ML20238F589
| ML20238F589 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley |
| Issue date: | 09/14/1987 |
| From: | Doris Lewis SHAW, PITTMAN, POTTS & TROWBRIDGE |
| To: | NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM) |
| Shared Package | |
| ML20238F596 | List: |
| References | |
| NUDOCS 8709160235 | |
| Download: ML20238F589 (4) | |
Text
{{#Wiki_filter:- . _ - - . _ _ . _ - _ _ _ _ _ _ _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . ___ SHAW, PITTMAN, POTTs & TROWBRIDGE - A PARTNEREMip #NCLUDING PROFESSIONAL CORPORATIONS 2300 N STREET, N. W.
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- taoel ess-e474 (202) rIs7eo E 2as.37ei September 14, 1987 ,AP7A,L DAVID R. LEWIS (aoz) 775 osse U.S. Nuclear Regulatory Commission ATTENTION: Document Control Desk 7920 Norfolk Avenue Bethesda, Maryland 20814 In the Matter of Duquesne Light Company, et al.
(Beaver Valley Power Station, Unit 2) Docket No. 50-412 Ref: Application for License Amendment and Approval In Connection with Sale and Leaseback Transactions by The Cleveland Electric Illuminating Company and The Toledo Edison Company (July 31, 1987).
Dear Sir:
On July 31, 1987, Duquesne Light Company (DL) filed, on be-half of The Cleveland Electric Illuminating Company (CEI) and The Toledo Edison Company (TED), an Application for License Amendment and Approval in Connection with Sale and Leaseback Transactions by CEI and TED. The Application indicated that the equity inves-tors who would be involved in the transactions would be subse-quently identified and financial statements provided. To date, the following companies have been identified as potential equity investors, who may participate either directly or through a sub-sidiary: Investor Potential Investment Bank One Equipment Finance Corporation up to $100 million Chase Manhattan Corporation up to $250 Million Chrysler Capital Corporation up to $400 Million Citicorp up to $200 Million 8709160235 070914 AN PDR ADOCK 05000412.- I PDR < k '\
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SH Aw, PITTM AN. PoTTs & TROWBRIDGE A PARTNERSHIP INCLUDeNG PROFESNONAL CORPORAYlONS Letter to U.S. Nuclear Regulatory Commission September 14, 1987 Page 2 Household Finance Corporation up to $200 Million Southern California Edison Co. up to $300 Million (through Mission Financial ' Management Company, a non- !' utility affiliate) Sovran Leasing Corporation up to $100 million State Street Bank of Boston up to $100 mi.llion , Trans Union Leasing Corporation up to $100 million Financial statements for each participant or its corporate parent are attached collectively as Exhibit A. None of the potential equity investors is a foreign corporation. i Among the potential equity investors above is a non-utility affiliate of a utility. The Application noted the possibility of participation by affiliates of utilities and stated that in such event CEI and TED would submit a memorandum addressing antitrust matters. This memorandum is attached as Exhibit B and demon-strates that there will be no significant antitrust change war-ranting further review. In the Application, First National Bank of Boston was iden-tified as the anticipated owner-trustee (the organization that would hold title on behalf of the equity investors and act as lessor). Some of the potential equity investors, however, have , expressed the preference that Wilmington Trust Company act as i owner-trustee. The general information specified by 10 C.F.R. S 50.33(a) through (d) respecting Wilmington Trust Company is provided as Exhibit C hereto. Copies of the most recent annual and quarterly reports for Wilmington Trust Company are provided as Exhibits D through F. Similar information for First National Bank of Boston, which may still be selected to act as owner-trustee, was previously provided with the Application. Finally, attached for your information as Exhibit G are copies of the draft sale and leaseback transaction documents. Terms in these documents are still being negotiated and are sub-ject to change. However, the basic structure of the transac-i tions, as described in the Application, is reflected in these l drafts and will not change. Also enclosed is a draft revision of the BVPS Operating Agreement (Exhibit H), which is being amended as described in the Application. l
A 4 f.' L SHAW, PITTMAN, PoTTs & 7ROWBRIDGE
~4 yarurassia ~ctuoiwo anoression L coaao=4Tious
- Letter to-U.S.' Nuclear Regulatory Commission i September 14, 1987
- Page 3 As noted in-the Application, the sale and leaseback transac-tions must for' tax purposes be completed in: September. The NRC published a Federal Ragister Notice relating to transactions on August 12,.1987-(52 Fed. Reg. 29,915), permitting approval of the Application on or- af ter September 11, 1987. .Because of the .im-portance of:these transactions and the benefit to ratepayers, DL, CEI and'TED respectfully request that-the license amendment au-thorizing the transactions be. issued this week.
Sincerely, -
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% \Y,3 h David R. Lewis Counsel for' Applicants L
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p . . 1 I SHAW, PITTMAN, PoiTs & TROWBRIDGE a mar ~casu,. mcwomo rao,t.s.om conno 1,0 . Letter to U.S. Nuclear Regulatory Commission i September 14, 1987 Page 4 Service List
-Regional Administrator U.S. NRC Region I Att'n: Mr. Lovell Tripp.
631 Park Avenue King of Prussia, PA 19406 Mr. Jim Beall NRC Senior Resident Inspector Beaver Valley Power Station, Unit 2 PO Box 181 Shippingport, PA 15077 Mr. Peter S. Tam Project Manager, Project Directorate I-4 Division of. Reactor Projects I/II U.S. Nuclear Regulatory Commission 7920 Norfolk Avenue Bethesda, Maryland 20814 Oreste K. Pirfo, Esq. Office of the General Counsel U.S. Nuclear Regulatory Commission Maryland National Bank Building 7735 Old Georgetown Road Bethesda, Maryland 20814
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l 1986 ANNUAL REPORT 1 . .! _ 14
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l l l_ The special feature beginning on page six of this report is a fictional l representation of the events involved in the affiliation of one or our i Indiana banks. The technique of featuring an imaginary bank in a fictional setting previously appeared in our annual reports of 197o. 1978. and 1981. The stones featured Roger McGraw. CEO of North Falls National Bank. Many of our long time shareholder s and followers of I BANC ONE CORPORATION will be pleased that Roger is still a3sociated with our holding company. His saga continues as does our expansion. I r
, BANC ONE CORPORATION and Subsidiaries .. About This Report
\ This 1986 Annual Report presents the operating results for BANC ONE including the af&
* 'l iations with American Fletcher Corporation and Spartan Bankcorp which occurred in i January 1987. While not required from an accounting and regulatory standpoint, BANC ONEk management felt it would be extremely t'aluable for the S,600 new shareholders who became BANC ONE shareholders in 1987 following the two af6/iations as well as for the 31.300 existing shareholders to understand BANC ONE as it is now constituted and as it will operate in the future. Since the two af6fiations were poolings ofinterests, all1986 and prior periods' data are restated to include American Fletcher and Spartan Bankcorp.
1 Financial Highlights Annual Percent Change 1986/ Compounded
$(millions, except per share amounts) 1986 1985 1985 5 years 10 years Per common share
- Net income $2.13 $1.93 10.4 % 14.5 % 13.2 %
Cash dhidends .82 .70 17.1 15.4 14.1 Stockholders' equity 13.74 12.28 11.9 10.9 9.8 For the year Total operating revenue 1,8E4 1,731.7 6.7 15 1 18.0 Net income 199.8 176.8 13.0 26.4 19.2 At year end Assets 17,371.9 16.474.5 5.4 17.6 13J Deposits 13.370.7 12,408.9 7.8 18.1 13J Loans and leases 11,549.1 . 10,061.7 14.8 22.5 17.0 i Common equity $1,250.6 $1,113.7 12.3 20.1 15.3 Shares outstanding (000) Common 90,988 90,592 Series A Preferred 988 996 ; Stockholders Common 36,855 24,748 Series A Preferred 3,560 3,583 i Employees (full time ' i i equivalent) 12.654 12,359 Banking offices 459 452
- Amounts reflect the 3-for 2 common stock split effective August 6,1985 and the 10% common stock dividend effective
, February 7,1986
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I BANC ONE CORPORATION 1 Report From Management ; 1 i The promise of interstate banking became a ! reality for BANC ONE in 1986. Including the l affiliations with American Fletcher and Spartan Bankcorp which were completed in January 1987, BANC ONE affiliated with ten banking organizations in Indiana, Michigan, Ohio and 4 Kentucky. These new affiliates, listed inside the , back cover of this report, represent $6.3 billion 1 of BANC ONE's $17.3 billion of assets at year end 1986. As a result, BANC ONE is the second largest banking organization operating in this four state area with the largest market presence of any bank in Indiana and the second largest in Ohio. In a specific sense BANC ONE's progress toward interstate banking began in 1979 when l the common identity, BANK ONE, was adopted i by all the Ohio banks, replacing both individual bank names and the corporate identity of First Banc Group of Ohio. In a la..,;t sense BANC l ONE has prepared for this event since the Cor.
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poration began operations in 1968 under its phi-
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S '" for affiliate banks' operations in their respective
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. communities supplemented with rigorous cen-tralized financial controls remains as essential l f-
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in an interstate environment today as it did (
,, t i when BANC ONE first expanded outside of the Columbus, Ohio area in 1968. Features in the 1 1970,1978 and 1981 Annual Reports narrated how the uncommon partnership operated for prospective affiliates. This year's report con-q tinues that story, now expanded to present a hypothetical interstate bank affiliation process.
One of the most significant events in the Corporation's history was the affiliation with k . American Fletcher Corporation, completed on January 26,1987. American Fletcher Corpora-tion owns five Indiana banks, led by American l Fletcher National Bank in Indianapolis, and has e ' total assets of $4.5 billion. Its Indiana banks operate 79 banking offices and it has extensive 1 4 .. John B. McCoy, Chairman i 2
O consumer finance, mortgage banking and leas- cents per share. The Corporation's 1987 earn-ing operations. Following the affiliation, Frank ings growth objectives have been established E. McKinney, Jr., Chairman and chief executive based on the level of 1986 earnings excluding officer of American Fletcher Corporation, was these charges. elected a director and President of BANC ONE During 1986 BANC ONE's affiliates CORPORATION. John B. McCoy was elected to expanded the already significant commitment the position of Chairman of BANC ONE and to specialized lending areas. Extreme com-continues as the Corporation's chief executive. petitive pressures in international and large As President, Frank McKinney will have a major wholesale lending functions have created com-role in setting the Corporation's future strategic modity-like pricing structures for those loans.
' direction. In addition Mr. McKinney will be the By making initial investments to develop chief executive of the subsidiary bank holding sophisticated data processing systems and to company, BANC ONE INDIANA CORPORATION. develop staff expertise BANC ONE can realize This company will oversee the operations of superior returns in lending areas not accessed BANC ONE's nine present and three pending by the majority of its competitors. Four areas:
affiliate banks in Indiana. This organizational credit cards, student loans, small and middle-structure is expected to serve as the model market equipment leasing and automobile leas-when significant market presence is established ing account for over one fifth of BANC ONE's in additional midwestern states., loan portfolio and collectively generate yields BANC ONE's net income for 1986 was just approximating twice the prime rate. The newly under $200 million. This income figure has affiliated banks have enhanced BANC ONE's spe-been restated to reflect all acquisitions com-cialized lending strengths. BANK ONE, pleted through January 1987. The Corporation's LAFAYETTE operates an affinity credit card pro-strong earnings power is shown through rela- gram for American Automobile Association tive rankings. Based on average assets for 1986 members in Indiana, Illinois and Ohio, and it BANC ONE was the 34th largest banking orga- currently has $160 million in card receivable nization in the United States; however, only 15 balances. BANK ONE. MERRILLVILLE is the banking organizations reported higher net nation's second largest generator of Health Edu-income. BANC ONE's 1986 net income will rank cation Assistance Loans to medical and dental among the 200 highest among all U.S. com- students. BANC ONE INDIANA CORPORATION panies and is the ninth highest reported by any has 46 consumer finance offices in Indiana, Ohio based company. Net income per share was Michigan and Kentucky specializing in second
$2.13, an increase of 10.4% over restated 1985 mortgage financing. HCL Leasing, which was net income per share of $1.93. Special charges acquired by BANC ONE LEASING, has an $85 and expenses relating to the merger of Ameri- million portfolio of office equipment leases dis-can Fletcher reduced 1986 net income by eight tributed throughout the country.
Following the recent affiliations, BANC ONE now operates 459 banking offices, making this the largest retail branch network in the midwest and one of the ten largest in the United States. A large portion of the Corporation's 3 J _________.___________d
l - investment in research is directed toward this mance to the Corporation's by-laws. He will branch system. The experimental 6nancial ser- continue to serve as a director emeritus. Seward vice center branch in Upper Arlington, Ohio. D. Schooler whose banking career with BANK which offers brokerage, real estate, travel and ONE, COSHOCTON spans over 60 years and insurance services in addition to retail banking who has been a BANC ONE director since 1973, j in one location, has proved highly successful. will retire as an emeritus director. Both Mssrs. Retail marketing concepts tested there will be Westwater and Schooler have played vital roles i
; incorporated in new branch locations and some in guiding BANC ONE throughout most of its i existing sites will be retro-6tted to offer a broad- history.
ened range of 6runcial products. A continuing Five af61iate chief executives who have study of branch and product profitability is suved their banks from before their af61iation underway. In 1986 BANC ONE af61iates pur- with the Corporation have retired. At four of i chased eight branches from other 6nancial these banks their successors have been pro- i
; institutions and 25 branches were consolidated moted from within. Stanley J. Calderon suc.
E to create more effective economic units. ceeds James A. Posthauer at BANK ONE, BANC ONE has enjoyed a reputation of LAFAYETTE John D. O'Shea has taken over leadership among banking organizations in data from Harry Kuhner who served at SANK ONE. processing. To maintain this position BANC PORTSMOUTH for 46 years, Thomas B. ONE has entered into a joint venture with Elec- Heringhaus replaces Gilbert J. Wellman as the i tronic Data Systems Corp. (EDS) to design and chief executive of BANK ONE, LIMA which he build a complete retail bank processing system co-founded, and Robert L. Byers has succeeded for major financial institutions. No such pro- the late J.E. Giffin at BANK ONE, BELLAIRE. In cessing system is currently available in the U.S. April Karen N. Horn will become chairman and This project which will take over three years to chief executive of6cer of BANK ONE, complete is designed to provide BANC ONE and CLEVELAND, succeeding Ralph W. Abelt who other participating banking organizations with retired in December. Mrs. Horn has been presi-the most advanced data processing capabilities dent of the Federal Reserve Bank cf Cleveland for the decade of the 1990's. EDS is the nation's since May 1982. In that capacity she played a largest third party processor for banks and has major role in resolving Ohio's 1985 thrift crisi3. enormous financial and staff resources to con- Mrs. Horn, who has a doctorate in economics, tribute to the project. Norwest Corporation, had been an executive with First National Bank which operates a multi-state, multi-bank fran- of Boston and held the position of Treasurer of chise in the upper midwest and has assets of Bell Telephone of Pennsylvania from 1978 to over $20 billion, recently joined in this venture. 1982. Her extensive executive experience will At the most recent quarterly board meeting enable her to direct the development of BANC Robert D. Walter was elected a director of BANC ONE's fourth largest affiliate bank operating in ONE. Mr. Walter is the chief executive of Car. the highly competitive Cleveland market.
; dinal Distribution. Inc., a major Columbus, 1
Ohio, based wholesale food and drug distributor. William K. Westwater who is one of BANC ONE's six original directors, having served since 1968, will not stand for reelection in 1987 in confor- _ 4 ___ _m______m--_-___m-
The cover of the 1967 annual report carried "15,000 People Who Care" does more than posi-the sub-title: "We've Just Started". Those words tion BANC ONE in the market: it serves as a are equally appropriate now, twenty years later. constant challenge for every member of the While 1986 was a year of considerable accom-BANC ONE team to put quality service 6rst. In plishment in getting started in interstate bank-1986 BANC ONE established BANK ONE -Col-ing.1987 and future years will provide even lege, a two-week residential educational experi-greater opportunities. Continuing expansion ence for management representatives from each and development in the eight state region open af61iate. The curriculum emphasized leadership to BANC ONE is an essential facet of our strat- skills and featured interactive discussions led by egy. We are fortunate that legislatures and gov- distinguished outside speakers and by BANC ernors in Ohio and neighboring states have ONE's senior management. Following evaluation responded to the rapidly changing nature of of the program, the college will be expanded i 6nancial services and have created a framework this year to two academic terms, again involving ' in which well-ordered geographic growth is pos- management from every subsidiary. The oppor-sible. As always, in exploring future affiliations tunities BANC ONE's growth has created for our BANC ONE will seek to enhance the long range staff will be extended to the more than 3,700 value of our shareholders' investment and will staff members who joined us through the 1986 avoid asset growth without commensurate af61iations. Through both the new and old l increases in earnings. members of our uncommon partnership BANC The highest corporate priority in 1987 will ONE can extend its record of innovative achieve-be to integrate the operations of our new af611-ments in banking and superior 6nancial perfor-ates. In this the " uncommon partnership" phi- mance for our shareholders. losophy provides the overall direction. While in many instances BANC ONE will introduce addi-tional new consumer banking services to the markets of our new af61iates, in many other { g , g' cases these new banks bring products and ser-vices all BANC ONE banks can use. We expect John B. McCoy the af61iates of BANC ONE INDIANA with their chairman capabilities and established market positions in consumer finance, mortgage banking, and 6xed income trust management all supported by strong data processing operations to play an especially vital role in the integration process. The success of a banking organization as a deliverer of 6nancial services ultimately rests on the quality d its people providing those ser-vices. BANC ONE he recognized this and is seeking to become the industry leader in qual. ity of customer service. The corporate theme of I l ( i l l 1 s l l L---_______
g BANC ONE CORPOR ATION 1 A Marriade MadeIn Heaven?
...a fictional representation of the affiliation process of an imaginary bank.
August 5 The plane touched down easily and taxied holding company idea to other states. to the waiting car. It had been a brief "Hi, John. Nice of you to pick me up." flight from Indiana. Larry Hand thought "I wouldn't have it any other way, it was a good idea to slip into Columbus After all, how many times will you and I for a final meeting with John McCoy, get to do this?" Joining BANC ONE hadn't been "Well, if we do it right, John. I think complicated, once the decision had been it could become a great way to affiliate made, but there were important with out-of-state banks Lots of other understandings among everyone that still holding companies may end up doing the needed agreement. Hand had been same thing."
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president of his Indiana bank long The two bankers were deep into the enough to know the value of properly conversation by the time McCoy ensed handling last minute details. the car into the traffic headed for "lli, Larry. Over here." It was John downtown Columbus. The plan that had McCoy, BANC ONE president who had been worked out would create a holding
. urged the meeting once Hand had raised company in each state in which there
! the question about extending the Indiana was a significant number of affiliate i
i l The diverse market served by CANC ONE affiliates stretches across four of the major states in the fou er Great Lakes region 9 m - , i ---_ - - - - - - 1
~n It o a region i? hich has areas of dense population as u> ell as open and productn'e land The BANC ONE market is
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SANC ONE CORPORATnN __ F (, w banks. Each statewide holding company "The more the raerrier," McCoy
. in turn would be e member of BANC agreed. "But that brings up my second ! ONE CORPORATION The proposed reservation. We must maintain the organization would be introduced with ' Uncommon Partnership.' The local l !
i Hand as chief executive officer in Indiana banker must still run the local bank."
! and opwating from his lead bank. Hand drew an imaginary chec'< nark "The more I think about the in the air. "I've put a mark beside that as statewide holding company idea," McCoy the number one requirement.Your said, "the better I like it. I've come up twenty year success story in Ohio is with only two reservations." completely convincing. Great Lakes Larry nodded easily. "Well, that's two Uncommon Partnership, here we come."
good reasons for us to meet." They both laughed as the picture McCoy pressed on. "The first separately formed in their minds. It was reservation has to do with layering. We've good to feel at ease with an idea, particu- - got to be certain we don't just add larly one as far reaching as the formation of a multi-state holding company I unnecessary management at the state holding company level. That could defeat involving most of the states in the Great us before we get started." Lakes region. That certainly was the "I agree, John Layering will become opportunity and the " Uncommon a bad word." Hand rolled the thought Partnership" would become a solid around in his mind. "My thinking was cornerstone for its invention. McCoy
' that we draw from the corporate staff would see to that.
here in Columbus where we can and then Later, going up in the bank elevator, j McCoy said, " Larry, I've asked a couple add only when it becomes obvious. With each of the state holding companies directors to stop around and say hello i drawing on the financial controls, data and I want to introduce you to our processing, and marketing effort of the senior staff." [ central staff, we'll eliminate a bundle , of duplication." l l
. i dominated by the major metropolitan areas ofCleveland. Akron. Wungstown. Columbus, Dayton andIndianapolis.
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r l - l l Hand smiled. "There's nothing more The official purpcse of tne gathering important than meeting the new bride. was quickly softened as John McCoy got Particularly when she:s willing." the meeting started in his easy manner.
