protkems. growling P I Akteugh there are bound to be setbacks dead. as there have Imptck vt the Baker InrtIabve Is a commrtment by the ndustnatIzed been vt Ihe past. we bebeve that a number tA countres have made. natcns to potccs srn tar to ease asked ot tne devetopng courknes. and wat conrvxe to make. real progress towad regaining thor ..The goals ol these pOICeS nCtude lower kdlatcri. vthCh ShOukf crecbtwort's. lead to lower xkerest rates, and sustawed growth whch along wkh I 'Prt J -~gprIC r,I+tv: access t'o workf expOr t markets woukl enable '"7t V ~ ~ debtor counbes to fur ter txxtd Ihev forergn exchange resouces. V V %e at Gbbank endorse tre Baker trxbatrve as an vnpor tant step loward the free ttow of xtvestment funs. and ttm vkernatcnat bankIng COmmun ly generally haS eXpreSSed 'ttar SuppOrl, AS We WvttEIIR ANOOEX move ahead xt our cooperabve elfor Is. we expel to see more V I .>r~r';> countres re enter the markels lor protect fvtanca co fxIancxtg by the ~ ra~p.! commeraat banks wrth the INbrtd Bank andregcnat development banks; tend Issues. vcreasngty xt currences other than the US. dot 'o tar and more trade fvtance. Some exrstxtg detk w tt be converted to equt y at trad the capkat they nnecL the dovetofxng courkres must adopt polkas to remove structural IneffCCnoeS and reduce cap tal . >PI V~k!, tbght. SO that domestc savngs become a far greater source of thev ~ " " ~ ~,PPI' development funds. They must encourage more pnvate dvect Iv vtvestnnnt tcmbolh domestc and forekfn sources. whch woukl 'I P ~ t V ',I Itir 'PC, V ~ ., N I ~<fr,Sc 7 r'-' N TERN AT I ON AL F I N A N C I N G fern A C T I V I T I E S dcc aN oi Gteorp's actrv tes, intematenal fxiancing curre ey outdandegs to 31 such refcsancing cowdries. amounteg invotves the management of nsk. Whenever Gteorp to $ 1'5 0baen al the end of 1985. This level is sfxfhtty txghcr than at lends. pkices. or avests funds across a natonal bode. year end 'R8". and stgafeantty kyyter retatNC to Gticorp's total assets'nd or in a currency that is foregn to thc bonowec d xeurs cafxtaL Cash basis ktans in the rofxsancxsg countnes de@red a transter and/or converbbd4y nsk. commonly referred to $ 11 txden $ 16 been at yeat and 1984. Consequently the earn lot c Country nSk. This ASkariSeS OeoauSC a Ccuntry may rnpOSC ings dna Ol $ 62 m'Ifen caused by cashbasis IoanS in the refxsanoing t~ excliange contets that may prevent Gteorp's customec at least countrm in 196ct turnedinto an earnings benefit of $30 raaenin 1985. tempotanfy. IrOm Obtarting andrbt transfenng the fotegACxChange whir i ttgenbna, Venezuela. and other countties pad boih previously 5 needed to servea ds obfgaten to Gteorp in futl and/or on trna even 5 uc and curtenuy due interest on cashbase loans. A summary of tt though the customer remains at aN tees ctcddwot thy in terms ul developmcntS In tne macr refxsanang COuntneS follows. 'm-'5 local curency II tres sttuaten persists lor rnoe tran 90days. Gteorp whikt no absolute assurance can be given. Gteorp management Bp+ ~ must place the at'ected assets on a cashbasis. and thts has an betieves that thew dcvstlopmerds vANnot ultxnately have ainatenally adverse impact on earnings. Interest previously accrued must be ad erse etfect a Gticorp's finanoat condthoh deducted from cwrenl eamngS. and current earntngS are further reduoedby thc COSI Ol Carrying tice CCShbaSS banS, nel Of intereSt. MENC05 actuaNy received in cash The govenvnent cf Mexico and the parbcipating inrematenaf banks Gteorp manages country nsk by e~tng thc eccnome dynate have signed ageements to knplement the preveusty reported 8Ad pespccts fof Nschvxfuat ccunb es 8Adby rnpostng brats oA tct8I restructunng d rnectxtm term matunties. Thsxtgh these agreemcnls, cross border and foreign cwrency amounts thalmay be lard vnthn wheh aNcct $ 487 ellen of Mexican pubte sector debt. car tan each country AI the end of 1985appeximately $ 48 blhon ot Gteorp's" amounts that woukl have matured Iheugh 1990 have bcenrcsche. assets wero cess.botctet and tote@> a=tcncy outstanchngs and duted the.igh I9%b Allot these agteementS shoukl become ctfective therehxU eXPosed to country'nsk. T h's fguoA repreSeids a sight by the cAd of Ihe frst ql?attCr Ol 198fx - dcchne born the level pevadxtg at Ihe end ol 1984. Howeec relative GSCOrP's sharc ol the resttuctwtng is appexxnatefy $ 14 billion, to assets and cafxtal, Gbcorp's total eoss border ex posurc has none ol whehis accounted lor on a cash bassc.reported as fatten shar ply. renegohatedloans. The weigtdecfavetageratcmatgcnS for Gbaxp's Total cross border ex posure at year end 1985 was div'ded among sharc of these bans are as fotlowS: industrial countnes I$243 btten~ nOn.at dvvdopvntg CcuntteS ($ '.&5 bltenb ol oxporhng develofxng Ccuntrea($ 33 btl~ and ONchore WEIGHTED AVERAGE RATh fftARGIN XU~ banksttg CCnters($ 2b~ Inno stngtc counby dd cress border and ~ tlnlitcts5 Ut CXXUU% OCSOAS ASSIAUCIUAOttS At I CA At St AUC'IUA tnc ~ bregn currcncy outstandngS aCCount IOr mare than 5% ol Gteorp's 1125% over prime $ 199 2.125% ovet prime teal assets.'Gteorp's targest ex posure ($ 58 b Nen. or 39'A Ol total 7'vn(r~g assets) was to Japan. whehis. alter Cse Uated States. the largest 49r ar72y.t?e ~~refer I IeNyaersy.oe uBOR ence tates. scktdng Pnme or a comparable domeste economy in the world, Gteorp's exposure <<xs otter was kxtec and UBOR Cfeeennce rate' There are seven counlnes in wheh out stanchngs werc between ISb P"i;Q 8 xl39b d total assets and three coUntnes whete oidstandxtgs wee eg <<59've pnme . Indiaity aer59b syrcr uBOR or a cotnpsrabto domeste j between 075'nd fx of lola! assets. /fly * $ 1 369. reference rate'>> Snce tet~ V number of countnCS have found dnccemwy totcfi. nance ther external debt. Gteorp has cross border and forcsgn ttttttUnwpmoo0otss otsnoUIAvtnotsAootsos-tttxs It?5 tcyt>>ttontctxssy Nt r ~ cnt I?50SI tcctnc OtnOO SSS? ttytr ~ ~ I c c t ny ncn0 S7 CROSS.BORDER AND 'Q~P'- FOREIGN CuRRENCy OUTSTANDINGS In adchhon, the 13 member Bank /tdviscry Geuci ot svheh Ghbank. :f c'&U Adjust tsd For Nct Local Cuncncy Outstandfngst NA cs a member has enckxscd 8 MCNCanrcqueSt tOdcfec for 180 Extertsat Guarantees and CotfatcralU> days, $ 950 m den ol pnnctpal payments that had b mn due in thc ,y~lrs.U, ~ eOSSVASCV CVASAAS At .CAASAO ssa5 '5984 5983 four tn quar ter of 1985 ltndet a tcvteus fxsaneng, A.n cssnvv ~ tn~cr I IndustnalCounttes....... $ 2473 $ 25.4 $ 24.3 Mcxeo is teasscsstng its 1986 Ixsanaal pbsnin the context ol the ;Inc{VSS +~r . Centratly planned Economes of eccnl od price declan. Mexeo has edeatcd trot its dlscussens wth Eastern Europe......... N .2 .2 the IMF and Wtxkl Bank contrive in Oroer tOobtan the suopxt ol thcsc tnshtutens lof ds 1086 pegtaAl. ctt . GIExpxtxsg Devekxxng Countres... 3A 3.7 3.9 Ounng 1985, Gbaxp's additenal aoss bcxder advances to Non Ql Oesefoptng Countncs..., . 18.5 19 0 19.3 Centers..... to TOTAL ..'.......... ONshore Bankxsg 2.0 $ 48> I,cl $ 502 gs5 $ 50.1 Mexean puble sector borrowers were appeamatety $43 tatbon. and a ppexxnatdy $ 28 tathon of pnrvxoal waS repad. kderest ixt i Mcxean pubte sector outstandxigs efudedinNCOme for the l nnttX)?io 5 II Oulttsncsn05 oto coUtnnvton o co?cUtoty otUC otct clcUcst lt ttcns cttoolct ct csont5I cntAotcos oct sotccx os otnst vcl\OU oncnnr ItinneontS cnctoL'nc ncvnlv y OSSSI5 xoSUIS cnonts ceo lncrp loci(Acct At occtsi ot IxAfcccnoncy cncvcnocc?5 occc ocV cccncccy soon n Stcct ~ os V Any Ay occA 'ovoy vtcnnxnt cn o cvttxyy Aces Io vcnc Sv oc Acnv t?cctonctot Acct jj',, COOVOtV j'P 'SS~>> '. 20 4'-'4~I< nz, ( ~,,r x>>>> , >>, IA -'~:-Xv w vtVa'AX year amounled to $ 166 mlten, and suchrnterest reoervedin cash pad apffxvmately $ 800nxlbon Ol rntere I tOCrechtor bankS. bnngrng i;.>>= .. amounted to $ 190nvttea pubth sector interest current through September I 198% andrcparJ the femaerng pnnapalbatanCe Of $ 750m llen OA the 1982 bndge IOat BRAZIL outstandlAg lo commccQ! banks. Tho secoAd disbvfscnlcAI ot Acw Qscvssc ns with Braz han offsets lo reschedule and extend 1985 and money amcunhng to $ 800rfxtlen. was made cn Novcr Aber 2'98'l 1986>> ~nbntieSOI pubhc and pAVale seclo debt. rnebdxsg manic whchhme all public sector interest was brought currcnt. Ovnng the of trade and interbank faohhcs. conhnua fourth quartet CPpfoxxnately 5266m lien of Ghcorp's Argenhne debl Qrrrng <%4 ooss border outstandxrgs in Braz4 were alfectedby . was returned lo lull accrual status, oi wtv'ch $ 159 nxHenrcrateft to the additens ol a ppfoamatcty $ 69mrthcn and reductens of appfoxxnately pubic sector h January 1986. a sdiedvted dravrdorvn under Je IMF
- aj~~i."=+~@ ban comm)(ments outs(and)ng. carnxigs froin guarantee)ng pc( tor nr<<)idpasi/ rxiiiJ))s bscsMSS((saris>>
fe frrf " CfOSS .~i and fcreign CurrenryaulStandXrgS, and appfOxXAatety $ 657 rfvtten was cotleclcdin cash ~ \ to Argentee comphanw vnth certah tMF per hrmancc aecna. Final disbufscnentS by thc banks witt be delayodunhl IMF d~s /IS~ I,,:." The government of Argcntxia has advised the intematenat banking ~ ARG ENTINA Based cntMF support hr Afgenhna's rew econome program. Ih> commufxty that rt intends to beqxt frrscvssens wr!h Ihe Argenhne partiapa hAA hit cfAa bona t baAks have cxccul cd agfccrncAI>>>> wiel bank advisory commrt tee in March vnthrcspec to a 1956 Ixianang 'g4 prendeg hr the Program Pcndxsg completen of those dlSCuSS'ens. tfe government has requested thai banks rolluveratl pnnopal ma!unties of Argcntee b Anew $ 37 blhon, f0~Sr tenn credit, vnth principa payments public sector and private sector indebtedness fattxsg due fkffxrgIhc br gefx ng after three yearS and artcfest at UBOR pbs les% or prime period, January l. f988 through Apnt 3Q 1986 hr 90 day and 180.day ~ti <<~f pbs 1 IA%. periods. respectively tI A new $ 500ffvtt'crt tour year lrade credt and deposit faatsy at During 1985 Gteorp's aoss border advances to Argcntxsa were ~ CtBOR pbs 1%% fir pnme pbs ~ eCreasedby add honS Ol $ 335>>Wlten. APPfOxXAatety $ 126rfxthcnin I alSO agreed tv COmm t fOr One year IOa trade C edit prin was re paxt Interest on cross. border ovtstanfhngS in Argen. TX'ave enance laohty and a money market laohly. In afkhten svbstan. tina rnobdedin income was $ 221 rfxtt on, znd $ 211 rfxtten of interest Pfcgres s has been made in lhe executen and rmptcmentaten of on such outstotdxsgs was received in cash Ol the cashrecer.cd, Agreemenl S hr refvtanang $99 bllen Ol pubi>>C SeCOr matunhfrS n 1 $ 65 ffxtlenre presentedinterest on cashbasls loans hr years pfrfv '35b iten ol private sector debL The pvbhc sector refxsanang . tv f985. matun IICS from 1982 to 1985 and provides lor tcncfs Ol vp to I2 yeaa. ~>> 'a no pfNa sector refvtanang covers 1984 and 1985 mabfllies Pbs VENEZUELA rm>>aln 882 and 1983 matunhes rel prcveusly covered and provides AA afffeemenl in pnnOPkf has been reached hr the fesuctufvnng Of SIZv .hr terers ol 10 years. $ 212 bllen ot Venezuelan pvbc sector debt. Ra restructvnng coves I.GhCufP is par hapahng in the new Iendeg in an amount appfoxi ~ prrnaPal payments maturing through 1993 and provides fof the .<~"Y matxsg $ 226nxtten. andits share of the pubi>>C and private sector re~ag of these matunhes over 12 years vrth quar lefty payments >> ~ fcfxsanong. detailed in the accompanying labia amounts h $ 387 endxsg in 1997. A $ 750mdten prrnc/Pat paymcnl wftloe made upon tho AVIIKXLGtcofps cofnnvtfACAts uAdcf Ihe trade cfcfht maetenaACC effective data 0 sa>>ssens regard+9 thc araltabhty of lofcrgn Iaohty and money market taahly are $ 95 nvtten and $ 156 mlten. exrtengo hr private tactor debt sennang are neannq comphten r>+' respectively. Argcfrhna red~ the fxst disbvfscmcnl ol new money in the amount of $22 been cn September 30, 1985. At that trna Argentxia As dotard in tte accompanying labia Gteorp's share ot ere pubic sector resrvctunng is $ 709 Avtlen. none of whrchrs accoufsed for one cashbas>>S or repOrted as renegctiated loans. No Venezuelan ~ ' p>> S ~sr>>sl~ DATAON ARGENTINAAND VKNEZUELAAGREEMENTS IN PRINCIPLE ~ hrf SI I>>frr>>rx Ifr>>>> rvt>> ~I>>fuff/>>/>>>>VV/Ir/>>l>>lS '.-',L, >>>>ixx>>N>> r>>>>s'il lvtlr/>>>>rr ~ wr ctsl ffin>>r Iwx I>>IIf >>/lnr>>r>> aux o I/ r>>>>V Ol/I (vr>>+ Irlfn n>>ifsrXir/>>f I>>>>>>fS>>l Iii>> +bi >>>>>> r>>wuwsnl f>>/Isrr+s rwrrnrv Ixslr>>A'I>>/NA>> >>>>s s Il>>x;rl/v>>fi rfrr/IIr f>> nf sracr>>/>>re>> rfsr>>>>x,>>>>/>>lr>> Argentina Pubic secfof. '... $ 122 1.759% fffcfLIBOR 1.375.1ovcf UBOR $ 20 $ 16 . $ 15 Pnvate TmAL, sector... .'. 265 $ 30T 2/431% oyer LtBOR I 1 f375%%de/cr LIBOR 52 $ 72 34 $ 50 31 $ 46 fMC.~0, '700 angl IBOR~p~ 227% ASer referenCerateS d 1,1/5% over UBOR or o:hcr .stcrcl ee:Crate >> $ 76 $ 76 $ 69 ~ x ct rrp If ~(4'~Q r @QIStr a~e p+ tg grin (gr(ct+pg Kg+~' ~,C~
- .w>>: $ 213 ffxtten. pnmanfy compoMd ol pnncipal payrACAIS of $ 160 nxtran. standby was nol mada pendxrg compreten ot fhscussens and the amatcly $ 597 nxtten ol gross interest revenue was earned on rcachxtg of an agfecmcnt between the IMF and Argcaea vnth respect ; >7&
I cS c
- c. "4v.
re $ 92( r(xt(en, 9 year term loan and have Pub(ro SCCIOr OutStandXSgs Were remOVed flem the CaShbaSe Of accounbng as a result ot the resbuctunrx) negobattons. men! tztat p(ovtdcs for a comrrttled to maintain approxtmatefy $ 29 D(len of ~t Icrm trade '-C D vtng 1985. no cess ba~ advances to Ve .zue(ay(put credit facilities through 1986 In addrten. the Pfcbpptne gch rnmen; sector bor recce(s v ev made. ard apptoxrmatcfy $ 17 mt((ron ol and the 12 member Bank Advisory Commrtrc(t lor the (sht(64xnes '<<p was (cpa@. Int(~t on Venczueb(n p.4(t sector tme agreedin pnnctpfe lo(csc"sxlu(e ac pvxxnatelv $88 bt!(en of 'rxsctpal outstaMcngs tncb(dcdinncome for the year amountedlo$ 83mtllen, exebng bank debt. and the lMF has afth(M toprovtde astandby rse1Fc. and$ 88mtrlxsnolintcics'n such o(ttstandxsgs was rccervedin cash. ctedtt. The avartatxltty of funds under <
- I 5
> tstchcyrr0$ . (rcttslshrtr(5$ l,$ see Japan. Brazil .' Canada........:....,, Unt(cd Kingdom ~ ~ '8 .". "1.1 S2 7 S 1 2c7'r1 S1.6 1r5 $ 4A '(ts 26 - 51A c3 I.I7 '8KS-: " 3.0 1<0 erT ','.7,: ( ~ 7.6 4.9 3.4( I '.8 = -,.;.2.1 $ 6.8 4 7 Mexic..... '.... ". ','.9 J) " 1,0 1JI 1.0 2.9 A ' .8" ...8, 1.7 2.9 tr1) ,.,. ",, 2.9> ..5, s'Sh2 .7 1% 1.1 ' 2A 23, ..8 FcderalRepub(icot Gc(may . I . ..: ". ' '" 1A !;1.6, 1.6-Phcbppcnw..., '......'. .I ..;'.:,.,',$ -.I ',1 '.g 1.0 VD A 1% 1A D 1A . ', .2.0 l.f(: -,1.6 'uStralia,.........; Fran".e ...'... ll .. . (.. 1 .1 t.1)...1A 1A,'.2," 1.5 ~ -'-',;117 pAs Ps~trna Korea.......,... Venezuclars....,, ~........ 'D S.l. c' '1 r1 A r7 .5, 1A 'r1 1% ~ ~ A 1 IN 'l.'4 ', 13, ', I - ~:,"t.B 1.2 1.9, (.1) ',5 ~ ".... "'2 " iit(I m>i'~ ... '........ A,S '", 1r1 1r1' ' l,1'r ~ HorsgKong r1 rg ',1) ( '7, r II 1.2 11 'reece'"........., cion(~~ye (l( Ortcttrrtnts 0>> Ptstretocn 0 IhXsvor y do 5 5 trrry n(svt tt rhtrIS otto sr 5 tl rrrrtitrrth trrs5 olcttrttnott (core nitrCS( ot Vref n>>ttrrrtr5SXc>>rhtte thr((thtr rrtntftli55M(5 srthctr+ hrt hrrcrrrcs orrr>>cry rto tschr trc 5$ ct srcv rrrrtrcy arts(tnt h(s ortr tt'.V(rr>>rcy et(crt>> s. s thy Atctccnvy tctyrttrhtrts 0>> rotor 10 5 ssrsh 9vr tottery act ther I Crsttrscus Sr rhch ttcocrr carry (orthrv n hteo artscsr or rrn ccrcyrr scanhy hi the (asny ot 0>> csrrthht rrylht cant y n hhch lht corr vcr>> Ie o tccsctty tto 1 t (try onorr((>>$ $ ccrlorr trey rtrrrcfr ccr>>rcy corttrrt>>5 nc crsno r>>nest>> >>tin sot(trot trc(c~ lo or rrro ~rorrncarrnrcsr>>(tert>>orvcesnrloros5(rtcnntusrrro Ssrcrrnncrclo( Ss(ncnnrhSyto vttvrrcsccscrrr>>ev $ (2ahorrr.yrrtt.(6(rtcnnstotrs f1(rcrcnntccrtc( chest. 5 Ttr tctrcrrt vwr r I \$ 5(trt tr rcrhvc ~ rsrr 0>>ttcy ccrhlhc rey 5 t 6 crtcn n trn.srcrtcs r roocrr tt orctcren n ccnrhcrrtrts rt>> hor rhtlsrn n <<I(ten to tcststto ssccstcrss nhrv(lhtlcaesr y n tu ttcct ~ I (rt (tcs tetr 5 Ic hr terr tr crrs v (rtcrrrotr 5 is(Is 1 I I r4 0 (tss thrl v cr or Srrvtcstrs v cttctndtr st t96$ tref t9(tt I CASH SASIS AHD RKNKDiOT(ATKD CASH SASIS AND amEaOTIaym CouM KRCIAL . COMMERCIALLOAHS LOANS AS A PERCENTAGE OF TOTALMANS Cashbam (nonacuua() k(ans alc those on whch. as a result of ck Ix as (oco(lectxx(. (ncome ts rccCxpQed only lo (he extent mshis SSSSd 2 AS(c received Renegotiated leans are those on whch thc ate ot tnteeSt 20 ~ .TSS $ %% SAI'As haS beCnreduCed ..- a reslr(t Ol Ihe bnreVe'S(na(X(ny tO meet trle Ongrnal tciniS The class(Ice(ron ol loans as casr base and renegotiate(( is a Il ~ Qs,a SpeeiabZCd dragnos(ro IOOI uSC(r by frnanotal XSSb(u(Cns Gltoorpa rent ex penenca as wee a Ihe cxpeltenm Ol otherS. generaey has shovn ((r(S 1919 S(5(r( 1911 i982 (QQ 1965 . 19(5 i~jrw ~ Ptrh. Cl 2 is IQ,~KQRCt~ <4 a substantial pecan'.age of cashbasis and renegobated loans 'hat DETAILS Ofl 8 EPI HAHCfHG CCtl HTTtI ES are uftinatefycotfectecL principal Gbcorp's policy of placing loans on cashbasis status embraces all loans on which principal or interest is 90 days past rkre. or when payment of intemst or determine to be doubtful ot coffee. lion Fvenrf a cash payment may be anbcpateri accrued irteest is revL sed and the loans put on cashbasis status after a 9@day .5 1.4 $ 116 $35 periodhas eiapsect 4.7 99 (11) Cash basis and enegceat ed commercial kens at year~ .5 13 685 wee $ 22 txftion, down $ 170 nv'Sion from a year aga, compared .1 10 wah a $ 308 rliaioninaease n 1984 over year~ 883. The 1985 , .4. 14 (1) decrease pnmanly reflects reduced cashbasis loans the domesbc it ;.1 real Wale and overseas sectors of the loan portkfxx Cash bass and 2.8 52 (2) enegcttated loans as a pecentage of total loan volume decked from .1 10~ ~ ~ .1 . 47 182 (1) Included h overseas cashbasis bans are a number of loans in Phfipfxnes. 1.8 (6) rxxlntries that are cunently inltNplcoesS of refinancing their external 101 3 debt or that have completed such refeancings. In view ol investor inteleat ki this aspect ol Gecoip'S actMtieS. the accompanying ta5e provides additiOnat details of cross. bolder and foxiest currency South Africa Venezuela . .3, .7 1.2 295 3 ~ 10 outstandhgs and also local and foregn currerey Cashbass loans ii .2 the affected countrNR Ihe lhird co4fnn cf the labia shows the inlpact AIIOthelia . on our earnings. spread among various countnes The amounts i' $ 1ILO Ot hoed ~ 8<<c<<~ ~ inckxfe interest reversed when loans are placed cn a cashbasis. pais lhe cost oi carrying the cash bass kenS. reduced by IntereSt recovedin cash and fncfudednreomrL ~ frlh$ $PP$ $ 1rP<<ri ri ill courts ~ II'<<$ M rI<<prr<<$ L tery coca<1~ <<aaperx bga l<<PI<<$ ~ <<ooLI ~ <<vl t7eP1 cMI<<Pir $ I<<II ceua Aca ALII<<ph<<qpIL ricvepw, swayed sJ$ <<L CASH BASIS AND REHEGOTlATF$$ COMMERCIALLOANS CMN SCHMO llJ7tS IOIII. ~ I ALLhrL . hI~S Iiiua apnea $ O$ $ L tMi 1983 1M2 1981 Cosh Basis and Rsilegotfatad Loans ln Domestic Of!Ces Real Estate Loans. . S 80 S12 S'01 $ 233 $ 127 $ 107 5 111 Other Commercial Loans . .~ 384 8 392 302 345 444 350 tn Overseas Offices . 1I729 28 1 755 ~ 1.883 1.638 1.111 575 TOTAI.CASH saa Is AND ltSNSOOT1 afKD LDANs. 548 $ 2+48 $ 2.418 $ 2.110 $ 1.662 $ 1.036 Cash Basis and Rene')otiated Loans as a idol Commercial Loans *0% 4. I yo 3.5% 2.7' 8%o Cash Basis and R . ated Loans as a % of TotalLoans. 2.0% 2.4% 2.4,o 1 9% 1,3%%d Real estate acqliedin set Sement of kenS. indudedn ceNr aSsetS rn overseas real estate accounted fci 548 nxyen Apploumatefy the fvianaal statements. totaled 5250m lien at December 3t 1985. $ 59nvtlen ol tlN 564 m Iten total increase was cfassfed as domesbc. up $ 64 nvtten flom $ 186m iten at December 3t. 1984. Domestc real 'For further analyss see Commercial Loan Portfolio Risk Analyss estate eppesented 5202m Iten of the total real estate at year end, and ori page 31). ~ r I, ~ ~ / I P P .: 23 'P 'h h Al< N V E S T M E N T B A N K 'sYb~M>v,v:i'Ai'"r'Z;>>,.: . ' I I I i \ I, i 1 r Ii i SECTOR PERFORMANCE, INVESTMENT DANK PRODUCTS i Debt ProductaiiVoney Market Servlcaa. Gbcotp is one ot ~t ltNLKASDt DOLL~ 10$ $ Isal - vvi the topthree deatcts inUS government sccutttes. which is the tatgest . Total Revenue . ~ . 81i588 $ 1,241 $ 348 28 and frast tkatd debt matkct e tte wofkL This past year vie became a Opefateg Expenses. ~,"" 803 587 216 37 pnmary dealer e the UK. govetixnent SCCunbes fnafkeL We also ~ Income Bekxe Taxes. 788 654 132 20 undctwnte, ttade, and fkstnbute sccunties fof munctpai lfCTINCOfaa 8 425 $ 343 $ 82 24 e the LLx and fof many sovctexgn govcrfxnents. Avetage Assets($ Btttensit'l RetumonAssetsgg...,,. .I ., ' 1~ 32 26 6 23 We assist corpotatens and feancfat estautens h faeng tenn funds thtoughnote issuance faataes. commetctat papea and ", RetfxnalEqe~tf%) fit~ lo'xtto~oPt .".... 03K 1.33', 33.2 0.01 0.3 interbank money market esttumcnts. We arrange keg tctm feanceg thtough ptvate ptacemcnta moftgage backed ccuftbeL and bonds issued outsde the Unacd Slates. we are market.makcfs and dtstnbutofs of a wide vanety ol dctx instruments waklwde. Gtcorp NKTINCOblE QY PRODUCT may also take pcetemmthe pfe approved b.ixts that tesat e a ~ AM@'4Dt fXXaJIZ IIXSmaM ol etcfest fate matunbeS. ~ Debt Products/Moncy haatkct Scf vces $ 255 Equity Products. For new and cfnetgeg businesses. Gtcotp has cstabftshed ventute capaat compar~ h the US. Canada. UK. katy g~'- Equily Ptoducts . Faegn Exchange Set vces . Advisory Ptoducts '38 18 25 France. and Austtatta. We have stock brokerage busresses e Japan. Hong Kong. Sega pote. the Unaed and Austtalia. Ouf daunt btokcrage subsdena Newbfdge Sefxxaes, isa - 't.~~c,". +11) Othcf. member frm of the New Ibtk Stock Exchange TOTALI ttvaaT%I alfT aAN KINO . M21 Foreign Exchange Sarvicoa. Gbcotp is the wOdd's largest totctgn exchange dcakx We povde foreign exchange scrvccs fof Ouf Cusemefs whoSe business. invesbncnL of lund tatsng acbvttes AVERAGE BALANCESHEET reach beyond natenal boundanes. We help customerS hedge ttetf ASuXMDt fXxi~5 oacallaaataav+ eteresl tate and currency exposure through avancty ofnsk LIDNItuos management products-such as etetest' fate and fofegn exchange swaps, futurvs, fofwards. and optens. Banks .:...,.. Deposts athtefest mth hvestmcnt Secunbes $ 1L7 5.8 htcfcd Beareg Deposts......$ Securaes Sold under 19.4 the course ot market makeg activfbes e fofckfn exchange markets. we may also take postionsmthe pte.a ppoved gudcbnes in antctpaten of changes e CunenCy markets. Ttadeg Account Assets . 4.9 Agreements to Advisory Products. Gtcofp is a leadeg manager e the US. ol Sccuntes Purchased undcf Repurchase.... 7.5 Agtcements to Resw . 63 tx.......~a Othcf Batowfdhtoncy Other .. 15.6 pensen tunds lof COtPxatens. stateand kcal govemmcnta and nonptofa ofganzatens. We also'ptovde gtobai pcrspccbve mth Othef Ptxnanty tfactco) . 18 7 olfccs e maiof markets wofklwde and etematenally dtvctsfed $ 47.4 $ 47.4 pot tkttes nonagcd out of bah London and Zurch, Wc have mctgcf and acqfxsten specialists e I5 countfes who assst companies tn fedeg buyers of sclicfs, and e sttuduteg these complex ttansactens. The Investment Batik also provdcs eveslors a Dead atray of trust. custodial, afxj pat tote scf viCCS, ttektdeg Allefeatl Dcposlof Receipts whch tacaaate US investment e ovetscas secunt I i' 4 he ktvestment Bank. al the end ol f905. hadbecome a the envy of compebtors. We'e only begun to apply the Icverage drfferent organizaten than rt was at!he start cf the year. d the network. In Septembl. Gtcorp meged rts treasury busxtess. both Gticorp's unparatteled customer base rs another unque strength foreqn exchange and money market acbvrtes. wrth br the Investmenl Bank. We have bng standxrg conteeng. and Ihe ktvestment Bank's secuntres actrvrtes The new organza. cbM retatcnShpa wrth tenS of thousands of Ihe moro rmporlant ten accounted rol $ 425 rrxtbonrn eamrngs xt 1985. COr pOratenS. 9OVemmentS. IXtanoral rnSbtutenS, and inVratcrS. In. We are nd bmrtrng rxx aspvatens to the hrstonc defxxtrons of invest creasngltt these customers ae keking br secunbes or secunbes. ment ban4ng For one Ihng. Glass Steagasn&rctens affect us only ~ related produds. and Gbcorp, whchrn the past otfered them 'n corporate debt and eqtxty undervmteg rn the US In workf markets. tradrtcnal bart4ng products. rs well pos boned to provxfe new ,we are periapt ted to rarso funds br both US and rntematenat cuS. krvestment banhng products and ~vces. kXnerS. We are a Ieadeg dealer and rkStnbutcr Of Unrted StateS gOV We have always laken pnde xt Gtcorp's rnnoratrve spa. Whb I'mmcnt securrtes. and we provrde a broadrange of secuntes and intang bta thrS Strength has hekf us rn gcod stead over lhe yearS. ~ sccuntcs.related products br our customers ever ywhera Fcr us. We'e grven crerbi for rnventrng both thc swap and the Euronote-two r investment ban4ng rs dcfrned only by our customes'eeds and our ol today's most promxrent rnvestment ban4ng products. By creabng own xrrageatcn xt fxxfeg ways to meet these needs. ncw ways to meet ow customers'eeds. we earnbel ter manye and Gbcorp rs rkxng well xt rnvestmM bankrng. Our 1985 eanvngs We Stay at the Ieadrng edge Of the rapXfly XrVeStment place uS rn the very top ber of rrNeStmenl bankS workfwtde. As we kek barkvrg busrness. the future. rt becomes dear that Gtcorp has strengths that few of Product rnnovaten depends on technotogcat rrvevatcn. and ow compebtcrs can casey match Gtcorp has a wee earned repulatcn br rts comrnrtment to technot ~ ogy ThIS IS a Spnngboafd lof the klveStment Bank. In l985. we spent OUR STREHCTHS approxxnatety $ 50rrxtbon cn new Systems and Iechnobgy and we txre we lend to lake Gtcorp's 93 country gbbal network br granted. rt S undue alnong rnvestment ." banks And as customers and porenbal customers kek rncreasrngry beyond ther natonal boundanes to meet ther fundhng and rnvestment needs, thrS grcbaireach-whchhas already made us the dear leader rn bregn exchange and the domeant brce rnrnterest rate and currency swaps-makes us 25 r.vYi~8aBZK2ZRI "AtCitlcorp, investment banking is defined only by our customers'eeds and our own imagination in Hrdlng ways to meet these needs." ~ + plan to spend $ 60 irvttionin tg6fx Better lechnology enables us to The integration vW Treasury willenable us to captakte on a number fullycaptatce on our global presence, bnngs us into doser contact of poss bte synerges. hke the doM retaterahip between our withotxrxrstomers. and enables us lo ad faster and more surely in foreign exchange lusnoss and our interest rate and currency nsk lhe workfwide captal markets We want to be number one in the management poduds. And Treasury's funding actrvibes for Gticorp effective use of technology on a global scakL giVe uS an exper trSe inmarket and tinVng that Canbe put tO gOOd ~ use for customers. OUR STRATEGY Focus on the investor onntinues tobe a cntical part of our strat hen youhave skfnihaet strengths-Bie our gtobaf Our goal is to beccme the preentinent drStnbutionnet>>ark Ibr reach and cusorner base-strategy becomes global reserve currency and key countrycaptat market paper straghtforward You play from those strengths. This 'nvestors are the utteute customers ininvestmen, bankeg. They means woking more dosely with tnstitutenat Bank rela the secunties-or the exChange, interest rale contracts. or whatever 'ensfvp managers to deliver investment banking , When we serve investors we also serve issuers. because we gain ~ poducts to customers. ln essence, the fnvestment Bank witt concen. the ptacrng power essential to fulfilling their innaixxaf needs. Move trate on 850 and fxoducten. apd the fnstitutionat Bankwill handle potent@I buyers also means more cont+vous pofas in our tieing markebng and delivery Teamwork witt be a top pnonty both within the and posrtxxvng actr/ities. As in most busxiesses, the frm with tnvestment Bank and throughcut Gbcoql the marketing advantage enjoys lhe supenor margins OUR SUCCESSES he best way to implement strategy is to bu kl on swcesses. The Invesunent Bank reaxded a number ol actvevements in f98& 0 We maintaeed <x>> strong market positxw as one ol the top three dealers in US, government securities. 0 We were far and away tt e woitd steading foreign exchange deafer This business contnbuted appoximatety $ 340 rrvtbon inrevenues in 1965. k JpW 3
- , 2A% in 1984 to 2lyyo in 1985 The percentage was 2AX at December. ~ 1 Panama..* 2 2 3L 1983. Cash basis tease 6nancings wee $35 mitt'en at December 3t 1985 and $ 64 mihon at December 3t 1984. Peru .. ~
~A Ilv / C ~, 1 C ~ h Tokya, our affikate Vckcrs de Cosla Ud. traded $ 25 btten e debt IS Gtcorp Venture Captal Ud. at>> vcnture captal and spe6at sccunties and expanded sgnifeantfy rts cquity brokerage ianchiise transaction vchide. had a record yeaC making 590m Iten in new by bcconvng oned the fxst srx loreign firms to gaea seat on the kwcstments. EIOOmision was phccd e a lund lor venture captal and Tokyo Stock Exchange. . restructuring eucstments in the UK. Sxnitar businessos are being star ledin contecntal Europe, Late Amcnca. and Ao'a., IS h Europe we acquired mam stodaxaking businesses in the UX. and Ireland. became a primary dealer e the UK. government SI In tho burgccning Euracammcrciaf paper market, we caraeued lo securities market, and started sccutics busecsses e Denmark bo the market leader in Euianotcs. Italy andluxcmbourg, Nh numerous national markets outside the US. we are rnarkct SI In the US, wo launched Newbridge Securities. a discount broker makers e government issues, under wntcrs d corporate scant'es, %4Ws4c $ a ago and member fen d the Ncw ibrk Stock Exchange. Newbridge and managers and dkstnbutors of mutual funds. Those activities are piandcs support to the discount brakeage actrvitics of the hdnndual L alt represented e Asia, Latin Amenca. and Euro'e Bank and executes ardos far oiled Gtcorp units around the wOrtd. kck for ecieasing success ininvesancnt banking. Wo aro IS Wc acquired AMBAG an esurance company that rs a market we are today and our future rsvcry bnght. because of Gtcep's 'here leader in thc faSt giaweg area d feancrat guarantees. AMBACrs a many skiaedandrcsouccfut people mound the aiba They are 9>>
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SI Wc ecreascd aur market share'nnxxtcipat ccuuntics underwnteg. where we were lhe top Icadmanagcr e shor I termrssucs. Fee ecorne from aur public feance busecss ecrcasedby 5'I Our carnegs from merger and acquistcn fees ecrcased diamat. C; caller We row havo hSA specialists e 15 countnes around lhe world. i ~ ~ and the number ot uansactcris e which we prayed a role woukl rank I I us among lhe top 12 evcstmenl banks waikhvide ~ t l ~ .,i .'a ' ~ ! I " ~ l'I ~ r p ~ I j J i ~ ~ ~ 9p4p4~ V 'I N
- natural extcnscn of our murxcipal feance buseesa fundanental conteuing strength.,