"And desirable," McCoy added. " Gentlemen, let me say how delighted we Affiliating with a bank holding are to welcome you to BANC ONE. Larry company is nct always a marriage made and I both thought it would be a good in heaven, but when the principals share idea for all of us to see that the other common beliefs, chances of success are people don't have two heads and that we vastly improved. At least that was the really don't have eyes in the middle of feeling when McCoy began the private our foreheads."
meeting. Would the feeling last at least The quick laughter triggered several through the honeymoon? Would it even comments about the wenders of cosmetic carry over to the next round of major surgery but the easy feeling of companion-meetings? ship was firmly established. McCoy September 15 added, "I want you to be sure to ask every question in your mind. Even those you There were twenty-two officers in the think might be embarrassing to us." room. Eleven from each bank. It was The invitation for an open discussion officially defined as a due diligence ( was followed by a series of sensitive and meeting, or at least the conclusion of the { revealing questions ranging from the due diligence process which provided a future direction of merger plans and the forum in which parties of both organiza- expectations for data processing to the tions could investigate the operations or requirement to change affiliate bank i question the procedures of either bank. names to BANK ONE. { lt typically served the legal process of { On the latter issue, McCoy detected uncovering, in a " diligent manner," all the probing and emotional nature of the { warts and blemishes of the acquiree or question. "Rather than have me stumble acquiring bank. around for an answer," he said, "let me have John Fisher, who runs our market-l l t But the areas personality is more influenced by the rural countryside and smaller communities than
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BANC ONE CORPORATION ing effort, show you a video tape of how he said,"but some of my people want to the name was first chosen almost ten hear the specifics of what happens, after years ago. It details the rationale behind the honeymoon. What happens to our common identity." retirement programs and job stability The room was quickly darkened as particularly?" the video presentation ro!!ed up on the it was a subject that had been openly screen, the gist of which dealt with the discussed before and it demanded an need for all affiliates to carry a common expansive response. McCoy turned to name to strengthen the relationship of Roman Gerber, BANC ONE Executive all affiliates with one another and to Vice President, to field the question. identify the corporation within the Based on his experience and sensitivity to investment community. The presentation the subject, Gerber related the human. , included quotes from other affiliates' resource policies and pracdces that had presidents about the value of the been developed over twenty years and universal name and the general lack of almost fifty affiliations. Gerber concluded negative community reaction to the by noting, "We've tried to build flexibility name change. The video concluded with into these programs, but as in all good a future oriented discussion of the need marriages, we'l.1 probably hit a bump or to compete eventually with other major two in the road. if we do, we expect to financial organizations in the Great work it out to your satisfaction." Lakes area. The common identification of The meeting wound through a series all affiliates was an acknowledged of equally tough and important issues. strength in the current banking environ- Hand finally guided the discussion to the ment and one destined to increase in core subject of budgeting and financial future value. planning. "I might as well get right at As the lights came back up, McCoy the heart of this thing. What kind of invited Hand to conduct the balance of earnings performance are you expecting the meeting. "McCoy, you and your from us," he asked? And then added
! people have done a fine job explaining the BANC ONE management philosophy,"
by the industrial and rnetropolitan centers. Many consider the area to be *the real America" ofour country. l [
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almost as an afterthought, "And how can The voice on the phone was not a you help?" stranger to Hand. Boardmz.n handled That brought Pat Handley, BANC acquisitions for BANC ONE and had dealt ONE Chief Financial Officer, and with Hand at various times during the Treasurer George Meiling, to the front of merger negotiations. "Hi, Bill, what can I the room for an in depth evaluation of do for you?" Larry asked. the predicted earnings performance of "We're starting to get some calls from the combined organization. Through a the letters we wrote to some of the banks series of graphs, Handley demonstrated in other states. Roger McGraw and I potential cost reductions through a thought you might ." combining of selected backroom func- " Hold up a minute, Bill," Hand tions. The cost saving opportunity was interrupted. "Who's Roger McGraw?" reemphasized by Meiling as he presented "You probably haven't met him," vital comparisons of the performance l Boardman answered. "He was CEO of our from comparable holding companies. North Falls National Bank when they McCoy ended the meeting by drawing joined the holding company several years the obvious comparison of marriages ago. He's with us in the Corporation now being built on mutual respect, shared and works with me in the acquisitions objectives, and solid economics. It was area." one of the Indiana bankers near the back "OK, I get the picture," Hand added of the room who drew concluding quickly. "What can I do?" laughter by noting that in marriages and "Well, we're making some calls on a banking, good economics beat shotguns couple of important banks," Boardman every time, said, "and I thought it would be great if you could join us to talk about some of October 16 t benefits you see in affiliating with us."
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" Larry, glad I found you in. This is Bill Plans were quickly made to meet as Boardman over at BANC ONE." Boardman commented, "By the way, Roger McGraw has a great story to tell The pictures on these pages, including the skylines of our major cities on the cover of this report, h
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BANC ONE CORPORATION about what has happened to his bank "It is pleasant to be with you tonight, since it joined BANC ONE." especially since I see some of your future "I hope it's a success story," Hand affiliates from Indiana in the audience," laughingly added. he began. "I guess I'm not surprised "It's that all right," Boardman said, they're here, even though I understand "and he tells a good story about how the the affiliation hasn't yet been approved by
' Uncommon Partnership' really works." the regulators. I was going to make some "OK, count on me," Hand said as he comment about premarital relationships, hung up. "And I'll see you over there but I'll let it pass. I do want to spend this
'Ibesday night for the big meeting." evening with you sharing my view of what I see happening in banking the October 20 balance of this decade. And it isn't all The room lights dimmed and McCoy rosy.
quickly stepped to the podium. Richards launched into a fast paced "It is a genuine pleasure for me to presentation faced with statistics which introduce our guest speaker tonight. He suggested that the interstate concentra-has the reputation of being one of the tion sweeping across the country would most insightful analysts in our business." eventually evolve into nationwide l
' McCoy was introducing Monty Richards, banking systems created from a linking from National Securities, to the BANC of major regional holding companies.
ONE senior officers attending the " Earnings performance, to drive a specially arranged quarterly President's strong P/E, will become an even greater Council Meeting. "We think he deserves management concern by the end of this that reputation since he ranks our decade. Those with a consistent record of holding company among the best outstanding results, particularly those performers in banking," he added as with strong equity to asset ratios, will be Richards, "Nums," as he was known in the survivors," he concluded after the industry, stepped to the podium. display the flavor of the BANC ONE market. While diverse in its economy, it is also a snug and tig l f 12
onight, flipping through a series of slides and where BANC ONE would fit into it.
' future demonstrating his prediction. "I'm He thought to himself that the discussion ence," anticipating only a few unusual financial near the end of the meeting about
! ed organizations surfacing in each of the dealing with future competition and how stand regions of our country. These will have to get ready for it, might turn out to be
'oved by what I call " Fortress Balance Sheets." the toughest issue of all.
- e some They will be marked by strong expense it was late when he pulled into the
, nships. control practices, selected centralization, driveway. The neighborhood was quiet nd this and will lean toward autonomy of with most of the houses darkened for the of operations. I also have to add that the night. After shutting off the motor, he sat he model BANC ONE is developing, particu- in the quiet. His thoughts formed around all larly for your interstate expansion, seems the many things that needed his atten-to be a very practical solution for the tion. Maintain the earnings, improve the aced future," Richards concluded. customer service, motivate and recognize
'hich The applause signaled more than just the staff, expand the interstate activity.
ntra- a polite reaction to a thoughtful presenta- He quietly opened the car door and sould tion it also carried the genuine acknowl- started for the house. It was going to be edgement of having been recognized as a good marriage. Maybe one even made king an outstanding performer. in heaven. "I'd better send I arry a es. Driving home that night, McCoy wedding invitation tomorrow just so he ea watched the blue BANK ONE sign atop knows how we feel," he said to himself. eater the main office building recede in the "Maybe I'll also send him a fifty year
' this rear view mirror. He smiled to himself anniversary card so he'll know what we're ord of over the good solid feeling he knew planning." l ase others shared about the evening. Sure, it zill be had been all upbeat. Great fellowship. A complimentary but challenging speaker.
And lots of talk about banking's future l 1 traphic \ area that is a great place to earn a liting and raise a farnity. For us, it is also a great place to be in banking. n.. w
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p 13
BANC ONE CORPORATION Starting A Great New Future American Fletcher officially affiliated with BANC ONE CORPORATON on January 26,1987. It is a significant date since it establishes a milestone equalled only by the founding date of the Corporaton - October 16,1967. Both dates mark the beginning of great new Frank E. McKinney. Jr. American Fletcher Chairman!CEO and John B. McCoy. futuye5
$rNu$k[Se$aI[a'tSNo/N 87[ofiSWon'$a$ r'y#N.#'s77. .1 As the tenth largest bank merger in American banking, the affiliation is important merely by virtue of its sheer size. More significant is the future expectation of improving the customer
.< ervice, enhancing the shareholder return and providing growth oppor-j tunities for the skilled staff. Additionally, the organization model for Indiana resulting from the merger could
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s .a-i EW" : One of a series ofad:ertisments used to launch the name change ofAFNB to BA.\K ONE. y
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$h : Buyosy become valuable in establishing BANC l. h b & $ $ 5*$50i
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ONE affiliates in additional states. . . . . .
' Dl' E$'?~d3}d ' e The introduction of BANC ONE to eji5f!S American Fletcher employees took place
~~ #05 NEONE '
at a total staff meeting held February 4 . . ~- g~..J,f- l in the Indiana Convention Center in Inds.anapolis. It was not a meeting of ff. .
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pin-striped-suited, glass-eyed bankers 4^ .-f- ' discussing interest margin and gap . e:$ES . .. : ~ [r~c ..f; { financing. Rather, it was an exciting gathering of friendly and energetic g%~
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people. It was a spirited meeting h;5fi,_ T' . ' marked by comradery and well being. , These pictures, showing only a few c ', + ,g ~ of 2500 attending, attest to their spirit
, 37".. f; . . "]i 1, * '.5 and expectations. It truly was the start :
of a great new future. 9.'@'i / l
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"' em BaAance Sheet /(
j
* (as restatwo December 31.
Dnember 31. 1985 l
-- 1986_ -
.l
$(thousando $ 1,289.246
$ 1,242,871 Assets: '
Cash and due from banks (Note 16) Deposits in other banks, interest bearing (including Eurodollar 577,699 825.208 placements and negotiable certificates of deposit of $537,665 54,845 494,182 and $735,387 at December 31,1986 and 1985) Short term investments Securities (market value approximates $3,312.200 and $2.926,500 at 725,388 I December 31,1986 and 1985) (Notes 1 and 16) 549,590 664,597 223,288 United States gcrrtmraent obligations 1,707,075 Obligations of federal agencies 1,310,672 665,881_ 226,324
' Obligations of state and political subdivisions 3,190.740 2,882,075 g Other securities Wal securities 4 4,543,037 3,647,608 Loara; and leases (Notes 1 and 6):
497.421 308.204 Commercial,6nancial and agricultural 1.389,199 1,581,067 Real ote, construction 3,702.839 4,125,171 Real estate, mortgage 808,356 808,236 Consumer 325.310
;/ Thx exempt 467,867 11,830,931 10,373,384 Leases 281,859 311.672 Cross loans and leues 11.549,072 10,061.712
' Unearned loan and lease interest (Note 1) 156,670 128.895 Total loans and leases .
l Reserve for possible loan and lease lotedNotes 1 and ',5) 11,392,402 9,932,817 t Net loans and kases
,i 258,042 Other assets: 265.134 U 159,032 176.202
' Bank premises and equipment, net (Notes 1 and 12) 19,992 19,685 Interest earned not collected 131,203 147,247 Other real estate owned (Note 1) 465,553 Excess of cost over net assets of af61iates purchased (Noted ad 2)
' 322,2_49 913,347_ 1,050,992 Other
$17,371,904 $16,474,520 Total other assets
{~ Total assde
+
The accompart),ing notes are an integral part of the financial sta'.ements. t i i i n k a l
[ t December 31 December 31. 1986 1985
) Liabilities:
Deposits: Demand-non-interest beanng Demand-interest bearing
$ 2.810.286 $ 2.584,084 1.546,014 1,178.949 Savings Money market accounts 1.074.481 1,124.817 Time 2.664.900 1.846.925 5.274.986 5.674.138 Total deposits 13,370.667 12,408,913 Short-term borrowings (Note 8):
Federal funds purchased and repurchase agreements Other 1.823.480 1,747.152 321.267 279.763 Total short term borrowings 2.144.747 2.026.915 Long term borrowings (Note 9) Other liabilities: 169.734 187.997 Anrued interest payable Other 104.205 144,414 282.571 541.799 Total other liabilities
' 386.776 686.213 Totalliabilities 16.071.924 15.310.038 l Commitments and contingencies (Notes 7 and 16) i Preferred stock:
Series A convertible, no par value,5.000,000 shares authorized. 988.418 and 9% 042 shares issued respectively (Note 15) 49.421 49.802 Non-convertible, $100 par value,100.000 shares authorized, 10,000 shares issued and outstanding in 1985 1,000 Common stockholders' equitv (Notes 4.11 and 15): Common stock, no par valut. $5 stated value. 300.000,000 shares authorized 90,988,044 and 90,591,884 shares issued, respectively (December 31,1985 shares reflect the 10% stock dividend effective February 7,1986) 454.940 452 %0 Capital in excess of aggregate stated value of common stock 388.879 387,807 Retained earnings 406.740 278.246 Total common stockholders
- equity before treasury shares 1,119.013 1.250.559 Less 345.456 treasury shares, at cost (shares reflect the 10% stock dividend effective February 7.1986)
(5.333) Total common stockholders' equity 1.250.559 1.113.680 lbtal liabilities, preferred stock and common stockholders' equity $17.371.904
, $16.471.520 i
The accompanying notes are an integral part of the financial statements. 4 l e l 17
r / i BANC ONE CORPORATION and Subsidianer _ -
- C nsolidated Stat:m:nt ofIncome /
for the three years ended December 31.1986 .- , y (as restated) 4 I
$(thousands. except per share arn rus) 1986 1985 1984 [
^ f Interest income (Note lh ' '
$1,164.857 $1.042.430
$1.250,907
, Interest and fees on loans and lews ,
r j l Interest t,nd disidends on: Obligations cf U.S. government and Meral agencies and l , l 1 140,856 145.617 129.244 i other securities 123,639 68.443 93.818 Obligations of states and political sedivisions Other interest income, including interest on Eurodollar l placements and negotiable certificates of deposit of i l 56,081 i 91.510 l 143.805 l $30.900. $53.115 and $104.544 in 1986.1985 and 1984 i 1,571,383 l 1,495.802 ' l.383.922 Tote.1 interest income l; interest expense: l l Interest on deposits 250,487 220.418 ' I Demand and savings deposits 230.373 i 497,425 543.575 507.085 Time deposits 138,103 128.527 14'i.175 l Other borrowmgs . 1 886,015 902.475 869.678 i Totalinterest expense ' I 685,368 593.327 514.244 Net intereot income 82.386 130.063 111.770 Provision for loan and lease losses (Note 5) Net interest income after provision for
$35,305 481,557 431.858 loan and least losses Other income (Note 41,868 34.429 Income from fiducury activities 36.027 58,187 52.383 46.450 Service charges qr deposit accounts j 68.602 89.399 84.525 Card processet,wd service income 748 25,252 1.333 Securities gr SS 61,333 61.614 41.997 Other 276,039 192.226 l- l 235.882 I Nat other ircome ;
Other e'xpenses: ' 280,788 247.242 221.487 Salaries and related costs 25.722 35,033 27.395 Net occupancy expense, exclusive of depreciation 39,983 35.747 32.263 i Depreciation and amortization (Note 1) 36.930 66,616 47,412 I Outside services and prxessing 49,199 43.321 34.618
! Communication and transportation 136,922 120.760 102.094
! Other 608,54I 521,877 453.114 Total other expenses
< 222,803 195.562 170.970 Income before income taxes income tax provision (benefit)(Note 10h 12.251 20,996 28.241 income excludmg securities transactions 10,749 (2.258) (391)
Securities transactions
$ 199,803 $ 176.824 $ 143.120 Net income i
Per common share information (amounts reflect the 3-for.2 common stock split effective August 6.1985 and the . 10% common stock dividend effect ve February 7,1986)
$2.13 $1.93 $1.62 Net income 91.125 88.779 84.812 Weighted average common shares outstandmg (000)
The accompanymg notes are an integral part of the financial statements. t I k
'. 18
BANC ONE CORPORATION and Subsidiar>es
)
l C:nsolidated Statment cf Changes in Ccmm:n Stockh:Id:rs' Equity t for the three years ended December 31.1986 capitat i, , (as restated) , Excess of ' Aggngate Total Commor Stock v Stated Value Common Stated of Common Retained y 5' thousands: Shares Treasury *' Stockholders' Value Stock Earnings Stock Equity
]
Balance December 31,1983 37.535,389 $187,677 $268,454 i $115,836 Pooling of interests - $2.746 ' 5 569.221 ! 16.774.925 83.875 122.326! ! 147.391 6.255 202.6h5 t Restated balance at December 31.1983 54.310.314 i 271.552 ; 246.128 l 263.227 9.001
/ Net ir:ome s '
771.906 I Cash dividenos. i 143.120 143.100 Corporation: I ' Common (5.59 per share)" l 4 Preferred 155 50 per slarel l ! (35.0421 (35.042) i (5.483) i t5.4831
, , iboled af61iates I (9.677) ;
1Yeasury shares purchased (322.108) 19.677)
; l 7.024 (7.024)
Shares issued in acquisitions 2.021.240 !' 10.106 34.907 , (5.7871 50.tWO Conversion of Series A Preferred
/ into common 495 'i- ; Pooleef af61: ate stock dividend I 2l <
10 i 12 and other 31.444 ' 157 ' (470) 686 I (2.5386 2.911 Balance. Dece.mber 31,1984 ,56,363,493 ! 281.817 280,575
' 356,831 ! 7,700 911,523 Net income 1
; Cash dividends:
~
176.824 l 176.624 { l Corporation: ' Common ($.70 per share)+ j
' (43.788) (43.7881 Preferred ($5.50 per share) lboled af61iates
' l (5.483) 15.4831 1reasury shares purchased c.13,301) '
(10.940) l t 10.940; 5.105 15.105) l Shares issued through pubhe offering. ! net of issuance costs 2.357.329 11.787 61.825 I (3.1631 76.775 Shares issued in acquisitions ' Common stock split. 3-for 2, effective i I (592) 592 August 6,1985 (Note 15) l l
; 24.266.385 121.331 (121.331) ;
Conversion of Series A Preferred into common i 1.W2 11 25 t 36 10% common stock dividend at l I fair value (Note 15) 7.280.064 36.400 i 158.341 (194.741) Iboled af6 hate stock issuance and other . 322.651 1.614 8.3 72 l (457) 13.717) 13.246 Balance, December 31.1985 l 90,591,884 l 452.960 387,807 278,246 l 5,333 ' 1,113,680 Net income 199,803 199,803 Cash dividends: Corporation: Common ($.82 per share) (54,585) 154,585) Preferred ($5.50 per share) * (5,449) (5,449) Iboled af61iates * (11,046) (11,046) _j heasury shares purchased (39,400) and retired (167,268) (836) (1,196) (869) (1,163) ( " Shares issued in acquisitions Conversion of Series A Preferred 85,336 427 950 (4,464) 5,841 into common 24,400 122 259 381
}boled at61iate stock issuance and other 453,692 2,267 1.059 (229) 3,097 Balance, December 31,1986 .90,988.044 5454.940 . $388.879 5406,740 5 I $1,250.559 i
' Per share amounts reflect the effect of the 3 for.2 common stock spht effective August 6,1985
. arid the 10% common stock dividend effectwe february 7.1966.
" Ending treasury shares were 334J03 and 345.456 at December 31.1984 and 1985. respectwely.
The accompanying notes are an integral part of the financial statements. 1, 19
BANC ONE CORPORATION and Subsidiants
- Ccasolidated Statemezt cf Changes in Financial Pbsiti::n for the three years ended December 31.1986
[ (as restated) 1986 1985 1984 Funds Funds Funds Funds Funds Funds Provided Used Provided Used Provided Used
$tthousands) i i Net income $ 199,803 $ $ 176.824 5 $ 143.120 $
Iten s not requiring use of funds during period: 1 Depreciation, amortization and accretion, net 35,455 32.364 25.364 Provision for loan and lease losses 130.063 111.770 82.386 Deferred federal income tax 11.401 9M 1.700 Operations 376,722 320.958 967 252.570 , 71,080 60.211 50.202 l Cash dividends declared Purchase and retirement of treasury 1.163 5.105 l 7.024 j shares and other : , i 1,000 l I. Issuance Retire preferred stock of stock for acquisitions . 5,841 I 592 50.800 l i l Common stock public offering l 76.775 l ' j
, issuance of common stock by pooled i j affiliate and other
, 3,097 l 13.246 2.911 !
j l issuance of preferred stock by pooled , ' i affiliate i i 1.000
! Equity transactions i 8,938 ! 73,243 91.613 65.316 53.711 57.226 1.301.430 1,303.065 ,
. Deposits I 797.863 i
! Federal funds purchased and repurchase i i !
! agreements t 76,328 ' 549.434 3.547
- 89,851 l 18.484 l Commercial paper i 106,613 8.472 l 56.503 92.804 l l
(' Long-term Other short-term borrowings, netborrowings, net t 34,909 54,438 328
; Acquisition of subsidiary banks: ; i t
Deposits - 163,891 ! 356.941 Other borrowings 74,912 13.426 Deposits and borrowings l.202,845 141,522 2.006.578 i 1.751.966 i 35 Deposits in other banks, interest bearing 247,509 l 68.166 560.231 447.231 6.970 16.117 Short term investments investment securities i 273,429 791.592 166.624 i 120,000 166.525 ;i Sale of credit card loans ' 1,590.555 l.583.968 1.765.588 Loans and leases 4 . i Acquisition of subsidiary banks: 42,544 l 130.958 Securities and short term investments ' 115,151 214.228 Net loans and leases i Earning assets 814,740 2.021,679 234.691 2.382.530 ! 576.348 2.277.398 i I 145,390 30,2'.002 l 171.697 Cash and due from banks AdJitions to bank premises and l l 30,777 31.020 34.120 equipment, net i l i i Excess of cost over net assets of affiliates 19,466 3.86, t 20.512 purchased i Acquisition of subsidiary banks: l l 108,215 592 61.608 Other usets j , Other liatiilities 5,610 6.609 j Other, net ! 151,343 132.454 i 18.315 151,000 317,801 337.481 6.609 306.252 Other i 132.454 ! . Total i $2,554,245 $2,554,245 $2,786.294 ! $2.786.294 [_ $2.641.204 ! $2.641.204 l The accompanying notes are an integal part of the hnancial statements. l 1 i i
.I 20
I BANC ONE CORPORATION Parent Company Only
=
Balnnce Sheet (as restated) i
$tthousando December 31. December 31.
1986 1985
- Assets:
Cash and due from banks
, Eurodollar placements S 931 l 5 1.029 25,000 i 38.300 l Repurchase agreements 2,700 i
! Investment in securities of affiliates (Note 1) 1,208,305 l 1.043.167 Amounts due from consolidated subsidiaries 93,428 i 37.960 Securities (market values approximates $10.497 and $32.233 at December 31.1986 and 1985) (Note 1):
Obligations of ste and political subdivisions Other securities 20.000 2,540 3.177 Excess of cost over net assets of affiliates purchased. net of accumulated amortization of $21.104 and $15.724, respectively (Notes 1 and 2) Other assets 118.425 120.597 Total assets 13,370 , _ 14.461
$1,464.699 $ 1.278.691 Liabilities:
Commercial paper Note payable to affiliate
$ 69,750 $ 23.300 2,000 9% Notes payable (Note 9) ,
15,000 16.500
, 11 %% Notes payable (Note 9) I 50,000 50.000 l j Accruev interest payable 1.195 3.260
{ Dividends payable 15,943
; Other liabilities 13.638
! 10.831 7.511 Totalliabilities 1 164,719
~
l14.209
! Commitments and contingencies (Note 16) ~ ~ ~
i Preferred stock: Series A convertible, no par value. 5.000.000 shares authorized. 988.418 and 996.042 shares issued, respectively (Note 15) 49,421 l Non convertible, $100 par value. 100.000 shares authorized. 49.602 10.000 shares issued and outstr.nding j 1.000
- Common stockholders' equity (Notes 4.11 and 15):
Common stock, no par value. $5 stated value. 300.000.000 shares authorized. 90.988.044 and 90.591.884 shares issued. respectively (December 31,1985 shares reflect the 10% stock i dividend effective February 7.1986) 454,940 452.960 Capital in excess of aggregate stated value of common stock Retained earnings (Note 1) 388.879 387.807
, 406.740 278.246 Total common stockholders' equity before treasury shares -
1,250,559 1.119.013 Less 345.456 treasury shares, at cost (shares reflect the 10% stock dividend effective February 7,1986) l' 45.333) Total common stockholders' equity 1,250,559 1.113.680 Total liabilities, preferred stock and common stockholders' equity $1,464.699 $1.278.691 The accompanying notes are an integral part of the financial statements. l t i i a _ _ _ _ _ _ _ _ _ _ _ _ _ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ^ - ' - _ __ . - _ - - _ __ _ - _ - _ - _ _ _ _ - - _ - - - - - - - - - - - - - - - - - - - - - - - - - - -
2ANC ONE CORPORATION Parent Company Only
. Statem2nt cfInccm2 if for the three years ended December 31.1986 fas restated)
$tthousands. except per share amounts) 1986 1985 1984 Income:
Dividends from bank af61iates $ 76,580 $ 62.829 $ 56.095 Management fees from af61iates 8,530 35.433 30.934 Interest income (Note 1): Af61iates 6,181 2.386 795 Obligations of U.S. government 17,704 8.938 Obligations of states and political subdivisions 644 613 Other. including interest on Eurodollar placements of 1
$450 $766 and $253. respectively 525 1.314 269 Income from other security investments 366 338 353 1 Other income 563 495 414 4 Securities gains /(losses) (243) 167 2.224 Total income 93,146 121.279 100.022 l
Expense: Interest 7,853 29.216 18.304 Salaries and benefits 9,536 7,434 6.677 I Data processing + 289 26,042 19.809 Depreciation and amortization (Note 1) 5,468 5.012 4.778 Professional fees and services 4,991 7.609 5.174 Other 9,206 6,234 5.318 1 Total expense 37,343 81.547 60.060 income before income taxes and equity in , undistributed earnings of affiliates 55,803 39.732 39.962 Income tax provision (benefit): 1 income excluding securities transactions (7.184) (9.250) (6.223) Securities transactions (112) (376) 580 , Income before equity in undistributed earnings of affiliates 63,099 49.358 45.605 Equity in undistributed earnings of af61iates 136,704 127.466 97.515 ; Net income $199,803 $176.824 $143.120 i Per common share information (amounts reflect the j 3-for 2 ccmmon stock split effective August 9.1985 j and the 10% common stock dividend effective l February Net income7,1986) $2.13 $1.93 $1.62 Weighted average common shares outstanding (000) 91,125 88.779 84.812
. I 6 '
- Fees paid by the parent for af6liate data processing in 1985 and 1984 were paid directly in 1986.
The accompanying notes are an integral part of the financial statements. 22 1 em
f BANC ONE CORPORATION Parent Company Only I Statement of Changes in Financial 1%sitira
. for the three years ended December 31.1986 )!
(as restated)
\
Sithousands) Sources of funds: _ 1986 1985 1984 Operations: , { Net income $ 199,803 '
$ 176.824 ) $143,120 Charges and credits included in operations not affecting funds during the current year:
; f Equity in undistributed earnings of af61iates ! (136,704) f Depreciation and amortization '
(127.466) l (97.515) 5,468 7 5.012 4.778 Loss on sale of securities 243 ! Total from operations 68,810 ! 54.370 50.383 Issuance of common and preferred stock related to acquisitions 5,841 ' i 592 50.800 Common stock public offering l Issuance of common stock by pooled affiliates and other 76.775 i
' 3,097 13.246 2.911 !
Issuance of preferred stock by pooled affiliates l ! 1.000 l Proceeds from repurchase agreements
! 141.013 Proceeds from commercial paper borrowing 46,450 23.300 i
! Proceeds from note payable to affiliate 2,000 i
Proceeds from sales and maturitus of investments l l and interest bearing deposits 36,477 119.436 3.326
! Decrease in cash and due from banks 98
; increase in dividend payable 26 '
2,305 2.851 1.601 l Other, net 340 , 1.204 l Total sources $ 165,078 $ 291.936 $251.238 l Uses of funds: ' i Cash dividends declared 5 71,080 Retire preferred stock $ 60.211 5 50.202 l 1,000 increase in investments and intered bearing deposits 2.783 j 37.477 136.693 increase in amounts due from affiliates 55,468 30.310 1.745
, , Purchase and retirement of treasury shares 1,163 5.105 7.024 Additional investment in subsidiaries 2,873 Acquisitions 15.728 2.944 Repayment of notes payable 25,561 ; 592 ' 50.801 Repayment of repurchase agreements 1,500 l 1.500 1.500 2,700 l 141,013 Increase in cash and due from banks '
Other, net 329 950 i Total uses $ 165,078 $ 291.936 ! $251.238 The accompanying notes are an integral part of the financial statements. l l1 i [i m 23
f BANC ONE CORPORATION rnd Subsidiards
.. Notes to Financial Statements (
Note 1. Summary of Signl6 cant Accounting Policies: The following is a summary of signi6 cant accounting policies followed in the preparation of the 6nancial statements: Principles of Consolidation: The consolidated financial statements include the accounts of the Cor- ! poration and all significant subsidiaries (af61iates). Material intercompany accounts and transactions have been eliminated. For purposes of comparability, certein prior year amounts have been reclassi-6ed. Financial information has been restated, as appropriate, to include two January 1987 af61iations ! (see Note 2) accounted for as poolings of interests. Investment Securities: Investment securities are stated at cost adjusted for amortization of pre-mium or accretion of discount on the constant yield method. Gains and losses on securities are accounted for on the completed transaction basis in the year of sale on an " identified certificate" basis. "Other securities" includes marketable equity securities valued at the lower of cost or market. As of December 31,1986 and 1985, the market value of these securities exceeded the cost. Bank Premises and Equipment: Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets. Upon the sale or other disposal of the assets, the cost and related accumu-lated depreciation are removed from the accounts and the resulting gain or loss is recognized. Maintenance and repairs are charged to expense as incurred while renewals and betterments are capitalized. Other Real Estate Owned: Other real estate owned represents properties acquired by the Corpora-tion's affiliate banks through customers' loan defaults. The real estate is stated at an amount equal to the loan balance prior to foreclosure plus costs incurred for improvements to the property, but no more than the fair market value of the property. Provision for Loan and Lease Losses: The provision for loan and lease losses charged to operating expense is based upon each affiliate bank's past loan and lease loss experience and an evaluation of potential losses in the current loan and lease portfolios. In management's opinion, the provision is suf6cient to maintain the reserve for possible loan and lease losses at a level that adequately provides for potential losses. . Income Recognition: Income earned by the Corporatiori and its af61iates is recognized principally on the accrual basis of accounting. Interest income on ome installment loans is recognized as income on the sum-of-the-months-digits method. Unde this method, the finance charge is reported in decreasing amounts each month which provides ar approximately level rate of return on the uncollected loan balance. Certain fees, principally service, are recognized as income when billed or collected. The affiliate banks suspend the accrual of interest when, in management's opinio , the collection of all or a portion of interest has become doubtful. Generally, when a loan is placed on nonaccrual, the Corporation's affiliates charge all previously accrued and unpaid interest against income. In future periods, interest will be included in income to the extent received only if complete principal recovery is reasonably assured. Employee Benefit Plans: The Corporation and its af61iates have various non-contributory pension plans covering substantially all employees. There was $387,000 pension plan expense recorded in 1986 while $1,628,000 was recorded in 1985 and $1,522,000 was recorded in 1984, including amor-tization of past service costs over ten to forty years. Adoption of the Corporation's actuarial cost method and assumptions by various affiliates acquired during 1986 resulted in a decrease in pension expense in 1986. The Corporation's policy is to fund pension cost accrued in the financial statements except for an affiliate that currently has no funding requirements but is recording pensior. plan 24
l l e i 1 i o l i expense. The weighted average assumed rate of return used in determining the actuarial present value of accumulated plan bene 6ts was 6% to 11% during 1986 and 1985. Accumulated plan benefits and plan net assets for the plan years beginning January 1,1986 and 1985 were as follows:
$(thousands) 1986 198S ,
Actuarial present value of accumulated plan benefits: Vested $67,323 $64,028 i Nonvested 4,059 < 3.667
$71.382 L $67.695 l Net assets available for benefits $128,623 $117.662 The Corporation and its affiliates provide certain health care and life insurance benefits to eligible retired employees. Substantially all of the companys employees may become eligible for those bene-fits if at retirement they have accrued 10 years of service as defined by the BANC ONE CORPORA-T10N Retirement Plan. The cost of health care and life insurance benefits for retired employees is recognized as expense as incurred. For 1986,1985 and 1984, those costs totalled $485.000, $500.000 and $407,000, f
Direct Financing Leases: The leasing operations of the subsidiaries consist of the leasing of various types of equipment under leases principally classified as direct financing leases and ranging in maturity from three to ten years. Interest and service charges, net of initial direct costs, are de-ferred and reported as income in decreasing amounts over the term of the lease so as to provide an approximate constant yield on the outstanding principal balance. Excess of Cost Over Net Assets of Affiliates Purchased: The excess of cost over net assets of affiliates purchased is being amortized on the straight-line method over twenty-five or forty years. Interest Rate Swap Agreements: The Corporation uses interest rate swap agreements as part of its interest rate risk management strategy. Swap income and expense are recorded using the accrual method. Swap agreements are marked-to-market when the asset or liability being hedged by the swap is sold or extinguished. Fees related to swap agreements are amortized over the life of the swap. Investment in Securities of Affiliates (Parent Company Only): The Corporation's investment in I securities of affiliates represents the total equity of all the Parent Company's wholly ow. J consoli-dated subsidiaries, using the equity method of accounting for investments. i
.a I Note 2. Bank Affiliations:
In January 1987, the Corporation acquired all the outstanding capital stock of one Michigan and one Indiana banking institution. The Michigan affiliation was Spartan Bankcorp, Inc. in East Lansing (East Lansing) on January 2. The Indiana affiliation was American Fletcher Corporation in Indianapolis (Indiana) on January 26. In 1986, the Corporation acquired all the outstanding capital stock of two Ohio, one Kentucky, seven Indiana and one Michigan banking institutions. The Ohio affiliations included First-Union Bank in Bellaire (Bellaire) on January 1 and The United Dank in Uhrichsville (Uhrichsville) on October 1. The Kentucky affiliation was KYNB Bancshares. Inc. in Lexington (Lexington) on June 1. The seven Indiana affiliations included First American National Bancorp of Plainfield (Plainfield) on January 1. Purdue National Corporation in Lafayette (Lafayette) on June 1. Money Management Corporation in Merrillville (Merrillville) on July 1, Citizens Northern Bank of Elkhart (Elkhart) on August 27, The 25 A _ - _ _ _ _ _ . 1
Carmel Bank and Trust Company (Carmel) on August 29, Marion Bancorp (Marion) on October 1 and first Crawfordsville Corporation (Crawfordsville) on November 1. The Michigan af61iation was The Citizens State Bank in Sturgis (Sturgis) on December 19. Also in 1986, BANC ONE LEASING CORPORATION acquired HCL Leasing Corporation for cash of approximately $14 million. On December 16,1985, the Corporation acquired all of the outstanding capital stock of Union Bank and hust Company in Franklin, Indiana (Franklin). In 1984. the Corporation acquired all the outstanding capital stock of four Ohio banking institu. tions including The Wi County Bank in Coolville (Wi County) on January 1. The First National Bank of East Liverpool (East Liverpool) on April 1. The Union Savings & Rust Company of Warren (Warren) on May 1 and The Waverly State Bank (Waverly) on August 1. All appropriate Snancial statement, footnote and other information for the six 1986 and two 1987 af61iations accounted for as poolings of interests have been consolidated with BANC ONE CORPORA. TION for all periods presented. There were no material intercompany transactions prior to the af61iations. The table below provides further information on these transactions. Common Shares Name of Af611 ate Following Banking Organization issued Acquisition or Merger indiana 21.035,328 BANC ONE INDIANA CORPORATION East Lansing 683,045 BANK ONE EAST LANSING Sturgis 595,999 BANK ONE. STURCIS Crawfordsville 1,025,521 BANK ONE, CRAWFORDSVILLE. NA Marion 484,000 BANK ONE, MARION, INDIANA. NA Merrillville 1,390,514 BANK ONE, MERRILLVILLE, NA Lafayette 1,427,576 BANK ONE, LAFAYETTE NA -
< Lexington 512.170 BANK ONE, LEXINGTON, NA The following table shows the effect of the two 1987 pooled entities on results of operations for the periods prior to the combination:
Pooled
$nhousands) BANC ONE Af611ates Combined
! 1986 Total revenue $1,418,270 $429,152 $1,847,422 164,738 35,065 199,803 Net income 1985 Total revenue 1,335,303 396,381 1,731,684 138,364 38,460 176,824 Net income 1984 Total revenue 1,187,251 388,897 1,576,148 115,810 27,310 143,120 Net income The results of operations of the acquisitions accounted for under the purchase method of accounting I
(see tabk below) hau been included in the consolidated statement of income since the date of acquisition. The exce:s of cost over net assets acquired was $19.500,000 in 1986 and $3,900,000 in 1985. Pro forma consolidated resuhs of operations with those affiliates included for periods prior to ,' af61iation for 1986,1985 and 1984 are not presented because of the immaterial impact. The following { table and related footnote preser.t other pertinent data for each acquisition (shares issued have been l l l 26 )
. l l 1
- i 1
adjusted, where applicable, to reflect the impact of the August 6,1985 3-for 2 common stock split and the February 7,198610% common stock dividend): Total Assigned Comrnon Value of Shares Shares issued Name of Affiliate Following Bank Issued- $(thousands) Acquisition or Merger. 1 Uhrichsville (a) BANK ONE, DOVER, NA I (a) j Carmel (a) (a) BANK ONE, CARMEL ; Elkhart (a) (a) BANK ONE. ELKHART ) Plainfield (a) (a) BANK ONE, PLAINFIELD. NA i Bellaire 310,100 $ 5,800 BANK ONE, BELLAIRE, NA j Franklin (a) (a) BANK ONE FRANKLIN j Waverly 314,701 4,900 BANK ONE, PORTSMOUTH, NA j Warren 2,389,607 32,200 BANK ONE. EASTERN OH!O. NA q East Liverpool 900,924 12.000 BANK ONE, EASTERN OHIO. NA 2 Tri County 129,462 1,700 BANK ONE, ATHENS, NA I (a) Uhrichsville, Carmel Elkhart, Plainfield and Franklin were acquired for cash of approximately
$40 million, Note 3. Subs:quent Af611ation:
On February 27,1987, the Corporation acquired all of the outstanding capital stock of The First National Bank in Fenton, Michigan (Fenton). A totil of 257,235 common shares of the Corporation were issued in the transaction, which is to be accounted forr as a purchase, At December 31.1986, Fenton had total assets of $79,800,000 total deposits of $73,700,000 and shareholders' equity of 3
$5,300,000 and net income of $700,000 in 1986. Pro forma consolidated results including Fenton for 1 1986 and D85 are not presented because of the immaterial impact.
Note 4. Pending Affiliations: The Corporation has agreements pending for the acquisition of three Indiana banking entities, First National Corporation in Bloomington, Charter 17 Bancorp, inc, in Richmond and Northwest Bank
)
1 in Rensselaer, The agreements with the organizations provide for an exchange of common shares of ) the Corporation for all their outstanding shares. The number of shares to be issued general!y is related to the average market price of the Corporations stock. Based on the market price of the Corporation's stock at December 31,1986, it is anticipated that approximately 3,884,000 common l shares will be issued. Following is a summary of selected financial data for the unaffiliated entities as of and for the year ended December 31,1986. The results listed do not reflect purchase accounting adjustments and are not necessarily indicative of future consolidated operations. The information is unaudited and is presented on a combined basis.
)
I
$(thousands)
Assets $651,600 Deposits 519.300 Liabilities 590,600 Stockholders' equity 61,000 Net income 7,100 27
Note 5. Reserve for Possible Loan and Lease Losses: Activity for 1986,1985 and 1984 in the reserve for possible loan and lease losses is summarized in the " Total Reserves" column on Page 40. Note 6. Investment in Financing Leases: The components of the net investment in direct 6nancing leases as of December 31,1986 and 1985 are as follows:
$lthousands) 1986 1985 4 w Minimum lease payments receivable $412,226 $286,234 Estimated residual values of leased property 55,641 39,076 Less unearned income (97,073) (70,828)
Less reserve for possible lease losses (6,823) (3,080) Net investment in nnancing leases $363,971 $251,402 The minimum lease payments receivable for each year 1987 through 1991 and the period thereafter are $142,748,000, $102,130,000, $75,725,000, $50,534,000, $26,978,000, and $14,111,000, respectively. Note 7. Leases: At December 31,1986, the Corporation and its af61iates utilized certain bank premises and equip-ment under long term leases expiring at various dates. In certain cases, these leases contain renewal options and generally provide that the Corporation and its af61iates will pay for insurance, taxes and maintenance. Certain of these lease agreements have been capitalized under provisions of Statement of Financial Accounting Standards No.13 and are designated below as capital leases. As of December 31,1986, the future minimum lease payments by year under capital leases, together with the present value of the minimum lease payments and the future minimum rental payments required under noncancellable operating leases with initial terms in excess of one year, are as follows: , Capital Operating
$tthousands) Leases Leases
, Year E,nding December 31 1987 $ 6,377 $18,181
; 1988 3,506 14,602 1989 2,184 12.288 1990 1,841 6,513 1991 1.578 5,618 Later Years 6,037 39.257 Total minimum lease payments ! 21,523 $96,459 3,109 .
Less amount representing executory costs I Net minim 1m lease payments 18,414 Less amour,< " presenting interest 4,736 Present value of capital lease obligations _$13,678 28 k
= I Rental expense approximated $26,372,000 in 1986, $20,797,000 in 1985 and $22,920,000 in 1984.