R E G U L A T 0 R Y R E V rl E W "ln 1985 we expanded our franchises around the world, intc new states, new countries, and new businesses; the change willcontinue steadily In the future." i ii C i, 1 n 1985 Gtcorp continued to expand its buseess fiancfxses We obtained a full banking fccnsc ht Sweden, whichnow gives us >a aound the world. Our commcroator xtshtutcnaf banking a convneciaf banking presence in allot hhe Scanthnavian ountti'ea actNrhes harin been widely cstabtrShed for many yeas. recent We opened Crhbank Budapest.tn recent years such banking as ,- expansenhas taken place mostty in our rxkvxfuaf and invest. we dd with Hungary was handled out ol ovr Vienna offica This nevr ment banking businesses. subsxfery wiltlet us move this business doser to as oriy'a neVerthefeSS Canhnuaf and grahfymg ~ In the Uivted States, whee cstrchve legislation and rcgufatcnhas been a signdcant km txvg factor expansion has been stowcs but Whee regulatrcn ia nore hberal ttcrmS like Glass Steagall and the McFadden Act don' seem IO translate well NtO Othe languages) cxpansionis We inrhatcd steps in 1985 to acquxc Bnhsh National LifeAssurance Company a hfe nuance under wnter and distnbutor based in U41 Urvtcd Kingdom The acqvrsr~ was completed early in 1986. Our Investment Bank grew svbstanhatty last year in the mora hbcraf overseas rcgvhttory cnvvonmcnt. I moving apace We strengthened rts presence in London, the heart of international Overseas in 1985, wc acquxcd Banca Ccnho Sud. based in fxtancing tl brought our ownesfvp et the Scnmgcour Kemp Gce NapleS. katy Its 43 branches witt conshtvte a srgrvficant ex panson broheage fvm vp to Ihe legal limit ot 2', and in Apnl 1986. when ttvs of ovr banking presence in Italy Ixtvt is droppe1 our ownership wilt become 100% II linked Scnm In Beige'e aoqvved the Banque Sud Beige. with a 50 branch gcour vxth the London actwem d vrckcrs da Costa. a brokeagc fvm network. thus supt>lcmcnhng ow ahcady wxfespeadFam bank we acquired in 1984. whchhas a strong pescnce in the Far East, drstnbvhcn system in that country When e hshiawS aikrwed, we acqvvcd Socco be Marshall' Austraha changed ds laws to 9ve banking hcenses lo foreign PL@ a biokeage spccraliting in govrvnmcnt MCvnteS and banks and by year cnd we had undertaken Iva commercial banking money make trade@. whch Pm+ has dcsgna:cd a pnmary Qcakv actNrtiCS in all six maior cities on that Ccnhnent. in those socunbm These acqvrsrtcns. whch strengthened txr InLahn Amcnca we acquvcd a consumer finance company in pOSaenin stehng and yen trarkng, when comtXned with our London Chile and took ctt icr inrtiahves consistent with ovr plan to grow local ctxrency busxxmcs and modeate the giowlh d our ciossboide exposure in those countnes we also acqurcd J8E ~ Evroddtar actrvihes. round outztx ahcady sgafcant UK. presence. a tagc stocfcxoke xi the Repvblc d Wand. and together wrih a fecal fxm set up thc Ctake.Vckes brat<cage in Australe. tn Japan we obtaned a trust company lccnse cnabfing us lo access that country's vast rnvcstincra management markcL and ctr Vckes da Costa subsdery was among thc fvst to be approved for a Japanese stock exchange scat. Allthe progress overseas is based largely on thc fact that rt is usuafty easer IOOpen Or expand a banking presence in anothe country than 4 is to open or acquxe axt in anothe stale in the Uivtcd States In the Unrtcd States. Congress has substanbaity slowed as efkvts Our regulatory agency efforts also produced rmpor tant results. lo further bankng dereguiabon Bnngng the naten's 50year okl They enabledus to acrSrxe more than 80% of AMBAC,the couroy's bankng laws up to4ale enioyed onsxfccrakfe altenbon and progress oldest cree nsurcr of mur~ bonds. markng a maer brcak hr several years, bul n 1985 the attenbon ol Congress was serzcdby throughnto an exabng new way of conductng our bus@ass. I Ve issues that rt pocervcd. understandably as more urgent the Fcdcral also exlended Gtrcorp nnsuance brokerage acbvrtes @to frve dcfcrt, tax rekxm Iegrsfabon, foragn conpebten, and probtcmS n new countries. agnculture and energy Congress n etfccl put bank dercgulaten On We made our fxst substareal foray iao the nkxmationbusness- ~ n, another of our stralcgc goals-tlvough a font venture wrthMOGraw. Ihe baCI: bumor-When'eabstroalty SPCakng, it rS kkefy tOreman dunng 198fx fbb. Manyng Mcfxraw fbtfs nkxmaten on commodrtes wrth . That, however docsnT srgnal a recess of our cfkvts. Whrte not Gteorp's fnanaat ccrwnuncatons retwork. we now canbrnry grvng upon Congress, we turned more to tie fuderaf, regulatory together buyers and sellers of commodktes and enable Ihem to trade agcncv. and state lcgrstabve avenues. dXCCIIy Vnth eaCh Ottes Vnth GbCOrp aVartabte tO CrOVXIC anallary ur btt at the Supreme Cour l wndnxtl dashed re hope fnanaal Ser Veea tOCOmplete rfe tranSaobcnS. for one stroke natenal expansen. The Court upheld ~ Them isuuranze and nforirtaten beachheads prorrzse to provxfe 4 that, contrary to our postxn, rt rs consbtubonat br states the staring pant for malo: lncbof busness vve hope to enter over bma 4 to let banks vvthn atxtxtcdrcgen aoss state lees. vttvte As we look atead. wc sce the era ol dramatc ex pamon, vnth G5ngressxwat heanngs cn TV and n the news fx.adtnes. rs evctvng IOCkng Out bankS OutSrde th I regen Al the Same trre. together wrth other exCfudedbanks. we were tryng to get Ccngress rnto a process ol gradual. pece by pece. stale by.state. protect by. IO PasS tngger IegrSIabOrL Vrlch WOukl ICI us enter thC prcteCted protect expansen. as technckxfy nstrtuter>bzabcn of savngs. and 'cgens aher frve years even rf the slates themselves dd not permrt us deVCIOpment Of neW fnanaalnStrumenlS prOCCCd The nert feW to do sa A bll was reported out by the Bankng Comnxt tee. but alter yearS Writ addup IOa a a~ n bankng aCbv teS that may nOI be the Supreme Court dcasron, ue txlt ddnol make a through tte Rules ex plOSve. Sudden. a'dranlabc. but n ds own gradual and steady way ~a+, k~r- Comm tice wrs be fundamental and substantrat Jt tn ou. stale by state cfkxts we werc successful n openng abate in Nevada and pesuadcd the Maryland lcg stature to let us open a murb branch full commeraal bank there nrrxl 886 Anzona pas~ IegrSlabon thai PermrtteduS IOaCquNS a bank there n 1986. MchXfan. Ohro and WSShngtcnPaSSedbliS n 885 that Ccnran tnggers that wet pcrmrt Gbcorp loonier wrthnreasonatse pcreds. +lir ,29 iW~ ($ 4 ,M+>>(r>> ~ . lr t>J,JF~ xxr R I S K M A N A G E M E N T lu 4 v r r,itr 'r,,'>.' ness d a feafcrai estr. and are monaored for aaherenca 6exlarly SaveetgnnSk and cross l ~ 'A l tutea Bfcctfve managencnt of nsk is cntcal lo thc border nsks we also subfect lo a kxmal review poccss by sener Lr> ~ SuCCCSS and lOng tenn pabtablay Ol any feanoraf eSb. managcmera Documented opeater4 poccdurcs that specify tuten, Al GtcofPi the concept ol nsk management is levels af approval autlenly scparatcn ol duties, and other ewnd emboded n all aspeds ot our opeatens and subtect to practees ant required for asbusecsscs r-"$f conteualrcvtcvf New nsk managencnl techniques coraeue to evdve IA 8ddibaA. Gtcofp adhcfCS ta COASevative 8CCaunteg Patciee, n response to changes e cnvtiorx wc and the nature of Gtcorp's ~ pwtctawfy to recognize expenses bke wrac otls at the ewtest i~> own busecsscs~ momea. Aggrcssve rdentdcaten of wnte cits and well dcvebped Tracbtenatty nsk managemera e bankep bcuscd on crecN, poccduleS lof manageg pobfcm cfedits Iced 'to 8 htghcf pobabtay bqutday and opcfatens. as the range ol Gtcorp's actrvrbcs of peopaf recovery i'7 and gcographc drversay have changed. so have the na'.ure and In suppxl of as strict conbots and poccdures. Cacarp has a strong scope al the nsks. Todsv Gtcarp is a muaeabanal feanciaf servces independent rCVteW pOCCSS. Wah an eternal aud I StaN that exCeedS company thai laces 8 txoad range ol nsks as it de'ers corn petarve 600 Further exameationis pandedby conbnual fcviewS by external r U scrvees la its cuslomers. Key areas ol nsk that must be managod are audrers and by regtaatory bodes wound the wrxkf. crcda. bqeday eteest rate. kxegn exchanga soveegn and cess These feancial and operabng controls we suppor tcdby a major r'r, txxdec trading, busness and envtronmefaat, legal and regulatory evestnent n ebrmabon systems that supply bmely and accurate rCP and opeatens. Sebctsd weas we discussed e dctaa late. inbrmaten to all tcvcIS ol managemcfa. This upwad llaw ol inbnna. ~'8 n the scctea ban ServOS aS a key measure for the effectiveness ol managcnient rt'i'r interns . r~4jrePc Kcy to appoachnmanaging nsk is dear, sound pdctes. I Gbcorp's managcnera philosophy has ~ managcmcra pdcics and their etfccbve communcatenlo air Icves d the Corpxabon pnmary among Ihose polces is drvesfcabcfL stressed t:te importance ol assets, Iiabbbca eamegs. and fetatcdnskS beng Fealty Gtcep conbnues to bebeve that strong and growing cwixnga, iri conjuncten with a large captal basa povxfe the abfay to abseb unbreseennsks or tosses. , The bsovregsccbans discuss nsk mwtagemcnt as a relates to the l il> drvesfed ol geography. currency. customeC poduct. wd terer. This dfvettfcaban, rcfered to as the actuanat basa hedges agaest tne adverse vnpact to the nstituten from any one event. management, and captal management Bse rcport discussions may be kwnd concemeg nsk management as ~ commecial and ca~me roan por Ifoles. bquxftty and rfaeest rate e ttxs arcual of scl of candtbans. relates to soveegn and cross bocfcr exposure {page 1@accoura grt i Deccntrattzaten is a cCmerstone of Citicorp's strategy Dccrscn. pdctcs(page 5"). and taxi funds rdaled feancraf poduds fpage 6Q. vriir4 makeg iS placed as dose as possbte to the mantctgaaces we serve ~ 'o ensure that dcctsans wc based on the best ava labe elormaten and on a undestandeg ot changes that coukl atfcct us. + sit~i. DNcrslcaten and dcccntrabzaten are barevxd by strong Ixtancral ~A I i 'r l jA,< - ~ A) and opcrabngcantrots. These edude htghfy brfnaltzcd crecbt and ~ I operabng porces and pocedurw. developed o<<cr a long penod at ( ' Appropriate IevtS are CStabrrshcd kx fe 2day etecst rate gage, 'ma foregn exChangc,and tradeg exposure kx 8Nuntts ol the argantzaten 'h I A f r ,I AJ r I fit ~ ' JA i A ~ 1 ~ i ~ I <<r. illi ~ \ r >,ig l"'...'." ' zy,'A +I 1' A r". r.i <<AA, '"rr nfl~'fP=; A' ~ ' ~ ~ A r "i i$,4, Il r" ',x $)rvt4lifC i r, i~>~ AX ,~)". <<;pp'>9. ~ Av l ~~s .A' qSJr r r, 30 r = lt -+~4 I ~ 1 Ls aa -~geek <<CDMMERCIALLOANPORTFOLlORISK ANALYSIS pecentage steaddy rnpcovedrn the 1975-1980 pesod, para"cicng lhe .::,,p'" management phiosophy has always empha progress of economc reccvey cn the waia of the past recesscn. 'tcorp's sized the cmpor fence of assets and earrvngs besng As the paced economc growth slowed. Ihe pecentage rose to 32IL drVeSSfcedrnICrmSOI qecgraphit Curreno)t CuSIOmet X5 19&? and 3C7X in 1983andreaChed 55% in 1985 These peCerc. tenor and product. '.hs dcvessfcaten, referred to as the tages are weil bekxcv Ihe 5975 hgrl Looksng ahead ove: the next actuanal baM. hedges agairct the advese xnpact to the 12 to 18months we expect our loss ecpenencewstc remasnwsthn XISbtutCn frcm anyane eVent e Set cf COndstenS. HIStcry haS ShOWn the range eXpenenCedrn the paSt fsVe yearS. GtCOrp emphaQZOS a that adverse developmentsaltectsng dsdsdualcountnes or ndustnes wetMeesfsedandheatthyeamcngsstream as the pnmary means g~'-I Or parlCufar preduCIS tend tObe Candied Out by IaVOratye deVelOp Ol absortlng mCumng IOanlOSSeS. ACCOrengttt GtCOrp XnrreCtatety menlS Xl cthe aCtnnteS an the lcng rua GICOrPutctcZeS thS Strategy Ol reCOgraeS aSIOSSeS aillOanamaunlS fudged tObe unCOCIeCbbb. brOaddCVeQICatenrndScoanpCXtkfSOntanagemenlrnOrder IO 'Ver tcmeaogniCantpartend theSOIOSSeaarereCOVered HetcrCal "zt.-.'p-., better contrd the amount of unpredctable tosses. For exampte. no expenence cndcates zsatcetasniosses east rn the por Ikte at a scngkc country oulSde the Urxted States has accouraedlormee than poet x5 tsme but have not been specrfcalty cdentsfset In antxxpatcn P~s 8Y of the total comcnecsal loan portfdso cn the last fcve years. Of these unsdenbfsed IOSSOS. U A aaOWanCe kX pcsscble Creds tOSses Howevet banks are xl the busness of measured rcsktaksng. and are perl of the normal cnstot lendegmoneg in commercsal lendcng. the amount of losses as a percentage otoutstandsng loanS is estabbshed by chargx59 Current earno59S vnth amounts over and above achelnet eanlosses. Noportcn ot the resuasng specsfCally afkcated or restrc'.ed to any Indra loan. or groups ol a~ rs -';4'osses can vary wcdety Irom peed to penocL andrs par tcularty sensstNe to loans rxgeographc areas, and the enlve allowance raavazade lo ',~", absorb tosses from any to5d all kans andlease Snancsng rececvabtes. ~i 'lee 1$ perCentage Ol IOanlOSSOS IOaVerage lOanS reaChed a POSI War peak In Orde tO~W the nSk CferaCtenSICSOI the IOan pXIIOIIOatyear ua ol 83% In 1975 due pnmarly to the 1973-1975recessconrn the end 1985 Gtcorp beleves st rsappropnate to vsew the portfoiso 'r>~,'S. whch par Icutarfy xnpacted the real estate rndustry. The loss accoldcng lo the elenenls shownrn the accompariying tata p& <a' COMMERCIALLOAN PORTFOLIOI NET OF UNEARNED DISCOUNT ~z 1044 loe ceo to scl I 5 llasc l05$ I 5 to j
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., v ..j~' Commsrcfal and lndustr(alLoansce ~ icnDomestcOlfces......... InOlerseasOrfces TCTAL.............. ..: . '..... $ 13I403 25,472 $ 12c827 27,929 5 59 249 a5% .9% $ 13.766 27.671 $ 58 116 .4%i .4'i~ .. $ 38+75 $ 40,758 $ 308 A% $ 41.437 $ 174 .4 IS -yg . o - Loarts to Financial fnstltutfonso'nDomestcGIIces....... 5 1e342 Q 604 t 19 $ 1.189 $ lnOveseasOftceso......... 5,318 4,733 A% ~ 4,377 9 .2~ >P.. ~?vF-"-cx* TOTAL....,......... 5 8,680 5 5e337 $ 1Q a4% S 5.566 S 9 .2A - r~'"7 RaalKState LOanSox -; InDOmeSfCOIICeS........." . $ 8e114 ' 5I300 8 $ 4,331 $ (I) v ~gal& lnOVerSeaSOIICeS........., 2I125 1,995 14 .7% 1.809 (11 ,F)~ 5 8n?39 $ 7+95 8 14 ' $ 6.140 5 (2) r Loans to Covernmortts and Offfcfal . <p'I+ histftutfons'.......... S 4,398 $ 4,695 $ 38 A% $ 4l884 $ 40 8% qti. ~ J ~'j,> C'fran ~<. ','I TOTALCOatllaRCIALLOAIIS rrr ascaasec asvse csex occesrvse acr vrecr ercveaceo pJ I oars Isaac SOSCVOeac ae kr nsarerceeSOOCee ~ Inc ve baser cn conrncnkecre ccnerev ~ . ~ $ 58e172 ocanccxce $ 58 083 5377 7% 558.027 $ 221 4'<@$ rar 5 ovrs co rxsccneene ca<<ecs neercnses ercr basses erscIs>> see necrose n c>>o aserss ce oonnncaas ane eeoec nsscr esne>> excraaon concoeror rer ceersons ctsrss vscs cavo xs kiter ocorcnex csseconsx c 'o sv vc' t 'car 'sesf ': - 31' . kI.roc Ixx<< c II $ sM@>> V '4: sea- >>ud>>af. ~ .~st',~~~' r!>>> COMMERCIALAHDIHDUSTRIALLOANS T!ERCENT OF COMMERCfALLOAN ~ ~ GbCOrp'SCCmmeraafandedustnalb~par tloleistxoadfydrve LOSSESTOAVKRAOELOANS sfed a terms of industry geog!aphy anduze ol custome None of the malar adustry segments a Gtcorp's cammctoat and edusthat lendeg port ble accounls br more Ihan 1'f Ihe total cammeroal laanPatblck and 35lb af OCS CLsegary iS tO malar multeatenal co u 1 O'4 axparatens This dNesrfceen has p!avon to bo a successful tactor ~,v c a cantrotkng risk. The weakness ot the workfwdc caxemy aortae ,c industty seclorsuoenbuted to an eacase a the net loanloss rate to ~rl $ % a 685y vnthlvghe losses overseas In the past five years, axnmcioal and eckctnat be toss ex penance has ranged between 2% and A%. Net 'esses on cammeoal lendeg can vary vndcly from penod to penod. par bcutarfy vnthin any grvennarrowly dctecd sectoc lfCI, NCI iten Whale loan losses a conxneoal and'ndustnal tegdeg cannot be tatcauacosscsttLkcegasag oauss accurdtcfy prcdct84 Gbcarp exfh4s fhal aver the next Q ta 18 cg months tts ban lac~Ms willfinal vnthe Ihc range cxPenenccd a the last five years tt~o OscQprr nn >>r.- nvowx twas get cx NLkcxxvs cn accLatgs LOANS TO Fl MANCIAL1 NSTTIITJTTOHS / Loans extended to correspondent bus and other bnanoe 'rvatutans athe VS and overseas aveagcd $ 53bllen, or approximately 9%of Citeorp's por tfofxx ~, LOAHSTO dOVERHMENT OFFICTAL I NSTlTUT!ONS AND,, ", 'g~~ >>y! sbn eaewetsbtbscatcga!ytcndbbcot bette Oian aeragec!Cda fntcmatenattcndegtagaremmentsandoffcialinsteutionsisa, '~".,~+; war thecss, rcftectcdby Ihc bsses toaveagebansof 04X axitecxngpart of Gtcarp's watdvndeactnntes. Outstandeg bans to 19851OSSeS reaXdeda Oe feanaat eSbtutenSCategCXyaVeSeaS gaVetvnenta and afbOafeSbtutenS aVC!aged$ 47 bltendunng 685 [g'in'>> ccnbnue tobe affectedbyfarcignaxtcncyavaylabbtycansdeabons andwereapfxaxxnatcfy8Y of Oie averagecomneroalloanportbte ~ , . represctaeg a protractcdinabkty el a couroy to scrvee brcygn losses tcaxdcd e Ovs category largely represent and the lackal dete Inn p!nSpeCtS kx the rcsumptenof instances whee par lensolbans were vyrstcn oilbased on a cata'uncnydcbl Orderly debt sennong. Ttvs rs partcutarty SOwhere forexfn Currency fXOI!aated eabbly toscrvee faegn oxreicy debt and a la& ol H,~~/, ~ ba!!ayving by a country is channeled through a feanoalesbtuten Cfearttve pospecls br the rcsxnp'.en at ardely debt '~T'~x.'grgS oo!ovvcc Gtcorpanbopatcs twev@eventuailycollecbng allor peti 0 Dureg tne next to 18machs Gtcap expects the net lass ratio a oxs category to terr~ abave that br corrxncroat and eduaret jy,ij ~ at these bans although suchwnte.offs are expoctcd toconteua loss ex penance from the feanoafestotiens bartavacrs loans, excbdeg those xudanccs of wntceffs based on csauaog suasncco oas s>>Maon Songnnsscncy aons seuc>>g Sycgncunoncyaoss nnuoogccnnaassonnsysccsa o*co>>sony consdeabons. canteues bebvv that tor commeoal Snd lOSSeS tObe wellbcbvv thOSC e Camrneoat and feeler industnal Icndeg and this trend is ex peaed to conti!xte oyer the text 12 IO 18 manOiS j Qav REAL ESTATE LOANS "cd.' .Ocsfxle cbOcutt cond tense the gbbat real estate matkcls, the teal estate por tbte pefarmcd well vnlhe esbtutenal and edustry standards No sgn tcant change is expcaed over the next tog ta 18 marchS coal r++, V gi y>>s sca >> +,s j c >> s u \ / P ~P'~ s Xoa ~xj. sy - pg I ~ I .t
- ocwcoxo xl, " ovxxaoo Mvloeac loeoxo, Jvxnaox asx o IOt co%sr 5 I $ OIOX es CIC Csosa5 OC OOc lab5 ceoo loons oovxscatlor 50JIN c(wc$ coCCOclcar Ss lolss5
,XS~IIA ',I'. ~ V CONSUMER LOAN PORTFOLIO ANALYSIS Lasses as s percentage At avcragrr Ioaw werc up substantLLNy r'CO',+X'L .- he fxolitdynames ot consumer kMeg aic such that from.78sb XL 1984 lo I 23% rn tax drircn prxnanty by Iwo ladas Ihc ~ I 5 each product has an expectcd tc5mt Of aed4 loss. whehrs IACrea Sod voturre of acdit card rcccivatycs. whch tvstonoaayhavo generally a Stalistealty Piedetabto CxPCASC Ot drxng busi. a Ivght" loss cx pen nce. and the somewhat than antiapatcd ACSS. For cxarnpkh IoaAS wrth low loss cxpc enoc NLCtudtr loss rate".ol ccr tanmedum and bghloss expenenCC loans. home mortgage kIns (txst and second) and government. In IRK Gteorp added approxxnately 3 m tlen caMs to ItS Credit guaranteed Student lOanS LCCAS Withmcdnrm tean IOSS CX~ACC card bass The cost ol tfxs successful sotc taten xrotudes tte aic secured produds, sudL aS mcbkr homo loans and automobte rdatrvcfy fvghcr toss ales that aeds cards ex penence dunng ther ~ lOanS. Indudcdrn the Category Ot txghlo5A loss expcACACC are SuCh carly years. The combnaten ol greater volume phrs thc txgh carly, unsecured produds as aecbt Cards. travel and enlertaxxLrent CardS year toss rates resulted XL crcdII tossexpcnscs that were . and otter pcrsoredrcvohnng Creat prOdrds Pnang ano marketeg consxfcrabtytxghcr than f984. poboes tobe I the lOSS Cxpenenoe Ot Caoh par boutar produd. Gbcorp follows a wnte oN poley that reqtxrcs that most consumer DOMESTIC PORTFOLIO ',', bans. with the exCepten Ol adequatety secured consumer mor l. The average domeste loan portfobo incrcasea by $ 99 o I en tc gagcS be wnt ten otl when paymenls are dcbnquent by a prcdeler. $ 405 blten Growth occurred in each cat~y ot consunter acdrt rixncd number ol days alter the coAL~ payment datrL ~i toss expense cxpcncnca, . number oi days is scl al a level appiupnate lo loan produd and eiM ~ / 0 ronmantat Charactenstes so as to result in the rccogniten Ot keses 1tras I tires 1aas 685 that makes thc I4ebhood ol sutxMquent rCCOvery ot those tosses brit. AVXN bctwL~ 20% to 30'hose loans nol ~et wnlten olf and vnlh pnna., ~ LOAN5 IKLIOIL " LO5555 011555XM LLLON L055 NOAO '05550515 IMte pJ or xtIciest payment dcb Lque5~ ol 90 days or moro compnsed ' '55'%of thc total year end 1985consumL~ kran portlotei a docrease Gcda toss cxpcAsc ~ k '1: 5 5 I ."Iem the comparable 1984 ratio of I5fyL The potey for suspendxrg CxPcnenaX Ibghcr ~ . 11% ', S430 3% 25 '.T, 'IO, accrualsd interest on consumer loans varics depcndx59 On the 1$ ~ I, 'terms, scctxrty and toaness experience charactensbcs of eacn prod :.*; 1.0 . 0.6 ud and XL COnSdmten ol vmte oN cntcna rn ptaoe COASLXACr loans 50,5 0.1 "O.i IA: 0.5 err 540.5 5501 - wlxdt aCauals of rnteicst had been suspended wcrc $ 502 AXNXXL . at year cnd t985. Foregone XLterest rcvenue reSLAng Irommspensen iaaf ol richest acauals was ret matcnal rn 1985 Consumer loans vnth ~ debnqucnccs Al 90 days or more for which interest conbnued to bc ~ accrued were $ 415 m Iten at yea'r end 1985 'he worktwde con~ loan por tfde showed stong growth in 'o85, wrlh the enrage loan port foie x5crcas5ng by $ 110btten. or $ 7x, IO $ 477 blten This rs pnnapalty due to thc cont55rxng domcste 1 'Iyowthin crcd t cards and shorter rcfatcdmortgage products The worklvndc rcvohrix7 crc5bt portlotei wixoh traS a hxfhloan lOSS , -x ~ I cxpcrenw grew from tgyO tc 2'A ol the total port tote XI 1985 Homo rL mor tgagc loans Itxst and sccondi. wtxchhsvc a v .r loan ess ex pen ence. decreased born 45'4 to 44% ol the workfwxfcportfotxx tntena. 5 bonal consumer loans now account for I5%, dowrl from 17 0 test year qI~ Ar 4~ I rI L,Or.514 5 A. ~ y tw tIHI t)@~Vcr) +f ~aY ~ ' ~ ~ t t ~ S aQ ~ ~ W ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ I ~ ~ ~ ~ ~ ~ r ~ ~ ~ ~ ~ ~ ~ f ~ ) e 4, ~ ~ ~ ~ ~ ~, I ~ ~ ~ ~ ~ ~ Vh, ~ ~ ~ ~ ~ ~ ~ I, ~ ~ ~ )~ ~ re ~ ~ ~ ~ ee .I ~ ~ ~ ~ I ~ 4 P CAPTTAL ANALYS I 5 TETIQ FUNDS RAISED IN 1955 Ounng (98K Gtcorp stgn fcantty ncreased as tota( and pnmary rlarO faOat~ capttaf through an(Orna( cqtxty genera(ton, nacases nlhe ahowance ~ ahaaltrrhccx ooaaat?\ that l Ih ate ~ hx posstbfe accM losSes. and tho tssuance d anew lonn ot pcpctual pn! tered stock. Total calx(Bi, as dcfncdby the regutatorS. waS $ (59 bf(anat OCCCmber 3t 1985a up $ 41 b ((Crt Or 35%, OVCr taSI year Pri. US Mane(....... Sod... '....... Overseas Markets ..'. $ 2.061 998 $ 3.059 $ 1.233 1.564 $ 2.797 53~ 2,562 +M,856 mary cap tal. as dcfncd by (le regulators, was $ (09 bf(an. up $ 20 b(hon. or 23(k Inxn 1984. Gtcorp's total captal rate at Occcmbcr 31. This fundratsng ptoyam lengthened tte ecccage matunty cl (985wasgQ%,up(3314(rcmthopnorycar'srahod779y Tie Gfcorp's habhty structcxe ar td tnpproved hqux(4y comparabte pnmary capt(a(rate.ras 623%, up hom 586% n t984. ln genera(. the tong tenn funds ratscd and pcfccnrcd stock issuedn 8othrahos ate vtcN above Ihe rogue(or's mtnxnumrcquvcmcnts ol 685 hadinlcrcsl rale rcprctng charactcnsbw doscly rafa(cd lo the , 60014 hx ldat capt(a( and Ss& for pnmary cap4al The capttaf rattos tnacmcdaf assets beng fnanccd Thts ref(ccts Gtcotp'sac(Ne ot each d Gtcorp's domcstc uAmlery banks and savngs and loan management of nsk assooatcdwtthmtsmatchcs n Ihe rCPrCtng assoaahons were a(so above the rcgutatory mnrhumS. dates of assets and habhtes: As Ihe accomfenytng chart shows. Gtcorp's long tenn US. ddlar nteest rate exposure ccmancd very 'LI4UIDITYANDINTEIIESTRATE I(IANAOET(IENT modes( ..Thts ls conststcnt wtth managcmcrs'5 strategy of ecch( ntng ddnCS adeqW(e hquX(tty aS haVng the fundS uvatfabfe IO n(crest rate exposure lo the shtxtcr term Among ." er acbons, repay fucy and pump((ye(lmaturng kabhhes Or Customer dcposas GOCOrp Cxcouted ntcrcst rate swap ayccments L S own acceunt n accordrtnce vnth ther terms The natute of the fnanaalntcr. In a contnung et(or( to manage nsbtuttcnalntcresl rate nhk. The 'ode(ton tune(en pnc '~ banks and bank teldng companes long tcrmntcrcsl rate exooscxe n currenocs other than US. dohars is ts such lhal they are mnimally abto h,~ ther tmmcde(e nomtnal and close(j met rkxod on B mon(ICy basts. fnancel obftgattons vnchrcaddy matkctabts ~s. assets payabfe Recent dercguht (ton wthn the Unttcd Sta(cs has enabled Gtcorp on dccnand and assets schedufcd to matura The ex(et tt d hquxf4y 'oo(ter ee consumer a yowng vancty d ptcxhtas. Ove the past nsk canbe measured by he dtffercnce nmaturay dates ol assets Iwdve months. avorare domestc cxxtscrrtcr habtnes have yown 'nd habMes InJudng those assets and habhhes payabfe on hem $ 25 2 b((an .'". $ 299 b(hon As a consequence. average US dcnendi There as also a n> tOeamngs fto(n er pOSure to trvcreS( dmestc consumer habhtes as a pctccrttage of Iotal avcraqe , rate fktctuattons httcrest rate nsk rcsufts horn a mtsmatch ol repriang domeshc assets now stands at 34">> Concurrent vnth tte nacase n ~ da(es bet ween assc!s and kab(4es. ano may also beat(ected by (le domestc por 1lo(O, acrsoas average consumer hab(4es have 4"nF non funds re(a(cd et~ cate pccxkcts. d scusscct further On Pages ycptcn to 2W of laal average ovec~s assets Total cor h~ p~~ 66 and 67 IJquxhty and an(crest rate rak are not xfcntcat snce habhtes as a percent d terat average asses has nacascd:o >> rcprctng andmatunly dales ltcqucntly dttW Ccntanng 2914 a year ago Contnued yowlhn Gtcorp's consutncr 3'rom ~t+ ~ a txxh ex posurcs vnthn acccpta(Serac hmtts over the short tenn ts lebhhcs has added further stabfny and depth to(he Corpora(en's CCCCmfyaShcd pnmanly by IebMy management, Thts rcquttcs Iundng prdtto-thereby Cnhanong Mtudtty, at(en(en (Othe maturtty and tcpnong structure ol asses 'ontnuous hl "aI ~ ~ ~ ~ r and tebltttcs For a targe muanattonaf frencet h nt~y successful hab4ly ' ' 'h'* )r rrenagcmccN ts chatactcctt Cdby a broad dtvccst (ca(ton ol Iundang SourCCS E r taXvttve dtvcrSt(Cahon Ol market. Cut renCy fender matunty "- ttl f yt' cpptctng frequency and 4ab4ty nStnnnent CnhanCCS hquX4(y The-I~ ab4ly to react quckty to crengng market corvfncns lor Ieblny ptoducts ts esscntel Gt corp has cotton~ to develop ncw fundng sources and to mar Nan acceptable Icvcts ol (tquxMy ln 685. ( acotp r~ a do((ar cqunta(cnl tdatat $ 59 o(fen of ' tdS vnth a mat uctt y Ol one year or longer tnoludng $ (0 bt(ton vnth t cnalmatur~ d 20 years or tongct ~ h'\ I h aha ~h th ~ ? . 7"',t .I t ~ ~, ~ .ti ~ t h 35 h. ~ ~ 448 ~r ~ A Ckd 1I LONO TKRMDCSI KSTIC ILS DOLLILR COMPONENTS OF CAPITAL IICTKflESTRATE Qec ~I riru ) ~ Ibllf7C(FOQlJRL4KMQD Alaucpls& ox}4@1 194 s }sa4 ctwKIE ~ ~ TOTRLCAtfTAL...... $ 15o948 S 1 1.805 $ 4.143 4.5 Stock and Surplus . $ 1PSD S 1,149 S 101 Prefened Stock 1}215 640 575 Vt ~ i Retarned EarningS Allowance for Possible ~ 1}235 4.637 917 663 318 OuaMying Suborder}ated Captal Notes . 1}815 1,479 336 Mrnonfy Interest }n 1}ro 'faCOil rIr ~IIh Aplong ~~%Of i ter ~44. }Inrru ~ ~~ }sr'}r rrlr ~ A l9s4 AA77 4/tW let40d ~ ~~ ,S Conscfdated Svbsrhanes Remaeder ol Subordeated $ 10,M2 TT S 8.872 50 27 S2.020 CaptalNotes . $ 84 S 170 S (86) Redeemable Pefened Stock. 40 40 Quaky}ng Oebt . 4}932 2.7' 2.209 $ 5,058 S 2.933 123 Pnmary Capaat, as ddaedby me Fedora} Resenre. ~' Stoclu}orders'rtu t}rOua}tying Subordinated Captal No!c" me I i Allowance lor Poss}5e Credit Losses and mrnoiay wc~est e conscfr dated subsidiaries. I I Total Captal includes Pnmary Captat. Redeemable P}efcl!ed Stock. and gross Oualdyng Debt restated }n corn pkance vntt} ncw regulatory rr~sncnts.. 36 FINANCIAL INFORMA TION INDEX ) ~ 4/ C+/ 4 ~ \ CItlcorp In Brief 08 The Businesses of Cltlcorp 40 I Summary of Financial Results 43 Statement of Income Analysis 44 Nel Intcrcsl Revenue 44'* / Crcd4 Loss Expense andAlkxrrance 44 I Fees. Cerrxrxsscns and Odrcr Revenue 45 4 r Opcrabng Ex pcnse 45 'CemC TaxCS 45 Gcographc Gsrrrbuten ol Revenue. Earnngs and Assci *~ Roport of independent Aud ltors Financial Statements 48 Statement of Accounting Policies 53 Notes to Financial Statements 55 inflation AdJusted Oata Supplement . 59 Financial Statistics 70 ' , Form 10 K Cross-Reference Index 71 Financial Data Supplement 72 / I 4'* 4 ~ .~ '..%%'C 4'Cu/~t rx \ JP>> 4+~/a C I 7 I C R P I N B R I E F ;-'4 Vc n~i'~9QB5 r - a r I * ~ I I ~ s I ~ I ~ \ I PKOPLS l ~R I r TOTALCAPITALAROPRQ((ARYCAPfTAL ers...L . "........ ~ I 1<<s<<PIIII orssrIII At nl<<va N '@+i Common Stocttflo4$ 51.000 I Staff ", ' Domcstc.....,, ',;,'. '::....,... i rt Overseas...,.....' '..': .;...... 42,100 39.200 TDL .'9 .. '.." .. .. 811300 OFRCRS ' ~ Vnitecf States {V85attces r142statcsand the Dstrct at Catumbe) . G242ank. NA, branches . ~ '93 GEIbank. N A. subsckanss. '. ~ 65 Gtrbank {New Ya4 State). N A, branches, 46 Gtibank {New lark Statet N A. Sutrvdancs. ,61 Gtcorp Savtngs . 0!hcr Great p subsckanes ~ ~ ~ ~ "~ -I C" t'. ' 492'92 Overseas {1 806attccs In 92 courecst Gtrbank branches and reprcsentatrvea{tees. .; Ec BankIng subsd1311es '601 ) Bankrngatt4etes 109 'I>> " I, II Other t nanoal attItrarcs and subscbares, . *. F4Yi TOTALDOEECSTla Alto OVCIESCAS ~ ~ - 21991 ~ ~ CAPftM.HALOS 1Ernc o IQ'A, cIRQE rslIEtcar9cear lans Asstrs vErn Eto rsrrrHr crrIQLAs <<rEICErrvaE c/ toss AssETs p): t. t I ~ oo M'4 9~ " J ~1 r 11.<H~2ebp err I ~1 EO 49>>v 44>>s ~P 20 >>s 1951 I9ro 1985 1)24 rrrr rrv9 uvl str9 erst. Intr <<~i>k:,>> r I I 4 COlthiON DIVIDKHDSDKCLARKD ARD HKfIHCOQK PKR SHARK KQUITY AIIDAVKRAGKA~ 'HS ~44555'g> ~ ~4 I'4 hf I ACfP 4 P IAAFCEIPtCI sss5 ssrt l'4,%s
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>r~F,.fr~~ ~."=".'~ j>>Y~+ H' I 0 F 0 %2~M~~'6" ": 7 B U S N E S S E S C I T I C R P ~ ~~ Today GI<CO<P, with as Subsxkancs and a(If<ates. <5 4 rnuar<atienal in SO(AC ot (hex acIMtses. I(on( gove(Amen(QI agencies lx<anrsat SCr V(CCSO(<IQ<uIQINSA IIS Slat! Ol 8Q00 PCOPIC Shr VCS Ihe IAO(der IOmCet the ChatfengesOI today'and IO<(xtr(OW'S txulncL(t needs of sndMdua(s. bus<<(esses, govern<Ac(NS and txsanfxat marketplace. Gticorp has organucdas QCIMtes a(oundcu:tomer snstautsons <<i Nppox<matcty 3900 locations. Ack(dxsg branch baAks. ~ OncAtcd co(e businesses Thc BQAk. Whch focuses on repeat(ve ottccsand subsidiary and Qtkkaledfccs sn 42SIaics . Sc(v<nglhenecdsol cons<<<hers. and ttsctnsfa<six!AQIBank and and the D strict ol Cobneaand 92othef countncs eroughout k(vestment Bark. Wtuch wort< in conluncten to serve co(po(at<<!As. 'Ihe workl ,financial snstautsons. and govL<<nmcnts For lur ther <Ato(maison Cy,', Gtsco(IL Gtsbank and ther subs<dsancs and affiliatesarcsubgct regarding Ihc th(cccore bus<ACNcs see Ihescctor fkscussscnstRlos( C S E C 7' R P E ~ R F 0 R Q A N C E S CKRKLea L~Vcc.+V'. The IO((OV>SA<~ .>>USSSOA ana !yves SCCOX INVcSAC<QI pC< lo(manCCS << also a s<<Fufcant factor Crcd t ca(d port toLCS hlvo a fustOACQSy Using CSC Co(O bus<ACSS le(mat Changes Outlined OA Page .. txgher toss expo<<ence. par tscu(arly in ther carly years ol dove'op ment. Thc Iughcr wnlc otfs wc(e(cffeAcd in thc comparat<verates d INDIVITTUALBANICINO ' ncl loan tosses to average k(ans 'I 23 N sersus 78 ~ thc pcvsous year Inde<dc <at Ba(w na(<ungs ol $ 340 mifx!Arose $ 118 m san. O(SX4. Over Consistent with thc chQAgc in thc way Ihc Co(pa(af>on repor ls snctor 1984 Ttus st(orsg pcr to<ma'ncc was burt on thc contsn<xng revenue (csuas. ksdMdual BQAk ea(nrlgs wc(c eisa(ged an Q(no<<< st IA b<x ld Qso mu nrntum gc<x!(QIL4 by Ihc consumer sector 5 (apdly expand<<ig total QliowQACC fof posssbkf rxcd4 losses equal to 50 "a ot coA%Ãooc IXSSNSLCSCS AS the QCComPanysng IQCIC sndCQICS. CUSIOASC( NCt tean 9(OWIh t(om 1984 year C<cd IO 1985 year Cnd Thrs Charge in 1985 x RehVu<C g(CW33>>. Vhih CaCh bus<ACSS yOuP making Co<SI<sbutOAS was $ Mm4anup $ 10 nut(NN( t(om 1984 S+ l~ to Itic <<sere fse Tl le st(ong revenue yow fh rvsatxcd Ihcscciur to In contrast to It(c33'~ <Ac(ease<A customer net (erenuc. dctnefy Pe ? ;st(Mits fhe tvqh(v C(<kst COStS (<SSOC(ated w m po flo(io cxfLlnsen ex pcnse <ACr'ascd 22s'ear to year OI that <AC(CQSC QPPoxs. g~rr cs+v urxt <<abased sk~~y <!s pnmcs(secd<xf to tursd new bus<nuss r sr(a mafdy two thxds vras(relic I to s qyor I ol thc base IN~(esses. Iia( aces Rdx<< t<<ug the Lector'5 N(spovcd pofaatxiay <inurn pleo<<<I'y tcuia(ty in thc Q(cad fughc(pocessrx) costs lo(cx parried customer rom fo 153'.~ f(um 127'o tast vcar Aft(sough stxkt term interest ran~ vdumcs The(Omar(dc( was dxcctcd Iowa(d Nut<a(s~a arned al (<'nsa<<u<<> rdathrtv stahfe:hrough most of 1985. efforts-.ontsnued to NAProving our k(Ager tc(m pogterung and the dcvclopmCnl Ol ncw <<<<CISX'.C t(u! NSSILlCI (>I r Skc t4CI<L<t<<bison eiU(ungs p!(k((nllnCC fcvcAuc sources, Nscludirsg investment <A ma(ketrsg, t(>chno(ogy and Tfvo<x ys t(iel f(u(CA(s~i At ks(sq<<< term tsatx(aces Qnd the use Ol <Ate(L& product deveiopmCnl TAC Nnp<ovC<nent in O(AC< sneeme (a<pc<<Set (Q<>! SW>(PS the fan% r>i(i!<<ahead CemPOAC(SI Of CUSIO(AC< fCVCAUCS Was was d((<en p <<harry by the Nnpael of loser don sestr NNC<CN mrcs as -=4>i tscf ti<< fsr(sf<.'rt<4 a<Tax(st r N'h vdaticty on tundrsg costs d non customer ass<as and xstcxcst anusunts he(d lt E l<<s<<VIS x(lf<<(MVf <SA 4 gkaLlt 1Llsis Oonsestseaay (sat<<<<sw>dc IAC SCCIC( ICvCI 8's<>s><<xi (SXS(t>f.tate re(Q I ILS<SL<ng a<XI CQ(dPO<k<CIS buS<ACSSCS Q(i CO<<<nb tA~I (<s ttic <rocconou< ksfcrna(so(Lit ac(M!es
- Gtsco(pc a hntdxsg conspany was snco<porat(4<A 1967 under the laws to Nrcnsecompc<<tson(nail aspects of the<<bus<<scssos Irom d Oetawlrc and <5 the so(c sharcnofdcf of CN4ank. N A beth bank and no(<bark rssfaufsons tf<QI povxfcfrsancLll ~~vsccs and.