Note 8. Short Term Borrowings: Information pertaining to the CorporatiWs short-term borrowings for 1986,1985 and 1984 is summarized below: Demand Notes Federal Payable Commercial Funds Repurchase U.S. Treasury
$lthousands) Paper Purchased Agreements and Other 1986: l I Ending balance $158.382 $1,136.361 $ 687,164 I $162.885 Highest month end balance 184,939 1,136,316 1,108.933
{ 167.785 Average daily balance 134,762 796,482 771,186 131.547 Weighted average interest rate: As of year end 7.62 % 14.74 % 5.9' 14.29 % Paid during year 6.62 % 6.78 % 6.09 w 6.56 % 1985: , End..ig balance $ 68,531 $ 970,039 $ 777,113 <
$211.232 Highest month end balance 88,463 970,039 837,361 211,346 Average daily balance 76,072 464,051 770.775 112,444 Weighted average interest rate:
As of year end 7.98 % 10.48 % 7.68 % 10.14 % Paid during year 8.17% 8.01% 7.79 % 8.21% 1984: ' [ F Ending balance $ 60.059 $ 543,007 $ 6b4,711 $118.428 Highest month end balance 67,591 738,680 748,057 i 183.293 Average daily balance 57,229 492,195 ' 622.015 86.611 Weighted average interest rate: As of year end 8.36 % 8.83 % 8.05 % i 8.78 % Paid during year 10.19 % 10.22 % 9.58% ! 11.34 % Federal funds purchased and securities sold under agreements to repurchase represent borrowings with maturities primari.ly from overnight to 7 days. In addition to providing for the short-term funding requirements of the Corporation's banking af611ates, these transactions also arise from the lead bank's market activities for correspondent banks. The Corporation's and one affiliate's commercial paper is supported by multiple lines of credit with unaffiliated banks renewable annually. These facilities total $180,000,000 and carry annual commit-ment fees of .21% to .25%. During 1986 the Corporation arranged a $150,000,000 short. term 6nancing facility with a group of eighteen major international banks. The financing consists of a five year note issuance facility permitting borrowings with one to six month maturities. Issuance is on a competitive bid basis supported by a $100 million daily backup facility at prime which is also available to support the Corporation's domestic commercial paper. There is a fee of W% per annum on the undrawn facility. The facility is cancellable on ten days notice by the Corporation in multiples of $10,000.000. No amounts were drawn down under the facility in 1986. I 1 l 29 L __ _ - _ - _
Note 9. Long Term Borrowings: Long-term borrowings as of December 31,1986 and 1985 included certain restrictions described below and consisted of the following: Suhousands) 1986 1985 I 11%% Notes payable 5 50,000 $ 50.000 Fixed rate Swiss franc bonds 50,684 , 50,709 9% notes payable 15,000 l 16,500 Other notes payable at 6.5% to 10% 21,289 37,158 i Fixed rate investment notes 8,452 1 10.159 Industrial Revenue Bonds due through , Dscember 1,1999 at 5%% to 10%% 7,415 l 6.700 Obligations under capital leases (Note 7) 13,678 i 12.166 Other 3,216 4.605
$169,734 $187.997 in November 1982, the Corporation issued $50,000,000 of 11%% unsecured Notes payable due November 1,1992. The Notes are nonredeemable until November 1,1989, at which time the Corpo-ratior t its option, may redeem any or all of the Notes at their principal amount plus accrued interest. The Note Indenture limits the right of the Corporation to encumber the voting shares of its bank af6liates or dispose of more than 20% of the voting shares of banks indiv'idually representing 10% or more of consolidated assets, in 1985, an af61iate of the Corporation issued 110 million Swiss franc bonds (U.S. $50.5 million) that mature in 10 years. The 6xed coupon rate of 5.5%, paid annually, has an effective rate of 11.21%
because, concurrent with the issuance, the af61iate entered into a Swiss franc /U.S. dollar currency swap to hedge the Swiss franc liability and effectively convert the issue to U.S. dollar 6nancing. The af61iate may redeem all, but not part, of the outstanding bonds at 102% from November 1990 to November 1991, after which time the bonds are redeemable at par. Under certain conditions, the af61iate may redeem all, but not part, of the outstanding bonds at 102.5% until November 1987 and at declining prices thereafter. The bond issuance agreement irnposes limitations on the issuance of additional debt and requires the af61iate's de6ned stockholders' equity to be at least $150 million. The 9% Notes payable are required to be repaid at a rate of $1,500,000 per year with interest payable semi. annually. The Note Agreement currently allows prepayments with premiums as well as prepay-ments up to $1,500,000 annually without premium. The Note Agreement imposes limitations on the creation t ' 6mded debt, tiens, lease obligations, payment of cash dividmads and acquisition of the Corporation's shares. The aggregate minimum annual retirements of long-term borrowings for each year 1987 through 1991 are $21,676,000, $5,893.000, $5,379,000,56,427,000 and $4.527,000. i
,i 30 L__________
Note 10. Federal Income Taxes: The Corporation and its af61iates 6le, subsequent to acquisition, a consolidated income tax return and income tax expense is apportioned among all companies based upon their taxable income or loss and tax credits. Deferred federal income tax expense results from timing differences in the recognition of revenue and expense for 6nancial reporting and tax purposes. The sources of these differences and the tax effect of each are as follows:
$(thouunk) 1986 1985 1984 Change from accrual to cash basis accounting for !
tax purposes
$ 9.843 $ 169 l $(5.921)
Excess tax depreciation 50,956 34.114 , 27.111 Amortization of excess tax basis of purchased subsidiaries 1,003 1,170 ! 1.598 Cxcess of book over tax loan loss provision (6,966) (6,296) j (10,021) ; Differences in book and tax income on 6nancing i leases, excluding depreciation (43,653) (25,049) (19.248) Prefunding health care benefits 2,796 Recognition of income on hedged transactions (1,371) (875) 2,949 Gain on sale of buildings, deferred in 1985 for 6nancial reporting purposes 805 (3,406) i Other (2,012) (794) _ 5.232 Total deferred 11,401 (967) 1,700 Amount currently payable 11.599 19,705 i 26.150 Total provision for federal income taxes $23,000 $18,738 ( $27.850 t The effective income tax rate is below the statutory rate due to the following: 1986 1985 1984 mm me m-. .- Statutory tax , rate 46.0 % 46.0 % l 46.0% Reduction (increase) in tax rate resulting from: , I Tax exempt interest 3 35.1 31.2 Sale of acquired securities and mortgage loan portfolios l 27.7 l with tax basis in excess of book basis 1.0 1.2 1.1 { i investment tax credit 1.1 ' 3.7 l.5 Capital gain benent sale of buildings .2 1.0 Other (1.7) (.7) (.7) Actual tax rate 10.3 % f 9.6% l 16.49n investment tax credits (lTC) are recorded as reductions of income tax expense in the year in which they arise and amounted to approximately $3,192,000 in 1986. $7,380,000 in 1985 and $4.233.000 in z 1984. The 1986 credit resulted primarily from recognition of ITC for leases entered into in 1986 { whereby the lessee agreed to reimburse BANC ONE for ITC lost because of subsequent tax law changes. { I ! 31
Note 11. Dividend Restrictions (Also See Note 9): Payment of dividends by the bank affiliates is subject to various regulatory restrictions. For national bank affiliates and state banks in Ohio the governing regulatory agency must approve the decla-ration of any dividends generally in excess of the sum of profits for that year and retained net profits for the preceding two years. The Michigan and Indiana state bank affiliates are subject to such state laws permitting dividends to be declared from retained earnings so long as certain specified capital requirements are met. At December 31,1986, total stockholders' equity of the banking affiliates approximated
$1,183,107.000 of which $408,512,000 was available for the payment of dividends without approval by the applicable regulatory authority.
Note 12. Banking Premises and Equipment: The major categories of banking premises and equipment and accumulated depreciation at December 31,1986 and 1985 are summarized as follows:
$(thousands) 1986 1985 Land $ 41,027 $ 41,420 Buildings (including $3,359 and $3,168 under capital leases at December 31,1986 and 1985) 144,087 135.595 Equipment (including $19,418 and $16,583 under capital leases at December 31,1986 and 1985) 195,012 169,425 Leasehold improvements 46,01C 49,127 426,136 395,867 Less accumulated depreciation and amortization (including $10,862 and $9,050 under capital leases at December 31,1986 and 1985) 161,002 137.825 Banking premises and equipment, net $265,134 $258,042 Note 13. Consolidated Quarterly Financial Data (unaudited): '
Selected quarterly financial data for 1986 and 1985 is presented below. The information is unaudited but does reflect all adjustments considered necessary for a fair presentation of the results of opera-tion for the interim periods. All per common share amounts are based on average common shares l 32
outstanding after giving effect to the August 6,1985 3 for-2 stock split and the February 7,1986 10% stock dividend:
$(thousands, except per share amounts) First Second Third Fourth Total
=======
Quarters Ending in 1986: ! Total revenues $465,940 $466,890 $458,170 $456.422 $1,847,422 Net interest income 161,460 167,950 171.570 184.388 685,368 Net income 48,681 51,676 52,948 46,498 199,803 Per common share Net income .52 .55 .57 .49 2.13 Stock price High 30.75 33.13 28.63 25.63 Low 21.36 27.88 23.88 22.63 Quarters Ending in 1985: Total revenues 413.500 426,680 431,640 459,864 1,731,684 Net interest income 141.260 143,030 151,070 157,967 593,327 Net income 39,437 40,760 45.574 51,053 176.824 Per common share ; Net income .44 .45 .49 .55 1.93 Stock price High 18.34 20.68 21.36 25.34 Low 15.23 16.66 17.73 19.20 1 ( Note 14. Related Party 'hansactions: j Certain of the Corporation's officers, directors and their affiliates are loan customers of the Cor tion's banking subsidiaries. The Securities and Exchange Commission (SEC) has determined that, with respect to the Corporation and five significant subsidiaries (as defined by the SEC), disclosure of borrowings by directors and executive officers and certain of their affiliated entities should be made, As of December 31,1986 and 1985, loans aggregating approximately $155,215,000 and j q
$95,054,000, respectively were outstanding to such parties. Such amounts do not include loans to j
members of immediate families of persons who are solely directors and executive officers of the significant subsidiaries. During 1986 new loans aggregating'$226,731,000 and amounts collected of
$166,570,000 were transacted with such parties. Additional 19, the Corporation and its subsidiaries incurred lease payments to directors' affiliates of approximately $1,296,000, $2,703,000 and
$2,757,000 during 1986,1985 and 1984 respectively. In 1985, a BANC ONE affiliate sold three downtown office buildings to an affiliate of one of the Corporation's directors for $29,075,000.
1 i Note 15. Stock Split. Stock Dividend anu Convertible Preferred: On knuary 21,1986 the Corporation declared a 10 percent common stock dividend to shareholders
)
of record on February 7,1986. On July 23,1985 the Corporation declared a 3-for-2 common stock split, effective August 6,1985. Accordingly, all per common share data includes the effects of the stock split and dividend. The Preferred A shares are entitled to cumulative dividends at a rate of $5.50 per share, voting rights equal to those of the common shares into which they could have been converted, and have a liquidation value of $50 per share. The Preferred A shares, after giving effect to the common stock dividends and splits since issuance, are convertible into 3.2032 common shares. Preferred A shares. 33 l __________.__b
under certain circumstances, may be called at any time after July 1,1986 at $52.75 per share, declining to $50.00 per share in 1993. Beginning June 30,1993 the Corporation must annually fund redemption of 100,000 Preferred A shares at $50 per share plus accrued and unpaid dividends less previously converted or retired shares, until such shares are retired. As of December 31,1986,9.205 sharea ($460,000) had been converted. Note 16. Commitments and Pledged Securities: As of December 31,1986, the af61iate banks had various commitments and contingent liabilities arising in the normal course of business, such as standby letters of credit and commitments to extend credit, which are not reflected in the consolidated 6nancial statements. In management's opimon, these commitments, including standby letters of credit approximating $461.000,000, repre-sent normal banking transactions and no material losses are anticipated to result therefrom. The Corporation's lead bank has entered into several put option agreements whereby it agrees to purchase certain tax exempt mortgage backed bonds that may be put by the bondholders on various dates through 2004, in exchange for a semi-annual fee paid by the bondholders. Bonds with a total par value of $228.500,000 are covered under these agreements, of which $66,195,000 have been participated to other 6nancial institutions. The agreements call for immediate remarketing of any bonds tendered to the bank by an investment banking nrm. The bank has entered into several interest rate swap agreements to minimize its interest rate risk over the expected life of the option bonds. The Corporation's bank af61iates are required to maintain average balances with the Federal Reserve Bank. The average required reserve balances were $207,781,000 and $181,016.000 for 1986 and 1985, respectively. As of December 31,1986, investment securities having a book value of $1,835,041,000 were pledged to secure governmental and trust department deposits in accordance with federal and state require-ments and to secure repurchase agreements sold. Note 17. Stock Options: The Corporation has a Stock Option Plan, initially ppproved by its shareholders on April 24,1984 and amended December 16,1986, which provides incentive and non-incentive options to certain key employees to purchase up to 3,000,000 common shares of the Corporation. The options are not exercisable for at least one year from the date of grant and are thereafter exercisable for such periods as the Board of Directors, or a committee thereof, specify (which may not exceed 10 years), provided that the optionee has remained in the employment of BANC ONE or its af611ates. The Board or the Committee may accelerate the exercise period fortan option upon the optionee's disability, retire-ment or death. All options expire at the end of the exercise period. No options were exercisable at December 31,1986. An obligation to make future grants on 21,709 shares existed at December 31, 1986. The Corporation makes no recognition in the nnancial statements until such options are l 1 ( l w_ _- _ ._ _ _
L' e. exercised and no amounts applicable thzreto are reflected in net income. All options were granted at 100% of fair market valde. Activity in the Plan for 1986 and 1985 is summarized as follows: t { 1986 1985 Number of Number of , Shares Option Price Shares Option Price ' Outstanding at beginning of year 218,8G4 $13.33-19.92 - 162,599 $13.3313.56 Granted 38,000 30,63 66,990 17.58-19.92 Cancelled _,j i6.170) l 13.51-17.5d (10,725) 13.56 Outstanding at end of year _ 240.694 13.33-30.61 218.864 13.33-19.92 Available for future grant ,_ 2,759,306 The stockholders of American Fletcher Corporation approved stock option plans in 1973,1977,1980 and 1983. Civing effect to the exchange ratio (See Note 2), the 1973,1977 and 1980 plans each authorized the granting of options to purchase 1,290.300 shares, and the 1983 plan authorized options to be granted for the purchase of 860,200 shares. Options to purchase 369,684 BANC ONE common shares were substituted for the outstanding options not e ercised at January 26,1987. Activity in the plans for 1986,1985 and 1984 is summarized below: 1986 1985 1984 3 Number of . Number of ' Shares Option Price Number of Shares Option Price Shares Option Price - umm Outstanding at beginning of year 956,026 Cranted
$3.2312.99 1,314,600 401,068
$3.23-4.74 12.99 1,818,032 l $3.06-4.7 Exercised 427.58,2 3.23 12.99 759.642 3.23 4.33 503,432 3.06 4.74 Outstanding at end of year (all exercisable) 528,444 3.23-12.99 956,026 3.23-12.99 1,314.600 3.23-4.74 Available for future grant 437,035 in 1983 SPARIAN BANKCORP established an employee stock hhtion plan under which stock options were granted at 100% of fair market value at the date of grant. The plan was terminated January 2.
1 l 35
4 198~. Transactions for 1986,1985 and 1984 were as follows after giving effect to the exchange ratio (See Note 2). 1986 1985 1984 Number of Number of Number of Shares Option Price Shares Option Price Shans Option Price Outstanding at beginning of year 32.563 $7.67-14.92 26.533 $7.67-10.57 13.266 $7.67 Granted 13,267 14.92 13.267 10.57 Exercised 6.030 7.67 7.237 7.57 Outstanding at end of year 26.533 7.67-14.92 32.563 7.67-14.92 26.533 7.67 10.57 Available for future grant 32.563 Note 18. Industry Segment Reporting: The Corporation and its subsidiaries operate principally in a single business segment offering general commercial banking services. Report of Independent Accountants To the Stockholders and the Board of Directors, BANC ONE CORPORATION We have examined the consolidated balance sheets of BANC ONE CORPC' RATION and Subsidiaries and the balance sheets of BANC ONE CORPORATION (Parent Company Only) as of December 31. 1986 and 1985 and the related statements of income, changes in common stockholders' equity and changes in financial position for etch of the years in the three ye'ar period ended December 31,1986. Our examinations were made in accordance with generally accepted auditing standards and, accord-ingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the consolidated 6nancial position of BANC ONE CORPORATION and Subsidiaries and the individual financial position of BANC ONE CORPORATION (Parent Company Only) at December 31,1986 and 1985 and the results of operations and changes in financial position for each of the years in the three year period ended December 31,1986 in conformity with generally accepted accounting principles applied on a consis-tent basis. pl COOPERS & LYBRAND j 1 l Columbus, Ohio February 27,1987 36
BANC ONE CORPORATION and Subsidiane3 h Year Financial History funaudited) ) Long-htal Loans Earning brm Common Primary War Assets Deposits and leases Assets Debt Capttal !, Year End 1986 s17.371.9 513 3 70.7 311.549.1 515.215J $169.7 $1.250.6 11.407.2 Balances 1985 16.4743 2.408 3 10.061J 14.134 3 188.0 1.uaJ 1342.6 similhons, 1984 14.0273 11.106.9 8J30.1 12.098.8 133.5 911.5 1.018.1 1983 11.979.6 9.447.2 6.800.9 10.474,6 134.1 771.9 852 8 ! 1982 9.283.3 6.986.8 4.873.6 8.000.4 95.2 629.1 684.1 1981- 7,741.5 5.809 3 4.1303 6.516.1 48.5 500.6 547.2 1980 6.558.1 5.007.6 3.573.4 5.451.3 48.8 440.1 482.2 i 1979 6397.5 4.800.9 3.545.6 5.3 74.2 75.1 402.8 441.9 1978 5.649.6 4.306.9 3.071.6 4.8273 83 3 362.8 396.0 1977 5.108.7 3.979.8 2J20.7 4.327.9 87.8 3273 354.6 1976 4.825.3 3.702.2 2.403.7 4.169 3 81.6 300.6 334.8 10 Year Cornpound Crowth 13.67 % 13J0% 16.99 % 13.82 % 7.60 % 15.32 % 15.44 % income Interest Before
%ar Other htal laterest Other Net Securities Income Income locome Expense Expense Income Transactions Income 1986 11.571.4 $276.0 $1.847.4 5886.0 (608.5 $ 199.8 1985 5185 3 and 1.495.8 235.9 IJ31.7 902.5 521.9 176.8 173.2 1984 1.383.9 192.2 1.576.1 8693 453.1 143.1 (8[,se8 n, 1983 1.042.6 1473 1.189.9 6703 365.1 142.0 110.8 111.9 1982 975.1 101.0 1.076.1 666.1 295.2 81.6 86 3 1981 806J 83.7 890.4 5673 234.9 1980 61.9 63.0 626.0 68.9 694.9 408.0 - 199.9 61.0 61.2 1979 522.5 55.6 578.1 305.5 181 3 58.0 58.2 1978 413.0 48.4 461.4 219.9 157.2 52.1 51.6 1977 341.6 42.8 384.4 172.1 145.3 43.1 42.4 1976 307.8 44.4 352.2 159.4 140.2 34 4 32 3 10 Year Compound Crowth 17.71 % 20.05 %
s 18.03 % 18.71 % 15.81 % 19.24 % 18.94 % Averaes Ending Non- Employees Return on Return on Common Primary Average Common Equity to Net latenst (FTE) per Capital to Interest Income to War Assets Equity Assets $1 Million Assets Margin Expense of Assets sumsmmmmmme __ Kef 1986 1.23 % 16.49 % 7.23 % 8.03 % 5.73 % 4536% 33% Perform- 1985 .23 16.84 7.07 7.48 530 45.20 35 1984 1.13 16.15 615 q ance 1983 720 5.50 42.42 .82 1.07 15.57 6.69 7.07 Ratios 1982 .% 13.92 4.95 40.35 .86 6.87 7.33 4.99 34.21 .91 1981 .89 13.29 611 ,7.03 4.92 35.63 .96 1980 .97 1434 6J8 731 4.97 34.47 1.02 1979 1.01 15.11 6.66 ' 6.97 5.18 30.67 1.06 1978 1.00 15.02 6.63 6.97 5.10 3039 1.14 1977 .89 1335 6.50 6.90 4 $8 29.46 1.18 10 Year Average 1.04 % 15.05 % 619% 7.23 % 5.19 % 36.85 % .94 % Average N I"** Cash Stock Shares Dividends Outstanding Pu Share DMdends Stock Book Per and Price har 1000) Pooled Historic Share Splits Value har End har End Common 1986 91.5 5 $2.13 $ 2.13 5.82 10 % $22.88 $1334 Stock 1985 88J79 isa 2.01 J0 32 23.41 1238 1984 84,812 1.62 134 OAIA .59 10% 15.53 10.54 1983 77.124 1.40 1.55 .52 3:2 14.19 9 45 1982 68.790 1.19 1.33 .44 3 3/10 % 14.15 833 1981 57,005 1.09 121 .40 8.68 8.19 1980 56.255 1.08 1.05 37 10 % 7.24 7.82 1979 56.029 1.04 .95 33 r 5.56 7.18 1978 55.972 .93 .82 28 ! 10% 531 6.48 1977 55.693 J7 31 .25 5.56 5.88 1976 55.639 .62 .62 22 10 % 414 5.40 10 Year Cornpound Crowth 13.19 % 13.19 % 14xM 939% 1 37 4
-l.
BANC ONE CORPORATION and Subsidiarns Five Year S:mmary-Averag3 Balanc:s, Inc:m2 and Expense, Yields and RatesW * (unaudited) 1986 1985 Average Income / Yield / Average income / Yield /
$(thousands) Balance Expense Rate Balance Expense Rate
- Assets:
l Securities Taxable $ 1,608.546 $ 141,175 8.78 % $ 1,405.617 $ 145.848 10.38 % Tax exempt 1,568,267 216,304 13.79 1.130.942 168.779 14.92 Total securities 3,176,813 357,479 11.25 2,536,559 314,627 12.40 Loans and leases: Commercial 4,098,712 396,991 9.69 3.377.599 375,205 11.11 Real estate 1,836,876 195,165 10.62 1,844,991 204.749 11,10 Installment 2,333,733 298,742 12.80 2,025.256 281,708 13.91 Credit card *' 1,244,922 255,237 20.50 1,016,881 224.909 22.12 Tax exemrt 843,693 116.513 13.81 648.680 100,685 15.52 Leases, net 295,127 40,189 13.62 216,556 29.347 13.55 (Valuation reserve) (138,073) (110.824) Net loans and leases 10.514,990 1,302.837 12.39 9,019.139 1,216.603 13.49 Money market instruments: Interest bearing deposits 507,512 36,754 7.24' 681.231 59,168 8.69 Fed funds and repos 283,072 19.326 6.83 396,499 31.998 8.07 Total money market instruments 790,584 56,080 7.09 1.077,730 91,166 8.46 Total earning assets 14,482,387 1,716,396 11.85 12,633,428 1.622,396 12.84 Other assets 1,816,203 1,751.753 Total assets $16,298,590 $14.385,181 Liabilities: Deposits: Demand: Non. interest bearing 3 2,266,473 $ 2,077,422 Interer.t bearing 1,261,047 62,244 4.94 1.009.493 56.025 5.55 Savings: Regular savings 1,072,770 56,287 5.25 1,074.365 57.385 5.34 Money market savings 2,257,193 131,956 5.85 1,626,792 116, % 3 7.19 Time deposits: Money market CD's 3,390,181 300,143 8.85 3,239,546 323.505 9.99 CD's-$100.000 and over: Domestic 1,428,097 111,061 7.78 1,409.985 130,636 9.27 Foreign 291,825 23,030 7.89 252,168 22,406 8.89 Other time deposits 712,483 63,191 8.87 672.446 67,029 9.97 Total deposits 12,680,069 747.912 5.90 11.362.217 773,949 6.81 Borrowed funds: Short-term I,833,977 118,916 6.48 , 1,423,342 113.411 7.97 { Long-term 178,974 19,187 10.72 , . 137,103 15,116 11.03 1 Total borrowed funds 2,012,951 138,103 6.86 1.560.445 8.24 I _ 128.527 Totalinterest bearing liabilities 12.426,547 886,015 7.13 10,845,240 902.476 8.32
, Other liabilities 377,322 395.071 Total liabilities 15,070,342 13,317,733
- Preferred stock 49,998 50,174
- Common stockholders' equity 1,178,250 1,017.274 Total liabilities, common and preferred stock $1f 298,590 $14.385.181 Net interest income 830,381 5.73 719,920 5.70 Provision for loan and lease losses (130,063) (.90) (111,770) L88)
Net funds function 5 700,318 4.83 % $ 608,150 4.82 %
*Tully taxable equivalent basis. See defimtion in Managements Discussion and Analysis.
- Pnor periods restated to reflect reclassification of certain fees to other income.