>A Irv (rxvn! <pn!(7(afxvc re(fx(ns-Asia, Par<to. Europe Qnd LQ!<n Ama SECTOR PERFORMANCE >ca - u((<(I xs tf>d s((osvi cs<ivngs Hx7h<>> (oan <ok<mes QA(t ke revenue Xl~ hj << S>><< ~~ <<Us I us*s r ru!I r(<<<f>t s n> ~ fs(fs ILlcr4 QA smpuc<<v(scvst in wo<io<vxfc P(i .<(u (i. Qs(fs Custonscs Nut Rnvenue 54<120 $3 10l $1 013'3 4 <<ms(P<<<!Us4((<x!r as'W 5 rssc 25 m Ie<f by Itic (not((7agc<<(nd c(cda E ip<.",sSCS(.;<(<I,<<:t<..tx.. G<<<u!<.<(ff ksw<<<snt<<csf raics helped kricp mor tgagc Gc t r.(c(CEspcnsc 988 586 403 txsan.<<<<n <<<sandtxm Frsfnsorf<Txylassefsmw27'~ lfv!N(sprfr<c Au<<<< v Qs Lsr<F ay (rq ve((4 Ni lrxfilxt<LU Bank xsg s <m pe< tant <fo(ncs t>C r(L<ixids tfv(Nnwyn<(c t<<a<<CA S(ste<ss Ihesav<<V+Q(vlfu<<AS Q<vf Dc~.<<y E spcrise Totai Expcn~ Othe( Inconie IErlscnsc) N'445 2,625 53<614 102 2 149
$ 2.735 476 $ 879 114 <<vsnssxxswxa! nso<kps<tursef<so<k irrcrsax<<f!Ns(ax(at<<<<sf><<(yarns ~I 12) r i <<!>t >sic< N I wit(s tl'u 'u< <tinued >hi(slit 1 ot cl xl >un'Ict s QAÃvQ<g fu ~B(foe Taxes 608 360 '48 69 ta (Q>fc(s tt <(<';s<<f Ik(sd<icf h se.:ss I<a.s(ca(d Qcco<<<its <<scieas<4 to ffSTII<coxaC 5 340 $ 222 5 118 53 r 175 r(s>uxvs Ah<<s<IC<x!t ltd (<ve< nilJiis 'O~ 54 o Ave(rsge Assets t$ B lfs(<<(six 55 44 ll
<'cv)~ I r lc 7;(rp <<lra( w 1 Ns 4 <<Yagv Qss(I vukx(k< arxl rrxated custo<A(v Ri!(urr i <<<( Ax~x>ts Ihf .61 51 10 ilm:ru<<r. Vrr.;<C(r<<SSILl(u<vfbs(hXFSC<O(S<VQX~<<ILl<(k<sseiPCriSC ,'(. >u' < x x'Xl <>I f(15 << <C(<'QS(s WQS'<<i<<<he ((<<at< <<I t(se Crs<>IXS<<XSQ Sf Nit <A Return on Eouif y tyd 15M 12 7 26 . <<'C>>><<L<<<>V. ~ 'P +> <<<<<<< ~ 4'I's>>< s>><s f<syla(il (s fsxyl('c fxupo<t><><s rsl i ref I c(s<drerxxv(st>(cs si'<5
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" '4 a~j 'Fa nr)f'e 4..<.INSTITUTIONALRELATIONSM)PS Last year. re<<ecting corrlxkred xrvestmer<ts in improved ser vice defiler y na Glace<PS <AS<<'u<KXK<lBilljk<XV<5 PruVk<e e< Comfyete raAgeet financial< QAdPr<xfucl deVC~AI, ekPCASCS Ol ACW QcquaseteOAS. CO1uyKL<WA ser vices to txisxx!Ss und iylvcvrrnxyrt oiganjra<Kxrs Qrourxf the world ol ccrtanbusncsscs. and arfvrysc <orex)n ckdianqe jAK<act vkaj<u<xx ial Rr K'1<cons<v<)s c ir A ngs arc der jved from products Nel commercial tean vm<c otts were $ 377 m iten. or 65 bases fxxnts !el OAA Aat;43rn<XXh ttX. V<S<e<u<KX<at Bank and <AVCS<ment 0 uik SCC<orS. Ol the futl yeai aVeragCCOmm<nejat kk3A pert<Olin anrACreaSCO< $ 156 ln 1985. visvtutkxkll Rl lltaoirsl<aps eamcd $ 755 Air<<en. representing me<<On or 27 bass penis. Ovry lad ycai'steve< Over thc past tcn Q2". ~ X<Crral!OVerttX $ 743mnenrarnedin 1984 ASthC . yCarS ACtWA<OO<fSaSaPC<CjV<taqCO<thCCOmmeraatlaanPOrl<O<K< Qccomf<ar<<erx) <QUC jndecat<& <A<a< icveixjes ol $ 377I me<leon wcrc have averaged 35bas s points catacorp con<jixjed to rnaxr<aanits up l5~V'ukcr 1984. W ih beth <AS<etutjcn tt Baiik and <AVjestmnt Bank ronSer Vatrke pc<CjeS in <hen'Ccgnrion Ol beth IXrbfjoand pijVQ!e
. pro<kk.ts con<ntxrtxrg to <hY'rowth W itc otts we<eel a tvghcr <cveL sector write ofts re<tv <jr K) ttre Crx<tevedwcakneSS in Cjy<anrix<uS<ncsdomestcat<y, ConsjS<ent vn<h the chango x rC." avay thc CoifxxatcnrePC ls and ovrvscas. Srxh as sh ppx<g Qrxf energy wblo er penscs were "sector results, the tnstitu<enat Ba >k's allowance for poss b<e aed 1
<8'V hjqher AV<ya(to aSSe<SO< $ 91 b 5OA rneieaSedby 3;VOVer laS( lOSSCS iS main<ax<ed at 60basjs puin<SOl yCar Cnd <OQAS. Ref<CC<ing )Car Wjtt<arehXAOn Cqrkty r!1 209 <<<AS<etutenat RetatjOAShpS the SCCtcr'S Smatter kX<npat<O<iO the Cied 1 a<<OWQ<!Ce Currency COA<en<lini <O CVCeed llie Cui pcreatC target equals $ 349 mitten, dovrn $ 4 Ax<ten from Q year ago Grxx)!Qpfvca<<y ~rpearr~3s growthinNorlh Amenca combncd On a gcographc basis. Nrx<AAmcrK:3's Acl income was tvgher iced~.p' vnthtvgtxy cashrcKrypts inLQ<in America helped too<<set dectxrcsin than the preveus year due lo hxther lees andrmnm ssrons. and Asrafpacjtc and Euiofx<. Mdd!c East Qrx) Africa, fwmaraty due to '. aircraft <ease resduat sa<es Latin Amcijcanne< income also Knproved PP hx)hei wntc Oks and x<cicasedopeiatx<g erPenscs ' 'ecause of vie<eased cash co!<Cclens and the Qmo.n<S iCCevedine Yle ITfre) jrvanoat tnstjtutens Oroutk which operates wrthxr all the geog<a cont<ac< sct<<omen< HK)he<write otfs and increased operating ii
~p<vc regkx<s. recorded a rhodes< rncreasc rn ca!<kngs over last yeac cvpenscs n Asralpaafjc and Eu opo. MKfd<r<East arxf Africa rcsutted i," i... SECTARPERFORlyiANCE, ' inlowcr earnings x< <A W regKX<S Compared to last year NOR Income By Pi!educ! Con(Y(bu(for< ', A<year Cnd.CQShb-mtoar<S<O<akX)$ aj2bt<KXkdOWA<iom$24 btten a year ago The ratio ol cash basis kjans lo total<Cans ~ e der/Cased lrcm 2eTKa Irl 1984 tO 204' i lg85 The dec<Ca~ jnekrdeS IHST<TUT<OHAL<<SLAT<OHSH<fjs $ 765 5743 5 1 2 '2 " thechcct c(5266mjtfennf Argr!A<jncrk+t that was rctuincd lo Vl 't 'e - Ofw<<KS< QCC<ua<S<atuSQ<theerx)O<thekXX<hquar<er Vlsl <ij<Kxrert Barite, ,,'.*ii,; 392 (62)'14) i ae. tnvestnxyr< B'ink; . 383
", 454 289 74 26:. ., AvCrage QSSClSO< $ 72b<teongrCW ). LomPar<Kef to 1984, reflecting Coi>jnueng sujet managemen< ol asscl grl w<h 'n kIASI((u((onat Relationships inatiiniianai Bank :s.i>
'j ~ ' j e je" e,r fSCS 'iai 'jar<'i, a,ei, 'lna e ~ are are ( f<H)l) 'jSI lion T<jta<RejYykje .-ee 1, S3,771 $ 3291 $ 480 '15, Tota<Rcverkre, ." . "..<<S2,542.*$ 2281 $ 261 Prov lrx Poss tire Crrvfet Losses, 374 76'rov lor Ross b<c Cre<kt Losi~, i '74 Ot y.<<*K)E pcrv kirrxrer! Bcekvn Lines es
; ., 2,018 1<381 2 13 1.705 1 373 161 311 818 I
'pera,'iv)E ames ....' '88 '93~ 1,500 '.275 213 161 225 76 t8 e <AeomeBckxe TQKCS .(125) (16)
'e NET <HCOMC A.rvikyr Ass<As<50 <<xx<Va Fketexik ixk Assi!<S 1'il e S 755 91 ..OAQ 5 743
-88 0 85 5 12 (002) 3 23, NSTIHCOMS
'Awyar)e Assjys($ 8 <tens)4 Rekim On Arete<St'4 '.', ~ . S 392 5 ~ )i 73'. ', 0.54 0 64 154 71 '5<62) (14),(0 10) 1
. ~1 gx e e'4. n
'e Re'ex i AFr>Y<frku 309 212 <03) ' ": ~RetumenEq<kty('4 a 13.8r 159 <23) c... n IKSTITUTIONALBANK AVERAGE BALANCESMEET
- e K<u<K!A t< Bar ekxv) <sock jets r!airxvf $ 392 m t<Kx< en 1985 rid~<
tan in ky ~,vjr, i n <NÃn trje5454irv<<<<jnearnedan 1984 prvnrrrxy 'i\ac e ~ J ~ ae ~ a l 'r ".. OCCSMSC<< ikISjn ikx! Vj <tie $ 374 rrjt!cry< feiovanexxl tex posptA. Crirdif kjSeer.'3 rra!4lrk'Nfxi Ltabltt<h ~ rjsvj~ L <985asbxr4xr jed vitii$ 213nktixjnin 1984 Return oneqkk< 7 was i
<36'4 conil<<lii!dwe!h 159 a kx tire f xx!r )ear ni fed'kt ri.ir Aajjr L>r 1985 as xx<KX<trvfxi the ace<xrpajrrenq tnbre.CQ sh (L Due liom Bare s
-3 3 ~w".O<>ar jere ~ ' 80 vvns $ 2542<rklrerx> regxinxve<enqni'f'ea(yew<<rover the $ 228I mar<eon Othry 5 7 O<hcf <fxentare<yrrxetcof 4 '6.1 4 r 'roan see)44 ri r rlrkvlxi <984 lxvv fe<erv) trnjrrgqajr aa<ilssa wK)e ianry. Ct kir eaten <M'ly< n! v< IVjr fix"<S t< Inly) fyrykiY< tees Aiv<Comnksneeons. a ~ ~ ~ e ~ ' 5762 a' " ~ " ~
$762 ,iixl XrxX irjr XKX!VjaXer~-XKkXkri)axe<aft k QSOmVV< isa<Os Qrd ~e , r irfrekjjet'jy:iy'rytiliiicrentfret act<<i,'Axyjt ili eker ae ree e. ~ iir e e
'e'cere nnu, r j inn ra aarrareneejlnaer j n ~ ~rgxy;i<xvg j!.pr Asu kx 1985 el $ 15')0<ivilonjncreascvf tY7 lgbokei iaernaei'\ne nn ie jeer e na e l e e e n ~ n a'r k enaerr nla
RECwkkrx4 <<Wv 'birr:"' RKlCBEE$K8 BANX)NG 'NVESTMKNT tnvcstmcnt Bankx4g al Cueor p encompasses secunl w rrctrvr~ Cral adV4srXy ~ed conlnbulcd less than 5'0 ol total earrxngs.
~agmxvnatety IP>> WIXIC44V)ture Cap lal
<<Q~i brergn exChanqC and maney market trad ng, VenturO Cap tat rnVCSI From a customer perspcctrre. a maFx por len ol Invcstnent Bank ment. nrcrct lant hankrng. Irlvcstrnct4I marrar)cmcnt. rtsurancc. (rust eamngs rn t985 came from products sold totnstrtutenat RrVatensh4) Zi'I and custodkal s~.<<ccs. and cconome rnkxrnaten set vecs For trrc OrrtemcrS ThCSC prOducts rnckrdc forcrqn cxchangc and h4XI(yng P<<k/v. Invcstmc<<4( Ban<<. 685 was a year of slrong growth xt anrncrcasrngly products, fxtancrat advrsory ser vecs. dctx products, rnvestnrcnt man complex nrarketptacc I Ict camegs ol $ 425mrtenn xcaMd 241~
'>>vr agCment, and pOr(IOte Serv4CCS over 684 Europe and Nor Ih Amenca each contr4xrted I'eographically i44, Revenues rose sharpty tO $ 16 txtten, as shown vl the accor:4)any. approxxhatety onc ttwd ol trvat Invcstn)cnt Bank nel <<4comc. wtxtc Iwti X4g labte., r x nsc was largely the mull of increased secur4eS tradrng LCIXIAmer ca and ASa aCCcunted IOr the Other IIXrd )P pcsrfenrng and distnbuten actrvrbcS as weft aS fxghrX fcru4gn exchange and money n:W rcvenuCS Rcvrxxjcs trom tcc based 4SECTOR PERFORMANCE
~i< >> actrvrteS also rOSC. parteurartyrnUS Cor(XXCICFx4aree. and Mergers <and Acqu <<4ens 4rtx4ture Captat repor lcd lower earnngs compared Ji4r, <fwrrtl<<4xx5
~ 1945 l9sc VAR Vrrth 1984 RCVCnueS rn 1985rrrekrded AMBACIOr the IXSI tX)4C Rcrcnuc,,, .5'lr589 $ 1.241 $ 348 28 .Opcratx49 cxpcns4is xrcreascd 37% over 684. rnknc v44th tnc con bnux4q cx pansen ot tho global busrness actrvrt y Approxrmatcty $ 35 Total 4.,)cratx4r) Expenses bcomc Bckxe Taxes . 803 TBS, 50 I 654
".16 132 37 0) ~rtirl nxtten ol the rncrcasc was nvatcd toacqursrtens rn As+and Errropc, ltsylr(colt!....S 4 5 $ 343 - $ 82 24 V44(h ad5tenal amcunt S expended far busrn4 ia drmbpment. leCh. '~>~<<-ii notog)r and other programs A~gc assets grcw byFJ'k prxxxpatty Average Assets($ B ttens) ., ~33 26 6 23 stcmrrxrv) tiombusrrcss cr parxsen x) North Artxxrca and Europe RctumonAsscts(Q... %~ 133 001 R4Vurn Cn a~(S and return On Cqu ty V.ere abOVC the COr pOra'.C tar RcturnonEq4xty~...t 33.5 332, 0.3
~ggJ AX r$ r>>r xr 44rtMcgr gctsarfdmarrpn~fxghcr than f984 4 ui Because ol thc drvcrsc nakre cl the Invcstn4cnt ()ankrng busrncss, mrs useful tc bok al the rcsutt S t;~ funetenal actmty as wert as by I .'i'~r xrg ar4d posrtenrng rn brcrgn cr4dtarxJc lnoncy market and sccur4eS rnstlumelss accounterf br agxoxrrrx)tcfy 80'>> of totat HO nt Bank carrxngs Fund rarsrng br our custoners and tx4an iwNw-.= OTHER iTEMS Other Items * ~ ~ ~ As a result ot thu chanr)CS dcscnb td on page 7. cturgcs herd at thC cor porte Icv4V col Itarn
~ <<ir ~ rn4ir r riii4 I945 x<<rx vxrt Total Revenue S 2$ $ (79) $ 107 S The credit loss provrsen that represents Ihe txxid up ol thc cred4 Operatxtg Ex pCnSCS 548 116 32 28 l) ai)WWar ee tÃyand that Charged lc Itre busrnCSSCS Corporate Credit Loss 0 UrvAocatcd cor porarc stall costs Provrsen 235 68 158 ,4. InCOrnC BCkXe Tax<<iS (346) (263) (83) (32) 74i>>(I Otr4cr 4)rx poratc rtcms x4ctudxrg crxtax4 star 1 up actN tes NKT IIICOllt $ (0 59) $ (129) $ (30) !23) r)4
; .hc sectors are rxx charge for thc<<e Cems wtxch ref lect cor poratc Aver i)gc Assi 9 i$ Brtfensy E 3 (I) (33)Ic4ct dcc <<er s ar4rf wtxcrx il aBocK'.cd. woukl detract turn orx I'>>i lo ixrvawew unrkvstirnr tx 49 ot hl rrv tnc core txrsrrx'sscs are per &nxr49 c<< ic ~ ~ rr ~ Other toms vwxctowrx x) t985comparcd to f984 prxn nrr asa J4
/ rcsuc tv s)urbc~ totxxtd tfe cred I asowancc fern 88 t p~gC basrs fKNgsro )06basr ponts v4 i syft )~1," F4T@44)x QF xi W) xtr. gyCr, ft r 42
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~ ~ ~ > ~ ~ . ~ ~ I ~ ~ ~ ~ ~ I ~ ~ ~ ~ ~ ~ ~ ~ I~ ~ I ~0 I ~ s ~: ~ ~t ~ ~
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/~Et S )' 7 E M E N 7' F I N C 0 M E- A N A ' S I S %Rt"cT-W".:-cC':"~ I ci"x NET INTEREST RKVENUE CREDIT LDSS EXPENSE AND ALLDNehNCE 'n'eta TAXA13LEEauIVALENT OASIS GteOrP IaS CcnbnuCVfrtS Percy Of rC!!CCtng Qff kneV A banhsmS .~ fcjJ) .f~ICara nsc n consxncr IOari voktmcs cxopctrcd a e current eainegs In 1905 Ihc focal crcd:t bss povrsen was $ 1,243 25~ eaease e ret rntecst fcl,cnuo ova 1984 Average nxlhcn and ectudcd $ 962 frxffen ot r V loan losses wbh arkfng px'fen xxac< carfxng Qscct vofurne ot Sht06bffen e 885 $ ?8I frkffen tO CteaffffcVartee In 1984. thC IOlal CredabSS pna~sen Ol e.gtf was iip LTh over '.te pcveus yea. In t985. total net $ 68 rlhLen covcred $ 507 frxsen ot nct loare bsscs v Ixh Qckfng $ 112 etenw revcviuc of $ 56bften grew Sli baen cn the nbtfen to Iho asowance. and e 1983 tfe comparabfc amounts wee c<rgg r year to yeas corhftartson Tho vofufne ~~ twas Qccompaned by $ 520m flesh $ 437 rixfhen. and $83 mffen.rCSPccbvety The acdit hss anne .aso n th Arv rate speed-39fyfhn 1985 vesus 36yshn afbwanco totalIM $ 1235rrxlfen at the e idol the veac rc'fcctng tfefh ".
'v'g 884-rcffcctng . gencral dccfno nUS doaar etecst rates wfvch of:nfal loans and tease feancng hi 1984 Ihe antoufss wac $ 917 ytekfcdbwcr tundng costs The'tmproved net rate spread was also rrxaen and 088y and e 1983, $ 771 m lien and 085~ respectNely r.m 'ffcctcdby Oio bwcc drag from cashbass bans Th dowfrward trend Ne commcicut loan tosses hr 885 arnounfed to $ 377 nxffen. Pi++g n avClagcntcreSlrales cvtdcnccdlheughmosl ol 1983 wbS fevaSed compaM tvth $ 221 nvfhon e 1984 and $241 fAJen e 1993 'e."~re n thc Ixsl tivcc quailcrs ol 1984 Interesl rates hll shar ptv e the lasl Tle $ 156 m Iten ncrcasc n 1985over ths pleveus year reflected fhc crS~>>quar fer of 884 Qndienuecd refafrvefy slabto throughout meat ol Potshetcd weakness neetavtedustnes. suchas sfvppngand 885 Tho ne mtc sprcacx, up 37 bass poets over test Yew widened enegy both dancstealfy and ovccsess. In admen, write ofls related n as a 7shnse eterest revenue reve than offset a yto ecrcaso n to kxagn deb scr vtceg pobfcnu conteucd coatee carzleS. The e inlCfCSI expense
; In 1994.Q 12%vofumonaeasewaskfdbyasgrxfeantnson CCASCXfVVlaanS. and bar tta!Iy Otfse'.by a nafcowe nel fate SPead, rate ol nct banbsscs as a pL<cntagc of av vage convneaalbans was 65She 1985comparvuwrth 38Shin 1984.ariel 39%e tgrt3 The ten~as aveagcol ths rate is 35'fh Rjcovfv mof $ 65fnrffiun;,tx IO Pus \ flirtXlteest reVCAuc UP OVC" Ihe PfcVeus year ~ I, e 9 cfxtfen ovec the IXOsCtS year and v,ere deived P'aeafefby$ 1 I 4 slurp nse e avaago caisuncr hans n 1985 was dlrven peunty from canmenxd and edustrbfharis.. n,1983 rccovcvics pnrt Qnfy by a $ 99 bach eacasoe domcste ccnsurfer hans whch amcwtccs to $ 51 ffsrfen These strong rCCOvcriOS are an +deafer of s WQS PnfxbPQffy nmor Igagc and crcchl card acbvttes. The ecn asc n CAeorp's conservative write otf pohcy and htregenf pOCOSses to
'afd fccctvkbfc vokrmc wQS fuefed by afl ex PafKfed custcxiicf card fNÃlfrcfQAd QSSCSS pcbfen Cfedet SbsatenL r .Lc a , baso conibned vvth confeucd veorous ccnsumcr spenerg Ncl consumer hsnhsses for 1985 am v xxcd to M5 nvtteih ci>> Demand rCmaeed tvmbr n~tte ffuACeg can CAVVOnment rctfcoteg a $ 2gg rrvffeninaoase born 1984: 1983 net fosses hWef nteCS rateS InrPOVemcent Wa S targets CVidenCCCfin, Ol'eteaffy amcunfedlO".196fih~ NCSaedshscmSQSQperaVitagecf ' ehe NeW YOrk branCh SISlem lhe SQVngS and hanS and the naten. ~ consurevtoaruwee lcd~ i cm,7tt e 894 and 79,o 'veragc f'v"'-'.4 Vexfri maigQgo ACIWOrk, . ~
- n 883 Tfe nigher fevel cf na hanbsseS e5OC tS fhe Slxft n tlxt .
~e
'isrvv lAtenatccnarttt Strcng lncney marktrt pOS4eatng prX4S IA l atncn pathic toward a 1vgfiec propa ten ot aeda cad rucevabos Gccht overseas hcatens. thc cbag trom cashbass bans and mc C-M pathfeshaVC a IXStoitCaffybgler lOSS OXperenCCL partreu, e posrtvo effect of the dc~to n tho US cfoffas on focal ccfnrcncy ta sly n eely yearn ol dk ckpncrs Over 3 mrstcn addsenal aecht eamngs cxxhrbutcd to the growtn of net eral revenue above the',, cast accounts were Qddcdh I!fb5 t poof year s loiat. AS GSCOrP haS COASrsfcntfy matlsaeCCL IhoaCM AS atfOWafCe In 885, GteCXp Ccntnucd tOmaruge the eteL<l SenabVtf y Ol the n ts. essence. an albcafen of casrfal end sa~ triseme pur pose H5 cc qi'Wp'~91 Pcl I lcbe lhfcugh Stregent WcrkfWXh fate 9 3P IcfixlS Cn the lntsnuteh Ot tne repV~g datec bet WCCAQSMIS and e~fXxa a!SO takeg eto account theet!cas ol Aon tunds cctated ereest rate prociucts.Ncw t<~ safe lendng is bc~ match funded at hvaabfc speeds aS aa CQPtcl-tO abSab any tOSSCS ftss COVeed by Current earnngS The Comprcrhv ol tie Cuflency artdfcdeal Resene kxmafty rccogntf cd Ih.s posten e thee dcfnaens ol pnmary Qnd lotal capSQL linen um -
~ ~CCenClmlCnCncegetelnCCnneeWICC i:e cvough Gtcap'b program ot tsnng fixed ra'.edctx Rctrcctx.sg ln vugcvncnt s stlateJ f Io coA'nc Ihe esMu ten s xcf '.Csl r iic yete ncttcd e plCveuS arvtual repels that axtsume banbswe ale F~ pxltis+ to tne srtcvt4emWcapsffofnc~ hng term. A IXCdCfabh COSI OI Pae tePaft tg e tnc COOS Sma hfedng gaff was modcsrry posbvo at year cnd wrxfc long tern rata cx posurc and that tl*srxxidQM oonSavabve lo Charge such pedctabrc etenaienaiiy Was alSO mOdeS( and Ccntcn JediO be dcxerSC aaOSS ffuny cuslcnces b~ IO CarnngS aS ihC CIVCCtry retaredr~e are feCOVtWCd Theckxc. Vtc ccxttnue lo favor a aungc e lxcscnl Qcl cxetng Cu VrentenStOPernctuStOCI arganCOmnhr CfnWnieaCdlt hSS expense ova oe hhof Ihc bun puf tbfe nstcad ol sccadng flirb ~cccj NET RATE SPREADTAXAGLEEOUIVALKcSTBASIS exPCASC al tfe trav;. Cachbanis booked. Ttvscnafxle wOu'd 1st s HBS bcllcr match ConSumer loan losses against current leven sos. ~ I
~s" In DrAitcsfec Offcccs 4A8 379 432 In Otetseas Offecs 3AS 344 328 TOTAL 3.98 361 3 74 ~ ~cx+ e e I e.S 44
'l l grÃee4j k t t ~-tc~rcte- n ~ cc vega f @~its v ch cfp v ccc,
'%>>.", .::~-',~-..': ',,"'","~%;.'Tk";-".~iK'"'!s:~g
>> '.1 'x "4 tp>>V~ FEESo COMMISSlONS AND OTHER REVENUE other assets bi 1983. tte lolal sncksded a $ 32<<vilen gain on a sale ol
~g Total W" comsrxssesis and othsv rwcnue ol $ 30bttenin 1985 Hossg Kong real cslalc. fjnsns oA venture caplal investments ol $ 31 sncscased3 ~ or $ 730 m lien. over 1984. the lotalin 1984 was up mllen and $ 34 m acne gaes on sales of secufsiesrecesvedin f 4CJ mt~. or 25+ ovsif 1983 The improvcmcnl in 1985reIICCled sctccment Of loans etsofO per kvmu":cc K as revenue bncs-lees and commssens, sccusstes tsadsrK!. Iorcsgsf exchange. investment scawtes lransac bow>> and oil.c'reve<<sic. Other Reve 1>>te I'iw~ and conKsxscens increased $ 437 mKIen. or 26Q lo $21 ~Items.............;.'rs bllen KI f985 fern $ 1 7 hitters Kt 198s'deduat Banking rzrd product ' "' '- 'tr ~+a~ acbvKzw -Gbbank vs and Gtibank Master Card-cont<<buted moro csan onc Irx<<I of this 0 owth uscseased promote<<at programs combrM wah cusstxfued strong domestic con9K<<cr socfkfeg ' ' ' Net Gains onSate70 spos tenet Assets
$ 07 91 97, -!'~', ~P ;custisfPef base expanded tnsbkKenaf Banking pOsed an i<<Crea SC in lc w pastseutasty An thc strength of &ter of credit acts vKy Thc <<sc sn tnveumenl Ba Y~ b Other TOTAL .. ~,,,........ B2
$ 280 $ 197 14 (8) $ 185 feusant cossnmsse<<swassustasnedovcfvafeusbusinessactlvK>>IJ, OpERATTNGEXpENSE Totaf opcfatxk7 cxpenM in 1385 was $ 55 btlen. an ecrease of $ N61mtkofk or 24yi over the $ 4 5 blten fecoidedin f984, lhe f984 ~ . over 683 was pfrsunlv aluibutabte to improved crc Jit casd lees in i, Individual bade retain/ lees in lnstKutenas Banking. and, r m m .wKls rcvenuxw ol $ 210<<xtten. an incr<<aso ol $ 67 mltesk or F%, over R~n 685 Oonestic operalens are p<<ma<<ly ccntcred on Ifadvktin US ~t~ ew'~asefs 9%~thnkklhthct adegofkkegn .Nxl picmsc: and L",Ifxpfne>>Kexpo<<sf%werc $ 961 mtbon lor 1985.
~CO<<I<<butOts lo Ihss s<<Crcaxc Globat 'oreg<< cxchask7C rcvenuc. from both customer cor Am vcxaf tsar<<oactens and tsadxsg COAtsnued IO bc dsvefssfxsd a&os" many INCOQETAXES bc>>brig centers Foreign exchange lese<<uc of $ 358 m ceri adva(scfsd Gbcorps cllecbvc lax rate was 418yo in 685 corns)arivswKh 424'o in 5 NO mften over 1984 retsccbng thc strong r~s n eoidsd in Asia and 1984 and 465. ~ in i983 T!ie lower rate in 1985 was due pris<<a!sly lo Essscpc Itic reduotnninNeW 1brk StatC and Gly deICrred la>>OS fetXfedlO Irsvestment secu<<bes transactens f .gistefed a $ 59m Iten Aet gars ICVefagcd tease sransaclens i'ori! n I9Ph. compased vath Aet garfs ol $ I6 msen in 1984 and $ 11 m tten sn 1983 Gains on thc sale ot snvestsltcnt sr~Ken managed by the IsusKsesses e bosn 1983 asxl!984 frere sh~ o<<sct morkvafe Io~scsresul'>>vf born sah.in the cor poralc Isostlnfe In 1985. >>bsposr. bon ol secu<<tes rcsustcd in rc< garss scakred by borh the core bud<<CSSsss and tre efvestrsent Porllole mai aged al the corpcfa'e kwet Other revs vkse was $ 280mltenin 1985 nmpaied van $ 197 in
'GsT4 and $ 185 mssenin 1983 1hc strong improve vncnt srt 1985 was PrsnesPalty de<<Ved from fIains realised On SaleS Ol mOr tgage POr I bleS aAdolhcf assels. amoufKsscceNcdinaconuactscKl~cmerKand garfs on safes ol a>>orat t ends+tear tease resrksals Gavis on the sales ot vcrKurc captal rid.'stments amountskf to $ '9 msenin f985 tn 1994 sAhsv revenue eicksded gains on I!ic ~a ol venture capKat sffvs~am ws of $ 49 m lien. a $ 12 rreen at ter ta>> gain on the sale ol an 'tlo h ' . <<ll iiafe, a $ SI mt ten qavt An the txryoack of tfx! ofxpnsatxtn's ,::~sg4'onver btsfe AAICS>>sv1 sd~riS On Sak~ of real estate. <<erlr~ya and 45 , ~ " o cE,p, ~ ~ ~, ~ ~
~ ~ ~ I ~ ~ ~ 4 ~ ~ ~ 1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ' t ~ ~ ~~ ~ 4 ~ ~, ~ ~ ~ ~ ~~ ~ ~ ~ ~ 1 ~ ~ ~ ~ ~ 01 ~ ~, ~ ~ r
~, r ~ ~ ~ ~ ~ ~ ~~ ~ ~ ' ~ ~1 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 'I ~ ~ ~ Ol
~ ~ ~ ~ ~ ~ ~ ~ ~ I ~ ~ ~ I ~ ~ ~ ~ ~ ~ ~ ~ ~ I \ ~ ~ 0 0 ~ ~ ~ ~ ~ ~ ~ \, ~ 0 ~ ~ . ~ ~ ~ 0 ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ P ~ ~ ~ ~ ~ ~ ~' ~ \ ~ ~ P ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~, ~ ' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~s ~ ~ I ~
~ ~ I, . ~ ~ I ~ ~ ~ 0 ~ ~ ~ I ~ ~ ~ ~ ~ ~ ~ r ~ ~ ~ ~ ~ t Ot ~ 0 0 ~ t ~ ~ ~~ACCr+~'CV4~4~44ÃtgI'WB>~icy '4 ~~~ )e+ qadi ig~ ~ ~ qI'Iu 'yr, a~ a ~ ~ ~ ~ ~ OO ' ~ 'w ~P ~
~ ~ ~I ~
~ ~ ~ ~ .~ . I ~, I ~ ~ ~i ~
~ ~ . ~ Ii ~ ~ ~ ~ I ~ ~ ~ ~ . ~ ~ I I ~ . \ ~ ~ ~ ~ ~ ~I ~ l ~
~~~ ~ ~ + ~ ~
~ ~'I I< ~g'{ IF&,r$
<'W <WW'l >I CONSOLIDATED GALAN<0KSHEET aTICCRPANOSUBSIOIAR<S "I<4~gI. DCCCllbCIIas OECEMGEII 3t
~ <ttltirtt\IJ r<II<l >'i * < ~taas 6{)4 Aaseti Cashand Ouc eon Banks . . d ~Cd $ 3.528 OepOQtS at lnterCSI with Banka 1+093 10.757 Intestmcnt Securrt>>s (Market vakro $ 9892 tn 1985 and $ 6387 in 684) (Note I) . 9id47 6.522
%adktg Account ASsets dt40d 5,145 Fcdcrat Funds Sokt and Sccurrbes FurchaSedL tdcr Resare Agreen>>nts . dr34$ , 5.141 Loans and Leas. Frnancktg Net (Notes 2. 3 and 4)Comrr>>{eral(Net ot unearned(sscovnt ot $ 483kt 1985 and $ 4IOin Const..t>>r (Nct ol uneamcd 6scoce ot $ 4,4(8 in 885 and $ 4524 kt 1984). 1984).... ~
. . d ddt%72 58.799{Sdtdt 5 42.66'I w<~P 'Leasefrnanong . 2AOQ 2.164
'103.6" 1 Loans and Lease Frnanong. Net ol Unearned Otscovnt ~......,...i... 41%dr490 ~r ancetorposstyeCrcdeLo..scs... 1. ~, I yt7)
~ TotalLoans and Lease Frnancrng, Net .;.!'. 41$ ~ $ 102.707 Customers'AcccptanceLrabkty........ '. ! ~OPO 7.u %~~Crt. FrcnvMs and Etakpment. Nct (Note 5) . 2,140 interest and Fees Reccrvatkt . ' .". ~ ' 2rtL)dd . 2.362
+7f~ TOTAL...... .." "....." ..
- i., ~ ". ~......., ." l ...."."....".',I dt~ '150.586
." {ld 40702 ~Nonlntercsl BcaragOcposrtsrnOomesttcOII>>cs 5 8.111 Bear~OcposesinOomestcOttccs...'......'...,....,:.;;". )).'r.,." dO+44.' kttcrcst NontnterestdcarktgOcposrtsrnOvcrscasO{tccs ..< .',;.... i... ',..... ".','.... (,";:It ,
.".... -.,"... .',;. it',t: .,34.535 2.807 Interest BeanngOt~sktOvcrscasOttccs..., MJOcposes .." . '. -....,,...... '... (',,',".,
'..,...',;.I",~,4104+50 Str300 '44.896
$ '90.349 I3)... 'I, ~.......... ', ...., .'.i:," ; I i ('., '028 ~dr59d 7.970 ACCCptanCeSOu(Stanrang . ~ ACCruedltiCSartdOther ErPCnSeS(NOte Otl>>r LiabM<cs Lortg Term Deut (Note 7) '
~{anatcdCapnatNotes(Notc8)......, .RedeemataePeterredSIOCk(NOte9) ~ ~ ~ ~IL ..., .:= .
..;..".".,'..')."',". drmt ~ ~ ~., ~ 'i<<<i ..t.', -.'"'."'.l;-:",,;. h'~ '; '1 dt<t'ld I'0 -. 4~0 '2993 3.741 1.649 Stoc)t)to(deca'rttt(ty fr~r,gFts ww Common Stockl$ 400Par)(Note 'll) ', I . ',i.;.~ .,849 M6 Issued Shares 142265.429 et 1985 and 138970558th 1984 Svrpkrs Rctaned Earrkngs...,.... COmmOnStOCkin Treaty atCOSt , . ~ . ~........,'. "...'. l"... i~,'! i, '-" (375) SHOO 958 4.637 (365) Totatstockhotdc s'Equity,.......................'~...',' Shares I2.888 539 th I985 and I2.702.)61 in 1984
'7,705 5 6.426 'ltt alii~4% TOTAL .... ST73,597 5150.586 kr&lhggw<tt vtlititw<LLIi<Lit,I rtt PIP4 St 0 tt<t 0 t<t<{roDIFforrtt WILD t<l<~t<tt \I I 'A" ~ NFL~'lt{ I t<<L+g tI<<
'L< .. 4 <.t.'t 49 ~4 t<LTi71 -. It. I+ I i
~ r9 I
<<evt .W ~g<P X'9 vv 999 9 9 vv9 ~ ~Batancea(Begvrnvrgd u'0 9 Protested 5toctt (Note issuance ot Stock tv'ees Purchase and Retvement
~ aLattcrarcttoof %7 "tv~ t MJ CONSOLIDATED STATEMENT OP CHANCES IN STOCKHOLDERS'OUlTY, 10)Year...: d Yaata.... Stock r r....... -............... CtTCO((P ANO SUBSrOtaRr ES 0 840 575 EtAt5
- 1984 $ 540 100 $ 640 Sf)a3 550
$ 540 (10)Common Btocjs(Nde tt) BatanCe at Begrvrvng Ot Hear . 556 $ 549 $ 542 Shares Q8970558n 685. Q7.15285rn 684 and Q5525,454 vt 1983 issuance ot Stock under Savvvgs hceeva Stock Opton and Stock Purchase Plans and Ginversren d Converted des (Notes 7 and 12) Shares 3294871 vn 1985, (817743n 1984and 162U61 fr 1983 MLAttcttas otto of Yean Shares 142265.429 9n
. 9 . ~....,......,....1985 Q897955S rn t984 and Q7.t52815 n 1983 E 589 $ 556 $ 549
'I Strep(tlo Batancoa(Beg~dveas...Preferred Stock issuance Cost....