38 l
1984 Compound Annual 1983 1982
- Averagt Growth 1981 1986 incomel Yield / Average Income / Yield! Awrage Balance income / Yield / Awrage Income /
Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense amme- um-mm ammmes - - ; I ( ! l i ! ;
'l '
$ 1.202.375 $ 129J18 $ 720,131 841.146 ! 1039% i $ 957.751 l$ 101.296 10.58 % $ 87.292 12.12 % 20.59 % . 16.09 %
122.083 1 14.51 I 701.291 ! 95.309 13.59 614.685 79.892 13.00 17.87 22.18 2.043.521 ' 251.801 12.32 1,659.042 196.605 1.334,816 l 11.85 167.184 12.52 l 19.20 1 19.55 3.029.600 385 342 1233 2.263.124 268.134 11.85 1.850.692 275.502 14.89 1.823.094 209.785 11.51 1.616.316 180.538 11.17 1.323.970 150.991 11.30 i 9.70 f 23.06 ! 8.52 9.40 1.616.610 242.432 15.00 1.139.759 173.109 15.19 863.056 137.418 15..' ! 24.08 ! 19.86 657.396 142.661 2130 331.525 71.806 21.66 239.858 30.806 21? , 4635 459.556 76.073 16.55 48.16 327.513 48.471 14.80 249.626 40.416 180.557 25.153 16.19 37.20 3031 13.93 143.615 20.553 14.31 120.529 18.404 15.27 22.35 21.31 (93.210) 168.984) (54.438) : 27Jl 7.673.603 1.081.846 14.10 SJ52.868 762.611 13.26 4.593.293 673.537 14.66 l 22.41 17.14 1.026.949 112,080 i 10.81 1.323.466 130,398 9.85 i 1.063.539 151.'210 14.22 l 2.00 113.78) 289.265 31.321 10.83 293.284 27.420 9.35 345.094 40.186 11.64 1.26 (14.39)
! 1.326.214 143.401 10.81 1.616J50 157.818 9J6 1.408.633 191.396 13.59 133 (13.996 l 11,043.338 1.477.048 13.38 9.028.660 1,117.034 12.37 7,336,742 1,032.117 14.07 1 1.585.661 1939 14.92 1.297.639 1.197J98
__$12.628,999 1134
$10.326.299 $8.534.540 18.65 r
l l
$ 1.877,888 $ 1.617.185 $1,407.966 867.375 52.808 6.09 11.20 683.193 41.322 6.05 351.921 i 17.866 5.08 38.93 3832 l 1.045,694 55.216 5.28 964.466 49.346 5.12 907J32
' l.302.573 112,392 46.129 5.08 6.84 7.37 8.63 1.037.403 84.597 8.15 10.558 1.031 9.77 i 2 391.432 295.569 10.59 2.220.552 224,603 1,959.163 10.11 248.304 12.67 19.05 10.17 1.235.643 130.491 10.56 895.911 88.103 9.83 777.258 95J75 12.32 , 17.02 244.304 24.683 10.10 2.65
' 183.045 16,122 8.81 258,936 592.424 33.568 12.96 i t.46) tl3.53) 56.340 9.51 576.312 60.698 10.53 680.315 72.338 10.63 ! 8.25 8.48 9.957.333 727,499 7.31 8.178M7 564J91 6.91 6353.849 515,011 8.11 19 54 12.04 1.258,050 126J91 10.08 91,524 1.004.372 9.11 1.215.481. 145.273 11.95 135.920 , 14.28 (4.11 )
15.384 11.32 124.860 13.941 11.17 53.508 , 5.833 10.90 l 28.93 31.45 1.393.970 142.175 10.20 1.129.232 105.465 9.34 1.268.989 151,106 (1.85)
, 869.674 9.18 7.690,114 11.91 l 15.22 670.256 832 6.214.872 666.117 1012 9.473.415 375.541 l: 298.537 325.513 20.69 6.05 9.02 11 326.844 9,605.836 7.948,351 49.843 18.44 29.246
; 852.312 f 91.217 586.189
-j 20.41 l $ 12.628.999 $10.326.299 $8.534.540 18.65 % -
! 607.374 5.50 446J78 4.95 366,000 4.99 24.20 l
l (82.386) (35) 144.271) (.49) (33.539) (.46) 48.44 l $ 524.988 435% $ 40'.5L7 4.46 % $ 332.461 4.53 % 21.64 % l i l i
. 39
BANC ONE CORPORATION anct Subsidianes
- Loan and Lease Ret.erves (unaudited)
Commer. cial, Real l 0 1 Financial Estate. Real Estate, Con- Credit Tax L'nallo- Total l and Agri- Con-Mortgage sumer Card Exempt Leases cated Reserves TAhousands) cultural struction mammmmmmmes summmmmmmun Balance, December 31,1981 l $ 20,148 $ 3,671 5 2,881 $ 12,210 $ 3,209 $ $1,002 $ 3,500 $ 46,621 ) Reserves of banks purchased 1,700 60 200 1.300 500 700 4.460 19,772 6,770 3,088 2,011 (300) 33,539 Provision,1982 901 1.297 (19,411) (923) (14.476) (3,490) (1,565) (40,579) Gross losses (714) 2,074 45 7.086 916 791 10,934 Recoveries 22 (17,337) (692) (878) (7,390) (2,574) (774) (29,645) Net losses Balance, December 31,1982 24,283 3,940 3,500 12.890 4.223 2,239 3,900 54.975 Reserves of banks 7,500 400 1,300 2,781 2,300 411 2,000 16,692 purchased (45) (50) (100) (3) (198) Reserves of bank sold 24,299 1,150 11.343 4,859 500 1,750 89 44,271 Provision,1983 281 (22,830) (1,167) (1,990) (17,897) (4,717) (2,918) (51,519) Gross losses 5,709 440 8.657 1,063 736 16,641 1 Recoveries 36 Net losses (17,121) (1,131) (1,550) (9.240) (3,654) (2,182) I (34.878) Balance, i December 31,1983 38,916 3,490 4,350 17,674 7,728 500 2.215 F,989 A0.862 l 4 Reserves of banks purchased 1,000 500 1,048 300 2.848 (284) (284) Reserves of bank sold 37,934 10,151 29.842 334 3,768 82,386 Provision,1984 1157) 514 ; (39,185) (2,255) (19,195) (18,609) (15) (1,913) (81,878) Gross losses (706) 6,889 631 1,508 9.827 2,500 1.312 22,667 Recoveries I (32,296) (75) (747) (9.368) (16,109) (15) (601) iS9.211) Net losses Balance, December 31,1984 45,270 3,258 4,617 19,500 21,761 485 1,948 9,757 106.601 Reserves of bank I purchased 710 46 9 24 3,038 3.827 Provision,1985 28,115 1,791 (1,695) 15,147 62,644 500 4,794 474 111.770 (34,682) (2,143) (26,764) (51,173) (273) (4,731) (120,003, Gross losses (237) 8,898 405 1,999 10,835 3,494 1,069 26.700 Recoveries (25,784) 168 (144) (15,929) (47,679) (273) (3.662) (93.303) Net losses 1 l Balance, 48,311 2,737 18,747 39,764 ,712 3,080 10,231 128,895
! December 31,1985 5.263 l Reserves of banks 2,708 4,421 purchased 338 254 229 507 26 359 l Provision,1986 15,983 1.066 (810) 30,970 76,099 (476) 3,305 3,926 130.063 i
(27,879) (122) (2,493) (37,822) (71,878) (4,158) (144,352) Gross losses 265 2.513 13,657 6,469 1,888 37,643 Recoveries 12.851 (15,028) 143 20 (24,165) (65.409) (2,270) (106,709) Net losses _ Balance, December 31,1986 $ 49,604 $ 6.726 $ 2,226 $ 26.059 $ 50,480 $ 236 $ 6,823 $14.516 $156,670 40
BANC ONE CORPORATION and Subsidiaries Loan and Lease Analysis (unaudited) f 1
$(thousands) 1986 1985 1984 1983 1982 l Ending loan and lease balances: summmmmmmmmmme summmmmmmmmme Commercial. financial and agricultural $ 4,543,037 Real estate, construction $ 3.647.608 $3.252.063 $2.659.694 497,421 $1.944.538 Real estate. mortgage 308.204 250.378 156.205 1,389,199 1,581,067 127.825 Installment 1.650.869 1.582.166 1,283.305 2.564,569 2.097,460 Credit card 1.746.577 1,353.932 851.538 1,37! 17 1.364.535 1,044.438 Tax exempt 481.355 291.016 808,236 808.356 Leases. net 578.056 404.212 248.367 370,793 254.482 l 207.729 163.354 127.052 Total loans and leases
_ 11.549.072 10.061.712 8.730.110 6.800,918 i Non-performing assets and delinquencies: 4.873.641 l Non. accrual loans Renegotiated loans 149,586 113.770 124.312 106.862 78.038 9,771 8.003 14,361 Other real estate owned 19,685 7.223 ; 9.466 19.992 22.953 Total non performing assets 179,042 19.979 ! 25.544 141.765 161.626 Loans delinquent over 90 days 134.064 f 113.048 (not included in non-accrual) 65,373 65,325 50,753 Loans classified as doubtful 47,578 51.123 36.490 income foregone on non. performing loans 34.431 42,299 37,209 11.925 (after tax)
$ 6,114 $ 4.906 $ 5,798 Reserve and loss ratios: $ 5.322 $ 5.201 Ending reserve to ending balances:
Commercial Real estate, construction 1.09% 1.32 % 1.39% 1.46% 1.25 % Real estate, mortgage 1.35 1.71 1.30 2.23 3.08 Installment .16 .18 .28 .27 .27 Credit card 1.02 .89 1.12 1.31 1.51 Tax exempt 3.67 2.91 2.08 1.61 1.45 leases, net .03 .09 .08 .12 t 1.86 1.21 Total loans and leases 1.36
.94 1.36 t 1.76 Net chargeoffs to average balances: 1.28 1.22 1.19 l 1.13 Commercial I I Real estate, construction .37 .76 1.07
' .76 .94 Real estate. mortgage ( 04) (.06) .04 .77 .63 Installment .01 .04 .10 1,04 .07 l Credit card .79 .58 .81 5.25 .86 !
Tax exempt 4.69 2.45 1.10 1.07 Leases, net .04
.77 1.69 .33 Total loans and leases 1.52 .64
) Recoveries to gross chargeoffs 1.00 1.02 .76 .60 ,64
! To ending loans and leases: 26.08 22.25
- 27.65 32.30 26.94 Non-performing assets 1.55 1.41 1.85 Loans 90 or more days delinquent 1.97 2.32
' Earnings coverage of loan and lease losses
.57% .65% .58% .75% .75%
3.31x 3.29x 4.28x 5.70x 5.00x 41 i
_ . BANC ONE CORPORATION and Subsidianes
. 1986 Consolidating Statem:nts (unaudited)
BANC ONE Parent Co.,
, . BANK ONE, BANK ONE. All Other Non Bank BANC ONE COLUMBUS, INDIANAPOLIS, Bank Subsidiaries CORPORATION
$(thousandst NA NA Af61iates & Eliminations Consolidated i Balance Sheet, December 31.1986
- Assets:
Cash and due from banks 5 357.831 $ 359.080 $ 664,342 3(138.382) $ 1.242.571 Securities 436.087 504.181 2.241.087 9.385 3,190.740 Money market investments 30.619 439.117 153.989 8.819 632.544 Loans and leases 2.072,041 2.606.838 6.615.269 254.924 11.549.072 Less. Reserve for loan and lease losses 29.191 33.061 87.032 7.386 156.670 Net loans and leases 2.042.850 2.573.777 6.528.237 247.538 11.392.402 Bank premises and equipment 67.343 46.250 140.552 10.989 265.134 Other assets 135.851 169.213 99.753 243.396 648.213 Total assets $3,070,581 $4,091,618 $9,827,960 $ 381,745 $17,371,904 Liabilities: Deposits' Demand $ 755.325 $1,011.860 $2.739.595 $(150.480) $ 4.356.300 Savings 72.699 748.565 253.217 1.074.481 Other time 1.399.026 1.029.713 5.517.831 16.684) 7.939.886 Total deposits 2.227.050 2,790.138 8.510.643 (157,164) 13.370.667 Borrowed funds: Short-term 571,526 957,645 471.494 144.082 2.144.747 Long term 8.822 4.275 19.690 136.947 169,734 Total borrowed funds 580.348 951,920 491,184 281.029 2.314.481 s Other liabilities 75.820 127.592 127.558 55.806 386.776 Total liabilities 2,883,218 3.879,650 9,129,385 179,671 16,071,924 Total equity 187,363 211,968 698,575 202,074 1,299,980 Total liabilities and equity $3,070,581 $4,091.618 $9,827,960 $ 381,745 fl7,371,304 income Statement for the Year 1986 Income on earning assets: Securities $ 40.382 5 37.123 $ 185,879 $ 1.111 5 264.495 Money market investments 15,203 25.566 15,076 236 56.081 Loans and leases 233.290 247,362 726.209 43.946 1.250.807 288,875 310,051 927,164 45,293 1,571.383 l Total earning asset income Interest expense: Interest on deposit! 142.890 148.001 463.025 (6.005) 747,911
;lnterest on borrowed funds 39.461 43.518 28,239 26,886 158.104 182,351 191.519 491,264 20,881 886,015 i Totalinterest expense 106,524 118,532 435,900 24,412 685,368
{ Net interest Provision income for loan and ,.
! lease losses 30.000 27.626 66.1 % 6.241 130.063
! Net funds Inction 76.524 90.906 369.704 18.171 555.305 i her Ot income 102,101 45.580 117.079 11.279 276.039
- Other expenses 128.623 112.159 322.520 45.239 608.541
- Net income before provision for federal income taxes 50,002 24,327 164,263 (15,789) 222,803 federal income taxes Ibenefit) 9.060 (5.359) 22.848 (3.549) 23.000
$ 40,942 $ 29.686 $ 141,415 199,803
; Net income $ (12.240) { $
l l 42
BANC ONE CO~,PORATION and Subscaries
+
Rate *Volum2 AnalysisH (unaud ted) 1986 85 1985-84
- Change in . Change in Income / Rate Volume income /
$<thousand58 Rate Volume Expense Effect Effect Expense mer Effect Effect Assets summmmmmmmm l
Securities: Taxable ,$ (4,673) f (73,621) $ 68,948 $ 16.130 Tax exempt 47,525 - $ (4.714) $ 20.844 3 _, (11.587) 59.112 46.696 3.538 43.158 Total securities 42,852 (85,208) 128,060 l Loans and leases: 62.826 (1,176) 64.002 i Commercial f 21,786 (32,672) 54,458 Real estate
- (10,537) (106.089) 95.552 l l (9.584) (8,687)
; installment (897) (5.036) (7.601) 2.565
! 17,034 (18,700) 35,734 i Credit card 39.276 (15.781) 55.057 30,328 (14,647) 44,975 I Tax exempt ! 82.248 2,790 79.458 15.828 19,169) 24.997 24.612 Leases, net (4.394)
( i 10.842 143 10.699 4.194 (663) 29.006 j Net loans and leases 4.857 86,234 (83,732) 169,966 134,757 (131,738) 266.495 j Money market instruments (35,086) (13.238) (21.848) (52.235) (28.072) ,i <24.163) Total earning assets 94,000 (182,178) 276,178 345.348 Interest bearing liabilities: (160.986) 306.334 Demand interest bearing 6,219 (4,965) 11,184 Savings: 3.217 (3.773) 6.990 l l Regula, savings (1,098) (1,013) Money market savings (85) 2.169 643 1,5?.C 14,993 (26,096) 41,089 Time deposits: 4.571 (9.275) 13.846 Money market CD's (23,362) (39,590) 16.228 27.936 CD's-5100 000 and over: (15.332) 43.268 - Domestic (19,575) (21,277) 1,702 Foreign 145 (9661 l 624 (1,536) 2,160 1.111
- Other time deposits (2.277) (3.106) 829 (3,838) (8.346) 4,508 '
! Total deposits 10.689 2.609 7.880 (26,037) (102.823) 76.786 46,450 l l Borrowed Funds: (29,000)I' 75.450
! Short-term 5,505 (10,025) 15,530 (13.380)
! Long-term 4,071 (35.914) 22.534 (405) 4,476 (268) (404) 136 i Total borrowed funds 9,576 20,006 (10.430) (13.648) (36.3181 l Totalictcrest bearing liabilities 22.670' (16,461) (113,253) 96,792 32.802 (65.3181 f W 120 Net interest income $ 110,461 $179,386
$ (68.925) $ 112.546
$ (95.668) [ $ 208M
\
- fully taxable equivalent basis. See definition in Management's Discussion and Analysis.
'The unallocated portion of the total change has been pro-rated into rate and volume components.
k l i t l 43
g, 7--
,> 3'., l BANC ONE CORPORATION and Suboiberits Management's Discussion and Analysis 1
s 1 4 d u - - -- - uw introduction Management's discussion and analysis of BANC ONE CORPORATION's results of operations include six 1986 and two January 1987 affiliations accounted for as poolings ofinterests. All appropriate financial data have been restated as though the companies had ber.n combined for the periods presented. Three ether 1986 affiliations were accounted for as purchases, the results of which are included from their respective affiliation dates. These affiliations are described in greater detail in
- Note 2 of the Notes to Financial Statements.
Included in this review are the following sections:
- l. Overview IV. Asset Quahty II. Net Interest income V. Liquidity and Interest Rate Sensitivity
^ III. Other income, Other Expense VI. Capital and Federal income ' Paxes Vll. Other This discussion should be read in conjunction with the fina wial statements, notes and tables presented elsewhere in this report. Terms used in this repot t include:
Average balances: All average balances are calculated on the basis of daily averages. Interim period annualizations are based on the actual days in the rdevant period. Fully taxable equivalent basis (FTE): Income on earning assets which is subject to either a reduced rate or zero ute of federal income tax, adjusted to give effect to the incremental corporate federal income tax rite of 46%. Where indicated, vield calculations n:flect these adjustments. Net interest income: Interest and related fee income on eare!r g assets (FTE basis where noted), reduced by total interest expense on interest bearing liabilities. Net interest n,argin: Net interest income divided by average earning assets. Net funds function: Net interest income reduced by the provision for loan and lease losses. j Primary capital: Common stockholders' equity and the reserve foj loan and lease losses. 3
- 1. Overview of Results Net income was $199.8 millbn for 1986, an increase of $23 millib over the $176.8 miliion recorded in 1985, which included a $9.3 million after tax gain on the sale of the downtown office buildings of BANK ONE, RMANAPOLIS. Excluding this one-time 1985 gain, net income per com-mon share increased 17.0% to $2.13 in 1956. In addition, nonrecurring merger related expenses, totalling $3.1 million net cf tu, were reurded in the fourth quarter of 1986. Details of the changes in net income per common ishare are presented in Pable !. Fully diluted earnings per share are not presented because pro forma conversion of the Series A Preferred stock would reduce 1986,1985 and 1984 earnings per share by less than 1%.
The key measures of the Cwporation's profitability and financial strength continued to rise in 1986. Without the nonrecurring gain in 1985, return on average assets increased from 1.16% to 1.23% in 1986 and return on co7nmon equity grew from 15.93% to 16.49% in 1986. Ending primary capital rose to 8.03% at December 31,1986 from 7.48% one year earlier. Driving the 1986 earnings performance were significant gains in average loan balances, notably i I credit card and commercial loans. Other major contributors were tax exempt loans and securities, the second and third highest yielding assets in the portfolio. This growth was funded primarily by : core deposits which steadied the Corporation's dependence on large liabilities and enabled the net j (A interest margin to increase slightly. l l
~
44 I ' L_________-_
l 9 1 1 I l 1 ' i Table I Analysis of Changes in Net Income Per Common Share l i 1985-86 1984 85* I l Net income per common share 51.62 l Increase /(decrease) from changes in: $1.93 l i i Earning asset volume i l 1.00 i .75 ) l Net interest margin .04 1 ;
.19
; Prousion for loan and lease losses
(.21) ; (.35) ! l Other income .45 !
.51 Other expense
(.971 t (.81) l Provision for federal income taxes ' (.05) .11 i l Subtotal 2.19 2.02 Change in average common shares 4.06) 1.09) i Net income per common share
$2.13 $1.93
*Fer common share figures are restated to reflect 10% stock dwidend effective February 7,1986 I
i i
!!. Net Interest income Securities and Money Market inwstments l
i The combined affiliate bank investment portfolios fulfill a dual role for the Corporation. It is the primary tool used m adjusting the entire Corporation balance sheet for expected changes in interest rates. Because loan and deposit portfolios are independently dynamic, snaturities of the assets and liabilities are often mismatched. If left unmanaged, they could subject the earnings stream of the i Corporation to random changes in market interest rates. I t I The investment portfolio represents a significant segment of the Corporation's asset base. The , rapidly changing marketplace, in terms of new investment products, the level of interest rates and l the shape of the yield curve mandate that the portfolio be positioned to take advantage of these opportunities as they avail themselves to achieve earnings enhancement and capital creation. See l 'Ihble 11 for a summary of the investment portfolio as of December 31,1986,1985 and 1984. l The Corporation's Asset and Liability Management Committee sets guidelines, within which matu-rity mismatches are managed. By actively restructuring the securities portfolio, in both size and l content, as market opportunities become available, the Corporation is able to offset undesirable e asset and liability maturity mismatches as they occur while additionally fostering the objective of maximizing portfolio performance as defined by " total rate of return". Total rate of return is comprised ofinterest income, realized gains and losses and the change in the value of the portfolio from period to period. Unlike the traditional measure ofinvestment perfor-mance (the accrual rate of the securities), total rate of return recognizes the tradeoff that exists between the earnings from a passive portfolio (the accrual rate), the increase or decrease to capital arising from realizing gains or %ses in the portfolio and the market's view of the value of the portfolio as expressed in appreciation or depreciation. This total rate of return on the money mar-l ket, treasury, agency. tax exempt and mortgage and other asset-backed securities portfolios being managed by BANC ONE centrally was 16.1% in 1985 and 13.8% in 1986, C" aistent with an opportunistic portfolio management philosophy,1986 witnessed significant changes in the composition of the Corporation's investment portfolio. Three actions occurred in 1986 that highlighted the changes. 45
In the first half of 1986 the relative attractiveness of money market assets diminished, while the Corporation's exposure to falling interest rates increased. This phenomenon supported a shift into intermediate maturity U.S. Treasury and Federal Agency securities. The fixed income market rallied in the spring and summer months, widening the spread and increasing the relative attractiveness of mortgage backed securities versus treasuries and agency securities. Consequently a major shift to the mortgage backed market was made in the second and third quarters. In the third and fourth quarters, in the wake of newly legislated tax reform, tax exempt money market assets became attractive short-term havens for funds versus other taxable alternatives. Tax legislation enacted in 1986 essentially eliminated the tax advantage of holding newly purchased tax exempt securities beyond 1986. Table 11 Securities Portfolio and Money Market Assets
$(milhons)
Securities Portfolio U.S. heasury States and Taxable Money Market Assets"' and Federal Political Total Equivalent hxable Tax Exempt Agencies ** Subdivisions Other Securities Yield"" Dwember 31,1986
%:unty within one war $577.7 $ 95.8 $ 297.0 $ 174.7 $206.8 $ 678.5 8.66 %
I onc tw wars i 677.5 371.1 367.9 1416.5 9.92 % Fw ten wars l 161.1 325.6 16.8 503.5 12.17 % oc ten wars and i evum iccurities 78.5 343.4 74.4 496.3 ! 15.26% ! W k d salue 577.7 95.8 1214.1 1214.8 665.9 3094.8 i f
%rtet value 1243.6 1297.9 674.9 3216.4 I hsNr esmalent !
smashese ocW 6.35 % 8.16 % 8.50 % i 14.87 % 7.69% 10.70 % { hecaer assure Iyrs. .1 yrs. l 3.5 yrs. 6.6 yrs. 5.0 yrs. I hematar31.Igas I i W W An $x25.2 $266.1 i
** $896.4 925.3
$1440.9 $226.3 228.0
$2563.6 !
beh %.arn i 1454.9 2608.2 l
** &13% 10.40 % . 10.28 %
i 14.59 % 8.51% 12.57% l 3 yn. .5 yrs. 3.1 yrs. l 7.0 yrs. 5.6 yrs. tasem .