~ '..,,........tssuance ot Stock under SavvvgS fnCentrve. Stock Optan, Stock Purchase and, Eu~NefncentNeCompensatenptansand Ccnverscnotconvertese Ndes(Notes 7 and (2) .. 4 058
'07 l9)S 911 (1) 48
$ 875 (10)Gavt OnPurdrate and)tet vernon( SatV<<99<<VV<<tvrm99, Ol Preferred S(OCk
'............. 9il ~,......... . 9'l,999 9 999 9 ave(9 '. gp-" ~ I Rvatainod Earnings (LL'ance at &~rvvvvgol Year 'Net Nvcome r'ast: On, ttenrts Oectared 9 vvdudvvg preferred dnnaends ot $59 at t985, 849537 995 $ 4.129 890 $ 3.579 860 1985),...... (353) $ 56 vn 884 and $ 33999 198K and redeematae Peterred dnndends ct $ 4 at 685, 1984 and 1983) (3'19) (271)(63), (39) agg@ I ttaLAttceaf ettDOvv wrA ...,... '... ...... Fertngn CurrenCy stan>ttven(ACCumurated ameunt d ($ 991 at OeCemoel3L IO
$ 59300 $ 4 637 $ 4 129 s /- Common S'h InTreasury, at Cost 9 &Cdance ar Btvttrnvto t<<ve'ar 8 (385) S (358) $ (181) ~t~e....... 9 12 tK 161 vt t98s. 12577465 vr f984 and 8303810 n f983 s'. leasrf v Stock at Cost (to) .(7) (177) Shares f86375 <<. f985. 124696 n 1984 ani 4273655 vt 1983
~ asaatca ~et<<Dof Yeatt Srrares (2.888539vn 685 Q.)02.161 vt 19(taand 12S77465n 1btat Stockhotders'qu(ty I ~...... S (375) 04425 $ (365) 5 13581 8t5 ~Barasce at Btv)avvrvgof Y,'ar ~ 9 ~ $ 5 771 $4 Char vgeS dusvtg the Year Nel 19330 655 956
$ 4LANCC af Clto Of %Call $ 7,765 $6 426 $ 5 771~9
'etr>><<rsr>><>rvwvv~vvvlvayvvta rvrtv>>wvvwyurvvvrNv<<<<>>vvvve~ .g t Ar *%'l 1<< r+<<\ ~ ~ r ",c . rj~."~ ~~~ps: 'JR CON SOUDATED STATES4KNT OF CHANO ES IN FINANCIAL POSITION OTICORP ANOSUBSIDIAHrES rse4 . Is83 Fttnda Prov tded kkS InCOmO 8 Odd S 890 Increase n Ocpos4s 04rBS0 10.555 3.256 Purchased Funds and Othrtr Boroovrnngs 2+2d . 2.091 Long Term Ocbl ap20 812 1.655 Subord~cd Cap tat Notes 1,649 Prelened Stock 575 IN 540 Decrease rn \ Cash and Oue trom Banks and Dcposas at Ireerest one Banks . 1.149 141 I . 822,530 511 246 ibtsda Uaod CaSh Gva InCreaSe rn ~ OCCtared 855 S 319 $ 211 . Cash and Oue lrom Banks and Dcposas a!Interest wdh Banks SJRtd kxestmcnt Sccur4es and Traranq /account rkssets 4r388 2.043 1.261 ferial Funds So'4 and Sccrrrees PurchascdIPecr Resale Agreements . 1+02 1.545 304 ji.a," . LoansandLcasc Frrrancmg Nct 0 +557 12.424 3 392 Prcnrrscs and 6 OujpmrW, Ncl , 404 29 I 296 4i Vff Dixrrasc rn Prrrcrrasia Frrnds anrt Otter Borrowrngs, 558 Qtw~ Nct ~ ~ 'I, 624 370 p'<r~i; . ~530 517 246 '!6 452 in ~~ Jw ei~r~.>>j>>rr>>>>isa>>J>>I) rauj ~ j>> tir>>rjjj">>>>>>>>'>>urj>>>>>>r I Wgj >>Suj '~{+QC , PT'%g rr ~ ,,jf ",.~~r('I ~>>tj .iran I A 'j r@>>t .If%jr 51. I 4 u cCr gf j j 1 rpe%~, A$$ et$ Casii arrd Ouc )rom Banks .. '.i S 4$ ,584) S 3.138 Dcposrts at Intercsl (N tn Banks 12 602 10.489 lnvCStmcnt Sicuiacs IMaikel vakrc $ 8596 '985arid $ 488) in )984) Sv347 4.915 ~ Vadvig ACCOunl ASSetS 2(725 2.028 ;Pj4~ Fcdi~at Funds sokt and securrtes Purctiascd Unde Ri~ Agrccmcnts J V ~ JP 11,S12 7.588 sQ ew I.oans aridl.ease F~(anting S 77,933 S 71.568 Less Attoviarce toi Poss tte Crcd t Losses (620) 1552) (1,930) (1.641) Loans and Lease Fvancng. Nct O'5v377 $ 69.375 Customer~'cceptance L~ey, . = . Tir472 8.910 andE~. Intent and FeeS Otner, ASSiSS r RCCC(vatSe Net l ~ '9 4 ~ i ~ s. 'Jt 1~1 1,984 +11 9120(E)50 3, ..1.779- ~ 1.548 '.669 5 I 12.439 4 ~ I 4 L)arbllltles ( ~(hga's7P~ Non tnlivi~t Bearvig Oisin Oomcstc Otlccs S.. 5)PTS . $ 7.52t )re(, gQ r Interest Bear ~Ocposrts in Oomcstc Daces Non Interest Bearvig Iritcnwt Bearing Di~s Di~s in Overseas Otlccs vt Overseas Ottces l 4* 27(280 A%12 51(C30 ", '.7- 22.652 '4. ((sI E( w~ TotalDcq)os ts Purctsasic Funds and Orner Borroviings, AcceptanCCS Out Sfalndvig, i ~ i ", ','a.:; r "~ ~ r .'.( S 01(610" ;, I ', . 1Br227 ' Tre71 r . $ 77. -, '8.991 13.967 ACCr WW bri~ and Otr>>r &penSeS Otn v Lab M~a I ~ 4400, ", 1827 Long T(vm DiM 1.831 , "I r ~ w,, ~C Sto".k)to)dec'$ Equtt)1 INore I8) CAP4at StOCk IS %00 part Outsrar vt~y Snan~ 37534 553 (n 1985 and 1984 i S '- '751 ','751 Sur p'us 1(492 "I 'I 078 .pg: . Ret~dEaiiirnl)S ~ - ~ II ~ .'(792 'i 4,489 Total Stocknokt(>> s Ertu ly i S 7,037 $ 6 318 TOTAL St 30(550 5 I I 2 439 I .vf uga<<enreewr~hhhr~vprLI I >wtr r&f rt, r, e ur ~ ~ <<1!arIrr( ,,I. i ts ~ ~ ,i' a 52 "gjf. 43. v, r'.'Q ff >>a ~ / S T A T E M E N T 0 F A C C 0 U N T I N G P 0 L I C I E 8 r'>>J1>>~$ IASIS OF PRESENTATION COMMERCIALLOANS rx'orrs<rrk'<fcd fr<a<ruat sfdt<vrvvtts rrckxlc lfrc i)ccour. s Cc<f)merc<at bans arc stated al ther face amounl, net ol unearned ot C Iso<p as vvtrrrrrv ovvned srbsrlvvy C I t)an4 fa A. a<vr discouAI th< c ArJtorrty o<vr)ef sub</<ad<res. at te the ernv')>frond when<I <s ddermncd as a resua d cvakx)tv)n procedures ra ttie 1; Jft mate<)l rlfeknmf)any tran>>~f<OAS payn)ert al <rteest or prncr pal an a camnkvcrat roan rs <Lubt tul ol AffirL<tris v<ri@A <<re 20 v la 50 ~ ovvned arc cinched unde fhe Cdbcf <ark the ban <S pfaCef OA a Clu) IAO<raCC<ua<I !%ASS tn ar<r Ca!/C /V, / c<arty A1<.ftlrxl Af QLlxxrllrt<Ii1Ad thc pro <alii stLI<c of IALVrico<Ac vvhee rnte<csl or p<nop4 rs pasl due b< 90 dlvs o< <1)or<>> Ihc ban rs tk)L!Irs r vr<xfL<<Ir) offr<v <evetuki ncomc t<<)m nvestmerts . auto<nafcaffy ptackid on a c1shbasrs crest)CCINC d ca<lateral or othe ~v' n km Ih)n LII'i i ovvned cr)mparves <s recognL<cd vvhen drvdercfs lavo'able a<aspects Any nfkvest accrued anil loaA placed <v) a cash >>) are nakvvL<<I, bass<steve<sod Jnd charged aganst currcrt eamngs kseeSI On -'1 ~ Cxvns and losses on <4'spostr)A d b<<<Aches subsdLues affIL)tes cashbass loanS <S the<<i)lfe ndudedn ear Angs arty to thC dr)doll)Lv Lvarfy rim'strrrerts fr)cfurfng vcAI<rc c'!ptat nvtfstmert/>>I er tert actuaay <L<<A<<ved n cash arrdLIL)<<yw kr AL)n<yvn<vrt's Lwtcnafc ol pLvmanert cr)parmert n vJLx!tv<i r)carkkvf vluttkv <L'vs<<)<re / COIISUMKR LOAHS fo<LirylL'<r<L<lcyfrJr\s4tnA,vvh/ch<eprescrts ff!ceffects of Con@me bans are sf Jfed illther face dmourt. Act OI tr)cilmcd I<dr<)tdtr)<I v)IOUS <k)rkvs atcurmrt c<dxd)geratkis tcrancraf state drcount rrxvrfs ol ov<vseas np<vatr)ns vrvh a prvnar y or t<rrctvrL)fetc re)cy Cnnsrt)e loans an. vvrdlen dl upon <eachng a lvede:crmned ir'/ oth<v CL)n the US <k)<far. <s'rrc4dedn re< sr)ed I" r<nqs n ff)e nun<bc< d daVS paSI du On a Cantlacff raf baSS Ihe nun<be d /~i i acco<rrtkur< r 10 COASor dated bala<)CC sherif, abng vdtt< <Clark<<I hedge days rs set al an apprapnate fever by ban pr<xkrct and by country SO .)r)d far LrrkictS as lo rosA n the rccogrxnon d bsscs on a bass)vr)ehnL)kkis lhe ~ Ihe <VkxaS <)I transfatn<l bnxgn C<r<<V)cy lnanC<at State<VV)IS d Ssesha ~1 Srt)sequent m:ave y Ol thOSC bSSCS taa bet>>een ot thoski o rv>>was <1pivafvrrs wvh the US dot<a< as thki prvnary cc . K'r fr/ )0<<< I<rrctxr<L<t c<rre ray r)cfudr rg tho)Li ope. atng n a tvqrvv nrrat v)nar y klfLVCSIOA drscaurt kklAS <S aCC<uCd aha ded CVAg baSS V/ACA <v<.vr)rn)Lvrt, arenckrdkidnkrkxgn e<changc revenue. along v vr) resuai n an app<o< cn1'te'rk1LN rate <I return a/c< tnc tern ot the ban p 4! I.)t<<<f I xvkIc e'.feL'Is fnreiqrl c<changLi t<adv)g postro<rs. natu<sr)g k)tecst accrued oA nondr scouAt loans <s based CA thk'rncr pat i SIX V Jrt I kr vnrd <ort<acfs a<Li Vakredmo<vfcy at Ivkv&rnqnrarket amourt ol fodnsa<a.landng ra4!s trrxf trv. <kisrrlcxj gare andbsscs arc rncfud vf v) torkvgn C<cndnge hNetue IHVESTMEHTSKCUIImES AHD TRADIHQ ACCOUNT ACTIVITIES )<vs skvarvm a<L car<<<<<I at cost asfustkv< br dma<trratr)Ad pnv))L<rnS 4) tne Lar<W car <fate and ace<err)A d d SCOurts ta n Jr< rtty Q)r)s arid bsse>><n sax's ot v</L)vmkirtsKvvies are corn Ixff<<<Son,I Wncrfrc VkVVh<<IC<r)t bass Ir.)rfcvt accAx<rt asses consstna d set 'urrta S Jr)d <AOALiymarket c)sfruAvv its a<<i p<L'skf1'tkd <vff ar ots+JJ x)AS ta dkr<Le ass<ff S Sdd bul '1 rat 1<<'I xrcrkt'il.cf and a/Li vaL<Lvf at mar) Lv Gans andbsses bath I ( n!d'i r.'A an<I w'eel!L<<vf J/Li cr<<ruoivf rke Jarvey ilccourt <CLLvrue j 1<viv<>>/trtrtr/r<)rtq;N'Lo<rsassffs <xt is v ruLI< i r) r vr vr'st rev<vtt/c f CLVL L)r 4trles 'AIL/r/)Jnf rtr<<)if\ cvrvr'sf <a4! v<L rt)s and rvrrrvs ah! v/r<rrvfaf rrx)f&w vtifhr/rt!i<<d<L<<Xs a<VS <Ivearref gar)S r~, )nrf > )ss<< r'rkxlkd ~ I tri)drvg acca<rv ALLvtue M>cept b< those ra)i etc>>) tr <4's/iyvgLvs as rxwfkyrs Gar)s a'VI trr)se) <LvJf Qd la fni)A. cL<t utu<Lis vvf kr*ard c<r v'!Acts rveLis'fL)f rate.s*aps /<Ad Ofrrc)S J<L stxv:rrcartr <k~L)r<vfJs h<vt<I<s a!i i dr ikvred and renL Cfed ds an.<<)sr/trrr<vrt to cree J <CLwvxrccr L' I Nr) ff,<rrs<Lvs a<<in<a<le tx't<vr!er cr/cstn)L nl skvarifiks and ff)e tr.vfc)I account i /gl.I // 'rf) 'ki t ~ rri'y. 53 ir, $g ~< <, q++Qfy i r/r/ rvgg Jgggi 'pA apex i t '>>p '>- vpt~ tttLvb it L f+ Ldk<<gq>>~> P~ t>>bvrs v tg +%+ .Fs'! ><<<<i~+~ >P M fr ~ ~~. '~+, tk '~+ 'Li kve<<.5 -' <<<<uu' L r M> - <<dg '$ >, jk ~ us/ tu>L 3! <<>> ~. ~'>> >%sty'P . 'tf 5~ it ..r,'e>>V>>II LEASE FiNANCfNQ Under II>> sfock cptckl ant stock purchase plans. Options at! dtso Lease fkLutcxtqrnwmms GtKorps sharc of aggregcc rentals at g!antcdn tandem and subscpptK>narycernepts dre alsoentered kLO ~44"" Liaw Itanc>ng Iransacterts and>L~V3405 Act of related Ihal g % fhc staff member!hc 3.'terna!>>c to purch:lsc c>ther market utv>tt v>>d >Acofric V340 Of bOOk V340 Shares UP IO thC Cnd Ol lhe OPt>OA Or SubSCf>PIKA / .~i~<<. 5 g Lrasc fkMnckxftransactens substant>affyrefxcscrk drcct If5anc >Pg fraawand 34o ktc4CL> L~agLvf leases Unea>ALxs ktcomo amN I>/Q(f Ufxjcf3 fritVfxxftvh>ch substatx>atty result S I l an ts, peed ate>>clctsc or pu!Chase prccs lucd at the date ol gtark ol subscpptan If CVCumPanccs afc SUCh that Purchase cf market va40 sha!QS apfxo.knsfe level rate of rLkunr when related to fhc . aearty rcfxcscrks the ccorv!mKa!!y fxctefabtc affcrnatNQ to thc stan tkvccovefcd Ltasn vlvcstr ALvk membec Ihc earnings pcf sharc calcutat>on tnc4dcs cUAM!loA G AS and kr>SQS Ifoffl5'l>>5CI rCsdu3I V3405OI IC35ed QLfuPA>>rk 'i equrybteht Sha!C5 QPPQSCAl fXIthe dk>ytre CCCCt. CofPPutCd by the treasury stock method ot ther parkef va40 states under ofken or 'i'. are k>C4dLXS >n Other revenue ~ 'hares SLbscppten ff ckcumstances kxfcate that purchase ol book v340 ~ ALLOWANCEFOA POSS'BLK CREDIT LOSSES rs the staff member's preferable affcrnatrvc, tho book V3bto Add>t>rxtc Iu IAC >1SOVrdf>>o arC made by A>>dns Ol thc POV>S>OA kX Sha!CS UACLfOPI>OA Of SubSCf Phon CfltCf kko thc Cd>A>ngs Pef Share from lhe afktwnncc. and Uf r>>t c!Qdd L~ ~vk Pos~! cnvkt k>s~aehargcd Ior toensc CfLXfklossesarc deduced recover>cs arc addL< fhc 4r the year >s 3 s>gn tcark factor >n dcferm!vng L~ catcuabon accordklg IO tf O twO CtaSsmeced Ttvsmc(txxf rLYOg nues the tact It>at thea are ttvo classes of stock par t>c>pat >Ag >n camngs one. Outstarx&ng shares ot stock v>h>ch sharc n alf C>c dt>fxuprLQQL~ kx tt>>tovtstcnkx poss IXcaxkt 4sscs Based 03!nngs. brxf'anothcf txok va40 shares under opfen N subccnpten OnmarLXPin>>rk'S Ftdgn>>rk 35 to thC ayaXOPnate IQVLkOf lhC VVh>Ct: Share Only >n a td>SIPbuted eam>nqs " ~<<.4, affowancc kx poss>fkeaLvyk 455'h amoulkac43tty protxkvf may bc gteafLv QPIcss tharl lhc pc( acd>t losses IN the yciir Thc d kivn>kLlt>onof!IlciMAO>trkby vttl>eh!he povts>on shoukf ctcccd N 'vcf Alter rssuancc. book va4e shares arek>>krdcdn thov>L~ed age AUfpbcf of shares ol common stock outstanding Used fo calQ>>tate car nk>gs pcf slLlfe I>> Liss th1tl o'I atvftt k7ssrs ts b39!d cn AfdfLlgLvNÃls cUrrcAf UfxxlIssuance ot sha!L>s UndLv Itic savtngs tncclkrvo, stock opt>ofL '4 j ~~ Lkt%Lgvxrofthe ark>c>fkftivf >n>odct nf do>pest>c 3!xf kkerrLst>onal and stock purchase plans. proceeds rccctved vf Qtccssof pat v34c >YNLxrt>>1 colkfttrxrs aLlnq>.'5 in Iticcharacter 3nd sl>!cot Ihc are aed lcd fo sul pkfs Upon >ssuance cf treasury sr>ares U!xkv r.v>> f<vtf>ki!5 ILfst 3> vf ~;>P <VLVItut>XL> IOSS Ctoef>QACQ. 3>xf Other per tt the Crecutr>O >ACcrkrvc Compensat>OA Pra!L Q>> eaCCLS Of p vk k x!K I!>>s frvs QLU4dt>>n v>C4dL>> an ass>issrpLvk t>f tnc abbty, fhc amount Qt lhc av!3!ffs over the avLvagc cost ol I!03A>ty tl' >Hi,g 4 N tk>rtutvtv<<vv,th 4!Livp >3rttvl('y Lk!rtgdt>ons fo cbta>Alt>Q kxctgn 5 >Jfes rs c!Qd>ted to surp45 e>u5>atvt>! f>tYesslr y kx ortLvIy dcfk Si!I v>CÃ>g, fNCONE TAXES STAFF BENERTS ANO EAQNfNOS PKR SHAAK Pnv>S>onkx OCL>rcd IS>La.S AL~kx aemsof rcvLVX>Carid etpcnso Sblff tv'.rtt!(se>frtfftst! k>>ktuev fvvx and Q/hvk sLvLKQQOSts ol A.per'.ed k! the ffLIAC>atsta'Qmerks >n d fferrrk yc>3rs than kx 13 k kknvivvkp its >Lr vugh are dr~xf on 3 axrcfk oasis crxkffoubons, purposes. k>ckkfk>g an acoropr>310 pto5SKA kx taus onulxbstf>b fv ',4 'r! >Ãxkf tf>Q 5!r,vsJc VK\vibvcipLlrl avtatrfs under the c recut>ve >!tet >ki,t! pulrl arid l'Oils ot riff>>v st!Lff t<>ALk>ts Nu chdlgrs 3fc rtih>>ttvf in>">tlvrxfsdue Iu tnt! lydntwxf ot CLLvLvfeufoorens rktd v = vied k>>ome QI SubS>fku>>S and affaatcs Investn>>nl Iaa crerMS QA>>asrvf equ pmcrk aic fccogtkf Qd per>od ol I>A>> rLvatLvf to the fLYovtvyot tpe lease >rktfstmLvk v>hKh ~ 3 ~Pj@ etc ~ ffv . lock Lk f<<>r> prdr ts Ur lrv! 5>d>scfkken INN pu!Chase ol stoL5> gvcs rise lo s>>ar acdks other nvrstmrvk ta>>cnvf ls arc nYop>L'c'd '"-ri urLLv tikisr>!Cr> pur(J>350 prat>5 >n etc b iar tne asset ts PraCLVf vt Servce ~wfefyv>z~.aLvk 5!L Qs ae>nauocd tn ff>> cakarfabon C'. ~ I t>> I <<>V 15 f >> V SIL!tL> A 'fJesentv 1) <<JLVCS >Ssuabte unntv trte et>Yuttve Stt 't~t"I '...'.ucr >>L > Vest> CA!PI xvvt rf<<x> prat>.lr rf tfv!>I >>rttte er>%1 ul >srts r>S 3f>d 54>s,"1;;<<>>>s to I!>k>'.Aasr MI>rs ur>der tp>> s'fKk cfk>rkl arid stock 3!ic I t.ms /r!K>tts 3rd sutfsuptvx>s mdv bt! IN etxvv rrtarbef >>i>> ink~> ur ILL>> .34k> stock I.t.lvvk Lakte stock >5 Gt>>uo cornrxxt v'r v k ttstt >s not rLw>K!>vfbv Gt>><vo ds to resaLi but can be sokf by Lf'L ffv!5,.>ff rntfftk>Lv kt tf>> n>3! Let Br>ok vak>0 s!Qck vt Gtcor o common 51<5',L tli ll is is su>vf 3! 3 Ix>> 0 cr XL>t tu Uuuk L:I>uc pu f JLfte at xf can L<>>tm 3 I r>rkr lo Cit>>utf! 3: tntt 5>>X SA3!0 Mm <<34e 31 tnr. Ikr>> Ot ~>L>:ta Apvx>IL!S!PL ~5>> Lrkkxf tf VILv>d mbrtuddt~nnglksas r>LVL>k >dL Ste k FOr OUISta!LIkvgcotenSd!XI m!faCkanS >i ai >>5 kkik,v<>v Akybts i34e snd!LW. COmn>on equ vabvk Snarl<are Lm - yt f5 xts>tktrvl u vr>g tt>e cedsr/v st>5'ethod ->>> t,'fW litv I i 3 5 .+pl ' ""- /,, t/ i '4 .- ~ i v<< 1 r<<t<<k i t <<d F, r~ VI 'p 3 i <<t 1 ~ ' fsgp 3' i g.Q<. = vs< ~ ~ P ~ ~ t ~ I ~ ~ ~ ~ ~ 1l ~ ~ f~ ~ ~ ~ ~ ' ~ I ~ t ~ ~ ~ ~ . ~ 0~ ~ ~ ~ ~ . I ~ ~ ' ~ ~ I ~ ~ . i ~ ~ ~ ~ 4 ~ ~ ~ ~ ~, ~ ~ ~ ~ - <<<< Ia "/" . <<4 '-~ '<<7 . Ig>> ay~ n i, <<. ~ v ~ 3, CONSUMER LOANS Consumer Loans Outstand(ng Tho CanSumrd loan Cater)cry n1)reSerkS IChurS B~.l m~ t)y Ckcorp'S busvrcss Ttvs rs generally ckkvted as nctud ng I 1sas Io~ to rndrh~ cor>surrKvs tnrcughou> Ihc vvorU lo mhw thor in Oolnostfc OII)cos borrnr4v49 requremcrks tor hous>ng. automob La and usher pvsorat Mortgage and)eat cslatcv S21r719 $ i 7.679 and L~ purpOseS The constfner Categcry also rnerudes vtdvect Insla>if. revorvrng ur vs cons>me) loans >I and other 274400 21.913 typ>IS of con> urnc: finance such as dealer hoor pbnLvtdrng S40r200 $ 39.592 in Owrsaas Otecas Mortgagcandreal esfafav S 3r474 $ 2,654 tnslalsnek, revolving erode and other conQinot loans 7r253 4,939 T~g> ~ ~ ' ~ ~ 'cy t)nea nod d scounl DON SINS SII LOANSI of UNsAIINSDolscoulcy ... S10,727 SS9,938 (4,418) SSS,S18 $ 7.593 $ 47,185 (4.524) 542 661 +~/~5.' rt hL 4>>pl p>v h>4><<> %% Irv>>r p le lv r>>> %p rh>& ~Pc~ Jj >4
- <<jPP~n CDl4SOUE)ATED ETALANCE SHEET CITIBAt4C, N A AND SUBSIDIARIES OECCs4$ KR at OECEIJBEII at 1$ $ $ I98<
. Oeduct)ons COmnKvohk lean IOSSCS Conwncroat loan rCCOherreS ~ ... ", .... ~ S 442 (Ss) $ 2ll (56) $ 292. (51) Netcomnrh~taantusses........ h .'..." .. ~ 377, $ 221 $ 241 C ~~I ne S 710 ' $ 386 $ 283 CcnSunm IOanreCOvenCS, (134) (1>001 (87) Net CenSVner laan IOSSCS SSS $ 286 $ 196 Add)tlons or>>>s>onlur poss Ifrrcrrxst tosses 'I S1 4243 Other (Pr>nc.party from zlorhancc Datances ct actsrred comparves and transraten of overseas alko>>>ance DaL1nccu -'ALANCSAfCNOOI> YCAII ., I ~ ~ .' ~ ~ ~ I . ~ - ~ ~ , ~ ~ ~ 5917 34 $ 771 I C >.h ~Pi rvfp~g >l )pl r l gimp >l ' > ~ r ~~ <<C Q ~ f4>' j << I <<+meal f'S <l l Jw, ti').. 8<<r Y. 1<<t C =1 ~ << S. PRKS4ISKS AND KQUIPS4EHT Gencratrtr Ccpforbabon and amor tvabon are COry4ruted on the DCPrCCratlc > and amer tVaten Ot PremrSCS and CftuPnN~ VraS $ 349 straight bne basrs ovef Iho estftrated useful b'k) ol tno asset of tho mtbonrn 1985. $ 262naonrn t984. and $ 199nvrten 683 ft lease tenn ~ w 8 PVRCHASKD FUNDS AND OYHKR SOR RHINOS Ptfrc~ Funds arnd OtItee Dofporpringaf Orxpnal ct Less Than One Raf ~ t4<<tvhirt LAlr't h~ lt .. *r...'.......... Fcdcral tunds punsrascd arH secunbes repurchase agreements(ft domesbc ottcesI rv , Amountoutstandngatyeaf eyd.....; year.........'... -. *........,. S10+04 79421 $ 9.597, $ 8.596 Average outstancpy7 cur vrg the Mirrrmvnoutstandfrgat antr month end.........,........... 109759 $ 9.329 $ 10.520 . $ 8.379 $ 10096 th, Ccmmr.~ PaPClrr Amount~strfrxbngntyear cnd........................ year............ '........ 2 79172 S 4,976 $ 4,087 ~ Avr~cutstarrdng dunnr7 tho Mairmumou'.Standptgatanymonth cnd......l........... S 4,977 S 79172 $ 4.970 $ 6.883 $ 3.766 $ 4.578 ~ Other lunds borrovvcd'" AmountoutstanCngatyoafcnd...., year,,..., .....:...:.,;.. '........ '...,...,...'<<1of40s 912,022 $ 9.817 $ 9.616 ~ ',.h Average oulslanclngdunng tho Mafmunoutstarrdegbtanymonthend Catt<<<<yt<<rt<< ~~itv ~ 9M<< mt<<f ~ rlr rt<<appar<<rwtpt<<<<hht<<t/rt aa<<) AtLtthp M% Srrt<<<<wthp Iw w~d/A) le) 9tl\r u'tllrLtthplptfwv~hf thpttpf Jppl ttr tttf %Fr rttr ~'2S othptfpbp~r~<<.Jprsf wfpr<<rttrrhpr999 $ 9.497 $ 9,998 . $ 8.498 $ 10,139 -'f i%%at rb~thtrptttrt<<rtrtaas ttNW~trtn
- l. 4. Cmn OBS 1)S 71IB au OWASICB FO)t POSS(BLED Came LOSSBS 'I l V> ~ i. ~ 4 rrI ~,lW ,I r~ . toss Balance at Begvrn>ng d Year 'W 017 5771 $ 687
l ~ ~ l Sr,i%<<',.r h 'est- -kn pW ~ 'trh<<P~ C 1 h h ~ ~~Y 57 h y~ <<f 9 ~<<>>. rt <<<<rt h " ~~fS~+Q~<~.t~p- 4AWX@ - ~~i@~C~@yr 1 '+~~' f g'4t;~t' 'p+~~~ t>> Y h>> 5 5 r' ~ t ( h T a hb!nr'res pic~ 5>> LONa.Tt.ttMOmy I y. tA)nq.Tertn Debts OllgtlvMatoses ol One 'mar or I'tta'551 I'nlstall I I Iaar v>>4E \ta ttIttII ~ aa>>aaa>>,<< ~ I~ ~ awa tl ~ I wlaala . 1 NtIIEAtaar ~ tal aelIVVI>>:at.t YlnN. Parent Company ' ' " $ 1.513 . ~ $ 1,5 l9 '. ~y . ~ ~ ~ ~ . ~ .. 2.813 167 ' '68 .,: .......... 863 ' 284 ts33$ 336 J.; t 'st.: ', Dle3-4)earS, ~5-t0)cant.... ....",, "486: 1,042 = '.. ~.... 'aa "" 48 Due"-5)ears .,: . ". 967 " ' - ~ 150tS ~ 1,113 Ia>>,aar>>a>>aaaa>>......: ..... I..." Iae tr)-15~an; .........I... ~ 1.430 -Ma I 446 182 'Cadre 'tats 6' 459 '-- * -.'~.~,ta>> I I.I55 ' 51.155 ' 515~ ' I I.JII, "... t.'(<I .-'I.(, '," 347,,-=- . ~ '8 " .I' !I ~ l25I,:T,).ft,.tl:4f '.5323IT:p 'uo4.5years....... I p~o ~ $ '2908 ': I ', $ 2 120 I tkOQOI"!j:.II'..st<<I' $ 6,P5'j.'I-I' I,:; .1,. I!"::..".:Yb.,'."., $ 10043" $ 6273 Ot$ 53fS t>:I '4-'r'"'I;IY$1). 93 ~ Iv u>>trtr 4tst ataaa g rasa>>as Ala ta I stat tNaav>>att Jtt " 'a>>asa clat>>5>>I ttas Ia dart 5 ~>>oat tt tas otal 1>> Atout>> Istt 55 aaastatt +sass&7 $ 04@ ltvrlNItatarr a>>At r aI saatl hvata 5%>>at I F<<<<ratutong tom debt nlatues over the pored to20t5 The v5terest AtOocembet 3L t985and t984. $ 739rrttenehdSNm'RA 'Y>) l>! ruedrbt ISSueS ranged tram 425'O2t IX't t r tteSOn baed . D vvvnbsv3L t985and 425 wvrtr5red average tlt1vestrates wtv, to tgly- M oeovntler 3l. 1964 The bend ttTM at Decerreer Gbnorp l)le wrvght<<ave(age lntecst rabcsonsuchtonj tormdett.:, '.. were t243)'nd 13~ at December 3t 1985and 1984.~icty, ~ . ~ <~g ~ ~ 31 t5385 t984 Iesplvvtvoy ~ ~ Substantaaay att tong tenn dsct Ised by subsoones ret QUBrorlA',8d ), ,, 'to)teg rate tovg tlvm debt rnaturesl...r tte pored to 2G35 The byOtevpss securedby theassets at thosuttc~>>"..>>:,It I;I '.,;1 ra".; tylvlwr!'iwarerkvsvnvnlvt pverbcaay by torrcutas basedon Atoecomtxy 31, 685 and 1984. outstandng 6'A cortverbbre,',7I.> gg cotatlmOneynlalbetrateset eavtaersttaees.bymntmun subordeatedretesduee2F. lvvere$ 9rn4tenand$ 12rn!Ion respecbvety Dunng 1985noersodvsconverted$ 3rrvttend Tte rares on r~ use est ratesas'spited sn theagIeementsgovbrlbng therespell) tei~ 6e't to t850'tat Decenlber 31 1985 and 660 lo t98N al ratedebt Issuesiangcd tern t ccnverbbte noes rto695?7 shares d ccmn Dong 684. $337mttonwas retaxt pursuant to ence'el to 4ock tv(Ino n 1984) ,'eues mv 31, t984 the <<svgnrcdavsvage nerest rates were 999 '. 'epurchase these noes. theganonvvhch was tetmatonat Tte at Oeces eer 3t 885and 684, lestlectrtely ~ ~ ~ I l notes are conterbbw at theoctend thohoder emotcorpconxnon stock at a corhcrsen pree ot $ 41 per share. Cl Cer taA event t a~ to ~nt ~ ~.".L~Q~ CertaIn Ct the agrIVVnentS under WtVChtcng term dote nbtrgi., ~ . ~ ' 'he pnor year'scbsctoslto ~bete~endlong haS been reCraSSIfe(r tO COnterm Wsth the currers tnanOat I krmdebt I 't ' stalelfl j<<r"i. Vata I a I* >>7>>P>>>>h >> 5>>5>>5<V, I ~, 5 ta I avs I ,555 k QX4! vent>>tlat I'- ~ . . frs'<p~5 PF7.>>.v "' ~ '~ '>'I'~N ~ 8 SUBORDINATED CAPITALNOTES 0. REDEEMABLE PREFERRED STOCK Al December 31, 1985 and 1984. 400000 shzes of ncn~reting wlSlllOHSO'D(xlAA5A rfA4rvo 1oes ts84 redeemable preferred stock were issueri and cutstandxtg, subject Roabng rate subordeatedcapitalnotesdue 1996 .Sf,050 $ 1,300 to redemptional a price of $ 100 per share through a mandatory 'I':.7 re 12~hSI subordinated caplal notes due 1996... 349 349 svtking fund In 1990t $ 1 milsonmust ho rebred with the remaining Roating rate subordinated capital notes duo 1997. S00 balance ol $ 39 miilionbeing retjredin years 1991 to 20G Dividends. $ 1,899 $ 1.649 which are cumutativo, are payablo semiannually. Beginn'egin 1985 the dividend rate is determined every three years unbl 2009 by a formula .~'<~;P", Suborcfnated capital notes are unsecured subordnated obligations of based on certainmoney market rates. Prior to November 1985 Gticorp subsidiarie and are uncondhtioratty guaranteed on a subor. dividends were paid at a feed annual rata Divxfends amounted lo dinated basis by Gticorp. The inteest rates on the floating rate note $ 1091 per share in 1985 and $ lt00 per sharein 1984 and 1983. issues ee delemined peiodicalty by formulas based on certain Gticorp may be required to repurchase the preterred slock al $ 100per money market rates, or in certain instances, by minimum interest rates shee if loans are not extended to Iho preferred stockhotdeI under as spec'fied in the agreenents govenfng the respective rssues. Dur. certain cicumstances. ing 1985, $ 250 rrI5on of Itoabvl rate subedinated capital notes ' due 1996 wee repurchased the gain on which was nolmateria. and ~ ~ ~ an additior.sf $ 500 million of floating rate subordinated capital ' 'r tobeissue notes due 1997 were issued. The interest rates on floating rate note ~ I v. t ~ ~ issues ranged from 193&St to &537yo at December 31. 1985 and = &37PX to 10375% at December 31. 1984. The weighted aveago +a%, fi-- inteest rates were &20&yoat December 31, 1985 and &328/o at I ))' ;" r ~f4 December 31, 1984. j At maturity. the notes willbe exchanged br a security of Citicorp that qualifes as primary capital then having a veue equal to the prin 'pal amount of Ihe notes. or under cetain circumstances re. deemed in whole or kt part, for cash At ihe option ol the issuer, the exchange may be for common stak, nonredeemable securities prefered stock or other marketable permanent prirnary captal secunties of Gticorp Altemativeftt t.'. > issuer willundetake to sett capital secunties cn behalf ol the hokfe t who tract to receive cash for capital securi ~ 6es upon an exchange of tte notes kt an arrxxrnt suffcient to pay Ihe principal of stxhr ~m. Because Ihe typo of at maturity willbe at the option of the Gticor p subsidiary that issued tte notes and because the amount of ctxit'ties to be 'esued vritl T.g w depend on their future markel vaktes. tho amount and lype of secur ~ A7 P fies to be issued at maturity of the notes meet bo determined As a esull. some ditution cf earnings per st~ may occur. I The agreements under which the rxXes ore rssued potxtxt Gticorfx under certain condaicnS. frOm payeg dividends in shares of t Gabank captal stock. i '~a I Ir t ~ I. J I Cp k ~ F b Jl fr ' ~ r+ r , PLprr ~ r . C N I \ a .I ~' ~ i I ~8. ~ I ~r '.v~kp C 0 4 C +.e7 '\ ~+ejlee4+'ep .jIj e~ej;e i, j~Q ~, @van'e w4jj' '4'eM. "a Leepwje'I je:+I. ~ ~ I ~ ~ ~, ~ ~ e ~ e e ~ ~ e ~ e ~ e ~ e ~,' I ~ I . ~ ~ ~ ~ ' , ~ ~ ~ I'. jl I ~ ~ I ~ ~ ~ ~ ~ ~ el ~ I ~ ~ ~ ~ ~ I ~ .. ~ j ~ . j ~ j~ ~ ~ I ~ ~ e ~ ~ j I I~ I ~ ~ e ~ ~ e ~ ~ ' ~ ' ~ ~ ~ . e ~ e e ', ~ ~ III I~ I ~ j ~ ~, ~ ~ j . ~ ' ~ ~ ~ I ~ \ ~ ~ ~ ~ ' I ' ~ ~ ' ~ ~ ~ I ~ ' j e e ' . I ~ ~ II ~ ~ e ~ ' ~ ~ ' ~ ' I ~ . ~ ~ ~ ~ j ~ ~ ~ ~ ~ ~ ~ ~ ' ~ ~ ~ ~ ~ ' e ~ ~ . I~ ~ .: ~ ~ j ' ~ ' ~ ' I . ~ ~ ' ~ ~ ~ ~ ~ ~ ~ ~ ' ~ ~ ~ I e . ~ ~ ~ I ~ ' ' ' j ~ ~ ~ ~ I ~ e . ~ ~ ~ ~ e ~ ~ ~ ee ~ ~ III e ~, ' ~ . . ~ ' ~ ~ ~ ~ ~ ~ ' I ' ' ' ~ ~ ~ I ' ~ ~ . ~ j ~ ~ ' ~ ~ ~ ~ ~ ~ ~ ~ . IIIII ~ ~ ~ . e e I' I ~ ~ ~ ~ ' e e ~ ~ I ~ e ~ ~ e e ~ j ~, ' ~ ~ ~ e II III ~ ~ j..~ ~ ' ~ ~ ~ ~ I ~ ' ~ ~ e . ~ 0 ~ ~ ~ ~ ~ ~ e ~ e j ~ ~ ~ ~ ~, ~ ~ ~ ~ j ~ ~ ' ~ ' ~ I' ~ ' ~ j ~ ~ ~ . ~ ~ ' ~ ~ l j~ ~ ' ~ ~ ~ IIII ~ ~ ' ' ~ ' ~ e ~ . ~ ~ . ~ 'llew ~ . e ~ ~ ' ' e e ~ ~, ~ ~ ~ ' 7 \ ~i>> C', C', 11 COMfjjl014 STOCK 12. STAFF OENKFITS At Ceccmbe 3L 1985 and 1984. aur.'erized common stock was 325 Retirement Plans. There are a number of pension plans ~uveing mlhon shares. The outstandrrg shares at December 3L $ 85 and substantjaty all staff members The cost ol the pincipal plan a~jp " 1984 incfude 30mttion and".2nxdenboak vdueshares. iespectiveiit amounted to $ 8 millionin 1985, $ 8 million in 1984, and $ 44 mtenin g; y!. issued in connecten wjti, certain staN benefd planL Under the terms 1983. IA 1984. revisions ol certain actuarial assumptions wee made to of lhe plans the payment lor book vabe shares soldback to more doscfy reflect recent experience and future ex pectatens. If the j,i Gticaip can be seltlcdin cash or in market vaixt shares at the opbon pevious set of assumptens, prindpaity a lower assumcdrate of return af Gticorfx >> and a lower asstrned annual rale of salary increase. wee used. Al December 31, 1985, st~ wee reserved for issuance as pension expense lor 1%4 waukl have been appoximatcly $ 38 Axsion follows on conveiSion of canvetjtde nateS. G2 mitten shares under gieate($ 21 msen after taxes) Ihan reported The costs of asbenefds >>~ the "; jr.~ incenlive alan, QA miNonbook value shares: under the under the plan ee accrued and funded on a current basis. The 1 j>>~g $ 73 stock option plan. a maxiAXXAOl 37 mNen shares riissued al actuarial coslmethodused for pensioncoA dcteminateniS tho 'r~j>>jj> market vabe and a maximum of 53 miBen shares if issued at book Frozeninjtiat Uabhty Mcthoct vabc under the 1983 stock option plan. under which options may be A compariso of the actuarial vabe cd accumulated fdan benefds . grantedin tanden. a maximum of 97 mlten shares if issued at market and plan net assets for lhe pincipal benefit ptan as ol the most recent Cia, Vabe and a maXimum Of.14.7 milliOn ShareS if iSSued at bOOk Vabe actuarial vaualion date is presented below 4P under the stock purchase plan. 52 mlten shares; and under the >>n executive hcentive compensation ptan, U mten shares. >>v>>jj>>>>jjr i H jjjujo>>5 0>> rxxl >>jjs 1sa5 Sac Rotfromont bonofits oamodby employees ~.rrr Yested $ 378 $336 ~ Non~ted . 52 4 Plan Not Assots Avallablo for Bonofits, ~0~3g t ~>>&~~ at market.' $ 932 $ 891 '.7'i Yj'>>~M Retirenent benefits eamedby employees repesenl the pescrd value r<<accumutatedbenefds eamedbased upon years of servica The pes'ent vabe of accumulated benefits Carry was dctemned meg <<jij vy -rr;< . a rate af retun oft'4 far active ptanmembers and QD% for pcnsiancrs and fafme employees jvjth deferred vostedbcAcfds. 9 j,)~0-Savings lncontlvo Plan. Under the Savings Incentive Ran, etigibfe staNmernbes receive awards equal to 3yo of ther covered salary. Staff members have the oaten of eceiving ther award in cash or defemng some or all ol it in venous invesimenl lunds. Gtjcorp '.ra r. >>jan > or ~ ~ <<s i )t,f ~ ~ ~ I' It .a'W~wa5544555uveIIaer444 -;~~a ' Ii I PI/ 04515 I ~ ~ ' ' ~, ~ ~ ~ 50 ~ ~ t I ' I4 ~ I 0. ~ ~ ~ 0~ ~ 0 ~ ~ ~ ~ ~ ' ~ ~ ~ t ~ ~ ~ ~' ~ ~ I ~ ~ ~ ~ ' ~ ~ ~ ~ ' ~ ~ ~ ~ ~ ~ 4 ' I, 40 ~ ~ ' 4 ~ ' 4 4 ~ I I 4 ~ ~ ~ ~ ~' ' I ~ ~ ~ 04 \ 'K ~ ' 4 ' ~ ~ ~ ~ ~ ' I . ' ~ a ~ 04 ~ 4 t~ ~ ~ ' ~ ~ ~ ~ ~ ' 0 ~ ~ 4 ~ ~ . ' ~ 4 ~ ~ 0 ~ 5 ~ ~ ~ ~ ' ' ~ ~ ~ ' ~ ~' ~I ~ ~ ~ ~ I 4 ~ ~ ~ ~ 4 ~ P ~ ~ I4 ~ ~ ' I ' ~ ~ ~ ~ ~ ~ ~ I ~ ~ ~ ' ~ ~ ~, ~ . ' ~ ~ ~ ~ ~ t ~ ' 4 ~, ~ 4 I ~ ~ I ~ ~ ~,4 ' ~ ~ ~ ~ I ~ ' ~ ~ I I ~ ~ a ~ ~ ~ ~I ~ ~ P I ~ I ~ I ~ I ~ 4 ~ ~ ~ ~ . ~ ~ ' ~ ' ' ~ ~ ~ t I I ~ ' ' ' ~ ~ ~ I I 'I .. ~ ~ ~ ~ ~ ~ ~ ~ ~ I t 4 'I ~ ttt ~ ~ I ~ ' ~ ~ ~ ~ ~ ~ 0~ ~ ~ 4' ~ ~ ~ ' ~ ' ~ ~ ~ ~ ' ' ' ~ ~' ~ ~~ ~ ~ ~ ~ ~ ' " ' ~, ~ ~ I ~ ~ ~ ~ ~ I t ~ ' a.' ~ . I' I ~ ~ 4 4 . ~ I . 0,45 ~ ~ ~ ~ ~ ~ I . ~ ' ~ ~ ~ a ' ~ ~ . ~ . I ~ ~ ~ . ~ ~ ' ' ~ ~ ~ 0~ ~ ~ ~ ~ ~ ' ~ ~ ' ~ ~ ~ ~ ~ I ~ ~ ' ~ 0 I ~ ' ' ~ ~ ~ 4 ~ ~ ~ I 04 ~ 4 ~ ' ~ ~ ' ~ ' \ 0 ~ ~ ~ ~ ~ ~ ' ' ~ ' I ~ ~ ~ I I I, ~ I ~ t ' ~ ~ 5. ~ ~ ~ ~ 4 0 . I I ' I ~ I ~ ~ ~ ~ ~ ' ~ I ~ ~ I' ~ . ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ II 4 ~ ~ ~ ~ ~ ~ ~ ~ I ~ ' 5~ ~ ~ .. ~ ~ ~, ~ ~ ~ ~I ~ ~4 ~ ~ ~ 0 . ~ ~ ~ ~ ~ I ~ ~ ~ ~ I ~ '- ~ ~ I~ ~ ' ~ ~ ~ . ~ ' t ~ I ~ ~ ~ ' ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ 0 ~ ' ~ ' ~ I I ~ ~ : ~ ~ 4 ~ ~ ~ ' ~ I Ir 4 ~ ~ I ~ ~ ~ ~ ~ ~ ' ~ I ~ ~ ~ ~ . 4 0 I~ I ~ ~ ~ ~ . ~ l ~ A'. ~ ~~ ~ \ ~ ~ ~ ~ ~ ~ ~ ' ~, ~ ~ ~ ~ t ~ ~ t,, ', ~ I ' ~ ~ ~ 0 ~ ~ I t ~~ ~ ~ ~ ~ t ~, ~ ' ~ ~ ~ ~ I tt ~ I I ~ j '44 4 'g . 00 I 0 4 tI I I 5' 48 ~ v'r IIt wV ., ~ 4+I ,,0,' 540 ",', .',""Q"~ P<kjgaaI.:,. r '4 . i >.'. ~ 4 L E525832%8>~: v8) 13. INCOME TAXES ANALYSISOF EFFECTIVE RATE ~ vvKLI0H50fool'ss. Soa riir vr xll 1gas rsal 1983 soarwvr~ tgas
- I h
Domestic US. federalincome lax rata..... Changes kom statutly rate rcsutbng 4L04/o 46.0/o 46.0/o>>i~4~ Grirent Fcdlai',......... State and local....... $ 30 52 $ 28 35 ~ $ 20 27 from Tax exon pl interest xicomc.... (4.7%) (5.2%) (2.6%) 'ncome subf'ect to tax at ~ $ , 47 cafxtafgainsratcs...: (A%) (.6%) (.9%) Slate and local income taxes. net of Stab'd focal....... (19)) 6 7~ US fcdcialincome tax benefit Taxes on income ol .. 1.0% ~ 1.5% 1.1% $ 37 $ 51 $ 87 ~ overseassubsxfiaries..., . (A%) .8% 1.8% ~i~i."=p>> $1 1 Q $ 1 14 $ 134 lncofne f lorn 20%'o 5lo owned curie>a)..... 590 affbates inctudedon an after tax Foreign(substanbaity m~movlgtoN $ 718 540 $ 654 612 $ 746 b, (1~) (1 6%) (I 7%) =.f 2V W4hin t'e tclal OVVisicn. the taX CffeCI Of inveStment Seouiitieg tranS. acbons Nnounled to a provi on of $ 23 nb'tlionkt 1985 and $ 7 rrvtbonin 1984and$ &initiiu iin IRK Although nol alfecting lhe total povision. current income lax pay TOTat.. '.......... 41.8% 42.4% . 465% ments may differ frOm!he amounts shown ascunent as a result of the 'US Federal income taxes in these analyses do not include amounts Anat determinatcn aS IO the timing Of Certain deduCtiOna andoiedhtS Whcft in the cpinicnOlmanagement, repreSent a de faCIOaddbcnat ipse>~~~r and w4I drt,'er because of Ihc avaittbitity of investment lax cicdIIL Federal tax burden that is pad currently. Banks effectNety kcur As a US corporation all of Gti~'s foreign pre tax earnings are'his taxinlhe form of earnings remitted to Ihe US Treasury by the subect to domestic taxiacurrently if eamedby a foreignbranch, or Federal Reserve. representing the Fed's inveslment earnings on the , earnings are effcctwely repatnatedif eamedby a foreign sub nonkitciest bearing reserves that bahks are requ'red to maintain with Federal Reserve Banks For Gtcorfk il is estimated that this de facto y or affiliate For I9K, foreign pre tax earnings represented&7% onsolidated pre lax income(approximatefy 70%in 1984 arxf 73% additional tax approximated $ 68 nvtren. $59 million and $6&million n 1983) tn addibOn. Cer lain Ot GtCOrP'S dOmeStiC inCOmeiS Subteot tc icr lhe yeara 1985v 1984 and 1983 reSPeCbvely baSed Cn aVerage foreign incorrxi lax wt etc the payor ol such income is domiciled remrve depostsof $ 823m tlion. $73&m ttionand$ 86&mitlcnin 1985, ~V+~, overseas. 1984 and 1983. respectively The total atfecbve lax rate for such year Deferred taxes iesult from timing differences in the recogixtionof adtusted for these amounts and incfudeg an equivalent adtustmenl ~'Pg~< revenue and expense lor tax and fxiancral accounbng purposes. to increase income before income tax. wadd be 441yo, 445'/o and 4867>> reSpeotrVely. The de taCtO add4XNal taX rg CatoutatedbaSed on Gbxxp's bank subsdianes'average reser v. deposts as a per. ~ Cenlage ol aveagc totai F~at Resave assets. app(ed to Ihe earn vv Puievi$ ev rxX$ 115 f ixi ri4 vie Lea& fxlancrngtransacbons . ~ .. 1 ga5 $ 5$ $ &6 ryg $ (4) ~~ ~~f th dd t IF~t 'tner.........'..., kwestment tax I credits...... t ) (~) 63 Not included above is the etfect of investments in tax exempt state andmuncipaf securities. assets whchyiekf Iovver ratesot interest Ran ~bethec s lfthe~wasta~bte r,...... 19 47 65 Terat.. '.. $ 37 $ 51'87 ~ i,v f %+I'Jf 1~1'kyr ~ .r'1vri . Ygv/a" li 63 ~+'p)'V.f; ~ -'vite Pp ~, ~~+ i >VV ".P<<c r. > siss 1st EARNINGS PER SHARE purchase either market value or book value shares are either included The accompanying table shows the catcufathor> of earnings per share as common equNalent shares or enter into the earnings per share on common and commcn equivalenl shares for nelincome alter calculation accede>g lo the two class method basedupon the deduction of dividends onredeemable preferred stock and preferred econon'cally preferable allematnsr to statl members. as further stock. Shares issuabfe under stock option grants and stock purChase described in the Statemenl ol Acr~ting Policies: ptan subscrhpthons which give staff members the alternative to Calculation of Earnings Per Share ~ >MKL>0>hs rscre> erh>5HARc svovhfs 1085 >884 f883 .;~'7P~~'; Net income Available for Common Stockholders
- c. ~
1.7 Common stock equivalents" . > 1 J3 1.1 1.2 - c. Sharesapplicabletodislnbuted porliOn . 129.7 126.5 126.0 Book value shares issuabte under stock option and stock purchaseplans 2.5 3.2 1.5
- a. c>strhbuted portion ffivhdends). . $ 290 $ 259 $ 234 h Undistnbuted porbon 645 571 . 589 TOTAL . . $ 935 $ 830 $ 823 Shares Weighed average common shares outstanding-Market vath>e ...125A 123.4 123.1 Weighted average common shares outstandhr>g-Book value 2.0 ~
~ Distnbuted portion . $ 2.05 '>>.c $ 1.86 Undetr>buted pmtion . 4.40 4.62 TOTAL . .$ 7.12 $ 6.45 $ 6.48 rr coeeroe shoes sh<<e<<<<es<<r>>>seers>>><<s<<sh>>o>> veer ehe e>eceo<<<<corer<<echeosehcheh>hh>e e<<r ee rreeo<<esecror ehoser h>>s<<sr>><<s <<>ceo<<vchs ss>cs coho eohr shee> shvc>>>se r>hohs oeehvehr osehrh sr>> ceo o/v shoes e>>>shor The futfy dkfured calculation assumes conversion ol alt outstandhng- Q2 miff>On >n 1984) are added to the numbo of shares>>eluded in the converthbte notes and the maximum dfuthve effeCt Of Common Stock Calculation(re&ting in a total ot Q26 mitten shares in 1985. Q23 equivalents. The number of shares >ssuabfe on conversion Ol the million shares in 1984, and Q60 m tfcn shares in 1983), and the related notes(Q2 mr(lien in 1985. 2A mitt>On in 1984, and 85 mitt>On in 1983) after tax interest expense ($ 03mhtthcnin 1985, $ 37 m I:hcnin 1984. and the addhthcnaf Comman stock equ'relents (Qt raft>one> 1985 and and 51QB mitten k> 1983) is eliminated.. I regs;. ( ~ )fh>".~cog'~ ~ W-. r ~ ~ J 15> GEOGRAPHIC DISTRIBUTIONOF REVENUE, than > OSe Charged to the core businesses) and other corporate sterna EARNINGS ANDASSETS inckxfag cer lain star I up actNNes. The prior years'i~es have Gticorp allnbutes total revenue ecome before taxes.net income and been redassified to conform with the current year' presentatxxL average total assets to operations based on the dom ate of the The Secunties and Exchange Commissar I requires that an aflow. customeL (ES possessions are xtdudedin ther respectIVe ance for loan losses apptcabkr lo loans rdated to kxegn activit>es be geuglaphc of Ihe integration of global activities. it is not practcatre to areas.'ecause make a precise se parabon. and various asstimpticns must bo made in arriving at allocations and adNIStments tObe used in presenbng restricted to any i~ disdosed in a note to Ihe frsandaf statements. Gticorp makes no such allocation, and no por ten ol the allowance for pOSSIbte cred4 losses is loans or groups of loans. For the pur pose ol meeting the requrement under generally accepted accounteg principtes to cakutate earlxngs and assets altnbulable to kxeign eis data. Tho prlnc'pal allocations and adjustments arrx (I) charges for all operations, $ 486 million at December 31, 19)5, $ 350 mittion al funds employed thai are nol generated focally are calculated on the December 31. 1984 and $ 301 milton at December 31. 1983 of the h~&Snrl<< amount and nature of tho assets and based on a marginal cost of 5 atiowanoe iS atOCatedlo foregn operatons. In the judgment cf funds concept: Gtcorp stockhdders'qtxty rs treated as generated management. such atlocatonrs nol meacsngful, scca the entre and earnedbased on each area's percentage of total assets: amount ol the allowance is evitable tpabsolb losses with respect to (2) allocation of expenses incurred by one area on behalf of another. both domestic and kxegn loans. l induding 046nistrative costs. based on methods intended to reflect ~ '"I services xovvidect (3) altocabon of tax expenses; (4) advocation of r ~ the dilterence between actual nel credit lossos and the proviskxl for possrbte cred4 losses: and (5) alkcation of corporate staff costs (other n hh>(&l ~ Distribution of Reyentjer Earnings and Assets I'eographic ~ ~ rcx>L, . - = eco>s srrcssr I>L vL>e>L<<r LLSLS ASLLts H LnLL>LHLor LNLLLl>5 1044 5986 . 683 I 10atj 5985 1983 1044 1986 5983 1044 1986 5983 NorthArrerica-> $ 4s938 $ 3.653 $ 2980 $ 762su$ 5%" $ 575+ $463 $ 367 $ 320 $ 85>653 $ 70407 $ 55.668 " 'i ' ~ ~ ~ Canbbean, Central and America .. " 1,183 919 1,014 '03 277, 452'45 ~ 177 234 19,094 18,785 18,734 Mkfdle East Africa....,,1s567 Iparxfc..... 1,330, 1,176> 3'91 284 191 208 156 . 33>899 31 197~ 30.819 TOTAL .'. ) .. 788 717 713 . 187 $ 8>476 $ 6.619 $ 5.883 $ 1,716 $ 1.544 $ 1.606 286 299 99 $ 998 138 150 21,859 $ 890 $ 860 $ 160,505 $ 142.631 $ 127.923 22,242 22,702 r II shcnnes lee cene>I II>h>)s>> >no fees c)>nmssons eno o)e> n<<erh>s 5>hri~ 5 jer mncn rhr LL>em>hvL noon>> 5>LS moon 55>1 meo shel moon >nosier n>no>L ne>neon>> 5 Lro e>oo>L 5 uo>n>>oneno 5 u'l <<>h)L r>mr>>erre eer esrnes ~ pre>csroesr>>L)vs reenn>I Io Lm>>o j>r>Lor>>)rnns rn Isos loser>I >561 ~>ne>>>es es>ons esr re>>n)e so assn..so>L 5 5 5)6 >ne)nr>s 5>h sos moon neo>no sos>>e u>es. ~ rn sjo6~ rn nn)>oslo>ress>>L sop pe6 mmeL 56rr jrmennenl jshrrosmHn Ilrerosioesenrhrn>s>no>r>>oua>er>r>ore>one ln sxLL Isoer>rises >)srr>u~eh>onn>rs e>>vmr>)>r>>jjlsrnnon slromeonrhr5>crim>son ncorneoeeee>>>es 5>>rmoo>L ~ n onrnro> en'or>n)>e>>hnc ns 56 5 Is ms>ss 56 m>>on>>nd 56 Lrsmecn slI e> ur <<n)hence neo>re cree>e u >es ncsnses corno>nu>Nr 5 turn >Nnn Isos. 5 Icr >)r>en n hsso eno 5)>9 menn n I565 ol Q> e>erose neon>> >oL>c>hr >ne e>H>v nor>no u> o>or)He> >o Ine IP>>e)I 1>res ", ~ ¹ 'nhmrI ~ ~~~4~ ~ Sr ',~;p'r r I, .,vR.>3. 18 ~>, I f ~r Ilri I L. I, ~.... ~ h ~ 'i ~'Eoxsf-., I ~I ~, I I " * '5 ~ Xh>IL>>sec ~ 65 I l "+>~@~:L J" n'L~ >4 E +55/ ~r. - o n~4<<n r FF@@+4+pjg>~~ h c 'w~ nv ) 'l t) ')l *..Le '>1 g
- d. Sharea~aCabfe tOundktrib~uted then .132% 129.7 127.5 Earnfngs Per Share
CRENA.'iiia " " '~i":EK~KBRKB t(L NON.FVNDS RELATED FINANCJALPRODVCTS bonds issued by UR murxapalles. Under munxxpd bond insurance Gtcorp otters venous finanaat poducts to its customers to meet their polcies, ifa bond esuer delautts on an insured esue. the insurer ncrxis br h(tuxf ty. acdit enhancamiw. hieign exchange, and pramees to pay the prinapal and eterast in accadance vvth the 'n(anat rate pdccbOa Many ol these pnxfucts were davabpedin a~t paymenl scheMe Acceieraban of payment under the insur response to Ihe growing sophistcaten ol the finanaat made(sand ance potcy by the insured e nol pernxt ted. cusiomas'eeds kx Nclbte ways to manage lundeg costs and AMBACsinsurance under wnting procedlas indude'a ngaraus hreign exchangC exPasure tn addi(en, the ottenng ol these poducts crad4 iavew atcng vnth an ongaeg nsk monaanng paces@ AMBAC may serve to reduce ral(er than +crease Gtcorp's own exposure to hr(xts its ex pcs(xa to bsses by underwriting only xivestment grade mavemerls e interest and hraign exchange rates. municipal bonds, by diversifying NS nSk geagiaphcatly by type ot Allproducts olfcred by Gtcorp are sub(act (orts normal stringent bond and by single issue hmilationS. and by obtaining reinsurance crcd4 standards. Iinanaat conlrO(S. and n Jc hmibng and morxtanng Premiums are racagneed over Ihe term ol Ihe esurance pote@ pocedures. Many ol these poducts do ret entail present or fu(ura Reserves hr keses are pavided br when defau(t by the bond esuo is tunded asset or hablity pasitere but are instead in Ihe nature ot raasonat(y anbcpated; suchhsses have not beenmalenal At 'ami(xtmen(s, guafanlccs. Or execu'Axy can(racls. Oacamber 3l tg85. the pnrc4(a(amount of muncrpat band insurance FoGowirg are d scussens of car tain signifcant products with 'nhrce retainedby AMBACwas $ 291 buen. The muncipat bonds indcatens ot gross vdumce insured have a weighted average hfe of 17.7 yaaa. Loan Commitments. A(December 31, tgKx Gticarp and Ns Interest Rate and Forcfgn Exchange Prod((cta. Gticorp pravxfe note esuance facihbes or ~ SubSX(rareS had au(S(ending unuSed Canxnr(men(S Of $ 344 bNCn tO make or purchase loanS. Io purchase thxd party iaceivabbs. to underwnteg fac(4es, or to extend credit in t(iu lorm ol tease fx anong. Substantiauy au ol these comnxtments are contingent upon customers'aintairxng speafc offers in(eras(rate and hreign exchange futures, fanNards, opbons and swaps whch enab(e customers lo trans(et mod fy or reduce their iryerest rate and kxaign exchange nsks. F Aures and hnvard contracts are comm'tments to buy or set( al a future date a financial instrument or currency al a contracted pnce and maybe sett(odin crad t standards In additen. Gticarp and its subsxfiares are obligated cash or ttxough delivery Swap cantraas ara carnmrtments to setue in under var eus recourse penis(elated to sales ol loans or sales of cash at a future date or dates based on diucrentiats between speci par tiapatens in poats ol bans. At December 31. 1985, the maximum fed finarcial indces as apptedlo a natenal prinopat amount. Op(en oUxfatenunder aurecourse povisians was $ 17 bi(ert. Ol wh'ch contracts give the buyer hr a fee the nghl but re( the obrigaten to buy
- ifs '
a domestc insurer. and to assure payment d speci(ed fxiancral The market and cradl nsks inherent inbdcbonat bankeg servces ob(xfatens of ac(etomar Faas are ecagraadratady over tha term ol are also presenl in these special@ed bnanaal poduas. as are the ue standby let ter ol aadil Losses have not becnm;itenal vanous operat.ng nsks thai exist in aN fxianaal actrvites Notenal Al Oecarnber 3l 1985. $ 224 bt(en of standby Ial(eis of aad4 ware pecipal amounts are oftenused lo ex press the vobme ot uese autstandxig including $ 65 buen suppor ledby marketable coca(eral bansactens. but do not represent lre much sma(ter amounts poten. or par(Cipatad to alber linanoat xebtutens Approxxnatety LPo ol bally su(tact to nsk. total outstanchng s(anahy let terS Of credit were esucd to support Market nsk is the exposure creafedby uuc(uatens in in(crest and reesurance IranSaCtenS. and 40".o ware esued lo assure payment ol hraign exchange rates. and e a luncten of the type ol producl. the customers'peafed fnancerobf~(ens. Thc raniainder ensure d Vdume al ue tranSaCban, t(e tenOr and termS (he agreement, and contract pcrbrmance or povide a payment necienism the vdatihty d the underlying eterest rate or exchange rate. Market Munfcfp((fBond lnsuranco. AMBACtndemrxty Corpora(en. a nsk e auacted by (henxx of tie aggrega(e par(fde and (re extent to malar>ty owned subMhar y ol Gbbank. povxfes de(au(insurance an whch posrtens have atfsetbng exposures. The market nsk ol an interest rate swap for exampie wiN ba educed by Ihe pa~ of sacuntes. financial futures, or other interest rate swap positenS vnth ~ ossa(ting exposures. Gtcorp manages its trading activites in Ihcse specialized fxiancra( products on a market value base whchraCOg. nizes in aamngs t(e gains or losses resu(teg Irom changes inmaiket 66 'i 'gogh est or exchange rates. Tradhng Ixrxts and ~tonng procedures 18 STOCKHOLDER'S EQUITY OF Cm BANK,N.A. used lo control Ite overail ex posure to market nsk. Authonzed cap tal stock ol Gteank was 40 mdton stares at 're Credd nsk is the ex posure to loss dime event ol non performance Oeceniber 3L 1985. 1984 and 1983. by Ihe other party to a transacten. and is a function of the ahbly of Ihe counter par ty to honor dS obtxlations to Gticorp Fo tlese specrabred Changes In Stockholder's Fquity fnanciat products the amounts duo from or du. Io the ctxinterparty KlKlvie5CP CIOllkNS wdl change as a result of mover nenls inmarbel rates. and the amount Balance at Begvinrng ol Year . subtect to ciedd nsk is tvndeu io thrS ttuotuating amaunt, Gticorp Additions a+trots credd nsk through cred t appiovats. bmds and mon toreg Net income S 807 S 777 procedures. and the recogixtionin earnings of unrealired gains on Conuibulen fremparent Company.. 405 . Ihese transactions is dependent onmanagemerd's assessment as to . coecctitxbly ~ Other adddions. net....... 10 7 Gticorp has srgnificanl presence in the markets for these interest 41422 $ 777. $ 763 rate and foreign exchange products. Al December 3t 1985, the tbeductlons nOtenal pnntXpat amOunt Ol Gteerp'S OutStanddig rntereSI rate SWapS ~ Dividends declared . S 380 $ 292 $ 272 was $ 364 bran convnitnents to purchase and sett morey market Foreign currency transtaten . 20 42 30 instruments or secuntes and comirxtnents to set tie against fdianciat INhte.otf of intang btes assocratrid indices unifer inlerest tate futures. Iorward and optn contracts were wdh acquetion of subsdiaies $ 383 btboix ~tments to purchase and sett currencies under and affdiates. 114 .= "30 22 ~ foreign currency sped. kxward and opten transactens were Other deductions. net . 19 $ 1675 bltea These amounts are gross votune indicators only and do 503 $ 383 $ 324 nol reflect the extenl to whch pos lenS may offset one another As OAtAIICCAT END OP YRAII S7o037 $ 6.318 $ 5.924 dscussed abovo. Ite amounlSpctentiatty subtect to market and cred t. ,, nsk are substanbaay smatter Ihan the gross volumes indicated hera Gtibank charges retaxed earnings with the amount ol goodwiN associated withinvestrrents by GI4ank in overseas subsdiares and
- , approxxnatety8f% ratates to sates of iasdentiat mar (gages. Estrnated or seN wiu(in a hmrtedbme a inancial instrument or cuir~ a( a bsses pursuant lo thcso abtxfatens are nol expeded lo ba matenal Cantradad priCe and may alSOSatue hi CaShbaSed On ditfarentrala Letters ot Crodft. Standbytetters of aedit are usedtn 'tandby between specifed rndcee vanous transactens to enhance t(e aed.t standlg Of Gtibank hmast cases. Gticorp manag&rlhe exposure" rata(ed ta these cus(omcrs. Standby fetters of aadit are irrevocable assurances tha( paducts as part of r(s ovaraN interest rate and bregn exchange Gtibank wibmakc pay(( en( in the cent that a Gtibank customer trading acbvibes, whchinctude both furcal asset and babhty cannot per hrm i(s abfqs(ens ta (hxd parties. pos tens and non funded positens. For exam'tcar pmay hdd a Gt bank issues standby let ters of aed4 onbehalt ot its customers sacunly in its trading parlhte and at Ihe same txne have futures br hur pnmary purposes to ensure ccn(rect porhrmance and bravo. cantracfs lo sell that secunty The bsMS on One poS tenmay cably aSSure payment by the rxrstrxner under suppty sar vce. and substanbatty otfsat gaes on the other postea These producls are maintenance canbacts or canstncten pro(cats: Ia fi ovde a payment also util@ed by Gtcorp to reduce exposures outside the trading meaharXSmbr a CuStamar'S Ihvd party ab(X7a(enS ar qCt aS a SubSb. porthtes. as hedges of interest rate ga ps and hregn exchange bxa bran escrow accounL to assure payment by a hreignrensurar lo pasrbans.
and eqixpment, most of whichhawt, renewal or purchase optens. Qdxmumrental comnvtments on in excess of undertying book value. bt accordance with generally accepted accounteg principtes. such cterges are not rettected in tte Gtcorp bnancial statements. and tie rotated amounts. net of amor ti leases. nel ot sublease income. are $ 186 rixtlenin 'te zaten. aggregating $ 256relbon. $ 109rrvaen. and $ 101 rnilbon al $ 181 irbttienin 1987, $ 149 mittenin 198fk $ 133 mdbcnrn I98R, December 3L 1985. 1984. and 1983. respectively are inctudedin otter m !tron in 199Q and $ 460 md!ion ttereaf tet totatfdig $ 1224 mdten. assets in the Gticorp con."otxfa! ed balance sheet. Gticorp's equ! y , tal expense was $ 256 rrxtten rn 1985 nel ot $ 55 irvtten sublease investment in Gbbank amounted to $ 7293mdlen. $ 6.427 rn!Iioe. and rentat theone. $ 209 md ten e 1984 nel of $ 53 mdtion sublease $ 6mratbon at December 31, 1985, 19&4 and 1983. respectively renlal income, and $ 194 mdtenrn 1983 net of $ 49 nxtten sublease =, rentalincone. Al December 3L 1985. certain divestment securdes. Iraddig account assets. and otter assets with a carrying value of $ 13347 . mille i wero pledged as ctdlateral lor borrowings. to secure public
- 17. COMMITMENTSAND CONTINGENT UABIUTIES afldialeS IO the eXtenl required IO Carry the inVeStnentS al a Value nct cetabfe leases for ~s Gticorp and ds subsidiaries aro obfxfatedunder a number ol noncan.
and trust deposds and Ior other purposes. 'arious fegal prOCeeddigS are penddig againSI Gticorp and its > ~ subsxfiaries Management of Gbcorp COnSxfers that the aggregate babby il any resulbng born ttese proceedings vntt not be material '. 67 e ~ J ~ g(gv 1 ~ <Ai'H9'~t +t: >'.c~ >. ~':> '. '"
- ~
. FlnanclalPoattlon Condensed Batance Sheet Net CXOC vvrx SI H IIIIIIOHSOr Cxxl xdIS 1 ass 198s lses HIALIIOkSOl rxXIHIS Assets Dcposas vvrh Subsidiary Banks prindpafty 1aas r98s Funda Provided Nctkxxx Deduct Equity in Undistributed .... r . '... 8 998 $ 890 S 860 d interest beanng . 8 4I073 S 4,318 Incom - Investment Secunties at Cost (htarkct value Sttt kl t985 and $ 259 xl 1984) Investmcnts in and Advances to 117 Funds Dcriived from Operations Increase in .. 8 18 $ (14) $ (4) +~Other 8 Than Banks . .Investments xl and Advances to Gtlbank,. 17 599 13,665 Purchased Funds and Other s....... NA. and Other Subsxkary Banks . Other Assets. TOTAL. Idyll ~ 10I851;- $ 32,893 7.746 $ 26.226 Ben owing Long Term Debt and Rcdccma5e. Preefrcd Stock Preferred Stock..... '..a RpQO 3j421 r)75 1,028 1,087 100 655 2 81 4 540 Decrease in LfabflNos and Deposits with Subsidiary Banks.." 245 1,203 Stockholders'quity Investment Securities... ~ . 183 99 Purchased Funds and Otter Bonowings. $ 11I483 Investments in and Advances to . $ 9,064 998 Subsidiaries........ 191 Advances from Subsdianes Other Llatxt tee. 1I339 - 1,494 OthetNCL....... ~ .. 87 ~ TOTAL.......... .. $ 8,908 1,335 Long Term Debt and Redeenabfe ~ $ 3,712 $ 4.295 Preferred Stock(Notes 7 and 9) . 11I328 ~ 7,907 Stockhokfers'qcxty . Funda IJsed TOTAL $ 32I893 $ 26.226 CashDlvidends Dedalcd Increase in .. '.i 8 353 $ 319 $ 271 Corsdonaed Statement ot Income HIIKldcddlOr DOll JAS Rovetl M0 dddd - ~ ddddl 'dl , Deposits with Subsidiary Banks. ~ klvestmcnt Securities Investments in and Advances to d ', 3,834 d d d I - Subseries . 8,057 2,288 '8 dd DivxwndskomSubsxflaryBanks 8 360" S. 292 S 272 Decrease in d l ~" . Interest fromSubsideries 1I295 1,421 1,094 Advances from Subsidiaries. 498 '; 1,057 140 'I) ~ S. Other (pnnor patty intereet On Oihct Net. rnestmcntsecurrtes)... ': . ~ . 34. - 4g . TOTAL. $ 8+08 $ 3.7'I 2 $ 4,295 +~889~1~759 $ 1~4+4 Expense Various legal restrictions txnrt the extent to which certain subsidiaries, Intcrcst nn Other Bcnowed Money.. $ 857 S 907 $ 682 of Gtiaxp can supply funds to Qticorp or rts other subsidraries and htcrcst and Fees Paid to lanes..... ....... ',005 aNiafes. Inaddxion, Ihe applcvdd,tho Comptldtcr of the Cunency is Subsxf r 187 316 358 required d total dividends dedarcdby a naterx1I ba% xl any Calendar 'IntercstonLongTermDebt 802 583 Loss bckxo Taxes and Eqcxtyrn Undlstrlbuted Ncl Income '3I040~~ $ 1630 Under thc formula asrt ~ year exceed the bank's net prrNs fas defined) fol that year combined wlthits retained net plofts hr thcfrcccdrrg two calendar yeae. toGccorp'9 natenalbank subsidiaries at December 31. I9rs had comtxncdncf assets ol approxi. mately$ &6btfxxl)GccorpcanrcceivedNxfendsflorn suchbank. ps~~ ff, olSubsdranes....... 4 (206) Income Tax Benefit-Grrrcnt... Equity xl UnddStnbuted '87 8 (351) S (275) 261 202 subsidiaries in 1986wlthout appxxxrl ol the Comptrdler ol the Cuncncy of approamately $ 14 txtrcn, plus an adcktenal amount equal to the~net paNs for t986ctp to the date of any such; p~p~d Net hcomeof S sbsxflares... 982 904 N)4 dnndcrx) dedaratioa srsTtrscossa........ 8 998 $ 890 S 860 I f dd Il r l l~
- 19. CITICORP (Parent Company Only) Condensed Ststementot Changes ln
d td I d e i I NFLATION ADJUST'E .. rem bevm~ee D D A T A S U P P L E M E N T . accompanying data have been prrmred according to 1985 Constant Dollar Data . xfetines issued by the Financial Accounting Standards W LALLIOII5CX OOLLAII5 to iflustrate certain aspects of how inflabon affects Net incan's rex(edin the conSOfidated:." Citicorp. The data are intended to supplement. bu'. nol replace, the basic historical fNanoiaf StatementS. The audited statement d income............. Adfustment to restate depreciaten for $ 998 tinanaat statements and other trad<tenet financial data included in . this report conbnue to represent Citcorp's actual operateg results. theelfcclsofgenerateflabonoi......... ~13) .. '9e ~ The inflation adIusted data reflect Cxt etfeds of generalMiabonusng Mar tMCD5la,A04usTRD FOR ttKMErtAt.lxFLATIOM $ 985 ~ the t~oncaf cosl jtxwstant dotter method, with tie Us. consumer r aerenrmrmmmrarLrm'raeeeeerr999". Price tndex kx All Urbane Consumers being used lo show data in aver. age 1985doltarL Current cost information, which shows the effect Financtae Data Restated for the P .octa ot d chang'ng prices of specific gcods and services used by a corn. aeneral lnffation Qp~Q~~~~+ pany, has not been presented since such information does nol ditfer H eeeLLecw5 5 Lcm 9 95n 5mnnr 'fcanuy fnxn the constant dotter data. oAIA nr5caeroaaeoveecSAnf w Amen AGr 9999OOLLAI95 5988 t984 9983 '982 l98t The aSSetS and flabcteeS Of a frranoiaf inStituticn are primarily mOn- 'Tbtal Revenue elary in natura As such. they represent obligations to pay or receive fixed and determinable amounts ot money whch are nol affected by A'sre ported.... 44476 $ 6.619 $ 5.883 $ 5.121 $ 4,053 future changes in prices. During Deiods ot inflabon, monetary 8SSets. Restated..... 89476 6,855 6,352 5.707 4,794 hse value in terms of purchasing power. white monetary babctibes have Xet income corresfxwding purchasing power gains. The assets of a financial Asreported....fo 998 S 590 5 860 $ 723 $ 531 institution atm include items +eh as trading account assets and Restated..... 985 814 843 730 550 premises and equipment that are considered nonmonetary and. XotAssets at therefore. do not give rise to purchasing power losses in the inftaten Year.End adfusted data. Asreported.... $ 7,765 $ 6.426 $ 5.711 $ 4.815 $ 4,281 Restated..... 8,670 1,500 6.998 6.400 5.8'?9 Purchasing Power Ctatn on Xot Mono. tcryllabffitloscr9..$ , 54 $ 37 S 18 S 44 $ . PorShare 's reported.... Net fncome~ $ 7.12 $ 6.45 5 f..t8 S 5.60 $ 4.20 Restated....' 7.01 5 tfb 6.32 5.65 4.37 Cash Dividends Declared Asrefxxted..." . $ %26 S 2.06 $ 1.88 S 1.72 S 1.56 Restated..... 2.M 2. 13 2.03 1.92 ).85 Marfcet Price cl Year.End As reported.... $ 49AS $ 38.75 $ 37.12 $ 32.50 $ 25.25 Restated..... 4&,54 3957 39.42. 35.81 28.90 Average Consumer ~ rif ~ Price Index 0967wt00)..... SRh2 ~ 3e1.1 99Accrer9 Are AAer>>5 rii99nAIA enr encn re Irnnesnr Ancr Aononww Ancr Ieec Irncrmrr occcrrint 298.4 289.1 272.4 oince Acceeelr Any Iecceirr IAA ocrnNr Areeinr Nirrm wreeL Aer>>mnoer 55 f '. Itr C>>eceivncee AncrrcIeene>>e iewnenivca~ Ar <<"Ir. mfme A-Lg>> 'e g~/~ ep~epar mn 4 m l s o F I N A Ns > I A L S T A T I ~ S,'~iM~>&$ 's T I C 5MSXCZ5l S s3IIARTERLYFINANCIALII4FORMATIOI4 OllCORP ANDSUBSIDtARIES n secsKw5 os cxxsssss sscrK Kss sssssss Asscxesss 4th 3rd 2nd 1st 4th $ 1,533 $ 1,368 $ 1s311 $ 1s234 $ 1,203 $ 1,065 $ 1,063 $ 988 Fees, Commissions and .r 844 751 740 6(15, 694 555 525 526 TOTALItEVENUE Pcvtit'on fcr Possitste Credst Losses Operating Expense. $ 2s377 394 1,609 ~ $ 2s119 $ 346 1 407 $ 2s051 $ 280 1s310 $ ~'253 $ 1s929 1s181 $ 1.897 1.224 $ 1.620 $ 146 1.137 $ 1.588 $ 139 1.091 $ 1,514' 1.004 81 TOTALEXPKNSE.....I... $ 2s003 $ 1,753 $ 1,580 '1s414 $ 1,477 $ 1,283 $ 1,230 $ t,C i tncome Befom Taxes Income Taxes. . 374 131 $ 368 139 $ 461 210 '515 238 S 420 '59 $ 337 137 $ 358 152 S 429 206 NET INCOlkE...... ~ $ 243 $ 227 $ 251 $ 277 S 261 S 200 S 206 S 223 . PerSI . Net tncamecs ~, On Comme+and Common Equvalent Shares...' -.. $ 1.69 $ 1.60 $ 1%1 $ 2 02 $ 1.90 '1.42 $ 1.49 $ 1.64 Assuming Full Dilution...; ., $ 1.68 $ 1.60 $ 1.81 $2 02, $ 1.90 ~ $ 1.42 * $ 1.48 $ 1.58 ~ TOTALASSETS...., ..'i..'$173s597 $ 168,062 $ 158sMO $ 1~n603 $ 150~6 $ 144,731 $ 143,509 41,841 'I \ Casts Dividends Declared i Redeemahte ptefened and PmferedStock.... .. '..... '.'19 . $ 18 $ 14 $ 14 ' $ 15 ' ~ $ 17 rs c $ 15 I $ 13 ij CommonStock Common Stock, Per Cornrnon Stock Price Range Share... ~5 $73 4465 $ 73 $ ~ $72 $ 72 ~ '.515 $ 65 $ 65 $ .515 ~, $ 65 $ .515, $64 $ .515 Migh........... '7 ~ RPk 51*/e 50 47sh 40'h ':"; 39 34sh Law......., .'. ~: Wb fs Close '......,... rs) oo ass sscssoe eseesces sss osssscss '. 40'h 48h vsncsecsesesr sssvessssscs 40 40'h ovsssssss. 42s/e 48*h 36sh 43s/e 33'/i 387i 1 '6N h 27lv 3Pjfs RATIOS s "- ~ ' s,s ~ " " " ~ 10&& '9fO tees Return cn.'age Total Assetsc>> . , .62% .62% .67% Retuman . xxtStoctchokfes'Equstycss. 15.1% 15.0% 16.5o/o Return an Tote stockholders'quitycss ....* . ',1 14.4/o 16.0% (s Average Cenmce Stockholdes'quity as a Pecentage of Average Total Assets . .,',9%'.4% 3.9'/o ~ 3.9i%%d s %.hi1~ Average Total Stoctchotdes'quity as a Pecentage of Average Total Assels . Dividends Per Common Share as a Pecentage ol Net Income Per Common Share. rsr an ssccsse os e vAerecse sssvxssess ra an esc othe siss roQI ssessens SAxs Swswlsss is e cecsherse or Aesecre Ceeeoess ra ssss eceme ssss rsnsenoeeserooNons Scocs theses os e ceseverse asnjr(e ksesv ~ ~'roses roses , i 31.7% s s 4.3% 31.9'/o 4.2'/o 29.0% 70 y, 'E s 1V v +le 'E 'ix *'E'Magi m V lg,l 'r s~ >v 1 9 8 5 F 0IR M 1 0 - K C R 0 S S - R E F E R E N C E I IV D E X ( ~ 0 ~. P flail w'1t rr~P Securities and Excharge Commission his Annual Re port and Form 10 K incorporates into a sngfe Whshingfon, DC 20549 document the requirements of the accounting professen and 4<4Q. the Securifies snd Exchange Commission, incfuding a ig Annual Report Pursuant lo Section 13 or 15(d) comprehensive explanation of 1985 results. of The Securities Exchange Act of 1934 For the fiscal year ended December 31, 1985 'A, PARTI Pago Convnissicn Fife Number 15738 Item 1 Busfness 7-17 24-27, 38i and 4~2 <~r ty ,ivy. CI77CQRP Item 2 Properties. .'y I Item 3 Legal Proceedings Incorporafedin the State of Delaware Item 4 Not Applicable IRS Employer Identification Number 13 2614988 Address 399 Park Avenue, New York, NY 10043 PART II 4t~ Telephone (212) 559 1000 Item 6 Market forthe Registrant's Common Equity and Related Stockhokfer. SECURITIES REGISTERED PURSUAMTTO SECTION 12(b) OF THE ACTr Matters........... 43r70,and84 'Item 6 SolectedFlnanclalData........ 43 Myri A fist of Gticep securities registered pursuant to Section 12(b) of the Item 7 Management's Discussion and Analysis of Secunties Exchange Act ol 1934 is avaihbie from the Offee ol fhe Seciefsr)f 399 park Avenue, New Yek, NY 10043. Operations '...... Financial Condltlon and Results of 7-36i40-46,and68 ~A 9 As of December 31. 1985. Cificorp had 12R3%890 shares of Canned Stock outstandrig. Itom '8 Data........... Financial Statements and Supplementary 48-68, and 70 fJedby Section 13 or 15(d) of Item 8 flotApplicable Ct Gticep(1) has fired ail reportsreqvired to be tfe Securities Exchange Acf of 1934 during the piecediiig 12months(or PART III fe such shorter period that the registrant was requked to fife such repels), and(2) has been subfect to such frig requ'reireiirs for tie past ttem 10 Dlroctore and Executive Officers of the 90 days. Registrant............ 70-82~ 4 The aggregate market value ol Gticorp common skrck held by non. sfffistes on January 31. 1986 was apfxoximatefy N5 txgon. Item 11 Compensation........ ~ 'xocutlve x. Item 12 Security Ownership of Certain Beneficial C Owners and Managemont, =;gf Item 13 Certain Relationships and Related