, tag, g , W9 51014.3 5 898.8 $177.7 $2090.8 AuAb assummis 1012.2 j 853.1 167.4 2032.4 -
amenumes ! 4889 euman, 11.53 %
- 15.51 % 9.12 % 13.06 % !
3.9 yrs. 9.4 yrs. 6.6 yrs. I t
%.'~=%. * ** ==e. - - __ %
~.,ato h
l . - _ _ - - - _ - _ - _ - - - _ _ - _ - _ - __ _ - - _ - - - - I
.pi, I-A l. Loan Ibrtfolio Average total loans increased $1.5 billion or 17% in 1986 compared to 1985. This significant growth i occurred because of a $721 million rise in commercial loans and a $537 million rise in consumer loans. Credit card loans grew $228 million despite portfolio sales totalling $120 million in 1986. l Strong retail loan demand, particularly in late 1986, generated a $309 million increase in average installment loan balances.
.i The Corporation's commercial loan and lease portfolios remain diversified as no single industry
' concentration exceeded 10% of total loans and leases. See Table 111 for information about conce
' tion of commercial loans and leases. The Corporation's exposure to oil and gas and agriculture remained small at .26% and .76% of ending loans and leases, respectively. The Corporation's foreign
- j. loans and leases were just .92% of ending loans and leases and .6% of total assets. The Corporation's total foreign exposure at December 31,1986 is summarized in Table IV.
'I-I Loan yields fell with market rates in general. Commercial and tax exempt loan yields, which are
' largely tied to the prime rate, fell 142 and 171 basis points, respectively. The yield on the credit card i portfolia declined as the Corporation lowered the rate in late 1985 on its local market portfolios. The i lease portfolio yield increased slightly as the high yielding HCL Leasing Corporation portfolio was added or, July 1,1986.
i i l Ta'oleill Commercial Loan Concentration Balance at % of Year End Commercial Loans
! $(millions) and Leases l Real estate operators, i managers, developers $706.6 13.06 %
, ' Other financial institutions, credit agencies and brokers 265.5 4.91 Wholesale-trade durables 259.0 4.79
, Construction contractors 250.1 . 4.62
, 'IYansportation, communication -
and public utilities 234.2 4.33 Manufacturing-machinery 224.7 4.15 i Manufacturing-food,
! apparel and furniture 212.3 3.92 Health services 173.4 3.20 I
; Holding and investment companies 170.8
' 3.16 Retail-restaurants 161.8 2.99 '
l Manufacturing-fabricated metals 144.7 2.C i Manufacturing-paper and printing 133.6 2.47 1 i i I i I 47 o
f1
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1 Table IV Foreign Exposure as of December 31.1986 Similhons) Eurodollar Letters of Total Placements Credit and Investment Foreign Country and CD's Loans Acceptances Securities Exposure Japan l $ 89.9 $ 10.0 $ 45.7 $145.6 United Kingdom ! 65.0 28.2 6.1 99.3 Switzerland 75.0 1.0 .2 $12.0 88.2 Mexico 18.0 49.7 1.5 .9 70.1 West Germany 45.0 45.0 Canada 45.0 2.4 5.0 52.4 Australia 24.0 13.5 37.5 Korea 29.2 29.2 Belgium 20.0 20.0 France 40.0 .5 40.5 Netherlands 20.0 20.0 Other 16.9 36.6 2.6 56.1 Total $441.9 $105.8 $135.7 $20.5 $703.9 Deposits andBorroued Ehnds Deposits and short term borrowings primarily provided the funding for the earning asset growth in 1986. Average total deposits grew $1.3 billion and average short term borrowed funds increased j
$411 million from 1985 to 1986. While most deposit categories experienced growth, money market savings alone provided 4F% of the total increase. In 1986, BANC ONE introduced simplified, tiered 0 pricing money market savings and interest checking products which proved very successful. The 8 loan-to-deposit ratio increased from 81.1% at year end 1985 to 86.4% at year end 1986. The Corpora-tion is exploring additional loan sales like the successful sale of $120 million of credit card loans in 1986 to maintain appropriate liquidity levels. Rates paid on total interest bearing liabilities fell 119 basis points in 1986 to 7.13%, reflecting the significant overall decline in rates to the lowest level in many years.
NetIknds Iknction ' The rapidly declining rates paid on interest bearing liabilities outpxed the decline in earning asset yields in 1986 enabling the net interest margin to improve 3 basis points. The provision for loan and lease losses stabilized in 1986 as the major national credit card program matured. As a result, the $ net funds function rose slightly from 1985 to 1986 to 4.83% of average earning assets. h l III. Other Income, Other Expense and Federal Income Taxes Components of other income, excluding securities gains, and other expense are detailed in Thble V. Growth in other income occurred because of higher fee income from investment programs, broker. Y age commissions, letters of credit, mortgage servicing and travel commissions. The largest category of other expense, salaries and related costs, grew 13.6% from 1985 to 1986 because of increased headcount from the 1985 and 1986 purchased affiliates and increased data l processing and credit card base. Higher 1986 outside services and processing expenses were the f result of $4.6 million of direct nonrecurring merger related expenses. 48 l
Table V Non-Interest income and Expe Summary
$(thousands)
Percent Change 1986 1985 1984 1986/85 Non interest income (excluding ! securities transactions): i Card processing and service income: Processing fees $ 52.2 5 51.6 I. $ 42.4 I 1.2% Merchant fees 19.7 15.9 16.7 I 23.9 Interchange fees 17.4 17.0 I 9.5 2.4 Subtotal 89.3 84.5 68.6 ! 5.7
, income from fiduciary activities 41.9 36.0 34.4 '
1 16.4 Service charges on deposit accounts 58.2 52.3 46.4 ; 11.3 Gain on building sale 13.5 Miscellaneous income 61.3 i 48.1 ! 42.0 l 27.4 Total non-interest income $250.7 $234.4 $191.4 , 7.0% Non interest expense: i ; Salaries and related costs $280.8 $247.2 i $221.4 ; 13.6 % Net occupancy expense
' 35.0 27.3 i 25.7 28.2 Equipment expense 25.5 26.4 24.3 (3.4)
Depreciation and amortization 40.0 35.8 32.2 11.7 Taxes other than income and payroll
' 23.0 21.8 15.4 ! 5.5 Marketinc and development 18.5 15.6 l 13.1 : 18.6 Outside services and
, processing 66.6 47.4 36.9 40.5 1 Supplies 18.7 17.8 15.2 5.1 I Communication and transportation 49.2 43.4 34.6 13.4 Other expenses 51.3 39.1
' 34.2 31.2 i Total non-interest expense $608.6 - $521.8 $453.0 16.6 %
Annualized net non-interest expense as a l percent of average assets 2.20 % 2.00 % 2.07% { The provision for federal income taxes increased slightly from 9.58% of pre-tax income in 1985 to j 10.32% in 1986. Thxes on operating income excluding securities gains actually fell between the two { years from 10.80% in 1985 to 6.20% in 1986. This decline is primarily due to a 36% increase in average tax exempt assets between years while taxable earning assets increased just 11% in the l same period. I Several provisions of the Tax Reform Act of 1986 will have an impact on the future income of BANC l ONE CORPORATION. Lower statutory tax rates, the disallowance ofinterest expense to carry tax exempt assets and the alternative minimum tax reduce the desirability for growth in the tax exempt l portfolio. These factors collectively will result in an increase in the future effective income tax rate (see Note 10 of the accompanying Notes to Financial Statements). In addition, the Tax Reform Act of 6 1986 eliminates the tax deductibility of additions to the loan loss reserve and the cash method of j accounting for financial institutions. These provisions along with the above increase in the effective 1 tax rate will result in an increase in taxes currently payable. These changes do not materially impact I l the liquidity of BANC ONE. l (
, 49 L__________-._
l L The D.x Reform Act of 1986 also changes the deductibility of interest expense by the affiliate bank non commercial customers. While the Corporation expects some change in customer borrowing behavior the principal change expected is a shift to loans secured by such customers' residences. l The Financial Accounting Standards Board has issued an Exposure Draft on accounting for income taxes. It requires use of the deferred tax liability method, which, if enacted, will change the liability for deferred income taxes but should not have a negative impact on the Corporation. IV. Asset Quality BANC ONE policy dictates that a commercial or real estate loan be classified as non-accrual at the earlier of 120 days past due or when collection ofinterest and principal is in doubt. At that point all accrued but unpaid interest is reversed and charged to earnings and the loan is charged down to the current value of the collateral. For installment loans, all interest recorded as income but not re-ceived and the remaining principal balance are charged off when a loan becomes 120 days past due. Credit card loans are charged off at the earlier of the date they are deemed uncollectable or 179 days past due. BANC ONE has an internal monitoring system that provides monthly analysis of delinquencies by loan type, nonperforming assets and potential problem loans for each affiliate. Each affiliate pre-pares detailed reports each month listing activity in these categories which are then reviewed by its management directors and the Corporation. The potential problem loan report subjectively classi-fies loans as watch, substandard, doubtful and loss. At December 31,1986 the doubtful and loss categories totalled .44% of total loans. Non-accrual and renegotiated loans ended 1986 at 1.38% of total loans. Loans that are 90 or more days delinquent, which are not included in the non accrual and renegotiated loan figures, dropped from .65% of total loans at December 31,1985 to .57% at December 31.1986. The reserve for possible loan and lease losses rose from 1.28% of total loans at December 31.1985 to 1.36% at year end 1986. Of the $18.3 million increase. $9.1 million was added in recognition of the sharp rises in the installment, credit card and lease portfolios that, while providing significantly higher yields than most other loan categories, have historically higher loss levels. Also, $3.9 million was added to the reserve to reflect exposure in a commercial real. estate loan. V. Liquidity and Interest Rate Sensitivity The ability to maintain, or have access to, sufficient funds for potential customer demands is the focus of liquidity management at BANC ONE CORPORATION. Potential customer demands include the need to fund additional loans and the necessity of meeting such demands for fund withdrawals that might occur. The Corporation views net short-term assets or "on books liquidity" as mdicating available balance sheet liquidity which can be most easily accessed for incremental funds. The "on books liquidity" is the first and most reliable source of incremental funds. The next potential liqui-dity source is a solid base of 459 affiliate bank branew in four states, providing access to a growing market of retail deposits. The third portion of the liquidity management system is the ability to access large liabilities in the local affiliate markets. The systematic management of liquidity by the - Corporation includes the sales of funds between banks allocating available liquidity and minimizing ; I l l 4 50 o_______ _ _ _ _ _ _ _ _ 1
jr r the unprofitable maintenance of excess liquidity. The final source for incremental liquidity is the ability to access large liabilities in the national marketplace. The national market as a source of funding is a readily accessible market, but is generally held to be the least stable source of funding. BANC ONE has established policy guidelines for the major liquidity sources. Table VI illustrates the sources of liquidity at year end 1985 and 1986, as well as on average during 1986. The first liquidity source "on books liquidity", .is composed of money market assets, government and agency secu-rities and the collateral value of exempt securities net of short-term borrowings and public fund deposits. By Corporate policy, total dependence on large liabilities and national market liabilities is conservatively maintained at less than 25% of earning assets net of money market investments, Large liability dependence was 19.86% at year tnd 1986 compared to 18.55% at year end 1985. A component of large liabilities is national market funding, which is potentially the most volatile funding source. National market liabilities are composed of net federal funds purchased, large CDs issued in the national market and insured brok' red CDs. At year end 1986 net national market liabilities wer: equal to 9.30% ofloans and securities compared to 7.63% at year end 1985, well below the 25% guideline, The increase in national market dependence was primarily a result of higher fed funds purchased. The increase in large liability dependence during 1986 was primarily the result of a change in money market investments. Table VI i Liquidity
$(millions)
Year End Average 1986 1985 1956 mummmmmum On books liquidity 5 269 $ 786 $ 1,158 Earning assets
$15.216 $14.134 $14.482 Less money market investments 633 790 1.319 Loans and securities $14,583 $13,344 $13.163 Large liabilities:
National market: Federal funds purchased $ 1,137 $ 814 5 963 j CD's $100,000 and over 106 134 28 Insured brokered deposits 133 156 1 176 Total national market liabilities 1,376 1.104 1,167 Less federal funds sold (20) (86) (115) Net national market liabilities 1.356 1,018 1.052 Other large liabilities: Repurchase agreements 684 773 778 Eurodollar deposits 252 292 ?82 Other short term borrowings 322 264 2,00 Local market CD's $100,000 and over 865 804 857 Total large liabilities 3,499 3.237 3.384 Less money market investments (603) (762) i940) Net large liabilities $ 2,896 $ 2.475 <
$ 2.444 Large liability dependence 19.86 % 18E% 18.57 %
National market liability dependence 9.30% 7.63 % s 7.99% 1 51
\
An essential part of liquidity management is asset / liability management, with a goal of managing interest rate risk. BANC ONE's policy is to minimize the impact of fluctuating interest rates on earnings and market values by limiting maturity and repricing mismatches on and off the balance i sheet. Table Vil is a schedule of the Corporation's asset / liability sensitivity as of year end 1986. As shown, BANC ONE was slightly liability sensitive (excess liabilities over assets) in both the short-term and at the one year level. BANC ONE utilizes instruments such as interest rate swaps and options to manage the interest sensitivity position. Table VII Asset and Liability Maturity Repricing Schedule as of December 31,1986 5(millions) M1 thin Four Seven to One to Over Three to Six Twelve Five Five Months Months Months Wars Wars Total
- mammme - - mumm-- ammmmme Earning assets:
Money market investments $ 573 $ 22 5 2 5 9 $ 26 $ 632 Securities 204 311 231 1,145 1,300 3.191 Loans and leases: Variable rate: Commercial and tax exempt 4,218 28 4.246 Real estate, mortgage 271 71 18 48 14 422 Other 919 919 Fixed rate: i Commercial and tax exempt 158 71 72 373 431 1,105 Real estate, mortgage 70 30 64 345 458 967 Other 459 243 440 1,638 1,110 3,890 Total loans and leases 6.095 443 594 2,404 2.013 11.549 l Total earning assets 6,872 776 827 3,558 3,339 15,372 Interest bearing liabilities: Demand-interest bearing 945 41 82 478 1,546 Regular and money market
; savings *' 1,594 129 343 1,328 446 3,740
; CD's less than $100.000 1,31, 469 351 1,066 105 3,808 CD's $100,000 and over 875 125 127 336 4 1,467 Purchased funds 2,031 37 7 66 173 1 314 lbtal interest bearing liabilities 6,762 1,101 1,010 3.274 728 12,875 Cap before interest rate swaps and options 110 (325) (183) 284 2,611 2,497 Net interest rate swaps and options (112) 20 82 (42) 52
! Gap adjusted for swaps I and options (2) (305) (101) 242 2,663 2,497 Cumulative adjusted gap $ (2) $ (307) $ (408) $ (166) $2,497 $ 2,497 Cumulative adjusted gap as a percent of earning assets (.01)% (2.00)% (2.65)% (1.08)% 16.24 % 16.24 %
'"Resular and money market savings are scheduled to repnce based on their expected sensitivity to changes in market rates.
52
VI. Capital BANC ONE historically has sought to rnaintain superior levels of capital compared t organizations. At year end 1986 primary capital was 8.03% of adjusted assets, well in excess regulators' requirement of 5.5%. For the year average common equity represented 7. assets, producing the highest level of capital to assets reported by any of the nation's 50 lar banking organizations. Capital ratios are maintained through matching dividend increases to e ings increases so the dividend paid as a percent of income averages between 32 and 35 percent the extent feasible the Corporation seeks to use its common stock as the vehicle for exchange in l acquisitions so that equity is increased proportionally to the assets acquired. As a result over the past ten years the annual growth in common equity of 15.3% compounded exceeds the compound growth in assets of 13.7%. Corporate policy requires each af61iate bank to maintain capital ratios in excess of regulatory standards. Af61iate bank capital ratios are generally adjusted by means of divi-dends paid up to the parent company rather than by downstreaming debt to the af61iate. The underlying principle in managing the pare '. company's capital position is to ensure access to global debt and equity markets to provide max..num funding flexibility. Thble VIII presents key i ratios relating to the parent companyt capital adequacy for the past three years. The Corporation's short. term debt is accorded the highest quality ratings by Moody's and Standard and Poor's and the long term debt is rated Aa2 and AA by those agencies respectively. During 1986 BANC ONE estab-lished a Eurodollar note issuance facility for $150 million for five years which is supported through a committed stand-by facility from 18 major overseas banking organizations. One hundred million dollars of this facihty is available to support the Corporation's commercial paper in addition to the
$180 million of domestic bank lines used to back-up commercial paper.
The Corporation has no specine plans for direct market issuance of long. term debt or equity. The three bank af611ations currently pending will be consummated through exchanges of the Corpora-tion's common stock as detailed in Note 4 to the Financial Statements. The Board of Directors authorized the issuance of up to $300 million of medium term notes having maturities of nine months to ten years. To the extent such notes are issued, it is anticipated the proceeds will be used to fund non-bank activities in leasing, mortgage origination, and consumer 6 nance areas. i Table VIII l Capital Ratios i Dividends Pald as a Percent of Net Income Parent Company Ratios l Corporation Internal Goodwill Fixed Affiliates Common Equity Double to Comman Charge Year to Parent Dividend Generation f.everage" Equity Coverage *' 1986 35.9 % 33.8 % 10.9 % 1.021x 9.5% ' 5.18x 1985 33.0 31.9 11.5 .999 10.8 , 2.13 1984 36.5 32.5 10.9 1.066 13.7 2.65
- Parent investment in subsidiaries plus goodwill divided by preferred and common equity
- Parent pre-tax net income plus non cash and interest extense divided by interest expense and preferred dividend 2
l 53 ; 1
c VII. Other 1985 Compared to 1984 Signi6 cant consumer loan and tax exempt security growth generated a $1.6 billion rise in average earning assets between 1985 and 1984. Explosive credit card growth (up 55%) because of the Comp-U-Card program occurred despite the 8 ale of over $160 million of loans to unrelated third parties. Tax exempt loan and security balances rose sharply as the Corporation shifted its earning asset mix to take advantage of its favorable tax position. Yield comparisons tracked the declining rate environ-ment of the two years in general as total earning asset yields declined 54 basis points from 1985 to 1984. Tax exempt securities yields were the exception as yields climbed 41 basis points between 1984 and 1985 because of attractive yields available to the Corporation in 1985. Funding the asset growth was achieved by growth in all borrowing categories. Deposit growth occurred primarily in money market CD's (up 16%) and money market savings (up 25%). Rates paid on most borrowing categories fell with interest rates in general. Other income increased $43.7 million from 1984 to 1985. A signi6 cant portion resulted from the
$13.5 million gain on the sale of the downtown of6ce buildings of BANK ONE. INDIANAPOLIS. The other major contributor was card processing and service income whi3 rose $15.9 million. largely due to increased credit card balances and the revenue they generate. Other expenses rose because of the increased card processing activity and full year operating expenses from the 1984 purchased af61iates.
Net income rose 23.5% from 1984 to 1985, while net income per common share increased only 19.1% because of the full year impact of additional shares issued in the 1984 purchased af61iates. 1 Fourth Quarter 1986 Compared to 1985 Because of nonrecurring items in both fourth quarter 1986 and 1985, net income decreased from
$51.1 million in 1985 to $46.5 million in 1986. In the fourth quarter of 1985, a $9.3 million after-tax gain on the sale of of6ce buildings was recorded while in the fourth quarter of 1986, nonrecurring merger related expenses and adjustments of $3.1 million after tax were incurred.