- " r-
J. I PART IV Item 14 andRoportsonForm8 K........ Exhlblts, Flnanclal Statement Schedules, 77 Certain statistical data required by the Secunfies and Exchange Coirxixssion are included cn pages 20 to 23. pages 31 to 32. pages ~ pl 33 to 34. page 7(t and pages 72 to 76. .4 rL vi, sQ
- Transactions......... ~
nL r, 'yr~nr ,,k~~= -"~ ..-;:-": "'. '...k'." "-'~=-.,-.;~4::,,~ -. -.~- .'-.. "-.~~~'~-.'.-g~"~'.-:-',,-,"".-;, ~ ~ ev S F I N A N C I A L 0 A T A S U P P L E M E N T ~~ >A~.>~+~~ AVERAGE BALANCES AHD INTEREST RATES CICQRP I5ND SUBSIOlARtES RXABLEEOUiVALENTBASLSIC ATCRAOC ATCRAO8 avtRADC Aasnrrd AyrnanF ACRAQC H IALLIDR5Df DOLLARS TOLIIIIC IIITCRC57 R47$ TDLIAII alttnisT RAIC IDLIRIT ~ etttncst AAIC 0:.P~ INTZRCSTRSCCNud INet ot Inooonod1 otocontnea ~ h Ocmestc Onces ~'fr'crlgagaandRnlestire....... Cmmelsrdandhdehnal .. ~,. ~ ~ ~ 0 14212 4300 0 TA22 601 64 . 13.70 11>>$ 1401 5 14,082 4&t 1.189 509>> $ 2.060 'ltd I ~ 69 IQ77 75 $ 16.285 342I 2.198 $ 1.960 312 234 ItOI t086 l063 SrL425 4101 1585 . Xd71 . 5.1IO ti 15 %4aloomeeodLcans....... 0 54003 4 42381*14 $ 58.021 5 5.801 1518 5 60 Sdl $ 8 209 13 65 ~5M Cnssanaar Leans ., ~,, \ ., 0 44560 0 4738 14'lO $ 4.43l l445 5 19.616 $ 2.647 t451 hoonaSICOICes ~ ~ 5 33,671 ILD64 1.013 I 6 65 5307 SAS 11 ed %rtd CccaannerLsans "... 0 47,737 0 4921 14AO $ 35 155 $ 5 444 lidl $ 24.923 $ 3 755 IS u IQ l9 14 %AILOana...... Leasefhantrny....'...., ~, . ~ . SI04820 . SA26 $ 14150 483 t432 1410 $ 94.182 I200 $ 14/St 392 le 04 2063 SCL504 I.114 $ 12554 362 2039 andLe<<4Fnancny..... 0104246 $ 1461 ~ 14A3 $ 95562 5>>7II3 I 5 15 $ 87275 5 It.iI 5 la 23 Tctal Loans Ftrnde enid ondResolo Aeveenrento (tlns44POIIT In dOrneetlOORIOOS7... ~ . 0 er03$ 0 I+07 1400 $ 450$ $ 935 1901 $ '4297 $ 151 1162 ~chc lnveetrnont doc ertttot 304>> a 'tral...,.... StateandtamCDII .. ~...,'... vs%usuyendfedalalagancos...., '~ -. 0 2v50$ 3$ $ . 0 260 48 10$ 10.70 1418 1422 $ 2.745 ~ 19 52 1241 07 lg 09 5 t.t81 454 382 $ 245 50 It.18 1300 676 ~....... Ted 704 71 I.924 232 12 05 hOvelteuotc<<nnnctoeyloaalntlrett. Total . Tymune Account As seta ~ .. 0 SI440 TI130 0 460 087 1462 12AS 5 22 I 3 6.'Idl $ 279 706 12 06 'll 42 5 4.941 $ 562>> 35 Agencr<<...... 149, .. ~.....'...'. 1043 7 r L rl Act Stare snd alvncPII........, VS Tlatlay snd Faderd ~ 0 ~ 417 064 ~ 0 00 71 124IO IL22 5 %015 336 3248 5 134 53 ie>> 1241 1338 1881 5 218 2228 5 18 26 Rid II 99 I 6 43 0 dv500 . 0 070 1437 $ 4JIS $ 798 1691 $ 3.195 5 ~ 70 %441 ~ ~ @torgot~ Deposits 1273>> 03 IPttnctpetlylnevorseesotllceel %4alaealett SnnngAIieta Nonhteresteamvrg assets. . ~...,, 4 11r011 . Stedv59$ 19+10 4 II150 SISv627 0.TO 1400 " 5 11577 5124X67 IQ564 5 518%id 1480 $ 10,70t 5>>0 ~ 19 I 1.504 $ 1074 $ 15279 5 142.63 I 5121.923 IIITSRCST CXPSR40 I h Ocm<<tc Oraces '>>.629 eyi 7eg, 6.252 $ 479 1 66 . 0 14200 0 060 ILTT 5 ~ $ 926 egsaeecleCeraliCal<<liolPOS4..'.... IOAI I 573 9 60 3.525 326 c ',> Tv314 ~ 241 IILI62 1.9ld>> 151 81 9.830 I 008 l021 1007, %aal Ocm<<tc hrelest Beanny Oadosrs Total............ hoverseaSOACea.. ~.... ' SC,182 . 0 Si104 4781 480 IA$ 'rk786 $ 29364 $ 2.963 5 tied lt >> 5 19585 ~ 1.735 'oet 5 I813 925 1065 lvrv Alllaaeynv en,vI~4- ~ Iarnd 4 Oorovved I Orme<<COIC<< Prrsna led Fryah and Oem ynmemCCO Otray PIACnatad ~ fedtrar flares Furca<<ed and eecvntesecadthdar 'Ayeemelaatr eovmnue.......... Piper...,...,, Frayta....... 0 OCASO 0 IOJaec 4+77 4380 0 408$ 0 - v 855480 418 007 IIL2$ 0~ 5 16.110 $ 9229 4270 5.646 $ 8.63I $ 972 525 568 tu3 1042 Iy vr6 ty 06 5 ego 8v379 3,166 ~ .SS I .,5 ~ $ 6894 809 344 483 Iyii S66 9u 9 15 j CaDIAINra<<,......... Long Term Data and Avcrdvvared 14032 . 1~5 11.10 9.063 l.034>> 41 6488 690 t064 %aalaroom<<ICOSCea...r.... 0 SSAOO Tidl8 0 4202 Ivoet 0AT 24.70 " $ 29000 8000 $ 3099 t.l45 lyee 2649 5 23584 1.916 $ 2326 I.934 986 24 24 i hoverleASOICea: ~ Tatal ~ ~ ~ . ~ ~ ~ ~, ~ ~ ~, 0 otv304 4 ert63 ITA0 $ 31,105 5 5 244 li IS 5 St!vM $ 4 260 1350 %rtalaear<<t Baanng IARAMr<< 5127r7774 dtev020 1407 $ 113256 $ 13875 l2 25 $ 98.880 511.154 I I 28 Prgrrg~ cemtndoaccsesvloa~oraces..... Lvawcs..... T~ 14340 6.021 11.195 d 051 l6824 %441$ cano'dtm'eoKT........ Orner Non arramR Bearng TAao 6.159 5.352 TOTAL IACLITCeAnd CTOCCKOLDCR O'ARRTT ~ ~ ~ ~ ~ ~ ~ 518IL505 5 I 42 631'F~ $ 127 e73 taty WICRCC'7 0 CytlllACACA KRCCRTAIICOP Iarycncsy~ Aycnaoc hoem<<ICCRC<<....... AsscT$ v... 724884 4207 4A0 . $ 60936 22tt 319 $ 4d358 5 2089 ~ 32 0 $ 2.332 SAS 2.169 344 62 06 I 2036 328 J'. TOTAL .. .. hOVelteatoaC<< ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ Cyr630 5140A8$ 0 8,508 3.90 6%131 5lti 061 $ 4 48 I 3 6l 1>>0 ~ IS 5 ~ 175 3 14 ~ ,rr IrerarKrvvorirrvrvavvrvvvv n aanrrrvr w v Avrvvvrar rater AArl IIIIaarrt avr vrv le livia vvl anvrv el vvAvrvcain ave a vvvtl ave eh var rtr ~ lrvDorvllevatr lr varrve Akvvtr Iravvr Rrlv Ktnvvs IvrrrrKcavvls Arvlavvli Irvvrst Dlrvnvt I >q+4 - / ~ ~ ' ' ~ ~ @~~5+ v / Pi' Lv ~ )'k 4 ~ ~ ~, ~ ~ ~ ~ ~ ~ ~ r ~ .. ~ ~ ~ r ~ ~ . ~ . ~ ~ r ~ i ~ ~ r ~ . ~ ~ ~ 0 ~ ~ ~ . ~ i ~ ~ lo ~ . ~ ~ I ,CYP. I 4'liC<<4 CA&A;ee I ~ 'vL:a LgP 'j'TH~. INVESTMENTSECURmES 'I'~~'; CARRNNG VALUEANDYIELD- "v& vr r'>>5 AV>>r BY MATURITYDATE AS OF DECEMBER 3l 1985 gC( OT>>CN r VS TOCASVIITANO STATS ANO IHONOOALLTH fCOCOALAOCNCKS OVCASCASOti(CCSl H IOLVONSOS OOLL AIIS AIJOVNf TILLO AVOVNI TCLO AVOVNT. IICLO re 10.32% $ 171 $ 1,733 Due Within 1 Year. . S 597 5.37o%%d r- Aller lbutWithhSYears . 594 9.65% 60 4.32% 6.9694',281 2,517 >>7i Alter5butWithin 10Years. 443 9.17 no 236 After 10 Years . 1.184 10.16% '58 5.98s%%d 473 Ir, A'g. TOTAL $ 2818 9.90% $ 825 6.19% $ 6.004 A~ '<<4.5 Ca 'alue and Yetd" As of December 31. 1984... $2.811 10.60SL $ 439 6.68'la $ 3.272 f.( ' Caring Value and Yield- As of December 31. 1983... $ 2,823 10.69% $ 477 6.67% $ 2.534 << ~oy iyiOlf SVOIIICn fCS ISO(yey Ori(ISOV ffe(rnrfofnosf tllsrosf riNTof seocrssofefoof nfeinefo of scceooin off(sofAnooy ffocoffynrfvoA(oofffn ospocoNI hNosoooof sso/loos sf oscsNcnf st I%4 fjjfrsoo(f Iofcl LOANSAniDLEASE FINANCINGOUTSTANDING H IALLIONSOy OOLLAfvjAr TC AACNO csas eAe fr Commercial Loans In Domestic Otfices '$16,028 . Commefchff and hdvstriailo S 13 514 . $ 14,910 $ 17,817 $ 16,104 eyv 8,165 4,912 3.975 2,915 2,635 Mortgage and Real Estatesrj LoanstoFinanciallnstitutionsos . ',353 1,003 2,341 2.623 1.287 S 21 (032 S 21.943 ( <<( $ 21,226 $ 23.355 $ 20.026 h Overseas Offices Commercial andlndustiial(IS S 25,683 S 25.235 $ 27,592 $ 29,590 ~ $ 29,4 '. 2s143 1,906 1.822 2.745 2J Mortgage and Real Estate(TI TC 'I'i Loans Io Financial Institutions. 5I383 5.827 5.914 4,151 3.403 Governments and Qffiaalhstftutens 4 4.298 4,074 '.140 3.635 $ 37S 623 $ 37.266 $ 39,402 $ 39.626 $ 39.159 I 58I655 S 59 209 $ 60 628 $ 62 981 $ 59 185 Unearned Discount . (483) (410) . (386) (463) (423) I'I'4( ComnjeicialLoans. Net ol Unearned Discount . S 58,172 S 58.799 - $ 60.242 $ 62.518 $ 58.762 Ai { Qr(rQ Consumer Loans h Domestic Offees +I Fg *," Mortgage and Real Estate(TT .'nstaNnent, Revotvhg Credit and Other S 21,719 27,490 S .17,679 21.913 $ 10,751 15,418 S 9,261 11.213 S 5.925 9.556 CIA. 'I ~ >>( f S 49I209 $ 39.592 $ 26,169 $ 20.474 $ 15.481 e h OverSeaS OISCOS . 10 727 7.593 6.856 6.824 6.806 53s936 $ 47 185 $ 33 025 $ 27 298 $ 22 287 / Unearned Discount . (4,418) (4.524) (4.030) (4.093) (3.759) 'ver ,* Consumer Loans. Net of Unearned Discount 9 55I51 8 S 42.661 $ 28.995 $ 23.205 $ 18.528 ri(A Lease Financing LeaseFinanc~i.NetofUnearnedlncome......... $ 2,809 S 2.164 $ 1.817 S 1.855 S 1.891 Alhvyance for Possible ~wedit Losses S (1 235) $ (917) $ (771) S (687) $ (58'I) T4 TOTALLOANSANOLSASSRNANCINO(NST $ 115(284 $ 102.707 $ 90.283 $ 86.891 $ 78.600 j rtI ncie(NS lOOIO INS (TAO<<<<IO SCANS(sfy CJVTf(ne(V ~II~ frfONAAsss CA(y vo(N soc(rs(srnrAoery cv IHfosiAfo rsf ncie(sss voos sooon>>nNNvs secf osoofnssfisoev of sess(<<o(nn fjiss, scfs nesfnn fsss scfs(Anc(In fsfrl aesffNA(nn Sffc sesssfonnfnn fssf ',tit.'4 'leant >>r' r*F 74 +gC. L C ~a 1.a pAzsrdi KM'M'"txLa'arLpa, a Ipp. av v ~ 'aarL ~ 'a.q; pw s .grvrri:aLLvag~ Ia<a -: .vI'1 ~ % ~ . ~ ~ ~ a ' ~a ~ ~ ~a . i 0 ~ ' ., ~ ~' ~ ~ . i ~ ~ a ~ I I ~ . a. ~i ~ ~ ' ~~ ~ ~ ~ ~, ~ ~ ~ ~ 0 Or ',,.. ~ ~ ~ ~ ~... ~ ~ ~ . i ~ ~ ~ ~ ~ . ~ ~ .:. ~ ~ ~ ~ ~ ~ ~ ' ~ ~ ra ' ra ~, ~ ~ ~ a . ~ ~ ' ~ i - ~ ~ ~ ~ ~ ' ~ ~ ~ ~ ~ ~ ' ~ ' I Jr, ~ ~ I pv r aaav 1 rm 'v Q ) r- ~ ) -I a Iv Tl. )Cree<<~ 'te ~ ICY',~~)A ' ~'~~Ns. ) I I r LOAN ltIATURmES AHD SENSITIVITYTO CHANGES IN INTEREST RATES vs& THE MATURfTIESOF THE GROSS COMMERQALLOAN PORTFOUO AS OF DECEMBER 31, 1985 ~ Ovf OICA I TAIT Jeyfe 33 AlTIAA wlteeA 5 OvfA le ~ I IALLIOASOA OOLLAAS ITCAA Tf AAS STCAAS TOTAL ~~1'IYI j C'A . $ 8,106 $ 3,124 $ 2,284 $ 13,514 eie L'\9 .'l. e<<<< ~ Mortgage and Real Estate 3.833 1,525 807 6,1 65 AS Other Loans . 817 300 236 1,353 I h Overseas Othces. 21.367 10.856 5.400 373623 'ee - TOTAL . $ 34,123 $ 15.805.i $ 8.727 $ 58)055 <<)I The following table represents the enssitfvtty Of the above loans due after one year I to changes inlntereSt ratea I. ~ Loans at Predetermined htenut Rates $ 5.473 $ 3.397 I'I 'w.332 5.330 Loans at Ffoabng or Adit)stable hteest Rates: I ~ 'OTAL . $ 15.805 $ 8.727 ~ I I 9~PvWY1 TIME DEPOSITS IN DOMESTIC OFFICES ISO0000OAIIOACI Cfatv)CA)f5 OTIICATIUC' ~ I IALLIOASOT OOLLAA5At TCAA f AO 'IOCKSIT CCAOSITS Under 3 months I $ 3,134 $ 2.504 .',. " ' 1',I' ,3to6months . ~ ~ ~ 968 747 .6 to 12 months. . f.t I 'll ...,1 '42 638:I 614 . A " Over 12 months I I ',182 'I' ,. 'ff ~ <'I ' - "i I AVERAGE DEPOSIT UASIUTIES IN OVERSEAS OFRCES AI e 'e ... $ 988 1984 '=- 1983 AVCAAAC AYCAIOC I II AYCAACC WCAAOA WTSACST AAC AAOC AIICACST AVfAACC AITfACST ~ I IALLIOAS Ot OCLlAA5 AALAACC AAIC SALAACC AAIf Banks)0 . . $ 17,501 11I37 $ 17,816 11.27 .'19,352 t'0.38 tg~YV << Other demand depos)ts. 6)470 IL2O 4,782 5.51 6,667;. 4.25 <<t0 Other tine and savings deposits> . 956 ~ 12.04 ~ 26.467 12.83 ", 24,008 11.62 I TOTAL . $ 52,929 1 ORB $ 49,065 11.55 $ 50.027 10.16 it) rtemAAITCOATS)5 IVAIITCCITICAITTOIOT00ACAACCCWAmtdt00ttt IA dIIVTAIIAbCHT0) 510(gOOIT )IT)0 I /. "4'-'t ~ OW ~ ~ 3 * ~ ~ y +1 1 .rl'ST0+ I, I 'I I )&~a> tt / 3 I I e ' 76 Seb I . I'I) IY JA<< WII e PAOPKRTtKS The prhdpat oi5ces kxeted at399Parir ~d 0@xrp er! CRibsnk, NAC0tbenV) aro NewItsk, New Yak. a24tory LXI4!DITSrFINANCtALSTATK54KNTSCtt KDLILKS, ~ AAD RKPOFTS ON IFOllMMC R urncial Statements 844k &suxy buik5ng keeled ~ ~ at t53 East 53d Strtet across iom 399 Pltrk Arrenua Appro)hratr4y 67% ot the 05corp Center end Consorted ~ Ckkxrp round Subskf>>riaL . Ccsrsot'dsted ol hcome Rakrnce Sheet ~ ~~ 399park Avenue compkrrr Is by Ci5corp. h Conacfdaled d Changes h 05barsr also owns ether prope5es hNewrbrk. hcb&g III Wa5 QOCkhttCrera'ECSity street whkh Is totally occupy by 0tkxrp and Its arQiates and Consdidated Statementoi Changes h Fhanctst Foskkrn 55845 Street, anhe-story busing at whkh 34% Is so 05corp also has major real estate hckfrngs h Lee 05corp Qedno Form 844 Current Report ter any monthhlhe lear Angekra end San Rancisca 'nded Oecembe3L t985 ~ ~ isemekma5505corp aboowns major premhos h various ct5es throughout the workl hcbding Paris, Lcnckn Dus ~ Brussels. Buenos Aiba, Rio de Jane'so, Seo PaukL Merdco San Aran, Caracas, Hang Kong, Man5a and hr5L eome 36% d CXicorp owned corpcnde rest rrdate ls kxahd out. 05ccrp'ssgn5csrssubsidisries 9rsde5ned) and 5>>ir Ftaco ~ dhcepora5cn or orgnnxne5cnhcbdc CXbank. NA 05corp Banking Corpora5on 05corp~ hc. LiikrdStates Dekrware Dekrware sUe 5re ONed States. OI the apperrkmately2200ot5ces and Other subekfkukts d 05corp and thek pktce c4 Incorpcra5on or other faciWies ot 05corp kcated thrcughout the workL apped orgar5ts5onhcbdc mately445are owned andthebakrnce arekesecL CMsnkgtew~State) NA UnitedStates CkkxrpTusLNA(Carricrnis) UnhrdSIates 05corp~NAgtxkts) LhitedStates CCNSKNT OF IN DKPKNDK44YAllDfTORS 05cephtema5cnalGnxss hc, Delaware Securi5re Markets.hr. Detawam ~ ~ '5corp PEAT. Post>> aterurleki lsttehett 4 Co, Otseasa hc 'ARWlCK Cat@dPuksc ~ants Debunk Dab'5ocrpReta5ServbeLhc, ~~ 05corp'4 Artides ofhcorpaa5cn and Bykrws, hstrvnents De5nhg the Rigtss d Secrst54s HoVers, hcbding L dentures and ot Diectora constkuonthstrumerssreta5ng lo various exacuaw and start benersptsns. hae been Bed wkh the Comrnsskrn as to hcorponracnby elerance ol ar report dated ~ Erhkita tOVSriaua regrWa5an Statemeea. SIOCktrokkrra may Obtah Cap'>>ad SuCh dOCumed 4 by Wrrtrrrg Jsnuary2L t%@rsta5ng lott>> orNsddatedbalance sheet ot 05corp end suhk5aries as ot Decertrer 3l, l985 end 7984and Ofce of the Coetaatt 399 park Avenue, Nevr Ark. the ehted ccrrsc5dated statamerss ot hoxna,changes h stock New rbrk l0043 ccneo5datedbakrnce sheet el ~
- =~~ef 'S rrr <tVr j P gS g p.-
. 47d the t985 05ccrpheaal Report ard Form 10K, h sre gg krsowhgRegk>>aricnStatements:d05cortL &bc,2~ ~258678,2.58678,277058, and 24L2298cn Fonn 84I andNoL295728,0.96725,267IBIL33-2978,33 784, and 3WII4 on Form S4 and ol 05bank, NA NrL 24044 2-988IR33 cnFcrmS IL 78'nd3MIBI -"gMVi+F4'.. '=WP~ ~4:~y '~+4"+'"'>~%~~'~ iQ.'~'~+%>~8 ~~AF~'" ~M~o 'a.'-.s ' ~ ~<<, t>>. t>> ';l",:.', Q. ".:t . 'tiIr ' .V>> <<f>> I OtOWLTURKS a pursuant to the requirements d Section t3 15+ ot the ~ Srchange Pcl ot 1934, the egi'scare has duty cavaod misreport tobe .stayed on as bohott bytte undcnagnod, Ihonxsso djy authoraed. John S. Reed ~W Ptncrpat Earcut've 05ce) and the Onctors d Cttcorp(tstedbobWj ececuted a power d attorney appoelng Pout OaahaiahnOeir attomeytntact,ampowiing hknto sjp thtsreport on their batik IE Rchatd Cctbye~ S.'~ Hate R hngermuat ~ ~ >>)'c. James K Bete James 0 Fartsy Lewmece E. Fouraker Senior Yce Ptostdcia-Secretary hrthur Ftwrr C thon C GtAtn, Jc Hany J Gory ~ 4 JohnWfhdey Wewy 3L tMS John P.Harbat ~ 'HJ Haynes Ascvant to tie requtemoras d tho Ocuuttke Act d 83l, Anory Hougtton,Jt threpot has been signed on February 28, tw6by tt>> CtGtovring barite Kraps poiaoie h the copachee C Peter McCdough ggggg S. Howard r ~ ~ Themes LL Sma3 C Thecbatd Franklin A. TlonMe Thames Senior ~ ~ A I Tl CORP T,'i CITIBANK SENIOR MANAGEMENT OIL AloetstsstiosaASI, SSICHAIILA CALSAHI ~ AtzL4,'cDLLIH4 - 'AYID40IDODHI..= Q, vce channan ol Gtcorp snd 45, youpoxocutNO ol Gtcop and 49,scncrcorporstooifccrof 45,youpcxccutIVOdGtcorpand ~ Obbank. e pdcymakng dtccr br Obbank. assumed responsbbty n Gbccrp and Gtbank. e rcsponu Gbbank. asstxnedrcsponstxsty n Otcorp's and Obbank's legal rcg. 885 br ho Nonh Ancrcan Ue lcr Neth AmenCa HO e alSO ~ 885' the Pnvate Bankng Geup vtatcry and external atlaxs ln 1985, Fnance Gnx4I and e rospcnsbb tho avd ptanNng dtcor br ' n tho hcbMdUH Bank. Ho has Lk Angcrmueser was chaxman d br the dcvcbpmcnt and manage Gbcorp and CSIbank. PnNeusttt bead expcnonco n corporate the CcrpcratCn'S Ccuntry fbsk mors ot Inancel scrvccs b corn he was crvcf nvcstmcnt dfccc bankng n New tbrk. Japan and Rcvew Comnvt tea He Fxncct mcnxaL ndustnal snd serves buli. head ol Corporate Ptanrvng super Brazs. He also served as country Obbsnk n 1973 as senor vco nosses n 0>> Urxtcd States and veed the corporsbcrt's account head br tho virid corporatcn , pcsdont and general counsel Canada lbs previous assgnnents ing snd ccnbot lunacy. head ol Geup nBraz4 andaxcf ot stall br incbdo venous posts n Southeast the Fnancxat Markets Grot'nd tho Canbbcsn. Central and South DDDOHTSL DAILY>i Asa. Iho Mob FAst. Snd Saucb most recently was head ol the Amencan Bankng GrcuP In 1981 4fx ycvp cxecubvo ot Otcorp and ASIXS. and aS axel exeouttve hvtetment Bank. Ho Ionod he was appontcd rkveon head ot Otbank, assumed rosponscxity n dicer br Gbbantcs atbbsta Ihe Obbank n $ 6l the Aetratasa and SovthcaSAse 885 br the ASafpaafC Grcup n SsvcSAnenain Bank n fbysdh Onxscn of Ihe Irebtubcnts Bank Ihe Insbtvtcnal Bank. Hs pcvevs He has also hadrosponsbAty br assgnmcnts naude sheen treasury fundeg, bregn exctenge Gbbank's branches n vcrezuda, Gbbank. is rcsponstse lor ntcme acbvboa and tho vostlmcnt port sorxor dtccr n charge ol opera bonaf debt rostruatwngs and spo- FAISL IL ctLAsKIL IOSO n the ILxHO FXned Gbbank bore n Mexccx and scncr dbccr h 1965. cxalwotdwxbcustomcrrdabona 'Rechaxmand the Corporate br aaly ln 1975ho was named Ala He is also chaiman of the Cope TechnOIOgy Cornrrxt tco Hee 'orporate Obccr n chsgo d ~ %&YIIASSCHIAI ~ rsbori S ntcrnal Porsonnol Rannng responsbto br ostabbsrxng tech. acbvtbes n Ihe Lbxted Kngdonb 47. youp xccvttnvo of Gbcop and Comrtxttoa Pcvcvstyhe headed nobgy pokey and stadards.br 'IIC Rcpvbbc cl bcbtnd snd Scend Gbbank. assumed Iosponstxtsy n lhe InsLubcnal Bank's opcratcns htrodvcng new techndogy and rurna h 1980ho was named 885 br ho US. Card produas n the Canbbosrx Central and br evcbatng the quaxty and dree Covnky Hoacl br Braz4 He fcxned Gevpollhe Incbvxbal Bank, He . sovthAnaemGnxsx He jonod bonol systcmsctbrta Unts 85 $ Gbbars n 1963 joned Gbbank h 1971 and wte *'bbsnk n 1950androso ttxough hewas slsochairmanOI'Ransac. neporebIo br markebrg snd Iho asenosof postcns.naudng sar. bon Tochndogtt ha responsbb ISSCHAJID 4 DISADDOCSCi . fclMpcyamn the New tcXk veen Agcnbna and Canadaand br the dcsgn. devobpment and 44,scaorcxccvbvoolOtcorp ashcadd the consxncr bankng ' Gbbank. heads the bxsvciuH branch system He was Mansyng opcrabcnd advanced otcctrorvc ~ 'nd Bank HeFvnedGtbcnkn I973 Ovcctor of Fambank. BctgNm and opesbonnNewtbrk and tho Mer 'ystene and netwoks brdelver. returned Io the US n 880 lo droct chant BankngGnx4x .. ngbnsrxxHscrvtccstoGbbank andbccarne a scncr ves pres. 'ent and tbrcaor d msrkcbng br the NeW Vbrk branoh Systomn the cane Iyanche/Dncrs club He was pcmotcd to ~LA 41. h, SLAH SISTINE bccametheOtccxpand = ':, snd Otcop cvstomcra He joined Gbbankn 1973,' ~ Senor Vco Ptosdent n 1981. He I $ 75. Ho served as tbvecnhcad of assumed rosponstxbty br 0>> Obbanks Scncr Pcrsonnd @lect . bbank's European contumcr Devebpmcnt DNIscn ot me Ind. bona and returned to the US. 879 IO Crea the Card Prcduas vcbL BarA n 1982. Snd lor Ihe ~ Oveorx h 1982ho assumcd Otcorp ScvingsOveoniate res ponstxtsy br tho Consumer n 1984.. Barvung Ravel and Entcrtanmenl Group and n 19S4 was named OaahDD*CLAIIICI 61, execu~ vce prcsdcd ol . ~ .= ~ Iz I,*I I'brthatGnx4Xandwss '! ".j.-'1 head ol domcstc busncsscs br GtearK asssts n rcpcscntng Ihe hcxvdve Bank. Ho <<tsumed Gbcorp nternatcnasy, and man. txs cuncnt res ponszxbbcx n ages the counuyvek exposxo
- p. hokkrrs'eqilyandchengeshfhancial pco5cnix each d the ysars hthe therrtear peiod ended Oecenber 3l, t985andlhe NA and srAxichsries as ol Decombe3L t985 and t984, whch fapcrt a44rees cn page
Wtetcm Canbbeart South Ancr. branch system bccornng bus. -, ca. Canada. tho Mxfdte East. Asa zvegcr br hat ot tho 286 ~ andAlncanlhehtcmatcnal Bankng Group.Ho Ioncd Obbank n 864., ,I >>>> 'ctng and dcvctopment br ' I * 'i i,... I ~ Gbbaveslbrthoml OwexnevH bankng acbvtt>>oa A ~ j II .II>> - ' v .II~ji j';, I' " I 79 ,>cyst@;g ir ~ AI .. 'IA d " C74 Jr vf, . >>f LAWKSNCK L OLKNN>> WILLIAM*HSIION>> JIL>> IIICHAIIDI HUSSII>> MAIIKF KSSSSNICH>>
- September 885 lencsng bnvts. Bcbre this assyv ,: CunentaSSg~shehetdkey 1 mere. he was cbvecn hoed br tho managcnai postxre n Otzxank>
~he vcsbnent Bank in North Amenca. Served as 4 trader and as managa ol Gtbare's Mu. Li>> general Sup~v>>sen Ol the SOund. pbxxwig and dcvcbpmcnt ufvt, He and in 877 bccarno area corpo. nepal Bond Deafer Department, ness ol Ihe loan p<<tfobcx Hop>>r>>cd waS relpOnS Iye br the SCCfcxs>> rate atfcer lor ta pan and Kara His rresl recent ass>>gnmenl was >>M the Crccbl Pobcy C,vrvrvtt>>XI in bon. dcn>>bpmcrc and repooten. Hc was appontcd scner vce sfvver vce posdcnt>>U>>vrsen head 881 and assumed tvs pn~ >>ng ol Gteap's subsfbsry, Gtcorp pmxdent rn 1978 In 1980 he waS ol the Money Market D>>v>>srofl Mc responsdxbt>>s in tune 1982. Pre Person to Person. Snco 1976. Mc nr ncd head ol tte tnSbtvtenaf Kvssench peed Gbbank veus assxfnmcrxs xxA>>de cav>>sxxl Haon has hckf venous posrtens in Bank's North East Asrs drv>>seri in 864. ~ endmost recency was n charge ol I headin charge of tho Real Estate thc Card Products Drwsen and tho IXfustncs ol rhe North Amcrcan New Itxk Banking Drv>>se>>I fn 1982 thC AS>>a PSC>>fe Bareng Geup Ol tAULKOLTKKJAHN>> 6L was Cape>>ntcd scner vee Bank>>ng Group and saner o!fear hc was appcxntcd drv>>sen execu. the tnsbtutenal BanlL Ho asuxrxxf pcsdcnt.sccrctaryof Gtcorp and in the f>>kl kx n the cve br Ncw ftxk consumer bsnfv fxs cuncnt fcsponsbfd>>s>>n Gbbafein Horsrcsponsete Northem Canbbean Regen Ho >>ng buseess. wfvchn 1984 also xv September 1985 br the Corporate Secreta>> y's DI peed Gbbare in 863 cbdcdUpslato Nc Itxk. Nc DANISLT,JACOSSSN>> bCe NC4deg Dceatara'CI>>V4>>S, Jersey and Conncctcut. Ho as. OVSNTHSN de OKSINKK>> 53. Isvcf aycstar ol Gbcorp and stockhakfcf retatenS. exChange scxncd h>>s pcsenl >>cspans>>bM>>s 4fx youp execubvo cf Gtcap and 'n 885. Gteank, rs fespons bfe lor warkl ISbngs. poxy and annual mcebng . 'rbbank. assumed cspansdxlty in wde Gtcafp/Gtibank avd tl and matters. hcad OCce contnbutens. ~ 1985 lor the tnsbtutenat Bank's dDWIN SI HOP%SCAN>> loan renews. He has hekf interns. pvbfc rssuos and cor porate secu. Europe/Mddfe East/Atnca GfouP . 43 youp cxccutn>> at Gtcorp and banal paSIS in Mexea CanadL rity. Prcveusfy he was rcspons bfe '~xrs f.'I' He fcVeussy Served SS head Ol ~ Gtibank. dxccts the Insbtutenal Japan. Hong Kong. endmost re. br dmfvstfaten and Cred I Man Corporate Bankng n Ffankfvrf. and in 878 as gcncfdmanaga in Stuttgarl From 1974 unt 4 1978 he Served aS yauP head kX aXPO rate bus>>ness in Germany In 1979 he was appcxntcd area cor porate ofbaa br Germany Austna and agcmerd poseens in ~ Bank'S Canbbean. Cent>>Stand South Amcnca Group Hfs preveus sss>>gnn>>ants Fcbdcd saner msfl the Mdcfte East and Nor Ih Afrca a 8 Super veOn at the WCSICm Hcm>>sphere G>>cup of the rxbvduat " cenay the Fhdpp>>ncs, v>>hao he vn s countfy sener OSccr from 1975 to l98Q He peed Gtibank in 85ct As dvcf avcbtar ho reports 6. reedy to tte Board d Dvcctors. THOIJASd JONSS>> agement br the Metrapal tan New 'rbrk branch system He pe+i Gbbarik in 1949 IIICHAIIDJ, SSHQANN>> 4L saner ccxpafatc atfccr ol Gbcorp and Gbbank. rs rcspons>> Eastan Ecxopo axf in 1982 ho. Bank oversee v>>g Gtcorp's dames
- 47. Cha>>>>man Credit pOICy Camnxt. 44. youp er XX't Gt corp and 4R youp execubvcol Gtcorpand 47. g,cup CxCCVCVC Ol GtCarp and N>>L >>S Ihe Ch>>f fending OIICCf OI Gbbare. heads me US Consumer rs fcsponskfe br US, Gtbafe. >>s rcspons bfe kx II>> h. r I bOth Gtearp and Gtibank. He ra res pansder ix estabisheg cred t rules and pabces and pavd>>Xf Bafeeg Group ol tte Indvdvaf Bank. Ho peed Gtesre n 869as amen>>her ol Gtcorp's strategc Equ ty Finance. the Latin Amacan Invesbncnt Bank and Gbbal Insur are>>I He peed Gteank in 1973
counting affccc rS the bnancral His pcvevs dss>>gnmcnts rncbdcd camo s saner vce pfosdcnt, His tc consumer subsxbares. >>Is Sav; conbatler br Gtcafp snd Gbbank, posts in Europr lar the Interne. 'i fnosl recant asSgnmcnt was as egs and Loan Assoc>>tens. Ihe c>>rnCO pinrng Gtibdnk e 19M'e bOnal Bank, fn 1977 he waS ap r eastern div>>sen head of Iho North upstate New York branctes and Amcrcan Banbng Group ol the bv Latin Amenca. He fcxncd Gtbank has beenrespons bfc for tho Cor ~ >> ~ pcxnted pcsx/Cnt and chef execu. paraten's accovfxxrg, LQS, opera. bvo oÃca at Gtcor p's Nstenwde I stdutenal Bank. He peed Gtibank b 869 tenaf prana>>ng and tax lvfetefvL Fee>>erat Savccs Axp. whchbe xt l965 A~&g Ii DOICALDS HOWAIID>> fn 1985 he SCIVCd aS Chairman Ol, came the backbone el thc Person. v>>>>>>i~ 'i OSOIIOd d HACISKQAN>>JIL>> 57. Oxccxrbve vce pcsdcnt. >>s Oe the Accsxsden and Divcsbturo Io Person network. Most recently 5>>>> gevp CxCCutn>>OI Gapa d Ch>>l Fee>>eel Qttca ol Cdcorp Cammd teel Mc Lohmann was US dN>>sen ex. Gtdrank. heads the F>>narc>>al bsb. axl Gbbank. fcsponsIyo lor CCubve br cho Westan Hera. Ivtens Group whchma>>ntsxrs Ihe ver V>>rvte bcNdity captaf Stnc. sphere Consumer Group in charge bank'S aperarenal and marketing ture pcs<<vrlg. Ihe f>>cvcbpmcnt ol af domcsba consuncr bar ik>>ng fefatenShOS v>>>>th dome ate and>>n. Gtccxp's Ion9 range fundAg plan out sde the Ncw vbrk Gty area. He lemabOnaf correSPondent bdre S snd marxsgcmcfa al ss etcrme p>>ncd C 'care in f969 and other fvrana>>sr>>nsrdutenS He cbate endlong Icrm debt>>ssucs. He r fcxncd Gtesfe's ovascas cfrv>>sen Peed Cdeafe in 857. Vd in 857 whac hc was asugncd to I ANTHONYC, HOWKINS>> a r key management pos>>tens in Rnezucta, Argent vra and Bra f4 61, rs youp executn>> ol Gtcofp Hc has served asOv>>sent>>ad and Gros. INestmcnt Bare. Ibs br Cene at and South Amaca axl assgnmcf ..s in the tnvcstmcnt Bank have/ncbdcdrcsponsdxb thc Caribbean He assumed Ivs bcs kx acbv>>t>>s in Europe the pe~ rcspans4xbt>>s n IAoy>> East. Affca. As>>a snd Ar January 880 's'rakl Ho was most fcccnffy in charge ol brvdstmcnt Bank sctnn- / beS in Labn AmenCa and Interne / tenet Pr>>vstc Banking He pv>>d Gbbank n 1951 and has eaved as head al the Invesuncnt Manage '>> *>>I ment Gravfx saner vce pcsdcnt in trey>>brkl Corporaten Geup and scnxx corporate otfccr in Bra f eSP 4 r ~ ~ p f. i>t~c~~/g > vS Ct LDNOr VICTOIIMCNCZC8>. IVILIJAMht NHODC8> LAMNCNCCM SMALLr bve viCC pre~, Ol 36, saner corporate oc>ccr of 9; e ha/imari restrvctuing corn. 44. SeCtOr exeaubve Ol Gtearp GI8>ank. svpennses Gbcorp and Gbbank assumed m>t tee d Gteorp and Gtatank. SAd Gt>bank. >s n ct'srge ol the L and External Alta>rs. v>tvch hckdcs the Dtfec al Ihe Gcncraf ratty Afrea n lor Lash Amcrea/ 885. He prcveus ass>gn. ~ The camnvt tears respons ble lor estat>Shing and >mplcmcnbng hst>tutenal Bann. Hc p>ncd Gbbank n 1964and haS prettaVSty CaunSCL Ihe COr parate SeCrO ment S inatuao pOStS nlrxia and Gt>corp's sovcnegn debt restive. worked in Ctxtk man~ a num, lary's Qtterk Got>crnmcnl Rota New tbik. In 1978he was appontCd Iunng pd>ces. Preveusttt he was bcl Ol apcrat>ng dcp8rtmcntS ard bans, Pubic Atfa>rs and Advdbs. scner c1ecl br Inde. He mast senior corporate offeer respanS> the upstate >>Nw York bank>ng ng, and adm>n>stcrs the Aud> I rccenl ass>gnmcnt. n IgfLLwas bte hi tre Canbbean. Central and svtaearas. He afW Salved as ~ American 0>>>serx rcveusttt he had respon. country corporate otlecr hr Hong South Amcnca and Svb Sahara baaaftfOLbank Saner Ccsaonn>8 ab ity hr consumer bnanaet Ser Kong and Ch>re. Ho joned Afnca. He has hekf several pcs> Offect H s rrest necnt ass>gn. vecs overseas and Ihe opcrabng Gbbank h 1972. bona n the Late an menl waS rCSPans>blly hr It>8 act>>>t>es ol the Personal Bank>ng area. Ms Rtedes joined Insbtur>anat Ba>.lr'8 North Amena8ri DLCNILMOhCND> ~ Gevp He look on tvs current 42. gevp executive of Obcorp and Gbbank n 1957. Bankng Gevp He assumedhe ass>gnmcnt n August 1982. Gbbank. is rcspanbbte br the INA0, ItlllCNMANt extent rcspans4tabcs h Sep. Mt Long joined Gbbank n lg72 tcmbcr 885, hvcstmcrs Bank hr Euepe. the 47, g>atn executne d and ANTHONY0 MANTZAVINOIS> Mddkt East and Afnca. Prior to this Gthank, assumed rcspanslxbty n THDMAC C THCOCALD>
- 47. saner vca pesdcnl ch cl ac. , bfe br EuePe and Ihe Mdd'o Easl.
~ 885 for Ihe hsbtutenal Bank's South As>8/Australe dweion ol the teoaL tno 'VSSttt he had been responslxNy hr Gteorp's Invest - Yhrd Corporaten Group sennng hsbtutenal Bank and most ch>ef Snanctat atecr ol a Gteorp ment Bank. nit Thcobatd is also ~~~ mapr corporate muh>natenal recenlly served as saner copo. subs'@erg head ot Gbbank's cte>f man cr nc Carpet nbon 8 ppgt~gg$ ctents aeund the workl. Nd shp . rate dfecr lor Europo, the Mddte Urban Aftavs Ocpartmcrgs Eco Fnanac(~xtvnce reVeusSII he ~ phg aaaavnts H>s prcveus East and North Afnca. Hc peed Auric Devchpment Ccntec and n was n char go ol the Internal>anat as>gnmcnls inchdcdrcspanslxb Gbbank n 196>L 1976 was ass>gncd ~saxity Bank>ng Group> Ite harkt Gxpo . >Iy lar 8>CASe/Auatrale/Mddle JOHN 8, hCCD> hr Gthank's consumer bus>ness raten Grrwp> the In>esbt>cnt Man East Af>tca bank>ng geup and Iho hHOng KOng. h 881 hewaS agemcnl G>o >p> a constxrnv 47, cha>>man and chef exccut>ve Fnanc>al hst>tutens dnnsen, as schchd to head Gtcenk'8 V>t>8 fxence atfbate n Austraia and t'ne oSccr of Gteorp and Gt>bank is vtcc as scner dteer n Span, Por and Mastc>Card bus>ACSS. The hsbtutcnal Bank. He joned lap pot>ay mak>ng df>aef Ol 'hctuded our opcratens ht South Gbbank n 86Q fugal, Cyprus, Greece and Can. Gbcorp ard Gbbank. He peed ada. Ibs most recent ass>gnrnanl C>r kata. Nevada and Maryland was lead ol the Inst>tutenat Bank Gbbank n 1965 and has hckl var. Suhseqvcntttt the Obbank Fnarv I, DAVID VANS>C LT> ious pos tens n thc orerscas d>tn 44. saner corporate cfear of h Europe/Mddtc Fast Afnca bank. sen. opcratng group, aaxnrmcr cial Account. Choec caid and pn. Gt>corp 8nd Gbbank. is reSPao8>. iAg group Ho pncd Gt>hant> n vate label bus>nesseswcie added ble br Ih>t Ase/Pac>fercgan Pre. scrv>ces graupt and vntl Scp 1964. la his area ol respons baty Mc tember 1985 was rcspons>blc br he hckl posts n varevS t Rxhcrman jo>ncd obbank n 87L the hdwxkxC Bank. un>la ol the Comme>a>at Bankng t S>CTCh IL SCtt tfhINO> GroonNew ybik 8>d was d>>>. 4.,+>+~ 45> group cxccubve d Gbcarp ard sen head hr the World Corpora. Gbbank drects the Invesb Aent ban Group Hts most reccnt asogn. Bank n As>cpac>fe. He fes had rricnl wcS d>v>s>an hcatf br the ~ icspans>baty hr tend>ng adnntes b. btut>oru4 Bank nNortncm d Gt>bank'8 wtv>tty o.vncd subsd. Europe Mt Van Patt peed Gbbxnk ianes n Canacta. vras senerdfcer n 862 ' hr Spavi Portugal and Andorra. andrresl rcccntftt was dnnsen head lor the lnstnutenal Bank F Agcnbna, Boive. Chle. 888guatt Peu and Uruguay Mr, Schurx~ joned C4>bank n 1963 t ~ t ~ ~ . x>t>.tNt. jt-> tr'>tv,&t>, +gg st' N t'Ot, ktstt >> ~ 'Po xv C I T I C 0 R P A N D C I T I .B A N K D I iR E 'C T 0 R S I ~~m~~~v" y he Boards of Directors 1.'ANSH7ANOKRIIUSLLSR'a HARRY4,ORAYia CHARLES M, FIOOTT 1 a ~1X V of Citicep and Gbbank meet on the Vice Chairman GtcepandGbbank. NA, RICHARD S. SRADDOCK 1 a Chavman Lt ted Tech cfog es ~p ' PACCAR Inc JOHN S RSSD ' I 'resident third Tuesday of every Sector Executive JOHN W, HANLKY1 a Chairman month to admktister tte Gtcorp and Gtlbank. NA " DvecteandFemer GtcorP and GbbarA, NA. ~ 'v 'l&, affairs of the organizations. COLDYH.CHANDiSR la DoMALDV. SSIDSRT i a br 7 Certain specifc operations and Monsanto~ 'tiefExecutrve 05cer Dxector and Former Chavman ~ areas of the corporation and the ~ JOHNII HARSINia ol the Board bank are reguLuty mon'teedby Eastman Kodak~ Former Directorand Chairman of the Board and J G Penney tnc. the diectors'ommittees, whose FAULJ COLUNS'a ChielExecubveOtrcer DR7 MARIOHSNRIOUS SIMONSKN 1 Saner Corporate 05cer Vice Chairman . activibes are described on ate GtiCOrP ahd Gbbank. NA Biazikan Inst rute of Economics fo.'towing page. 4AMSS He SVANS ' ILJ, HAYNES i a The Getup Vargas Foundatcn Senior Counselor Former Chavman LAWN SNCS ILSMALL a 1 i Dvector ot Gtcorp Wc Pexfc~a AMORYHOUOHTON1 JIL i a Sector Executive Gtcorparxf Gbbank. NA. a Di actor ol Gbbank JAMSS IL FARLKY1 a of the Vce Chairmin DARurINS. SMITH 1 a Execubve Cenfrlittee. NA Chaxman of the Board and Coming Sass Works Chief Execubve Otfcer FOURAKCR 1 a DILJUANITAM7 KRSlis 1 Kimbedy Clark Ceporatcn Famer Uivted States Seaetlye corn ~ C.FSTSR McCOLOUOHi a THOMAS C THCOOAID i a vce Chaxman/ Secta ExecutNe , Bushess Adnxixstrabon Harvardniveesity chaiman ot the Gtcorp and Gt bank. NA. DILARTHUR FURSR 1 Execute Ceivnlt tee FRANKUNA THOMASia Chavman Xerox Ceporation~ Bank Leu AG, ROORR MILLIKKM' The Fonf Foundation CUFTONC OARVIN1 Jtb a 1 and chiel Executive otrcer Chairman of the Berd and s(~-.-.='~l~ Mibken ILCenpany Ctvet Executive CNtcer Exxon Corporatcn 1 I 71 C I T I C 0 R P N I 0 R M N A 6 M N jS~ E A 1 I:Pf E E Hans N Angemueeter Lawrence R. Glenn Thomas E. Jones John S. Reed WAram R Rhodes +$ 4~& Robert Q Bait Rchard S. Brartfock Mchael A. Catten Guenther E. Giener George E. Hageman, JI Watiam J. Heron. Jr. Mark F. Kessench Paul Kotteitahn Rchard J Lehmann lra S. Rimerman Peter fL Schunng Per ytran Chia Paul J. Cohns James Q Fartey PametaPFtaherty E. Gibson '"'and ~ , Edit P. Hottman Donakf S. Howard C;Howkins I Huber Daniel T Jacobsen Charles E. Long Anthony G. Mantzavinos Victor Menezes GtenR Moreno Patrick J Muthen Lawrence M. Small Thomas C Theobald Davd S. Van Pelt i 7W ~ F7%1 LI 7 ~AC 'I i71 ~ 7 7 ~, V" 7777~~ ~ . ~~., ~ '1'nk7 4 7 '>>vs ~ - f. >> /ger"Q>>ri. ~ ~ B 0 A R D S 0 F D >> I R E C T 0 R S'C 0 M M I T T E E S ~ lt )c-Audit Commltteet Committee on Dlrectorst Executive Cornmltteet PersonnelCommlt teal supervises Indepanffent recommends qualified provides backup for the overseas employee audits of Cltlcorp and candktatesfor Ooardsof Olractorsot policies and programs of cJ<<r oversees tha astab- membership on the Boards Cl tie orp and Ct tl bank. Clttcorp and Cltlbank. ,'%@le Oshmant ot appropriate ot Directors of Cltlcorp and Member Gticatx James H Members alkul C Gannn. JL v accovn'tlAQ pot fetes for Cltlbank. Evans. alton C Garvn, a, Hany J Charman; Hany J. Gray CIBOOIP and Cftlbank Membcfa Gticofur John S Reed. Gray OI Jvaivta M Krcps. Donald HJ Haynes. Oonakl tf Seber t. Snd Members Dafwn E. Smnh, Char Chatmark afton C Gavn. Jr. l tf Sebert and Ffankkl Thomas. Ffankkl A. Thomas ~ mant Derby H Chandfec JohnP.Harbn,Dt JvaxtaMKreps. Gbbank. N A: James H Evans. The Personnel Comnxt tee reviews n ~ Ot Lawrence E. Fovraket John W Roger Miaken and Dawn E. Smith anon C Gavn,P. Hany J Gray Hanfcy John P.Harbn. G Peter McCcfovgh, Charbs M pfgdI and Of ManoH ~afc G~w GMenk. MA:John S. RCed, JohnPHarbn, Roger hhakrnand C Peter McCdovgIX Oonakl tf Sebert and Ffa¹vn A Thomas. Ex Otscio Members Both Comnvt. SAd SPPIOVCS CoffiPCAsatioA POI ~ icy and othcf pefsoAAcl.rer8ted programs to mantan an envhon. mcr¹ at Gteor pfGtcenk Nat Oawin E. Smith tees John S. ReehL Hans H, atuacls and retans peopled Ivgh The Audit Ccmmittee, whose Angermucflet James Ct Faley and members src afl ndc pendent Out. The Committee on Dhcctors Ca pabt ty Ccmmrtment and nteg. ThomaS G Theobald. A sde dhedors. af but one ol whom actively sdxxts fcconviendatens Aty ki adfston. ue comrnuee serve loinuy on Ne Examning lor prospectrve dhectors from ther This comm't tee acts on behalf d oversees management dovelop. Comirxftee of Glink, heats at currer¹ menbers and stocfdx¹ders the Beads ol Grectors shodd an fnef¹ pfogfanls, svccesscn u W+cyP gi t<<hfi-I bast kxt thneaeaChye wiN the COIPOratiOASpvt¹ioaccovf JSAla. . its chief sccovAtng 05ccc SAd tho Ne corporation and ~ten SAd, CofeisteAI wrN ule feeds ol ol the various services and cus. urgent matter ense Naf fcqvhcs a decskul tebre tte Bead s next schemed to meet. The Execuuve prannng SAd Cfnpbyee benefit chief sv5tot Dno ol its principal functens is tcmers, recommends the apprOval d a candxfata The nomnees ae Ccmmrltee haS neafy au ue pOwea Ol ue BOadS d Dhectora, CSIt wp"~H to review ue aufst p4us and then presented to Ihe Ivlboard. excel¹ br certain powers expressly ' CLlsroN CI OAIAANrJN, J'. ~ 'COpe Ol examnaten OlbOIh the which plcpcsea the stale d dkeC. reserved to ue Baud d Ohcctofs. \ ndcpfuxbf¹ avditcfs SAd the cof. lofs lobe svbnvt ted to Ne aleck. gl poraten's internal aud4 dNisoa In holders at the annual meeting IA Public Issues Cornmlttaet g+ \ addbon. a s Ihe response Lty ot afkktKA Ihe Ccmmrltee S Chaged revlows Cltlcorp'8 pollclas >>c Xctv cv this comflxttee to recommend to wrN kccpng cvfioAIandrcccfA. and performance on I tho Board the annual appontmcnl mendng changes b JOHN S asso Inatters of public concern. c': due outsde avd tora The Board erectors'oAlpcnsation Charrnan 'c accepted the fccommcndaton Members Frarxkfn A. Thomas. that Peat. Ma wick. kotchcs 6 Co. Fiduciary Review Chahmak Hans H Angcrmvcuct be fctancdlof Ig868nd ths pfo. Commltteal ovorsees the James H Evans. Or Arthur Fvrer. posai vvtl be plcscf¹cd to tfe administration of the John W Hanlcy and DI Jvaxta M Bduclary powers ot Ct tlcorp. Kfcps. J, stockhofdes lor approvaf at the JANNS asso *I annualmeetng Chairman Membes: Donald tf Sebet. Char Tho Pubcc Issues Comnxt tee's >>>> l OuriAg y¹nt IACCtngs vvN tfe marr,Ot Arthur Fvrct Harry J Gray mssen s to. $ $ vfo that tfe public 8'l Exafxnng Committee, tre Ind. Examining Commlttaet John PHarbn, Amor y Hovghhe. Jt.. nteosl s mantanedn tfe pebr ngs ol internal and ox Icrnalbudl. conducts a continuous Roger M Ikken and Fhankkl A Themes, mance d our bvsness rdes and n tas and external regulatory agen exarnlnatlonlntothe achevng a moro ccmpctitivo bus. ces aro reviewed andrcsponses to affairs of Cltlbank, The Fiduciary Review Commt tce floss cnvtonfAcnt. ther fndngs are mofxtolcd to wfvch meets lour Ines a ycat "r Members Oarwn E. SnvN. Chat mcfvtcra fhfucray actrVjteS COn nsure spplopnate bsoewp mea stoa are takea These are man; Cdby H Chandler, ducted tftovgh svbsxsares sAd rcvewcd wiN and without Ite Dc Lawrence E. Fourakec John W aufiatcs around the world. These Hanfey John PHabn. G Peter actrvites ndvde Ihe management . Ixosenco ofmanagcrne¹. and McCdovgh and Charles M. Piy¹t. aIIANNUNA>>$IIOQAS n separatdmeetngs wiN Peat, and adrnnrsuabon ol trust and Mawick. Shtcncs 6 Co. vwNno - The Examnng Comrrxt tefx wnose agency accounts $Uch 8$ pcnson Charms n ~ '~mbcrsol management present. members are 8$ ndependent out. tfUst$ 8Ad ONCf cmf¹oycf . ~, Ttercsvusofueseexamnatens, sde erectors, ccnducts a ccnteu SpCASVcd benefit f¹ans. personal 8ts aloAg with ouf owflIndngs. 8rc ous exannatOA nIO Ne alan of trusts. estates. nvestmcr¹ achn. >>' rcportcdrcgvfafyto tie Ivs Board Gtibank 8nd together with the sof y accounts afld ccf porato II Isalso Ine fvncten Ot thrt COm. AuditComnvt tee. repOrtS rtS fnd. Tho ccmnvttce also tns'ecshps. Avttee tO Ovcraee Ife accountng ings to the Board. The Comrfxt teo IOVNWS pd>>&@sand CcntfCIS n pobces usedn preparng Ihc IAccts yxnuy vvN Iho Avfst Coni. such aeaS ot fxkrcrayfcspoASOJ.. kencial statemer¹SOI Gth¹¹P Axttee, the chief accovntng dficec ¹y as nvestment standads and r', and Cebank. the chicl axktof 8rld Vie corpora confhcts ol nterest. The Comnvt txul S pubbc SCCOUAtantS. tCe w8$ Cstabkuedby the BO8rd 9oaawIN~zl;~a. SafrN The Examnng Ccffxfxtlee dosefy mofxtcrs exannatans by Ne bank's pfnfxpal rcgvfatoc tfe ol Gticorp n May f985 Io reoect Ihe nef eased Ixfucary SCtrvites CcnduCted n veheleS dher than 7 Chatman Comptroser olNe Currency as wes Gtoank and replaced a sm lar as ntemat and external svdexs. colnrfvttee ol ue Board d Gbbank. and bfkirrs Isr tO insu e apprO pnate acten s taken by manage. <<t mani nresponse '.r 'oNALov sslsaay Channan OASWINS SNITN IW Charman vr'i 4~ 83 k ~ ~ i >> '~n ~~ 'MI. >> ~ I r.'j f reiie. T'reefs r l~ S T 0 C K H 0 L 0 EAprilR N F 0 R M A T I re 0 N ~rgb NOTlCE OF THE ANNUALfrtEETIN0 TRANSFER AOENT The annual meeting ot stoctdictders viillbe hekl on&esdatt Gbbank, NACorporate Trust Services, Box 4855, New ybrk. NY 198% at tl am, kt the auditorium of Gticorp Headquar ters at 399 Park 10043 Avenue, New ybrk, NY CO-TRANSFER AOENTS A formal notice of this meeting, together with a proxy and proxy state. The First National Bank ol Chcagrz Corporate Trust Department. One ment, has been included with this annual report. Stockhokfers are First Nationa!Raze, Chiqagoi IL60670 'rged to sign andretum their proxies promptly. to assure that the stock of the corporation vnll be represented as tufty as possible at the First Interstate Bank of California,707 Wilshre Boulevard. Los Angeles. mac bng. CA 90017 Citicorp has approximately 5VNO common stockhokfers of record. RECfSTRAR ~g~i4 About 83% ol the Cticorp shares entitled to vote were votedin person United States Trust Company of New York, 45 Wall Street, New York, or by proxy at the fast annual stocfrhotdeis'meeting on April % 1985 ~r~W'vX Add'tionatttt thereare 233Equrty Hotders ol SVe% Convertibte Subor- ~e~r1, deated Notes Due 20fO / 1'ChREQfSTRARS e The First Naticnal Bank of Chicaga Corporate Tiust Department, One Addibonal copies of this annual report are avaitabkL Wttte to Ctticorp, First National Raze, Chica IL60670 'j gpp4T~ Public Affairs Department,399 Park Avenue, 18th ROOE New York. NY I Rrsl Intestate Bank of California.707 Wilshre Bcutevard, Los Angeles, ~, ' i ~ e ~ CA 900fl Copies of the written ranscriP and tape recordkig Of the proceedings al Gbcorp stockholder meetings are availabte to Gticorp stock- JAPANESE SHAREHOLDER SERNCQ ORQANCATfON hotders at cost from the ONice of the Secretary. 399 Park Avenue, New AND PAYlNO DANK 'rblk, NY 10043. The Yasuda Trust and Banking Compact tJmited, Stock Other reports available frrxn the Pubfrc Affairs Depa tment include &AingConcepts of8anfr Capr'falManagemenf and Coporafo 1~ Department, Yasuda Seirre!Daini Buikfxig. 10.1. Nishi Shnjuku4ru, Tokyo Japan i ~ Giving, whic',T describe Gtibank/Nicorp contributions to community CRlCORP STOCK Lf~~ Guttural, education, heafttE and urban revitalizatenorganizations throughout the country. h1idwsst Stock Exchange ~ee r Supplemental financial data are pubfrshed quarterly and are available London Stock Exchange fiom Gticorp tnvestor Relations Department, 399 Park Avenue. New ~ Amsterdam Stock Exchange, 'Tbrk, NY 10043. Tokyo Stock Exchange . "~', ! e Zurich Stock Exchange r Geneva Stock Exchange fi Beset Stock Exchange 1 Me e ~ I t, e 1 e z ~ e r ~ A PueUCATiONOF TiiE CTTCCFTP Pvsui AFFAiPS CTViSiCN,e OE9GN err icOTP COMMMMCATicN cEsiGN PiiOTO PAGE Q VFEMAMFTFVEMT PliiNTEOTN TPC US A XOM e,copvlvmr orirrevcrricorip-e 2505 ' ', ~ ~ i I' 84 eel "O' +v4T e P.-"F.- ~ PSiverr FTP C I I ilrII,4 rAUr r ~ -PP.'~lt $ ~ R V I C E E X C E L L E N C E A W A R 0 .'il4P~ 'YA Irjf O '~A ltlcorp ~Jar~ i P.l, +rTT? teamwork rosts on tho collective achievements of many individuals. ,.IT> But within a crowded field of exceptional performersT thore are individuals whose work shines The Service Excellence Award goes to those who embody the Citlcorp standard of customer service. These people were among 1583 so recognized in f985. I~ .-C I Yil> m ~ I ~rT) g4>> Mr'h~~ ~1 +)) v ~ ~'I"."i; J';) r,CUU rr. (~, r r.li P'+ ~ U 0 P~~~H~$ Fr 4 COATAC YIOTIA U5$ 5CCA Ytt OAYIO NAATNAIL IHUTTO ATATt5 INNTtO NIHOOON .iZT. W:A'i,)4) ljgQ 4>> iIUf~+<Ti itCii 5 'rl ~I %A ) i. NAllTA NN NCCAAIN HV'5ttlN H AU VAN ~ IAIUATttt TA IAANOA VNIT5051ATtt lttAHON CHIIC .48 J,'gt ...pP'"'".4 , iT,"I;)?I <UU p'~Ait/U? >7/i 'ji-jan&?Ci>>,U gm s4~ ~~/ ., T. w5E JOHN AATI NTACNCAAOTNtt 0 AAAAH AN NOVO 5AUN 'p ')i- OOAHNICAN Nt WOAIC 5UOAN rrr Tm ,'I Ll j Cl77CORP PIP Llt&>> I PPPh l'lh'bP/wh P,P nP-P pj's, ~ .. 1 ~ gh vga W."z lP'k 'k>~ C ~ ~ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D Ce 20549 FORM 1~ QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF . THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1986 Commission file number 1-5738 CITICORP (Exact name of registrant as specified in its charter) Delaware 13-2614988 (State or other jurisdiction of) (I.R.ST Employer incorporation or organization) Identification No.) k Avenue, New York, New York 10043 ess of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 559-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during'the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Citicorp Common Stocki ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 131,547,334 ($ 4 F 00 Par) (Shares Outstanding on March 31, 1986) 33 FORM 10~ CROSS-REFERENCE INDEX This document serves both as an analytical review for analysts, stockholders the interested persons and as the quarterly report filed on Form 10-g with the Secur a Fxchange Commission. Part I Financial Information ~Pa e Management's Discussion and Analysis of Financial Condition and Results of Operations,. ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .. . ~ ~ .. ~ " ...~ ~ 3-22 Financial Statements, Schedules and Statistics Consolidated Statement of Income for the Three Months Ended March 31, 1986 and 1985 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ oo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ . 23 Consolidated Balance Sheet as of March 31, 1986 and December 31, 1985 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .~~o ~ . ~ .. . ~ ~ ~ ~ ~ ~ ~ . 24 Consolidated Statement of Changes i.n Financial Position for the Three Months Ended March 31, 1986 and 1985 ~ ... ~ ... .. .. .. ~ ~ ~ ~ ~ ~ 26 Consolidated Calculation of Net Income Per Share.... ~ . ~ ~ .. ~ ~ ~ ~ .. ~ ~ ~ ~ ~ .~~ 26 Citicorp Financial Statistics ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .~~~~ .~~~~~~ . ~ ~ ~ . ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ Part II Other Information Item 6 Exhibits and Reports on Form 8-K ~ .~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .~. 35 Signatures ~ ~ ~ ~ ~ . ~ ~ ~ ~ .~~~~~ . ~ ~ ~ ~ ~ ~ ~ .~~~~~~~~ .. ~ ~ ~ ~ ~ ~ . ~ .. ~ ~ .. ~ ~ . ~ . ~ ..... ~ ~ 35 In the opinion of the management of Citicorp, all adjustments necessary for a fair presentatio of the results of operations for the three months ended March 31, 1986 and 1985 have bee included. 34 ClTICORP ~ y~((~~ F iflBAc l8l Review and Form 40Q First Quarter 't 986 '-6~~'4o 3,.'5 MAY2 0 1986 g$ o~+ ~~~0,. -.<e iNCo+ 4 L'I 0 CONTENTS PAGE Fi ial Highlights ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ F i ial Summary e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Sector Earnings and Corporate Items..... ~ ..... ... ~ ~ .~~~~~ ... ... ~ ~ .~ ..... Individual Bankinge e ~ eoo ~ ~ ~ ~ ~ ~ ~ oo ~ ~ ~ ~ oo.oeo ~ oooooooooo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5 Detail of Consumer Credit Losses... ~ ~ .~.~ ... ~ . ~ ~ . .~~~~~e e ~~~~~~~ ~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 6 Institutional Detail of Commercial Relationshipso ~ . ~ o ~ ~ ~ o ~ Loan Losses. Cash Basis and Renegotiated Commercial Loans. . ~ .. ~ ~ ..... .~ ~ ~ ~ ~ ... .~~~~~~~~~~~~~~~~~~~~~~~~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 7 9 9 International Financing Activities. .......... ...... ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e o ~ ~ ~ 11 Investment Bankingo ~ oo ~ o ~ ~ oo ~ ~ ~ ~ ~ eoooo ~ ee ~ ~ oooooooooo ~ ~ o ~ ~ oo ~ o ~ o ~ ~ ooooooooooeooo 15 Other'temso ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 16 Statement of Income Analysis Net Interest Revenue..... . . ~ . ~ ......... ~ .. ~ ~ ~ ~ ~ ~ ~ .~~~~~~~~~~~~~~~~~~~~~~~~ ~~ 17 ~ ~ ~ ~ Credit Loss Expense and Allowance.............. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 17 Fee and Commission Revenue .. ...... 17 Trading Account. ... ~ ~ ~ ~ ~ . Foreign Exchange . ~ . ~ ~ ~ ~ . ~ ~ ~ .... ~ .... .. ~ .. .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 18 18 ~ ~ ~ ~ ~ ~ Investment Securities Transactions. . 18 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Ot Revenue.. ~ ~ ~ ~ ~ . .. ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 19 T ther Operating Expense.. ~ .. ~ .. ~ .. ~ ... ~ ... .... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 19 In Taxes ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 19 Geographic Distribution of Net Income....... .. ~ . ~ ~ ~ ....... ............,......., ~ ~ 20 Net Interest Revenue Statistics. ~ ~ ~ . ~ ~ ~ ~ ~ .... ~ ~ ~ ~ ~ ~ .. ......o. ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ .~. " ... 21 Liquidity and Capital Funds Analysisee ~ ~ ~ ~ .~~~~~ . ~ ~ ~ . . . .. ~ ~ ~ ~ ~ ..... ......... .. ~ ~ 22 Financial Statements Consolidated Statement of Income Quarterly.. .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 23 Consolidated Balance Sheet. ~ . ~ ~ ~ ~, ~ .. ~ .. ~ ~ ~ ~ ~ . ~ . ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 24 - Consolidated Statement of Changes in Stockholders' Equi ty - Quarterly." .... 25 Consolidated Statement of Changes in Financial Pos ition ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 26 Calculation of Net Income Per Share....... ~ ~ ~ ~ ~ ~ .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 26 Citibank, NoA Consolidated Balance Sheet. ~ ~ ... ...... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ 27 Average Balances and Interest Rates Table.. ~ ~ ~ . ~ .. ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 28 Citicorp Financial Statistics Net Incomee ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ oooo ~ oo ~ ~ eel ~ .o ~ ~ ~ ~ ~ e ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 30 Common Dividends. ~ ~ ~ ~ ~ o ~ ~ ~ . ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 30 Stockholders'quity and Selected Returns. ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 30 Loans and Lease Financing Outstanding.. ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ 30 - Detail of Credit Loss Experience .. ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 31 nvestment Securities. .. ~ . ~ ~ ~ ~ .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ 32 ~ ~ g-Term Debt. ~ ~ ~ ~ ~ ~ ~ . ~ ... ~ . ~ .. ~ .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 32 Form 1/e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 33 Form 10-Q Cross-Reference Index. ~ .... ~ . ~ ~ ~ . ~ ., ~ ......, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 34 Signaturesoo. ~ ~ ~ ~ ~ ~ o ~ ~ o ~ ~ e ~ ~ ~ ~ ~ ~ o ~ ~ ~ o ~ ~ e ~ ~ ~ oo.o ~ oooeoo ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 35 FINANCIAL HIGHLIGHTS SELECTED INCOME STATEMENT ITEMS CITICORP and Subsidiaries (In Millions Except Per Share Amounts) First Quarter 1986 1985 Chan e Z NET INCOME PER SHARE e On Common & Common Equivalent Sharesi ~~ ~~~~~ $ 1 87 S 2002 $ (.15) (7) Assuming Pull Dilution0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 9 ~ ~ ~ ~ ~ ~~~ $ 1087 S 2002 $ ( ~ 15) (7) Common Dividends Declared Per Shara0 ~~~~~~ ~~ ~~~ $ 615 S 0565 S 005 9 Common Stockholders'quity Per Share> ~~ ~~ ~0 ~~ ~ $ 51 ~ 78 S47016 $ 4062 10
- 57. gnWp Cxeaubve Ol Ot>Corp and appa>ntment, he was ot/>acr n 1985 br the Ind>vdud Bank's Can. 4IL veectexrnart/s>roar exccutNC Otltank, assumed cspanns4xtly n charge n Gcrmantt headed ue sumer Sovices Gnwp> Interne. d GtearpandGbba~tes
SECTOR EARNINGS Earnings of the Three Core Businesses (not including items retained at the corporate level) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 379 $ 340 $ 39 RETURN ON ASSETS AND EQUITT** Return on Total Assets (1) ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 61Z ~ 74Z ( ~ 13)Z Return on Common Stockholders'quity (2)0 ~ 0 ~ ~ ~ 1502Z 1800X (208)X Return on Total Stockholders'quity (3) ~ ~ ~ ~ ~ ~ ~ 1308X 1700Z (3 ')X
- On net income available for common stockholders after deducting preferred stock dividends of $ 20 million and million in the first quarter of 1986 and 1985, respectively, Net Interest Revenue, ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 1,431 $ 1>234 $ 197 16 Total Fees, Commissions and Other Revenue, ~ ~ ~ ~ ~ 959 695 264 38 Total Revenue ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~ ~~0~ ~~ 2,390 1,929 461 24 Provision for Possible Credit Losses ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 429 223 206 92 Operating Expenseoeo ~ ~ ~ ~ ~ ~ ~ 0o ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ 0 ~~~~~0~ 1>499 1, 191 30& 26 Net Income, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~ i ~~~ 270 277 (7) (3)
(3) Net income less redeemable preferred stock dividends as a percentage of average total stockholders'quity0 FINANCIAL HIGHLIGHTS SELECTED BALANCE SHEET ITEMS (In Millions) March 31 Loans and Lease Financing, Net Commerclal00 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~~ ~~ ~~~~~~~~~~~~ $ 58,503 $ 57,624 $ 879 2 Consumer. ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 57,243 44,634 12,609 28 Lease Financing0 Loans and Lease Financing, , ~~~ ~~~~ ~~ ~ ~~0 ~~ ~ ~ ~ 2 865 2 257 608 27 Net of Unearned Discount ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ i S 118,611 $ 104,515 $ 14,096 13 Allowance for Possible Credit Losses0 ~ ~ ~ ~ ~ ~ 0 ~ ~ Total Loans and Lease Financing, Neti ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 i ~1366) ~95T) 409 43 S117>245 $ 103>558 S 13,687 13 Total Assets, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ i ~~~~~~~ 181,896 154,603 27,293 18 Total Stockholders'quity 0~~~~~~~~~~~~~~~~~0~ S,026 6,655 1,371 21 Total Capital (4) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0~~ ~0 ~ 17>688 12,487 5>201 42 Primary Capital (5) ~ ~ ~ 0 ~ ~ ~ \ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~ 11>370 9,197 2,173 24 (4) Total Capital includes Primary Capital, Redeemable Preferred Stock, and gross Qualifying Debt restated in compliance with new regulatory requirements, (5) Primary Capital, as defined by the Federal Reserve, includes Total Stockholders'quity, Qualifying Subordinated Capital Notes, the Allowance for Possible Credit Losses and minority interest in consolidated subsidiaries0 FINANCIAL
- Based on annualixed results (1)"'Net income as a percentage of average total assets (2)"-'Net income less total preferred stock dividends as a percentage of average common stockholders'quity.
SUMMARY
Citicorp's first-quarter 1986 fully diluted earnings per share of $ 1 '7, declined 7/ from th .02 reported for the same period last year. First-quarter net income of $ 270 m was 3/ below the $ 277 million reported a year ago Total sector earnings of $ 379 million were up $ 39 million, or 11X versus 1985 'ndividual Banking earned $ 97 million for the quarter, up $ 27 million over the same period in 1985. Institutional Relationships reported income of $ 205 million during the period, a decline of $ 25 million from the prior year. Investment Banking earned $ 147 million in the quarter, exceeding 1985's first quarter by $ 47 million. Citicorp continued to strengthen its total capital base with increases in common equity, issuances of qualifying debt, as well as additions to the loan and lease loss allowance. Total capital at the end of the quarter'as $ 17.7 billion or 9.65X of total assets, up from $ 15 ' billion, or 9 '2X of total assets at year-end 1985 and up from $ 12.5 billion, or 8 03X of total assets as of March 31, 1985.
'f The Corporation's loan and lease loss allowance continued to be built during the period, with a pretax charge of $ 126 million to earnings, up $ 87 million from last year. At March 31, 1986, the allowance totaled $ 1,366 million, up $ 409 million from March 31, 1985 and$ 131 million over year>>end 1985 the total, $ 286 million has been allocated to the Individual Bank, representing .50X of the consumer loan portfolio The Institutional Bank has been allocated $ 351 million of the allowance or ~ 60X of commercial loans. The remaining $ 729 million was reported at the corporate level. The total represents 1 '5/ of period-end loans and leases. First-quarter revenue of $ 2,390 million was up 24X, or $ 461 million, over last year. H revenues from asset-related credit products, driven by higher volumes, in addition eased fees and other revenues, propelled first-quarter revenue growth. Operating expe ses were down 7X compared to the fourth quarter 1985, but increased 26X over last year's first quarter. Operating expenses rose over last year due to the base expense increases required to support expanding businesses, additional investments in new business initiatives, service improvement and market development The loan loss provision for the first, quarter was at a higher level than a year ago, primarily due to higher consumer write-offs reflecting greater volumes (particularly in credit cards) and the build-up of the credit loss allowance mentioned earlier First-quarter return on common stockholders'quity was 15.2X compared to 18.0X in the first quarter of 1985 and 15 ~ 1X for the full year. Return on assets of 61X represented a
~decrease from 1985's first'uarter return of ~ 74X and 62/ for the full year.
~SECTOR EARNINGS AND CORPORATE ITEMS Citicorp reports the three core business sectors Relationships and Investment Banking Details of
'f Individual Banking, Institution 1 earnings by sector have been disclosed since 1983 in order to present a better understanding of Citicorp's core businesses.Consistent with this objective, our presentation of sector results now reflects three changes which were made beginning with the 1985 Annual Report and are described below. In addition, this quarter's reporting contains certain refinements to the definition of Ins titutional Relationships, The first change reflects the reorganization that was made in late 1985, in which the treasury function was transferred from the Institutional Bank to the Investment Bank and th ternational Private Banking activities were moved from the Investment Bank to the I ual Bank.
The second change that has been made is to the allocation of the total credit loss allowance to reflect management's philosophy of how its businesses should be charged with the credit losses which may be expected over a protracted period of time. Citi now charges its sectors with a credit loss provision that maintains an allowance at vel that provides a measurement of costs against revenue generation consistent with the nner 1 in which Citicorp manages its businesses and makes incremental business decisions In any time period, the total allowance required to present the total loan portfolio in accordance with generally accepted accounting principles may be more than that allocated to the businesses The additional amount along with its related provision is recorded at the corporate level. Refer to page 3 for a discussion of Citicorp's allowance for possible credit losses at March 31, 1986 third certain tax expenses, which had previously been held at the
'he change concerns corporate levels The allocation of these taxes to the businesses more appropriately reflects sector performance and is necessitated by the increasing impact of these taxes on the Corporation.As a result of the above changes, the amounts held at the corporate level will contain: the credit loss provision that represents the build-up of the credit allowance beyond that charged to the businesses; unallocated corporate staff costs; and other 'corporate items including certain start-up activities The sectors are not charged for these items which reflect corporate level decisions and which, understanding of how the core businesses are performing. if allocated, would detract from an The following table summarizes net income by product contribution A discussion of sector results by customer relationship follows. First Quarter (In Millions) 1986 1985 ~Chan e Net Income Individual Bank Products* ~ ~ ~ ~ .~~~~~~~~~~ .. .. ~ $ 97 $ 70 $ 27 39 Institutional Bank Products delivered to Institutional Relationships* ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ 135 170 (35) (21) Investment Bank Products delivered to Institutional Relationships. ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 70 60 10 17 Other Investment Bank Products ~ .~~~~~~~~~~~~ 77 40 37 93 Sector Earnings ~ ~ ~ ~ .. ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ .~.~. .~~~~
~ ~ 3 379 6 340 S 39 11 Corporate Items (after-tax):Credit Loss Provision. .~~~~~~~~~~~~~~ (58) (13) (45) Other Corporate Items.. ~ Total Corporate Items
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ (51)S(109) (50) (63) (1) (46) (2)
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 6 S (73)Total Citicorp+ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~270 ~277 (3)
- If the corporate allowance for possible credit losses was allocated to reflect core business results in conformity with generally accepted accounting principles, Individual Banking and Institutional Banking products would reflect incremental provisions of $ 36 million and $ 83 million for the first quarter of 1986 and $ 20 million and $ 7 million for the first quarter of 1985, respectively, bringing the ratio of allowance to loans for these businesses respectively to .90X and 1.44X for 1986 and
.78X and 1 05X for 1985.INDIVIDUALBANKING FINANCIAL PERFORMANCE AND DISCUSSION Citicorp's Individual Banking activities provide a complete range of financial services to consumers in the United States and,'hrough its Private Banking and International Groups, to consumers around the worldi These activities include transactional services, savings pro , loans, insurance particularly life, accident and health, where permissible-an estment services, specifically, discount brokerage and tax-exempt money market funds First Quarter (In Millions of Dollars) 1986 1985 Chan e X o.os Total Revenue. ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ... ~ .~ $ 1,288 $ 922 $ 366 40 Provision for Possible Credit Losses. ~ ~ ~ ~ ,~~ 227 115 112 97 Operating Expenses ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ .~~~~~~ 881 680 201 30 Net Income. ~ ~ ... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ .. ~ .~ 97 70 27 39 Average Assets ($ Billions) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .. ~ ~ ~ 66 50 16 32 Return on Assets (X). ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ i ~ ~ ~ ~ ~ 60 ~ 57 .03 Return on Equity (X) ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 14 ' 14 ' ~ 7 The Individual Bank continued its substantial growth in revenue and overall profitability with revenue momentum continuing to be provided by the New York branch system, domestic card products, worldwide Private Banking, and the International Group Total revenues advanced 40X to $ 1,288 million, benefiting from growth in customer assets and the favorable rate environment, as well as from Individual Banking's continuing program of selling mortgage pass-throughs and mortgage-backed securities The ability to originate, package'"and sell mortgage-backed securities is a key component of the Individual Bank's strategic goal of becoming the preeminent domestic mortgage bank Re and asset growth momentum was also sustained during the period by the domestic ca sinesses, with outstanding cards exceeding 17 ' million. Earnings of the Private Banking, group were well diversified geographically; approximately one half of which were attributed to domestic operations. During the first quarter, efforts continued to incorpoiate the 1985 acquisitions in Italy, Belgium and Chile into the International Group's .global distribution network Additionally, the first quarter saw the acquisition of an insurance brokerage in the United Kingdom The substantial loan growth over the last year was accompanied by an increase in net credit write-offs First quarter write-offs of $ 221 million were up $ 116 million over the corresponding period last year, While much of this increase is attributable to increased volumes, the continuing shift in the portfolio toward a higher proportion of credit card receivables was also a factor~ Card products, which are the fastest growing segment of the business, have an historically higher credit loss experience, particularly during the early years of a credit card portfolio. The higher write-offs were reflected in the comparative first quarter ratios of net loan losses to average loans: 1 59X versus 99% in ~ ~ the previous year, Consistent with the change in the way the Corporation reports sector results, Individual Bank earnings were charged an amount to build the total allowance for possible credit losses equal to ~ 50X of consumer loan growth from quarter-to-quarter. This charge in the first quarter of 1986 was $ 6 million, down $ 4 million from the same period last year, with the allowance allocated to the sector amounting to $ 286 million as of March 31, 1986 compared to $ 223 million at March 31, 1985 '
During the first quarter, operating expenses were 2X lower than the final quarter of 1985 30X higher than last year's first quarter. The variance to last year's fourth quarter largely due to lower promotional expenditures, while the increase over 1985's first attributable to the higher infrastructure expenses required to support greater v additional investments in new business initiatives, including aquisitions The major Individual Banking businesses - Bankcards, the New York branch system, Private Bank worldwide and the International Group substantially exceeded corporate return targets, returns from other developing areas reduced overall key performance indicators Detail of Consumer Credit Losses ( rimaril installment and revolvi credit loans) 1st 4th 3rd 2nd Qtr Qtr Qtr Qtr (In Millions) 1986 1985 1985 1985 1 Gross Loan Losses In Domestic Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~' ~ ~ ~ $ 238 $ 210 $ 170 $ 147 S In Overseas Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 26 25 21 15 $ 264 $ 235 S'191 $ 162 S Loan Recoveries In Domestic Offices, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ S 35 $ 33 $ 30 $ 27 $In Overseas Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 8 8 5 5
$ 43 $ 41 S 35 $ 32 S Net Loan Losses In Domestic Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 203 $ 177 $ 140 $ 120 S In Overseas Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 18 17 16 10 ~221 $ 194 $ 156 S1 +5 Net Loan Losses as a Percentage of Average Consumer Loans.. ~ ~ .~.~~~~ ... ~ ~ . ~ ~ . ~ .. ~ ~ ~ ~ .. 1.592 1.452 1.262 1 '52 A strict contractual write-off policy dictates that consumer loans will be written off afte predetermined number of days'hose loans not yet written off and with principal or inter payment delinquencies of 90 days or more comprised 1 ~ 86X of the total March 31, 1986 consu loan portfolio, compared with the March 31, 1985 ratio of 1.59X. The policy for suspendi accruals of interest on consumer loans varies based on the terms, security and ri characteristics of each product, and in consideration of write-off criteria in place. Consu loans for which accruals of interest had been suspended were $ 635 million at March 31, 198 Consumer loans with delinquencies of 90 days or more for which interest continued to be accru were $ 485 million at March 31, 1986 'INSTITUTIONAL RELATIONSHIPS - FINANCIAL PERFORMANCE AND DISCUSSION Institutional Relationships'esults include earnings from the delivery of Institutional Bar'nd in Investment Banking products to corporations, governments and financial tions worldwide Refer to page 8 for an analysis of earnings by product. First Quarter ( In Millions of Dollars) 1986 1985 Chan e Total Revenuei ~ ~ ~ ~ ~ ~ . ~ ~ ~ . ~ ~ ~ ..o.. . ~ ~ ~ ~ ~ ... ~ ~ ~ ~ ~ $ 872 $ 845 $ 27 3 Provision for Possible Credit Losses. ~ .. ~ ~ ~ ~ . ~ ~ .~ 83 81 2 2 Operating Expenses ... ~ ~ ~ ~ ~ ~ ~ ~
'. ~ ~ ~ ~ ~ ~ .... ~ ~ .~~~ 415 366 49 13 Net Incomeo ~ ~ io ~ o ~ i ~ ~ ~ ~ o ~ e ~ i ~ o ~ oo ~ o ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ 205 230 (25) (11)Average Assets ($ Billions) . .. ~ .~~~ ~ .~. . 77 73 4 5
~ ~ ~ ~ ~ ~ ~Return on Assets (X)....... ~ .. ~ ~ ~ .~~~ 1.08 1~ 27 (. 19) Return on Equity (X). i. ~ .... ~ ~ ~ ~ . . ..-...