Strong earning asset growth generated a $24.6 million increase in net interest income. Speci6cally, strong commercial and installment loan demand in the fourth quarter of 1986 were major contrib. utors to the growth. Signi6 cant positions in collateralized paper taken in the fourth quarter of 1986 primarily caused the average taxable securities growth. Two core deposit categories provided the bulk of the funding for this asset growth money market savings and interest checking. The net funds function improved from 4.66% to 4.83% as the provision in the fourth quarter of1986 was 10 basis points lower, indicative of improved credit and chargeoff trends. Inflation The Corporation has consistently maintained that the impact of inflation can be minimized by properly matching maturing and repricing opportunities of assets and liabilities. Changes in interest rates, which are largely driven by inflation expectations, become less signi6 cant under this operat-ing philosophy which concentrates on managing the net interest margin. The emphasis on spread management instead of guessing on the direction of future interest rates enables the Corporation to maintain stable margins in both high and low inflation environments. The narrow range of net interest margins over the past 6ve years, which included both high and low inflation periods, of 4.99% to 5.73% bears this out. 54 __ E
BANC OME CORPORATION The B~ue One Awarc. I e . 4 -. s ', , b -
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Some of the BLVK ONE, MtNSFIELD staffmembers signal their pleasure in uinning the Rrst annual au ard for outstanding afRiiate bank performance. The ten best atTiliates in 1986. based on the eight measures ofperformance. utre: 1-Mansfield 2-Dover; 3-Cleveland. 4-Alliance. 5 Marion. 6 Sidney, 7-Ashlar:d. 8-Milford. 9 Fremont. and 10 Coshorton. 34l Recognizing unusual achievement and bank, said that it was a total bank victory stimulating special effort is an important and one in which all 250 employees can ingredient in our ma'1agement style. In be proud. order to reward outstanding overall An attractive silver bowl trophy affiliate performance, the Blue One identifying the annual winning bank was Award was initiated during the year. presented to the Mansfield staff for The staff of BANK ONE. MANSFIELD display in their main office lobby. The won the first of what will become an trophy will travel to the winning bank annual event created to recognize the each year. best performing affiliate. Maintaining high performance Eight categories covering bank throughout BANC ONE CORPORATION profitability, credit quality, reserves and is a part of our daily life. Cong;atulations liquidity. and productivity were to the winners of the first Slue One considered in selecting the winner. Tom Award and keep it up. Hoaglin. President of this year's winning 55
BANC ONE CORPORATION - EXECUTIVE John B. McCoy John F. Fisher William C. Leiter j Chairman Senior Vice President Controller OFFICERS o Frank E. McKinney, Jr. William P. Boardman George R. L. Meiling President Vice President Treasurer Roman J. Gerber R. Patrick Handley
': Executive Vice President Vice President William M. Bennett John C. McCoy DIRECTORS Chairman Chairman.
BANK ONE, DAYTON, NA Executive Committee BANC ONE CORPORATION Daniel C. Boone ('d h.E. DAYTON, NA * "" ' ' President l
~
BANC ONE CORPORATION William L. Case" Partner Rene C. McPherson W. Lyman Case Enterprises Corporate Director Leonard K. Firestone" Private investor Robert H. Ibtts Chairman BANK ONE, COLUMBUS NA John W. Calbreath* Owner John W. Galbreath & Company Seward D. Schooler" Retired Chairman John F. Havens" BANK ONE. COSHOCTON, NA Retired Chairman BANC ONE CORPORATION Robert D. Walter Chairman & Chief Executive Officer Edward H. Jennings cardinal Distribution. Inc. President The Ohio State University William K. Westwater President John W Kessler Westwater Compaay Chairman - John W. Kessler Company Leslie H. Wexner Virginia W. Kettering" Chairman Chairman The Limited, Inc. C.F. Kettering, Inc.
' Honorary Dire: tor John B. McCoy " Director Emeritus Chairman BANC ONE CORPORATION l
l 56 L__________
-l_
BANC ONE CORPORATION i
.. i Corporate ProAle i i
BANC ONE CORPORATION'is a Delaware-chartered bank holding company which owns all the stock 1o
.'* 34 banking organizations operating in Ohio, Indiana, Michigan and Kentucky. The Corporation's 22 Ohio !
banks operate 323 banking offices 9 Indiana banks operate 116 offices,2 Michigan banks operate 10 of and one Kentucky bank operates 10 offices. Additional wholly owned subsidiaries offer financial services in! areas of mortgage banking, consumer finance, equipment leasing, fiduciary and trust services, credit life ( insurance, and discount stock brokerage. BANC ONE has acquisitions pending with three banks in Indiana and one in Michigan. l i AfAllates Pending Anillain OHIO EN.B. Bancorp, Inc. (Fenton, Michigan) ' BANK ONE, AKRON, NA Charter 17 Bancorp, Inc. (Richmond, Indiana) BANK ONE, ALLIANCE, NA The Northwest National Bank (Rensselaer, Indiana) BANK ONE, ASHLAND First National Corporation (Bloomington. Indiana) ' BANK ONE, ATHENS, NA BANK ONE, BELLAIRE, NA Stock 1kansfer, Registrar, and Dividend BANK ONE, CAMBRIDGE, NA Reinvestment .Wat BANK ONE, CLEVELAND, NA Common and Series A Preferred: BANK ONE, COLUMBUS, NA BANK ONE, DAY'IDN, NA BANK ONE, COSHOCTON, NA Kettering Tower BANK ONE, DAYIDN, NA Securityholder Services Department BANK ONE, DOVER NA Dayton, Ohio 45401 i BANK ONE EASTERN OHIO, NA (513) 449-87 % BANK ONE, FREMONT, NA 1-800-848-0191 (toll free in Ohio) BANK ONE, LIMA, NA BANK ONE, MANSFIELD Stock Listings BANK ONE, MARION Common: BANK ONE, MIDDLE 1DWN New York Stock Exchange: Bncone BANK ONE, MILFORD NA Ticker Symbol: ONE BANK ONE, P0ffrSMOUTH, NA Series A Preferred BANK ONE, SIDNEY, NA NASDAQ: Bancl PfA BANK ONE, WAPAKONETA. NA Ticker Symbol: BONEP. BANK ONE, %DOSTER, NA 10 K Report BANK ONE, TRUST COMPANY, NA Shareholders may receive a copy of BANC ONE's (NDIANA 198610-K Annual Report as filed with The BANC ONE INDIANA CORPORATION Securities and Exchange Commission upon subm,ission of an appropriate written request to BA 0. .' i ORDSVILLE, NA e rge R. L Mg ame corpora 2 oMces. { BANK ONE ELKHAlfr he rep rt MH & a6e abr Apd 1, B87. BANK ONE, FRANKLIN BANK ONE, INDIANAPOLIS, NA BANK ONE, LAFAYETTE, NA BANK ONE, MARION, INDIANA, NA BANK ONE. MERRILLVILLE, NA BANK ONE, PLAINFIELD, NA MICHIGAN BANK ONE EAST LANSING BANK ONE, STURGIS KENTUCKY BANK ONE, LEXINGTON, NA i Non-bank Af811=*= BANC ONE BROKERACE CORPORATION BANC ONE CREDIT CORPORATION BANC ONE FINANCIAL SERVICES. INC BANC ONE LEASING CORPORATION I BANC ONE MORTCACE CORPORATION l l
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BANK 50NE . . BANC ONE CORPORATION Bulk Rate 100 EAST BROAD STREET U.S. Postage COLUMBUS, OHIO 4325 PAID TELEPHONE: 614/248-5944 BANK ONE g 'd 1' 4-
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PWeest tes? 1948 g 19e7 toes g he the period 7btal operating rewnue $ 475.451 $ 466.890 1.8% $ 941.350 $ 932.830 .9% Net income 18,880 51.676 (63.9) 78.130 100.357 122.1) hr essames share Net income .30 .55 163.6) .83 1.07 (22.4) , Cash dhmiends* .23 .20 15.0 .44 .40 .10.0
. Stockhnklers' equity 14 il 13.06 8.7 At period end
/ Annets 17.893.000 16.474.000 7.4
. E Deposits 13,671.000 12.849.000 6.4 ,h
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r . 1btalloans and leases 12.152.000 10.561.000 15.1 Common equity $ l.370.000 $ 1.186.000 15.6
/ Shares outstandmg (000)
Common 94.545 90,775 l /' Series A Preferred Esy reales 990 Return on average assets .44% 1.27% .93% 1.26% linturn on average common I stockholders' equity 5.56 17.28 11.78 17.14 . hera8e common stock. i holders' equity to aoets 7.82 7.16 7.71 7.13 .l Net interest margin
- 5.75 5.65 5.78 5.71 'l Un [* EMEN"eNI,s"=
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%i Effective August 24.1987 EMNK ONE. INDIANAPOLIS, NA will become the stock transfer agent.
registrar, dividen<l disbursing agent and dividend reinvestment agent for IMNC ONE common stock. Shareholders may communicate directly with: BANK ONE. INDIANAPOLIS. NA
- 101 Monument Circle b.
Indianapolis. Indiana 46277 (317) 639-8110 # N e Y o-
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. Report from Management
- BANC ONE CORPORATION nported net income of $18.7 We are most pleased to announce the election of John R.
, million or $20 per share for the quarter ended June 30 and Hall to IRNC ONE's board of directors. Mr. Hall is ,
su month nrt income of $78.1 milhon or 5.83 per share. These Chairman and chief executrve emeer of Ashland Oil. Inc. Mr. samings per share compare to 5.55 per share for the second j Hall jomed Ashland Oil in 1957 and served as president of its quarter of 1986 and $1.07 for the six months last year. Ashland Chemical subsidiary. Ashland Oil, headquartered in Second quarter and year to date net income was impacted by Ashland. Kentucky, is the largest employer in Kentucky. the decision, announced on June 24. to make a specul .
, addition of $53 milhon to the reserw for possible loan losses. BANC ONE's fundamental operations contmued at
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I ' This special provision. 4usted for BANC ONE's effective tax extremely stiong levels dunng the second qwter. Total rate, produced a charge to camings of 5.43 per share. loans grew at an annualized rate of M.6% during the quarter ni the net interest margin tracked levels On July 24 BANC ONE announced it had reached a established both in the first quarter and last year's second degrutiw agwement for the amliation of The Manne quarter Credit quahty continued to show across the board p' Corporation headquartered in Milwaukee. Wisconsin. The improvement. The levels of both non. performing assets and - Manne Corporation has assets of $4.3 billion and operates delinquent loans declined for the is.:rth consecutiw quarter.
. 21 hanks with 76 offices throughout Wisconsin. Fol;owing Net charge-offs dropped from an annualised 1.05% in the this amliation BANC ONE will haw combined assets of $22 first quarter to .$2% of loans in the second quarter.
- the Un ed Stat s. wi opera 5 nks th 54 ' n as emces located in Ohio. Indiana. Wisconsin. Michigan and ped c e in
$ Kentucky. Under the terms of the agreement which were coritext of market and banking industry trends.The j
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- reached under competitive conditions. BANC ONE will issue i llowing table compares BANC ONE's action with that of the 41 otM top $0 banking organisates which elected to 2.'02 shares of common stock for each share of The Marine e
(W Corporation, producing a transaction valued in excess of
$500 milhon. The Manne Corporation will become BANC nuke spec merw additions in the second quarter. ,
l 7 ONE WISCONSIN CORPORATION and its amliate banks will gg f - 2 swee sneeriing ,y .8 change their names to reflect the amliation with BANC #8 #**br" + j, ONE. George R. Slater. ,who is Chairman and chief caecutive LDC Exposure tolbtalloans f l p of The Marine Corporation will retain those positions at Special Provision as a Percent of
.7% 4.8%
4g i BANC ONE WISCONSIN and will be elected Vice Chairman LDC h 55 % ' and director of BANC ONE CORPORATION. 29 % After Tax Provision as a Multiple of
. The Marine Corporation's banks collectively haw owr a 4 10% share of Wisconsin bank deposits and haw an ewn
- Normal
- Quarter's Eamings .7 a 5.3 a e# '
-a ., u .r , se tu n s, ig larger presence in the grea:er Mdwaukee - northem -
'S Chicago metropohtan area. BANC ONE expects its strength Not only does IRNC ONE have one of the lowest
'. M in consumer lending will complement the Manne's exposures to LDC loans among the nation's major banks. A.
Z capacities in middle market lending and leasmg. Marine's but we chose to create the highest level of loan loss reserws Y ir c creanisation of autonomously operated commumty banks of any of the top 50 banks. We were able to create reserve closely parallels BANC ONE's " Uncommon Partnership" lewis that reahstically reflect current market values of LDC P operatmg structure for its affihate banks. The Manne credits at the cost of less than a full quarter of eamings. ; 7
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Corporation s earnings. retum on assets and return on equity han ;encreased in each of the last frve years. For 1966 As we indicated when we made the announcement of the '
- g. Manne reported a retum on assets of .92% retum on equity special prcvision, we fully expect to retum to normal -- *'
of M.06% and all time high cammas per share, camings rates for the balance of the year and expect that i full par 1987 income will be at record high !cwis. # Ii. During the second quarter IMNC ONE completed the 3l 1 3 amliation with the First National Bank of Bloomington the l Corporation's tenth Indana bank. Renamed BANK ONE. ,, , Mr. 8140MINGTON, it operates 9 offices in Monroe County and
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has total assets of $270 mdhon. Ind ana University is located T
- in Bloommaton which enhances IMNC ONE's strong market { (1, y
- 4 presence in major college and unrwrsity cornmunities John B. McCoy c h throughout the midwest.
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Consolklated Balance Sheet i 90thoussadd tuneudiese a June 30, thsember al. June 30, 1987 ING 1986 Cash nd due froen banks $ l.129.367 $ 1.242.871 $ 1 258.857 Deposats en other banks, intere;t bearing 415.092 577.699 426.518 Short term smentments 144.035 54.845 243.M3 Sauerttimer - Umtad States swernment obligations $37.229 $49.500 724.834 Obhgations a( federal a8enews 615.924 664.597 500.695 0 Oldiestens of states and pohtscal subdnwens 1.175.713 1,310.672 1.541.930 Other ascuntwa 6Wjg 3 5.881 434.'061 1stal asserttias (mathet value approsumates $3.154.000 at June 30,19874 3.134 M5 3,I90.140 3.201,540 l.'; g/ lamas and Iseness - commercial. nnancial and agncultural 5,001.366 4.543,037 4.159.550 ' j lisal estate, constructed 490,480 497.421 358.004 y 1
,. Real estate, nuortflage 1.387.006 1.389.199 ' l.424.400 j Censumer 4,304.091 4.125,171 3.729.529 l 1hs esempt 729.831 888.236 838.662 Leases $12,507 467.867 334.515 Gross loans and leases 12.425J81 11.830.934 10.844.660 Unearned loan and lease W rest 273.039 281,850 283.426
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1btalloan* Wnames 12.152.342 11.549.072 10,561.234
., Reserve ir possable loan and lease losses 217,8.'6 156,670 134.949
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listIsmas andIsasse Other assets: II,834,308 11.393.483 10,436,385
Bank premises and equipment, net 270.538 265.134 255.165 t
. Interest earned not collected 170.177 159.032 171,566
~* Other real estate owned l 13.085 19.685 181.283
- i t Escess of cost over twt assets of aMhates purchased 145.207 147,247 137,584 j Other 321.818 322.249 334.583
/ Ibtalother assets 920.825 913.347 917,181 )'
heal assets $17,803.883 $l7,371,904 $16,473,8_44 IJabgettes: i s -non-interest bearing $ 2.539.489 $ 2.810.286 $ 2.540.932 Demand-interest bearing 1,554.275 1.546.014 1,282,785 5 Savings 1,066,757 1.074.481 1.081.587 Tlr 1stal depeelta 608 2 N b ' 13.479.643 13.370,467 12.848,784
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Short term borrowmas: Federal funds purchased and repurchase agreements 1.829,106 ) 8t23,480 1.501.315 y Other 275.767 321.267 274.700
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Ibtal short4erm borrowings 2,104.873 2,144.747 1,776.015 9+ ' Lanit term borrowings 155.561 169.734 175.876
*f Other labehties: 4(a e
C1 Accrued interest payable 111.677 104.205 156.623 Other 279.785 282.571 281.419
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Sital other habihtaes heal in.haana.e 391.462 386.776 14,071,934 438.042 14.322.589 15.238,701 Preferred stock Senes A convertible, no par value,5.000.000 shares authorised, none 988.418 and 989.783 shares snaued respectruely 49,421 49,489 Comunes %* somity: Common stock. no par value.15 stated value. 300.000.000 shares authonsed. 96,544.836. 90.988,044 and 90,774.806 shares issued. respectnely 482.724 454.940 453.874 ' Capetal en escess si aggregate stated value of common stock 431.918 388.879 388.648
, Artained earnmes 455.469 406.740 '443.969 .
.%.w' e 1stal seeman %' egally beiere treasury shares lass 127.866 treasury shares, at cost 1,379,194 1,280.589 1,184,$1I (8571 ',
. heal esomen %' equity 1,370.104 1,250,559 1,885,654 35 1steillab8mies, preferred seest and cessnes %'agshy $17.092.443 887,371.904 $16,473,844 fas . sann an an sesoral sent at she enn.euel ammena 1
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ks du esse and sai sunsh partens ended June 30,1987 and 1986 8mhmmands, asupt per shase desas tunsudned) per Ibs 7tses 81emahs Perihm Ses llemshe Eaded Jens 30 Ended June 30, M. '" 8" '"' l inerrest erd fees on loans and leases
$ 332.602 8 315364 $ n'.2.229 $ 628.269 -
Inerrest and dradends on: Othestaans of 1J.5. smernment and federal agencies and otlwr secunues 37.751 35.654 76.255 67.435
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Othestions of states and pohtical subdevisens 24.022 31.262 48.705 64 418 Other anterest ancome 8 845 ' 16.873 !$.618 34.844 1stal letsrest imesme 443,390 399,153 ~7t2,807 794,964 - Istmast esponse 1 laserest on depants: '_ Demand and aannes depostts 66,514 ' 62.385 129.153 123.789 [ Tune deposats 103.914 134.149 205.792 267.782 "s 7, Other bortuonngs 36.302 70.417 73.985 _34.669 . ,
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)%S hallmusest emposes IIst istuustineses 308,730 194.088 331,203 187,950 405.303 347,445 445.564 339,410
^ Puestseen for loan and lease losses 85.247 31.426 115.$00 60.762
- y list istuust huseum after psenesium ist less and Isase inness 117.413 las.534 371,948 ass,see .
Odur hesme: Income from nduciary actMties 12.123 10.844 23.772 30.588 j arrvice charges on depasst accounts 15f1 14.380 31.236 28.311 Card processang and service income 24,71A 21.871 47.849 42.871 3 Securities sama 5.335 4.319 11.638 15.611 Otner 14.292 16.323 34.048 30.383 l Entsi ether lassee Other espseess: 73.P"1 87.737 148,543 137,864 g' Salanes and related costs 76.558 67.684 151.646 137.647 . 4 kt occupancy sapenw. esclusM of depreciation 9.528 8.347 15.925 16.740
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* . Depreciataan and amortizaten 10.743 9.647 20.870 18.903 i Outside :ervices and proceming 17.555 17.271 34.901 30.932 -
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./* Communicataan and transportation !!.863 11.845 25.603 24.084 .
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.r, Other 34.741 32.783 68.054 63.817 a I helether essesses 181,988 147,577 319,900 393.133 M lasses beferv isdsrellessme taans 31,486
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$scuntas transactions (1.4101 11.845) (3.276) 16.953) 4[ '
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# $ Het leessee $ 18.600 $ $1,674 8 78,130 $100.357 'd/ jj_
I list lasses per emesses abere S.30 8.55 8.83 *l.07 - hh -
; Wrighted average common shares outstanding (000) 93.757 91.238 92.661 dl.192 Si N
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;.- gaWE, and hesidenes censolisheed staternent of Omnges in Financial Pbsition 'j dr We ses ausse aded Asse 30, letF and 1806 1
#MW 1987 Isee I Puses Funds last Pueds hues fast i Pvevedad Used Chases psewedad timed Changs
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Not inosras 8 78.130 $ $ $ 100,357 8 5 hasns not Nguirbtd use Of funds during period I Depmdaten, amortasation and !
*sentien, est 23.025 13.992 "
Proveuen for less and loses lasera 115.500 60.762 Opensisms 216.655 2'6.655 175.111 175.111 ; Cash dwidends deciated 43,992 34,302 i Purchase and newement of treasury shares 3.179 lertire prederved stock 464 1,000 ; Earecise of stoch estions 3,793 772 l Other sounty transactaans 18 172 l issuance of stack ist aremions 32.675 5.841 Egm$ luensasilmes 36,468 44.474 ts.006) 8.785 3ti.481 t29.696) 4 Deposits 10.645 324,184 I hderal hinds punhased and repurchase 1 agreements 14.824 346,837 , t'M paper 30,404 38,799 Other short-ears hervowings. net 50.882 44,006 ' lang-term hervu6nes, not 14,373 12.121 nrwu wh assurned 81.149 , IJabilitiesof acquiredcampanies 315.349 S4.531 l Deposits and hensuings 336.598 90.649 245.949 478.633 302.056 176.577 Deposiu in other banks, interest bearing 162.607 308.690 Short term investrnems 36.230 254,534 Imestment secuntas 167.663 302,709 Sale of credit card loans 100,000 120.000 laans and leases $28,127 663,702 ' Acquaibon of subsidiary banks: )
$ecurttus and short term investments ..181,758 17,644 l Met loans 128.595 18.544 l Berning assets 430.270 974.710 t544.440) 773,224 992.5'89 4219.375)
Cash and due from banks 142.822 109,400 Additions to bank premises and equipment. net 19.109 11,414 Essess of cost euer net assets of arnluess ,.
= purchased $46 9.206 Cash and other assets acquired for gg l
l . assurnptson of deposat liabilities $1.149 1 . j AcquuJtion of subsuhary banks: - - f
- other assets 37,803 4.723 -
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Other habilsties 1.138 4?$ Other. net 3.640 105.953 .gg Other 147.600 57.758 09.842 109.828 ___. 212.445 t102.6171 /c heal $1.167.591 $1.167,591 $1.543.58) $1.543.581 I
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M M N mal Sulmusmies Consolidded SWement of Changes in Common Stockholders' Equity for te else asal as esenth penuds ended Asu 30.1987 and 1906 1
$1lhassenW lanadesel l hr the Thses 80ssehe per the Sea lessehe Eaded Asse 30 Eaded June 30.