~ ~ ~ .~~~ 26 9 31 ~ 8 (4-9)Revenues from Institutional Relationships were diversified over a broad range of products. The 3X increase in total revenue over the first quarter of last year reflected improvements in fees, commissions and other revenues. Asset-related credit revenue was unchanged from quarter to quarter, while foreign exchange was lower. Write-offs were flat with the first quarter of 1985. Operating expenses were up $ 49 million, or 13X, over 1985's first quarter. This increase over the first quarter included costs associated with improved service delivery and product developments Key performance indicators continued to surpass corporate hurdles with a 26 'X return on equity -and a 1.08X return on assets. Average assets at $ 77 billion grew by 5% over the sa riod last year. Geo phically, Institutional Relationships'arnings in the first quarter were diversified with approximately half attributed to North American operations. Earnings that result from the delivery of Institutional Banking products to the institutional customer base were $ 135 million for the first quarter of 1986, $ 35 million lower than for the same period in 1985 First Quarter Institutional Bankin Products (In Millions of Dollars) Total Revenue ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ .~.~.~ $ 681 $ 688 $ (7) (1) Operating Expenses. ~ .~. ~ ~ . ~ ~ .~~~ 356 315 41 13 Net Incomeo ~ ~ ~ o ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ oo ~ ~ ~ o ~ 135 170 - (35) (21) Total revenue was down $ 7 million, or 1X, from the first quarter of last year. The improvement in 'fees, commissions and other revenues from Institutional Banking products was not sufficient to offset lower foreign exchange, last year's sale of aircraft lease residuals and other assets, as well as the beneficial effect of a contract settlement in 1985. Asset-related credit revenue remained flat to last year. Operating expenses of $ 356 million were up 13X over the first quarter of 1985 'verage assets at $ 75 billion grew by 6X over the same period last year. 0
iVet commercial loan write-offs were $ 82 million, compared to $ 79 million in the firs quarter of 1985, reflecting continuing weaknesses in certain industries ~ Citicor continued to maintain a conservative posture in the recognition of both publ an private-sector write-offs. Consistent with the change in the way the Corporatio rt sector results, Institutional Relationships'redit loss provision was increas million in order to maintain its allowance for possible credit losses at . X o$ 1 commercial loans. The comparable increase in the first quarter of 1985 was $ 2 million. Cash basis loans totaled $ 2,196 million at quarter end, down $ 29 million from 1985's first quarter and a decrease of $ 52 million from year end. The ratio of cash basis loans to total loans decreased from 2 'X a year ago and from 2.0X at the end of the fourth quarter to the current level of 1 9X Earnings that result from the delivery of Investment Banking products to the institutional customer base were $ 70 million for the first quarter of 1986, $ 10 million higher than for the same period of 1985 First Quarter Bankin 'nvestment Products 1986 1985 ~Chan e X (In Millions of Dollars) Total Revenue. ~ .. . .. .. . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 191 $ 157 $ 34 22 Operating Expenses. . . . .. 59
~ ~ ~ ~ ~ ~ ~ ~ ~ 51 8 16 Net Incomeee ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 70 60 10 17 Total revenue in the first quarter was $ 191 million, 22X higher than the first quarter of last year, reflecting improved fees, commissions and other revenues from Inv ent Banking products Asset-related credit revenue remained flat to last year. 0 ing expenses at $ 59 million were up 16X over the first quarter of 1985. These resu are also included in the discussion of Investment Banking on page 15 Delivered to Institutional Relationshi s 'roducts The table below shows net income by product for the first quarter of 1986 descriptions of these products are presented in Citicorp's 1985 Annual Report 'etailed First Qtre (In Millions of Dollars) 1986 Core Lending.. ~ ~ ... . ~ ~ ~ ~ .. .. ~ ~ ~ ~ ~ ~ . ~ .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~8 60 Debt Products/Money Market Services, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 37 Foreign Exchange Services Specialized Finance. ~ . ~ . .. ~ .
~ ~ .~.~.~~~~~~ .~ ... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 15 ~ ~ ~ ~ . ~ ~ .. . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 28 Liquidity Insurance, Financial Guarantees .6 Asset Intermediation . ~ ~ ~ . ~ ~~~~~~~~~~~~~ 28 Advisory, Trade, Transaction Processing Other ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 37 Total Institutional Relationships ~ ~ .. ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 205il o ommercial Loan Losses 1st 4th 3rd 2nd 1st Qtr Qtr Qtr Qtr Qtr Millions) 1986 1985 1985 1985 1985 Offices'~ s Loan Losses Domestic Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ S 15 S 30 S 21 S 13 S 22 Overseas .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 83 138 79 74 65 S 98 S168 S100 S 87 S 87 Recoveries Domestic Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ S 7 S13 S 2 S 7 S 5 Overseas Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 9 13 15 7 3 S 16 S 26 S 17 S 14 S 8 Loan Losses Domestic Offices. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ S 8 S 17 S 19 S 6 17 Overseas Offices. ~ ~ . ~~~~~~t~~~~~~~~~~~~~~~~~~~~~~~~ 74 125 64 67 62 S 73 S 79 (oan Losses as a Percentage of erage Commercial Loans.. ~ . ~ .. ~ ~ ~ ~ ~ ~ . ~ .. ~ . ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ .57X .96% .56X .51% .55% BA RENEGOTIATED COMMERCIAL LOANS basis (nonaccrual) loans are those on which, as a result of doubt as to collection, income ecognized only to the extent cash is received. Renegotiated loans are those on which the of interest has been reduced as a result of the borrower's inability to meet the original 8~ orp fol'lows strict cash basis practices whereby loans are classified as cash basis whenever reach 90 days past due status, irrespective of collateral or any other favorable prospects. o Citicorp's policy allows for exceptions in unusual circumstances, any such exceptions have insignificant in amounts basis and renegotiated commercial loans at March 31, 1986 were S2,196 million, down S29 ion from a year ago. Of the S2,196 million, approximately 30X was to borrowers in countries
- entral and South America, primarily in Argentina, Venezuela, Brazil and Mexico. The
/Pacific region accounted for 27X of cash basis loans mainly in the Philippines.
Cash basis lease financings were $ 30 million at March 31, 1986 and $ 70 million at March 1985. The classification of loans as cash basis and renegotiated is a specialized diagn t used by financial institutions. Citicorp's experience, as well as the experience the generally has shown that a substantial percentage of cash basis and renegotiated loans ultimately collected, Real estate acquired in settlement of loans, included in other assets in the financi statements, totaled $ 242 million at March 31, 1986, down $ 10 million from a year ago and d S8 million from December 31, 1985 'omestic real estate, which represented $ 187 million the total real estate at March 31, 1986, accounted for substantially all of the decrease total real estate acquired since March 31, 1985 March 31 1986 Loans'~
'In Cash Renego- Dec. 31 Sept. 30 June 30 Mar. 3 Millions) Basis tiated Total 1985 1985 1985 1985~Cash Basis and Renegotiated Loans: In Domestic Offices Real Estate Loans ~ ... ~ ~ ~ ~ ~ $ 89 S 10 S 99 S 101 S 95 S 113 S 192 Other Commercial .~. 348 7 355 392 549 501 332 In Overseas Offites.......... 1,715 27 1 742 1 755 1 840 1 762 1 701 Total Cash Basis and Renegotdated Loans, ~ , ~ ~ ~ ~2 152 S 44 ~2196 ~2248 82 484 S2 376 S2 225 Cash Basis and Renegotiated Loans as a X of Commercial Loans. ~ ~ ~ 3 8X 3 'X 4.12 .9X Cash Basis and Renegotiated Loans as a X of Total Loans,. ~ ~ ~ ~ ~ ~ ~ 1.92 2.02 2 22 2.32 2.2% 10
INTERNATIONAL FINANCING ACTIVITIES International financing activities are 'discussed in Citicorp's Annual Report and Form 10-K for the year ended December 31, 1985 'he following is a summary of developments in certa n countries concerning efforts toward the resolution of payment problems experienced by countries. While no absolute assurance can be given, Citicorp management bel that these developments will not ultimately have a material adverse effect on Citicorp's financial condition ggXICO The government of Mexico and the participating international banks have signed agreements to implement the previously reported restructuring of medium-term maturities. Through these agreements, which affec't $ 48 7 billion of Mexican public-sector debt, certain amounts that would have matured through. 1990 have been rescheduled through 1998 The last of these agreements became effective during the first quarter of 1986 share of the restructuring, which is described in detail in the 1985 Annual
'iticorp's Report and Form 10-K, is approximately $ 1.4 billion. In addition, the 13<<member Bank Advisory Group, of which Citibank, N.A. is a member, has endorsed a Mexican request that maturities aggregating $ 950 million, due in the fourth quarter of 1985 under a previous financing, be extended until the third and fourth quarters of 1986.Mexico is reassessing its 1986 financial plan in the context of the recent oil price decline Mexico has indicated that its discussions with the IMF and World Bank continue in order to obtain the support of these institutions for its 1986 program. During the three months ended March 31, 1986, no additional cross-border advances were made to,Mexican public-sector borrowers, and approximately $ 3 million of principal was repaid, --Interest on Mexican public-sector outstandings included in income for the quarter amou d to $ 42 million, and such interest received in cash amounted to $ 40 million B Discussions with Brazilian officials to reschedule and extend 1985 and 1986 maturities of public and private-sector debt, including maintenance of trade and interbank facilities, have concludedo An agreement has been reached with the Brazil Advisory 'Committee on a proposal which has been sent to the international banking community for approval. The agreement. affects principal of approximately $ 6.1 billion of 1985 maturities and $ 9.6 billion of 1986 maturities, Under the agreement the debt that fell due in 1985 will be rescheduled through 1993, with principal payments beginning in 1991 The 1986 maturities will be rolled forward on a demand basis with the Brazilian Central Bank. The debt vill have interest rate margins of 1 1/8X over Libor or over an adjusted certi,ficate of deposit (or comparably 'priced domestic) rate, compared to the previous spreads of 2/ over Libor or 1 3/4X over prime. Citicorp's share of the restructuring includes $ 109 million of debt previously priced over prime and $ 959 million of debt which utilized Libor as its reference rate. Also, interbank and trade lines of approximately $ 16 billion (Citicorp's share is $ 661 million) will be maintained for another year as part of the proposed agreement Pending the effectiveness of the proposed agreement, provision has been made on an interim basis to extend or roll forward 1985 and 1986 maturities through August 15, 1986
'uring the three months ended March 31, 1986, cross-border outstandings in Brazil were affected by additions of approximately $ 89 million and reductions of approximately $ 28 million, primarily due to principal payments Approximately $ 144 million of gross interest revenue was earned on cross-border and foreign currency outstandings, and approximately $ 155 million was collected in cash.11
ARGENTINA Based on IMF support for Argentina's new economic program, the participating internationa banks have executed agreements with Argentina providing for a new $ 3 ' billion, 10-yea term credit, with principal payments beginning after three years, and a new $ 500 million four-year trade credit and deposit facility. Banks have also agreed to commit on year to a trade credit maintenance facility and a money market facility, In on, substantial progress has been made in the execution and implementation of agreem fo refinancing $9 ' billion of public-sector maturities and $ 3 ' billion of private-secto debts The public-sector refinancing covers maturities from 1982 to 1985 and provides fo tenors of up to 12 years. The private-sector refinancing covers 1984 and 1985 maturitie plus certain 1982 and 1983 maturities not previously covered and provides for tenors of 10 years. The agreements are described in detail in the 1985 Annual Report and Form 10-K. Citicorp is participating in the new lending in an amount approximating $ 226 million, and its share of the public and private-sector refinancing amounts to $ 387 million. Citicorp's commitments under the trade credit maintenance facility and money market facility are $ 95 million and $ 156 million, respectivelyi A drawdown under the IMF standby originally scheduled for January, 1986 was made on March 14, 1986 after completion of discussions and the reaching of an agreement between the IMF and Argentina with respect to Argentine compliance with certain IMF performance of this delay, the IMF standby was reduced by the amount of one drawdown criteria.'ecause After considering a request from the government of Argentina, the Bank Advisory Committee agreed in January to roll over public and private-sector principal maturities falling due during the period January 1, 1986 through April 30, 1986 for 90 and 180-day periods, respectively. In April 1986, representatives of the government of Argentina met with the Bank ory Committee to discuss a 1986-87 refinancing program. In the course of these disc ns, the commercial banks agreed to roll over principal maturities during the period ay 1, 1986 through September 30, 1986 for an additional 180-day period, During the three months ended March 31, 1986, Citicorp's cross-border advances to Argentina were increased by additions of, $ 64 million Approximately, $ 108 million of priacipal was repaid Interest on cross-border outstandings included in income was approximately $ 38 million, and approximately $ 30 million was received in cash Of the cash received, approximately $ 6 million represented interest on cash basis loans for years prior to 1986 VENEZUELA Agreements were signed by Venezuela and the participating international banks in February, 1986, encompassing the restructuring of $ 21 ' billion of Venezuelan public-sector debt. The restructuring covers principal payments maturing through 1988 and provides for the rescheduling of these maturities over 12 years with quarterly payments commencing in 1988 and ending in 1997 ' $ 750 million principal payment is to be made upon the effectiveness of the rescheduling A program for making foreign exchange available at preferential rates for private-sector debtors is in the process of implementation Citicorp's share of the public-sector restructuring, which is described in detail in the 1985 Annual Report and Form 10-K is $ 709 million During the three months ended March 31, 1986, no cross-border advances to Venezuelan public-sector borrowers were made, and no principal was repaid Interest on Venezuelan public-sector outstandings included in income for the quarter amounted to $ 18 milllr and $ 12 million of interest on such outstandings was received in cash 12
PHILIPPINES In the Philippines, Citibank and other banks have signed an agreement that provides for a new $ 925 million, 9-year term loan and have committed to maintain approximately $ 2.9 billion of short-term trade credit facilities through 1986 government and the 12-member Bank Advisory Committee for the Philippines have agreed in
'n addition, the Philippine principle to reschedule approximately $ 5.8 billion of existing bank debt, and the IMF has ag o provide a standby credit. The availability of funds under the standby credit is su to compliance with IMF targets and conditionalities.Citicorp's share of the new term loan is approximately $ 126 million, and its commitment under the trade credit facilities is approximately $ 751 million. The rescheduling of existing bank debt will involve approximately $ 371 million of Citicorp's Philippine outstandings CROSS-BORDER AND FOREIGN CURRENCY OUTSTANDINGS (1) Ad usted for Net Local Currenc Outstandi s External Guarantees and Collateral Total Ad usted Outstandin s (2) (In Billions) Mar. 31, 1986 Dec. 31, 1985 Countries With Outstandings Exceeding 3/4X of Total Assets Japane ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5 ' 5~8 Brazilo ~ ~ ~ ~ ~ ~ l o ~ o ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4.7 4 ' United Kingdom. ~ ~ ~ .~~~~~t~~~~~~~~~~~~~~~~~~~~ 3 ' 3 ' Mexico ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 2~ 8 ' Federal Republic of Germany. Canada. ~ ~ ~ ~ ~ ~ ,~~~~~~~~~~~~~~~~~~~~~t~~~~~~~~~
" ~ ~ ~ ~ .~~~~~~~~~~ 2+7 2+5 22 ' 2.8 P ippines ~ ~ ~ . ~ ~ .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 ~ 8 1.8 liaee ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1~6 1 ~ 8 e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1~ 6 1.5 Argentina (3).. ~ .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 3 1.4 Korea"(3) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 1 ~ 3 1~ 4 (1) Ou'tstandings are presented on a regulatory reporting basis, and include all loans, deposits at interest with banks, acceptances, other interest-bearing investments and other monetary assets (2) Legally binding cross-border and foreign currency commitments, including irrevocable letters of credit and commitments to extend credit, after adjustment to assign externall'y guaranteed commitments to the country of the guarantor, amounted to $ .7 billion in Australia , $ ~ 8 billion in Canada, $ ~ 5 billion in the Federal Republic of Germany, $ 1.4 billion in France, $ ~ 6 billion in Japan, $ ~ 5 billion in Korea, and $ 1.9 billion in the United Kingdom at March 31, 1986 'ommitments were not material in relation to adjusted outstandings in any other country in the table.(3) Less than 3/4X of total assets at March 31, 1986
'3Included in overseas cash basis loans are a number of loans in countries whi<h ar currently in the process of refinancing their external debt or which have completed suc refinancings. In view of investor interest in this aspect of Citicorp's activities, th table below provides additional details of cross-border and foreign currency outst nding and also local and foreign currency cash basis loans in the affected countries; ir column of the table shows the impact on Citicorp's earnings (after-tax), th three-month period ending March 31, 1986 spread among various countries. The amount include interest reversed when loans are placed on a cash basis status, plus the cost o funding the cash basis loans, reduced by interest received in cash and included in income DETAILS OF REFINANCING COUNTRIES At March 31, 1986 Ad)usted Total Estimated Cross-Border Impact Of And Foreign Cash Cash Basis Currency Basis Loans on Y-T-D Outstandin s (3) Loans (1) Earnin s (In Billions) ( In Millions) (In Millions) Argentina.... ~ ~ .... ~ ~ .~ ~ ....... $ 1 3 $ 87 $ 1.0 Brazilooooo ~ o,oo ~ ~ ~ ~ ee ~ ~ ~ ~ o ~ ~ ~ o ~ F 7 111 3 7 Chilee ~ o. ~ . ~ ~ e ~ o ~ ~ . ~ ~ ~ ~ eo ~ e ~ ~ ~ oo 0~6 15 (0.1) Dominican Republic.. . ~ ~ ~ ~ . .. ~ ~ ~ ~ 0 ' 8 0 ' Ecuador. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .. ~ ~ ~ ~ ~ ~ ~ . ~ 0 ' 8 0.2 JamaiCaoeo ~ ooe ~ ~ ~ ~ o ~ eoo ~ ~ e ~ eo ~ ~ o 0 1 Mexico ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 2' 54 (0.2) Morocco ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0~1 Nigeria.... . .e . ~ .. ~ .. ~ . ~ ~ Ool Panamae Peru.......e
" ~ ~ ~ ~ ee ~ ~ . ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ .~ ... . .~~~~~~~~ . ~ ~ ~ ~ ~ ~ ~ ~ .e 00 1 2 3 38 (0.5) Philippines.. ~ ~ ~ ~ ~ . ~ ~ ~ ... ~ ~ . ~ ~ .. 1 ' 163 1 ' Polande ~ ~ ~ ~ ~ ~ ~ o ~ o ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ e ~ ~ o 0' 105 0.8 South AfriCao ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0' 6 Uruguayeo ~ ~ oo ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ 0 ' 3 Uenezuelaee ~ ~ .~. ~ ~ .~~ ~ ~ ~ ~ ~ ~ lo3 275 Yugoslaviae.. ~ ~ ~ .e. ~ ~ . ~ ~ . ~ e. ~ ~ ~ ~ 0' All Other (2) ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ 0' 108 TOTALe ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~15 2 $ 986 (1) Includes both local and foreign currency loans. (2) 14 countries under $ 50 million of Cross-Border and Foreign Currency Outstandings: Bolivia, Costa Rica, Honduras, Ivory Coast, Liberia, Malagasy, Malawi, Mozambique, Nicaragua, Senegal, Sudan, Togo, Zaire, Zambia. (3) Legally binding cross-border and foreign currency commitments, including irrevocable letters of credit and commitments to extend credit, after adjustment to assign externally guaranteed commitments to the country of the guarantor, amounted to $ 1 in South Africa at March 31, 1986. Commitments were not material in relation to adjusted outstandings in any other refinancing country 14
INVESTMENT BANKING - FINANCIAL PERFORMANCE AND DISCUSSION Citicorp's Investment Banking business includes global investment and merchant banking, funding, foreign exchange services, venture capital investment, securities brokerage, in nce, and financial advisory services provided to both Institutional and Investment B ients. First Quarter (In Millions of Dollars) 1986 1985 Chan e X Total Revenue ~ ~ ~ .~~~~~~~~ ... ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ .... ~ ~ ~ $ 465 $ 340 $ 125 37 Operating Expenses ~ ~ ~ ~ ~ ~ ~ ~ .. ~ ~ .~.~~~~~~~ .~ i. ~ ~ ~ 226 167 59 35 Net Incomeoeo.o ~ ~ .o ~ o ~ s.ooe ~ ~ ~ eoee.oo..ooo ~ ~ oo ~ o ~ 147 100 47 47 Average Assets ($ Billions) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 37 30 23 Return on Assets (X)... ~ .. ~ ~ ~ ~ ~ ~ ~ ~ . Return on Equity (X). ~ ~ ~ ~ ~ ... ~ ~ .~ ~ .
~ ~ ~ ~ ~ ~ . ~ ~ ~ . ~ ~ i' ~ .. ~ ~ ~1 39.6
'9 1 '5 33 7 7 .24 5.9 Investment Banking achieved substantial growth during first quarter of 1986 with revenues rising 37X and net income up 47X over first quarter of 1985 trend of falling interest rates worldwide and a weakening dollar continued during the 'he period. Against this background, strong securities trading results were posted on the international side particularly in Europe and Asia, and global foreign exchange earnings for the quarter rose 28X Equity, products showed major increases through significant venture capital gains. Fee and commission income for the quarter was up 45X over the prior year with increases coming from public finance, loan syndication, financial advisory, investor services 'nd i ent management activities Ope ing expenses rose 35X over first quarter of last year. Over one third of this increase related to newly acquired businesses, primarily AMBAC, a municipal bond insurance and financial guarantee company acquired in mid-1985 continued business and technological development 'he remaining two thirds reflected investments'he Investment Bank's global distribution network expanded during the quarter as new activities started up in several locations in Europe, Asia and in global insurance. In addition, strategic steps were taken to benefit from opportunities arising out of the liberalization of banking rules in key countries.Investment Banking's returns on assets and equity for the quarter improved to 1.59% and 39 'X, respectively, and continued to exceed corporate targets'nvestment Bank Products The table below summarizes Investment Banking earnings by type of product. It includes the products delivered to the Institutional customer base as well as other Investment Banking products, Detailed descriptions of these products are presented in Citicorp's 1985 Annual Report. First Qtr. (In Millions of Dollars) 1986 Debt Products/Money Market Services 52 Equity Products. ~ . ~ " " " ""
~ ~ ~ ~ ~ ~Foreign Exchange Services ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~34 54 Advisory Productso ~ ~ ~ ee ~ ~ ~ ~ e ~ ~ o ~ ~ ~ e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5 Othero ~ ~ ~ i ~ . ~ o ~ ooooo ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ---- .- 2 Total Investment Banking . ~ . .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
~ ~ S147 15OTHER ITEMS First Quarter (In Millions of Dollars) 1986 1985 Chan e Total Revenue,. The components
~ ~ ~ ~Operating Expenses. ~ .
~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ .. .~. ~ ...... ~ ~ ~Provision for Possible Credit Lossese ~ ~ ~ ~ ~ ~ ~ ~ ~ Net Income. ~ . . ~ .. ......
~ ~ ~ ~ ~ ~ ~ ~ .~~ ~ ~ ~ .~~~~~ . ~ ~ ~ .~~~ ~i'. (44) 36 119 (109) of the Corporation's activities that are not identified with the three core S (21) 29 27 (63)
$ (23) 7 92 (46) 24 (73) businesses are presented in aggregate within this category. The items primarily includ~(i) the credit loss provision that represents the build-up of the credit loss allowance beyond that charged to the businesses; other corporate items including start-up activities (ii) unallocated corporate staff costs; and (iii) The $ 46 million decrease in net income was primarily attributable to the $ 92 milliom increase in the provision for possible credit losses which was recorded at the corporate level. The corporate portion of the total allowance at March 31, 1986 was $ 729 million as compared with $ 388 million at March 31, 1985 the provision charged to Individual Banking and Institutional Relationships
'efer to pages 5 and 8 for a discussion of 16STATEMENT OF INCOME ANALYSIS (See a e 23) NET INTEREST REVENUE (Taxable E uivalent Basis) Net interest revenue for the first quarter of 1986 was $ 1,496 million, up $ 221 million or 17/ m the same period last yeari This strong performance was fueled primarily by a $ 2 illion, or 17/, rise in average interest-earning assets accompanied by a slight inc ~se in the net rate spread (3 '0% vs. 3.88X). The volume increase resulted mainly from substantial growth in the consumer loan portfolio, particularly domestic card products and shelter finance. First-quarter net interest revenue decreased $ 61 million, or 4X, compared to the fourth quarter of 1985 as the net rate spread dropped 22 basis points quarter-to-quarter (3.90/ vs 4 12X) ~ However, the $ 5 ' billion increase in average interest-earning assets largely offset the impact of the decline in the net rate spread. CREDIT LOSS EXPENSE AND ALLOWANCE Citicorp has continued to maintain a coqservative posture in recognizing loan losses in current earningsi In the first quarter of 1986, the total credit loss provision was $ 429 million and included $ 303 million of net loan and lease losses, while adding $ 126 million to the allowance In the first quarter of 1985, Citicorp reported a total credit loss provision of $ 223 million, made up of $ 184 million in net losses and $ 39 million in addition to the allowance. The fourth quarter of 1985 recorded a credit loss provision of $ 394 million consisting of $ 336 million in net losses and $ 58 million in addition to the allowance. Corporation's loan and lease loss allowance totaled $ 1,366 million, up $ 409 million The from March 31, 1985 and $ 131 million over year-end 1985 of the total period-end loans and leases, an increase of
'he 9 basis allowance represented 1.15%points over year-end 1985 and 23 basis points above the prior year's first quarter. Fo first three months of 1986, net commercial loan losses totaled $ 82 million, up $ 3 mil on over the first quarter of 1985 reflecting continuing weaknesses in certain industries; however, current quarter losses were $ 60 million below last year's fourth quarter First quarter recoveries of $ 16 million improved $ 8 million over the corresponding period last year and were derived primarily from commercial and industrial loans Net consumer loan losses for the first quarter of 1986 amounted to $ 221 million, an increase of $ 116 million over 1985's first quarter and $ 27 million higher than the fourth quarter of last year. The higher write-offs were primarily produced by the growth in asset volumes and the continuing shift in the loan portfolio toward a greater proportion of credit card receivables. Refer to the Individual Bank's financial discussion for further detailsi The higher write-offs were reflected in the comparative ratios of net loan losses to average loans: 1.59/ versus ~ 99X in the previous year. FEE AND COMMISSION REVENUE Total fee and commission revenue in the first quarter rose $ 197 million, or 43/, to $ 659 million from the $ 462 million level a year ago, The Individual Bank accounted for approximately half of the increase as growth in the credit card portfolios continued, resulting in increased membership, merchant discount and interchange fees. Fee and commission revenue from Institutional Bank products rose 21X versus the first quarter last year, primarily in financial guarantees and trade-related service fees. The Investment Bank recorded a 45X increase in fee and commission revenue over the comparable period a year ago, diversified over various business activities, which include corporate and public finance fees and financial advisory services fees. C d with the fourth quarter of 1985, total fees and commissions increased $ 31 mi , or 5X, benefiting from increased credit card volumes, 17
TRADING ACCOUNT Securities trading revenue was $ 35 million for the first quarter of 1986, up $ 4 milli from the comparable period last year and down $6 million, or 15X, from the previo quarter's results'he first quarter-to-first quarter improvement was prim t result of good trading performances recorded in European and Asian trading cen ~hi more than offset declines in domestic securities trading. The fourth quarter quarter decrease reflects the impact of interest rate fluctuations on the domest fir government security and municipal bond activities FOREIGN EXCHANGE First-quarter foreign exchange revenue of $ 99 million increased $ 7 million, or 8X, ov first the 1985 'he quarter of last year and $ 29 million, or 41X, compared to the fourth quarter increases were driven primarily by higher foreign exchange revenue fr overseas locations, particularly when compared to the fourth quarter of 1985 'evenu attributable to New York operations were approximately flat compared to the first a fourth quarters of 1985 'oreign exchange revenue generated through customer commerci transactions and trading continued to be diversified across many trading centers. Accumulated foreign currency translation, which represents the after-tax effect translating certain foreign currency statements into U.S dollars, is included in retain earnings in the consolidated balance sheet and amounted to a gain of $ 22 million in t first quarter of 1986 compared with a $ 3 million loss in the first quarter of 1985 and $ 4 million gain in the fourth quarter. INVESTMENT SECURITIES TRANSACTIONS Gains from investment securities transactions were $ 29 million for the first three mont of 1986 compared with $ 6 million in the same period last year and $ 24 million in t fourth quarter of 1985. Bolstered by the impact of current economic conditions falli interest rates worldwide and a weakening dollar 1986's first quarter gains as both domestically and internationally versus the same period a year ago. Compar t fourth quarter of 1985, profits from investment securities transactions grew in t e U S. but declined overseas 18
OTHER REVENUE Incr./(Deer.) vs. First Fourth First Qtr Qtr Qtr (I llions) 1986 1985 1985 Affiliate Earnings ~ ..i. ~ ~ .~. ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ oi ~ $ 19 $ 14 $ (2) Net Gains on Sale/ Disposition of Assets ~ .. ~ . ~ ~ ~ ~ . ~ ~ ~ .~~~o~~~~~ 108 43 98 Gains on Sale of Residual Value of Leased i .~~~o~~~ 8 (24) Other Equipment ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Items ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ Totaloe ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~
" ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ o ~ ~ ~ ~137 2S56 1 (2) (39)
~33 First quarter 1986 other revenue of $ 137 million advanced $ 33 million, or 32%, over the same period a year ago. The first quarter-to-first quarter growth was driven by a $ 98 million rise in gains on the sale/disposition of assets, with profits from the sales of mortgage pass-throughs and mortgage-backed securities, and from the sales of venture capital investments contributing equally to the increase, However, the strong performance in asset sales during the first quarter of 1986 was partially offset by profits from the sale of aircraft and railcar lease residuals and amounts, received in a contract settlement during the first quarter of 1985 to the fourth quarter of 1985, other revenue increased $ 56 million primarily due 'ompared to gains from the sales of mortgage pass-throughs and mortgage-backed securities and venture capital investments.T THER OPERATING EXPENSE F e first quarter of 1986, other operating expenses rose $ 308 million, or 26%, over the comparable period a year ago. The increased expense base was largely the result of increased product volumes, business and technology development and other programs. See separate sector financial performance and discussions. Compared with the fourth quarter of 1985, total other operating expense declined by $ 110 million, or 9%~ INCOME TAXES Applicable income taxes for the first quarter of 1986 were $ 192 million, down $ 46 million, or 19X, from last year's first quarter and $ 61 million, or 47%, higher than 1985's fourth quarter. The decrease in the effective tax rate compared with the first quarter of last year from 46X to 42X reflects a higher level of tax exempt income in 1986 and the capital gains tax rate applied to the first quarter 1986 venture capital gains The increase in the Corporation's tax rate relative to last year's fourth quarter from 35% to 42X was largely a result of the impact of tax credits in the earlier period. 19
GEOGRAPHIC DISTRIBUTION OP NET INCOME Based on internal allocations and adjustments, earnings are categorized between domesti and overseas as follows: (In Millions) Domestic Overseas Tot 1986 First Quartere ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ $ 115 43X $ 155 57X $ 270 1985 Fourth Quarter. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 154 63X $ 89 37X 243 Third Quarter. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 87 38X 140 62X 227 Second Quarteri ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 115 46X 136 s4r. 251 First Quarter. ~ ~ ~ ~ ~ ~ ~ ~ ~ t~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 97 35X 180 65X 277 Full Year. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~453 45X S545 ssr. S998 Because of the integration of global activities, separation, and various assumptions must be it is not practical to make a precis made in arriving at allocations an adjustments to be used in presenting this data. The principal allocations and adjustments are: (1) charges for all funds employed that ar not generated locally are calculated on the amount and nature of the assets and based on marginal cost of funds concept, Citicorp stockholders'quity is treated as generated an earned based on each area's percentage of total assets; (2) allocation of expense incurred by one area on behalf of another, including administrative costs, is ba ed o methods intended to reflect services provided; (3) allocation of tax expen (4 allocation of the difference between actual net credit losses and the provi fo possible credit losses; and (5) allocation of corporate staff costs (other than thos charged to the core businesses) and other corporate items including certain start-u activities The prior year's disclosures have been reclassified to conform with th current year's presentation. In the first quarter of 1986, Citicorp's domestic consumer and corporate businesse continued to build revenue momentum, with increases in asset-related credit revenues, fee and commissions and other revenue over the year earlier period Consumer asset volumes particularly in shelter finance and domestic card products continued to grow resultin in higher asset-related credit revenues and fees and commissions Additionally, th increase was bolstered by gains on sales of mortgage pass-throughs and mortgage-backe securities and gains from sales of venture capital investments Domestic trading accoun profits were lower than in last year's first quarter. Higher domestic consumer credi write-offs and the increased addition to the credit loss allowance raised the provisio for credit losses domestically. Higher operating expenses reflected continued business development, expansion and improvements to product delivery, Versus the fourth quarter of 1985, domestic earnings decreased with the comparison particularly affected by the weaker trading performance and increased consumer credit losses'verseas earnings in the first quarter declined compared with the same period a year ago. Stronger fees and commissions, securities trading and asset-related credit revenues were partially offset by declines in other revenue, primarily the result of last year' contract settlements Additionally, higher commercial write-offs in certain ge hic regions and higher operating expenses of several newly acquired businesses impa the comparison 20
First quarter overseas earnings increased significantly over fourth quarter results reflecting higher trading profits, foreign exchange, fees and corn ions, and other revenues partially offset by lower asset-related credit re s The improvement was also affected by lower commercial write-offs and lo perating expense levels. NET INTEREST REVENUE STATISTICS* Domestic Overseas Total NET INTEREST REVENUE (Taxable E uivalent Basis) (In Millions) 1986 First Quarter $ 917 $ 579 $ 1,496 1985 Fourth Quarter $ 903 $ 654 $ 1,557 Third Quarter 848 567 1,415 Second Quarter 776 576 1,352 First Quarter 740 535 1,275 Full Year ~3267 2 332 ~559 9 AVERAGE EARNING ASSETS In Billions) 19 Fi Quarter $ 81 3 $ 74.3 $ 155 ~ 6 1985 Fourth Quarter $ 77 ' $ 72 ~ 7 $ 149.8 Third Quarter 73 ' 69 1 142.2 Second Quarter 71 ~ 6 65. 5 137 ' First Quarter 70 ' 63 2 133 ' Full Year 73 0 67 ' 140 6 ~ NET RATE SPREAD (Taxable E uivalent Basis) (Percent) 1986 First Quarter 4 57 3. 16 3 '0 1985 Fourth Quarter 4.65 3 '7 4 ~ 12 Third Quarter 4 60 3 '6 3 95 Second Quarter 4+ 35 3 '2 3.96 First Quarter 4 28 3.43 3 '8 Full Year 4. 48 3 '5 3 98
* 'rior 's year's amounts have been restated to conform with the current presentation 21LI UIDITY AND CAPITAL FUNDS ANALYSIS Citicorp's total capital (as defined by regulators) increased by $ 1,740 million during the quarter and totaled $ 17,688 million or 9 65X of total assets on March 31, 1986, up $ 5,201 million or 42X from a year earlier. The increase in first quarter total capital lted primarily from strong internal equity generation, additions to the allowance for ble credit losses, the issuance of $ 250 million of Fixed Rate Subordinated Capital N due in 1998, and other qualifying term debt. Primary capital (as defined by regulators) was $ 11,370 million or 6 '0X of total assets on March 31, 1986 of $ 2,173 million, or 24X, over the same date last year and a $ 478 million, or 4X,
'his represents an increase increase over year-end 1985 'he increase in primary capital over the prior year-end reflects internal equity generation of $ 261 million, and additions to the allowance for possible credit losses of $ 131 million Citicorp continues to have the largest total capital of any private financial institution in the world.In the first quarter, Citicorp was an active borrower in the term debt market thereby enhancing liquidity. Fixed rate debt of $ 912 million was issued in the UPS. with maturities from two to thirty years, $ 650 million of which qualifies for inclusion in total capitals Fixed rate debt of $ 352 million was issued in the Euromarket with maturities from three to twelve years, $ 202 million of which qualifies for inclusion in total capital. Citicorp also issued, domestically and overseas, $ 783 million of floating rate debt with one to twelve year final maturities, $ 500 million of which qualifies for inclusion in total capital. At March 31, 1986 Citicorp's total assets were $ 181.9 billion, up $ 27 ' billion, or 18X, from the comparable period last year. Consumer loans increased $ 12.6 billion or 28X from the first quarter of 1985, largely through higher credit card receivables and significant growth in mortgages ~ The been Corporation's .i'
$ 27.3 billion asset growth in the twelve months since March 31, largely funded by increases in interest-bearing deposits (including sig has ant increases in consumer deposits), the components of total capital, and issuance o ther term debt.Ratios 1st 4th 3rd 2nd 1st Qtr Qtr Qtr Qtr Qtr Percent 1986 1985 1985 1985 1985 Total Capital (1) as a Percentage of Total Assets (2)... ~ .. Primary Capital (1) as a Percentage of
~ ~ ~ . ~ ~ . ~ ~ ~ ~ . 9 '5 9.12 8 '7 8 20 8 '3 Total Assets (2)Common
~ ~ ~ ~ ~ ~ ~ ~ ~Stockholders'quity Generation
~ ~ ~ ~ ~ ~ ~ ~ .~ 6 20 6 '3 6 05 6 06 5 '1 Rate (3) ~ e ~ o ~ o ~ ~ io ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ e ~ i ~ ~ ~ ~ ~ 10 '2 9 '2 8 '5 10 78 13 ~ 08 Dividend Payout Ratio. ~ ~ ~ ~ ... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 32 ~ 1 32.4 34 '9 30 '5 27.35 (1) See page 2 for definitions (2) Total assets, prior to deducting the allowance for possible credit losses, in compliance with regulatory requirements (3) Net income available for common stockholders less common stockholders'ividend as a percentage of average common stockholders'quity.22
COHSOLIDhTED STATEMENT OP INCOME QUhBTEBLT CITICOBP and Subsidiarie: 1986 1985 (In Millions Exce t Per Share hmounts) Sleee Fourth Third Second Firs: INTEREST BEV191UE Interest and Fees on Loans and Lease Pinancing0 ~~~~~ ~ ~~~~~ ~ ~~ $ 4,038 $ 3,997 $ 3,870 $ 3,895 $ 3,76a Interest on Deposits with Banks. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~ ~ ~ 285 279 289 296 29: Interest on Pederal Funds Sold and Securities Purchased Under Resale hgreementso ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~ ~~~~ 318 322 266 239 26 Interest and Dividends on Investment Securities U0S Treasury and Federal hgencies ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~ 61 63 63' 68 7-State and Municipal0 ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ . .~ ~ ~ ~ ~ ~ .~0 15 10 8 Other (Principally in overseas offices) ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ 175 162 138 126 11! Interest on Trading hccount hssets0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 218 237 195 217 21 Total Interest Revenue0 ~ ~ ~ ~ ~ 0 ~ 0 ~ ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~~ ~~~~~~~~~~ ~ $5 110 $ 5 070 $ 4 829 $ 4 849 S4, 722 INTEBEST EXPENSE Interest on Deposits. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 00 ~ ~ ~ ~ ~ ~ ~ ~ $ 2,262 $ 2,170 $ 2,206 $ 2,271 $ 2,21> Interest on Other Borrowed Money, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 892 882 800 836 831 Interest on Long-Term Debt and Subordinated Capital Notes.. ~ . 525 485 455 431 439 Toral Interest Expense0 ~~~ ~~ ~~~~ ~~ ~ ~~ ~ ~ ~~ ~ ~~~ ~~~~ ~ ~~ $ 3 679 $ 3 537 $3 461 $ 3,538 S3,49: HET IHTEBEST REVENUE0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~ ~~~ ~ ~~ ~ ~~ ~ ~ ~~~ ~ ~ Sl 431 Sl 533 Sl 368 Sl 311 ~$ 7 23. LOhN LOSS EXPEHSE Prov ;for Possible Credit Losses. ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ .~. ~ ~ ~ ~ ~ ~ . ~ ~ . S 429 S 394 S 346 S 280 S 22'$ HET ST BEV191UE hFTER PBOVISIOH FOR POSSIBLE CBEDIT LOSSES0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ $ 1 002 $ 1 139 $1 022 $ 1 031 1 01 PRES, COMMISSIONS hND OTHER REVENUE Fees and Coaaaissions. 4
~ ~ ~ ~ ~ . ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ .~~~~~~~~~~~~~~~~ .~~~~ S 659 S 628 $ 512 $ 521 S 46:Trading hccount. . .0 . ~ ~ ~~~~~~~~~ ~~~ 0 ~~~~ Foreign Exchange.
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~Investment Securities Transactions..
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .~ " ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ .~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .~~ .~.~35 99 29 41 70 24 58 118 25 80 78 4 3 9. 4 Other Revenue. ~ ~ ~ ~ , ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ~ ~ ~ ~ 0. ~ ~ ~ ~ ~ ~ .~~~~~~~~ 137 81 38 57 10. Total Fees, Commissions and Other Revenue... ~ . . .0 ' ~ ~ ~ ~ S 959 8 844 8 751 S 740 S 69 OTHER OPEBATIHC EXPENSE Salaries'. ~ ~ ~ ~ ~ 0<< Staff Benefits, ~ ... ~ .
~ ~ ". " ~ 0 ~ ~}}