1647 1986 1987 toes Betance, beennes of period 5 1.296.516 3 1.151.827 l Nst inunne 5 1.250.559 $ 1.!!3.681 18.640 51.676 78.130 100.357 ptssftase and ratsunent of tnesury shares, at cost (1.1791 heres issued for acquisitsens (1.1791 36.596 32.675 5.641 Esercise of neoc6 eptions 1.542 287 3.793 772 Corssersson of Seraos A prederved into common and other 48.944 48,939 377 464 Cash dmdends_ Corporateen: Common (323 and 3JO per shan ice tfw three months and
$44 and 8.40 per ahan for the am nienths eeded June 30.1987 and 19861 G2J061 (13.187) 141.4821 Pndernd ($1375 per shan for the three and saa months ended (25.991)
Asne 30.1987 and $1.375 and $2.75 per share for the three and als nienths ended Asw 30.1986) j
- 19) (1.361) 11.388) 0.729) 1 Pooled afAksess (2,786) (1.222) (5382)
Butames. June 30 St.379.lN St.185.884 $1.379.IN $1.185.854 i i i Consolidded Stdement of Reserw for Ibssable lean and lease Losses der the three and am sinnan penads ended hme 30.1987 and Isas I subsusansaureada m per the 7tsee Itsudbs hr the Shs IIssihe Saded Ame 30, Saded Jess 30. 1987 ISAS 1997 1988 Selance. beenning of period 5157Je9 8 133.239 Acquired reserws $ 156.670 5 128.895 2.053 (129) 2.845 207 pnmsion for loan and laase losses 85J47 31.426 115.500 40.762 t ce ,esd a te raerw o6 m haceweries o 8.0161 sism (72.4631 t 9.553 8.429 18.899 16.948 Notleases charged to the reserw G7.233) (29.587) (57,I39) f55.515) Beisnes. June 30 St17.876 $134.M9 $337,876 _ $134.M9 l Notes to Financial Statements -
- 1. The = ._-;4 nnancial statements are unaudstad. Hasswr. In the opmien of manadenamt, they contain an adjustments (a0 of q
whsch are normal and recurrmg in naturel necessary to present fairly'=the fmancul posetaan and the reauks of operations. The notes to the nnancial statements contamed m the 1986 Annual Arport to .- " ; should be read in carvuncton with these Anancial statements prior period Agures in the accompanying nnancial statements hswe bnn eestated to inchade sia 1646 (see Note 2 in the 1986 Annual
- K Bsport to Stockholders) and two 1987 afrWaations Isee Note 3 belowl accensnied for as penhnsk
- 3. The prensasa for iederal income tanes is at a rate whuh management belesws wiB appressmate the eHoctiw rate for the year.
- 3. On knuary 2.1987. the Corporaison arguend all of the capaal stock of Spartan Bmkars, Inc. In East On lanuary 26.1987. the Corporatemi accured all of the out ' Machienn.
stock of Amarun Fi4cher Corporation in is. Indiana. A total of 21.718.373 shares of common stock were issued these transactiians, whach were accoun'ed for as poohnss. On February 27.1987, the Corporation acquered all W the outstandmg capstal stock of 7he Fir:t National Bank in Fenton. MactugarL for 255.541 shares of common stock whxh was accounted for as a purchase. On Aane 1.1987, the Corporation acquired all of the outxanding capdal stock of F#rst Nassanal Corporation in 8&oonundton. Indiana, usums 1.979A15 shares of common stock. The transactaan tsas accounted for as a poolang. but prior period Agures were not restated dae to irnmateruhty 7 #
- 4. Ti.e Corporation has agreements pendmg for the acquisitsen of two indiana banksng entnies. First National Corporation ki Bloonungton.
3 and Charter 17 Sancorp. Inc en Itchmond. and one Waconse banking entitwann. The Marve Corporation m Mahnaukee. The agree. ments prendt for an eachange of commen shares of the Corporatam for all outstanding shares of the entdass. The number of shares to i j be issued generaHy is renesse to the everage market price of the Corporation) stock. Based on the martet price of the Corporaison's stock at Ame 30.1987, et is antacepstod that appresanately 1000.000 coramon shares will be taeued in total. _ r
- 5. In lune 1987. the Corporation increased its reserws for posait4 credit losses from third world nations by $45 million an amount in escens of $5% of the Corporataann inan espesure of $82 puuaon.
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- 8. In the second quarter et 1987, t!w conwrtible $enes A pniernd shares issued in 1983 were caned for ion. As a neult an In.t imately s.000 shares of the 988.t40 shares men conwrted to common stock which nauhsd in the of an addasonal s 800 casumen shares in the second guarter.
- 7. The Carpersalon has nied with the Securases cul Enchange Commmason a shelf requeration ist the issuance of up to $300 nullion of
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Madnam hers Notes to be drawn at verseus dates in the future at provasimg interest rates 7he Corporation has not set issued any debt *
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name ese eenpenanen and ea% l BalaflCe$, IflC0me Afid Expellse, Yien alid Rdes tummesse 19e7 and omsren ase omsren homens and S 1.874.338 8 37.813 8.00 % 5 1.898.011 $ 38.584 8J4%' 1hs earnqst 1.145.e44 30,544 13.44 en.3eo 13X __ l.235.406 1sesi 3.883.384 77.398 10.14 0.133.417 78.948 10J2 Cornmercal 4.877.845 111.963 9J1 4.571.527 100.784 8.M 3 2 Credd card 1.383.874 83.834 19.37 1.355.968 (4.8 12 19.98
%sesempt 745.430 33.378 13.04 798.656 32.550 11A5 laases, net 303.GM 13.875 13.95 372.247 11.537 12.57 (Imen ard lease loss reserve) U63.336) 0 58,577)
Nelisens endisases ' !!.778.446 344.648 11.00 !!,434J10 327,733 11A2 inessest bearing 308.863 8.484 4.93 312.417 5.000 6Je Fed funds solc and repos 147.839 3.391 6.33 110.726 3.844 6Je 1stal snoney r.orhet instruments $33.483 8.945 6.73 423.143 6.673 6AS 1stalearning aseses 18J70.173 436.000 11.14 le 990.770 413.354 11.18 Otlwr asset.s 1.881,004 y 300,487 1stal assets $17,331.976
$ 16 asia _57 unhuntas Danu d:
NoMnterest bearing $ 3.381.840 $ 2.382.006 Interest bearing 1.A37.884 14.850 4.48 1.511.315 14J88 4A5
- 4. Regihar t,W1.904 13.300 4.08 1.052.274 12.338 4.75 Mansy mar 6st 3.834.808 37.378 SJ7 2.686.813 31.751 5.08 ma hat CD) 3.306.974 08.373 7.88 3.200.491 64.2t3 7.73 Ic 1.475.841 38.544 8.M 1,412.006 23J73 4.85 Foreign 153.S$1 3.396 8.87 155.191 2.95 7J1 Other tune 713.434 14.500 8J3 656.197 14 ~~ - 8.71
, 13.344.006 170.438 8.11 13.(K,7,063 164 5.11 g
Short4rrm 1.983.838 31.9H 4.44 1.M9.174 39.; < Lang term 157,43s 4.308 14.96 163,654 4.3 . 10m lbtal borrowed funds 3.150.444 36.303 8.77 2.112.828 34,115 6J5 Sulalinessent bearing liebestise 13.131.830 308.734 8.31 12.787.803 19W tit 6.30 Other habildus 333,344 360.650 W Beh0miss 18.M7.700 15.530.541 [ Preferred 37.119 49.4.'!! Common stockholders' equity' I.347.137 1 280.255 total habasties, seamen and pseferred sesek $17,331.976 $ 14.860.11i7 Not latenst huesswa 330.343 8.75 714.727 5J1 Provtsson for loai and lease losses (88,347) (3J3) (82) _ 00.2511 Mut funds functise $135.815 3.53 % $184.469 4 99 % .
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! Ynstt*/ Ausraer fareme 9 firW4 Sainase tapsese Raer Salance Espense Raer Sainnee Essense l.
Race f
$ 1.766.953 $ 36.I'8 8.1196 $ 1.719.370 $ 35.810 8.26 % $ 1.555.629 i',
I.433.683 49.987 13.83 1.5A6 976 53.927 13.48 1.575.519 8 36.573 54.272 9.43 % 13.82 q i. 1, 3.200.636 86.105 , 10.67 3.306.346 89.737 10.77 3.131.148 90.845 11.64 J i4 4J12.555 96.421 9.08 4.183.596 95.974 9.10 4.099.719 102.357 1.830.288 46.330 10.04 10.01 ? 1.782.280 48.484 10.79 ' .t 2.553.139 78.261 12.16 2.403.903 76.582 12.64 1.859.508 2.256.731 49.899 73.651 10.76 3 13.09
}' 1.26) 661 63.800 20.06 1.222.465 63.082 20 47 1.248.730 64.125 j/ 823.250 27.280 13.15 836.897 28.883 13.69 856.734 20.60 9 e ~
345.726 12,106 13.89 335.891 11.802 13.94 255.730 29.590 13.85 % i . (142,6921 8.141 12.77 -Q., g' +L .. '- (139.4411 W% 324,198 (135.9586 I
. 10.883.927 11.82 10.625.591 324.804 12.13 10.441.194 32 5 12.59 -[p
' A .. ;
.'. 537.706 8.232 6.07 437.832 7.686 6.96
( 214.947 3,089 5.70 139.838 2.230 633 504.613 416344 9.638 7.66 '$ i 7.235 6.97 g i [ 752m653 11.321 5.97 577.670 9.916 t 14.837.216 421,624 !!.27 14.509.607 424.457
..441 44.61 920E 16.873 735 g~ '
14 993.299 435.4t! 12.05 v 1.864.272 f.807.202
- l 2 A27.538 '
$16.721,488 $16316.809 ,$16.320.837 ' f. - .
1 f' .
$ 2.451.740 $ 2382.451 5- - ! 2J13.446 1.407.692 16.534 4.66 1.285.819 15.841 4.89 f , ~ 1.206.240 15331 5.06
! 1.053.152 13.263 5.00 1.062.772 14.219 4
'6 i a. 033 1.066.723 y
2.588.987 33.475 5.13 2.361.460 33.376 5.61 2.140.965 14.383 32.763 5.41 6.14
- L h*
"l T
4 1_ 3.148J16 64.604 8.14 3.380.169 75.802 8.90 3.4412 74 79.491 927 & l.323.200 yhtik
/, 'y 4{1 277.504 22.275 5.502 6.68 7.87 1.302.088 292.569 24.080 5.448 734 7.39 I.628.990 326 836 31.813 7.83
.g'l r ' o ." 746.412 15.529 6.350 7.79 v .*-
8.25 741.775 16.393 f 8.77 717.267 16.505 9.23 Q
}
12.996.903 1.910.939 171.182 28.166 5.23 5.85 12.709.123 1.788.088 185.159 26.482 5.78 5.88 12.741.761 1.736.714 196.534 6.19 W 171.773 29.804 6.69 4.371 10.10 187.112 5.099 1A [i[ 10.81 177344 4.365
'l y' 2.082.7t! 32.537 630 1.975.200 31.581 6J4 1.964.058 34.669 11.00
; :' 7.08 12.627J75
= .
352.873 203.719 6.40 12.401.872 372.485 216,740 6.93 12.492.372 231.203 7.42 [4.['c - 396.882
'j 15.432.488
- a. 15.056.808 15.102.iOI 49.462 49.489 50380 g 1 239.538 f.210.512 1.167.856 r.
y I m.
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. f. .' $14.721.488 $16.316.809 $16.320.837
. Es
[ 217.905 $A3 207.717 5.68 204.278 5.65 (( i . 0 7/201 (1,01) t
$180.285 4.82 %
G1.681)
$176.036 f 87) 01.4266 (.87) d*,
481% W
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$172.852 4 78 %
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- Consolida.ted m .e, Qua.rterly e .ian e4,is Fin.ancial Data Omeresre
;; ese7 sees tast -
Sereed First _ Fourth Third Seceed 12 swaths /
}f. e.; perted and h-h-==a,
')
laens and leases (ne' c(unearned) $ 12.152.2 $ 11.725.5 3 !!.549.1 $ 10.807.4 $ 10.5612 5 Earning assets 15,642.5
,' htal asseta 17,692.7 15.116.1 17.073.8 15.215.7 17.371.9 14.683.7 16.626 2 14.297.8 16.473.8 f
Deal depmats 13,670.7 13.331.8 13.370.7 12.776.9 12.848.8 . lang4erm detit 155.6 160.1 169.7 176.7 1759 K Reserve for loan and lease losses 217.9 157.8 156.7 141 3 134.9 y~ Common stockhoklers' equity 1.370.1 1.296 3 1250.6 1.220 3 1.185.7
,, htal pnmary capital I.588.0 1.454 3 1.407 2 1,361J 1.320.6
". Comesmead insens stessessets IA Net interest incomr" 230.27 214.72 217.91 207.72 20428 860.62 !,*'l:J Provinson for noen and Isaw losses
- 85.25 3025 31M
( 37.62 31 43 184.80 Q T-Not funds fwict.on'" 135.02 164.47 180.29 176.04 172.85 675.82 ?# ( Other income: Service charges on deposits 15J7 4.,kr D 1514 15.22 ~ 1444 1438 61.11 N,4 y Pldudary bicorne 12.12 IIA 6 1036 Cant processang and 10.62 10.85 44.95 '. ! y , _N o service income 34.74 23.11 24.30 22.14 21J7 94.38 4'44;- Securtues transactions 5.34 6.30 3.75 SJe 4.32 2138 .w "gS Other neskinterest income 8 14.29 19.76 14.40 16.55 16.32 65.00 i heal other income 72.06 76.44 68.32 40.86 G7.74 286.72 Other apense: NI.~b . Selanes and benents 78.58 75.09 73.99 40.15 67A8 294.79 %-
.. Occiqiancy and depreciation 38J7 19.52 20.78 1839 17.9W ?9.16 *77 T7 Other non-interest expense 86.16 63.40 73.46 60 45 61.91 262.47 . {.ip _
y htal ether espmse 163.99 158.01 168.23 _ 148.19 147.58 636.42 M .- gr haable equivalent a4untment 23.00 23.93 33.52 36.j5 3632 117.20 u.f p Net income before income tan 21.49 79.01 46.86 hans on operating onceme 1.40 17.69 (All 61.56 56.69 208.92 ..
-c j
["p hues on securities transactions 1.41 1.87 1.19 6.01 2.60 3.16 1.85 2427 7.07
,d . Q y
l m i.ume s 18.e8 s 59 45 s 46.50 g 52s5 s Si.68 s m.58 7,yq . 2 w income .eme i. h commen stockholders $ 18.87 8 58.09 s 45 14 5 5139 $ 5030 $ 173.49 e. f ,. m Vgy
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S. SAIC M N edS h a Consolidded Quarterly Financial Data
$4mallmas, cumpt per share deal tunnedstad)
Omerence i987 8906 y i neceed ri e Fourth Third Seceed If amenths I( # ' hsy operating ruties'": heturn en average assets .44% 1.43% 1.10% 129% N' fr
$ Arturn on average common ewity 5.54 18.40 14.45 16.91 1.27%
17.28 I.07 % 13.67 Jherage common equity to assets 7.82 759 7.41 '
, 7.42 7.16 736 Er.deng pennary capital to assets 8.87 84 8.03 8.12 7.95 8.87 SIwge analysis*.
Interest income 11.14 11.18 l Interest esperne 11.27 II.61 12.05 1I30 3 5.39 537 5 a4 5 93 6 40 5.53 Net interest income 5.75 5.8) 5.83 5.68 5.65 5.77 Pnwenson for loan and lease losses 2.23 .82 1.01 .87 ^
.87 123 *
. - Net funds function 3.52 9 4 99 4 82 4 81 4.78 4.54 Qedit amebeiss Net charre4 dis to average loans and leases .92 i
,s ;' . 1.05 J2 1.05 1.12 .96%
Endend reserves to loans and lease: 1.79% 136%
- d. Non-performenf assets:
1.35 % 1.31 % 1.28 % 1btal $174.53 $177.51 $179.01 $174.17 $181.95 Mercent of tstalloans andleases 1,44 % 131% 1.55 % 1.61 % 1.72 % Loans dellnquent 90 or more days *: Ibtal 8 88.87 $ 59.74 $ 65.37 $ 64.05 $ 7954 Percent of totalloans and leases .47% Ji% .57% b 29% .75% ftr esassess shoe datas
#a' Net income $ Je 3, Net income as originally reported
$ .63 $ .49 $ 37 $ .55 $ 1.89 Je en Cash drndrnds* .23
.63
.31
.61
.21 39
.21
.56
.20 2.03 A6
}4 ,
'$y- Book value 14.19 14.18 j
13.74 13.44 13.06
- Stock once: y,
%p High 38.13 28.50 25.63 28 63 d'.
6 f f, 41 f law 23.25 22.88 22.63 23.88 33.13 27.88 28.63 8h g1 . Close $ 27.83 $ 26.25 $ 22.88 8 24.25 $ 28.50
$22.63 j 7,723 Shares traded (000)
- "j
$rs,.*A45 11.389 7.354 5.780 4.399 32.246
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une ome conoonanow.e sutes Management Analysis of Operations c = b " IIANC OF*: CORPORATION's 1987 results melude one 1987 and two INTEREST EXPENSE 1 1985 af6hations that wre not included m 19M6 results twcause ci Tutalinterest noense derl'ned for both the second quarter and 6rst the use of purchaw accountmg. a methnd which combines the com. panies' results frorn the merger date forwaril. All appropriate prior sin rnonths of 1987 comt ared to the enor year. ka es paid for all - -_. gnterest bearing liabilities fell 101 and 119 buts points with the mar-
.s, ' senud mformaison was restated for ses 19M6 and two nrst surter het betwen comparable three and sin month per.ods of 1967 and s}
1987 afhhatums accounted kr as poolmas of interests. a method 4sr.
. ;y.
e whsch assumes the two companies were comhmed for all perkas presented. Another second guarter 19't7 atriliation was accounted for 19M6 Total average enterest twaring habihtees rose $ts40 milhon and
$620 mdhon m the ume companion.
Mapor growth occurred m awrage core depout balances. Increaws
' y' ~
d l l ([ 3 as a puohng of interests but prior penads' hnancul mformanon mas m excess of $1.1 bethon of average balances wre recorded m mier:st f.b
' not restated due to smmateruhtv. Thew afhhations are descnbed m and non-mterest bearing demand and regular and annwy anarket l
't '
greater detasi m Note 3 on Page 5. Income on earnmg assets subert savmss m both three and sin month penods' compansons Isee hble to either a reduced or zero rate of federal mcome las es presented on 2). New simph6ed 6nterest twarmi demand and money market saw 47
^ t a fully tazat4 eeuwalent bans which is computed by dwidmg the ants products with twred pncrng that were mtroduced m 19% haw enempt encome by one mmus the incremental federal income las rate of 40% m 1957 and 46% en 1986.
successfully attracted sspns6 cant additioruJ deposits. The Corpora. '[- l' teons umque method of lucal pncmg and gahenng of deposes pro. wides an ef6cient fundmg mechanism for those afhhates with high N - DffEREST INC00lE r loan demand. It also gms the deposit generators lendmg oppor-Decioning interest rates and the effect of a lower federal maramat tumtws beyond their local market which benc6ts the Corporatsun d
'v income tan rate in 1982 (for corwertmg to fully taxable eeuwalerd i basaal combined to produce declarus in total mierest income for h a whole.
l both the thrw and ses month penods ended June 30.1967 compared to 1936. M2
- I A signi6 cant shift in the earnmd asset mis has occurred owe the DEPOSIT Git 0%TH ANALYSIS b' twelw months. Average total bns and leases hm mereased billenn. or 12.9%. for both three and ses month compansons.
the same tsme, average short4erm emestment balances have gg At int,w was gassed Quarser Change Sts Heathe Chmage k_ l'!- -
~' dechned approximately $400 milhon (see Table it Drwing the bn growth are mcreaus of 19% for commercul loans and m excess of h h 20% for mstallment hns and 6nancing leases. The rise m awrage .
% p ,,, w p,,,,,, '
crede card balances occurred despite the March 31.19M7 sale to an Batanee Chige th Chunde saammin mammmmes summmen -
. unrelated third party of an additional 1100 msthon or loans to num-Demand-noninterest bearms 5 166 th 8 213 th .f 7 -
tain an approprute nun of retail and wholesale loans. Sagni ficant 273 g M).5 fourth quarter 1966 auto loan actraty coninhuted most to the 1500 Demand.inentest luarms sannes 331 689 215 34a 691 29.5 22.1 f@M- ' "_ milhon merease en mstallment Wns. The Corporation's emphasis Monry market CD) 0 34i s4As 0 44) f 47.11
?M on home equity lendmg products has added sigmficant balances CD's $100.000 and over 13261 tie.71 C92 0546 *
'+ owe the past twelve months. Other tune depouts
% * ;q[', Ttia general mterest rate dechne owr the past twehe months and the change m the margmal federal mcome tan rate caur ed the ywid healdepose growth ese s s!3 t.6s 4M a14i 5 700 CJs 56%
> 'y.J jy, en total earnmg assets to dechne from 12.05% and 12.28% en the 'f M' %r second quarter and the first six months W 1986 to 11.14% and 1116% WNDS MICTM
*""' @h .,
n, - in the second guarter and hrst sin months of 1987. The lower 40% snargmal mcome tan rate for IWL7 resulted m an 18 and 19 basis The wry close monitored net irwerest margin increased to and 7 basis points m h three and sas month compansons of 1987 to
,f[g:
V pomt decime for the three and sin month penuds endma June 30. J '@ 19dti tsee Me 31. This 6ncrease would tw lit and 19 basis points ' ' y%e 1987. Since the taxablir equwalent ywids are a pro forma calculation. higher if the impact of the lower 40% federalincome tax rate is not e' r & they do not haw any impact on the true economic gwid to the Cor. considered m corder to make the companaons more rneanmaful. P; r # .7
' og/ g.
paration. Most portfolio yields traded leer m 1964 as rates in This margin improvement comes from sharp mereases m higher - i e'Y prneral fell betwnn the penods, margm retail lendmg. decimes in mterest rates paad on deposits that -
.e ;
outpaced the decimme loan rates and lowered usage c( more expen-7, J Table I sm large denommaten deposits. 4
.y %n in the wcond guarter of 1967. the Corporation recorded a one-EARNING ASSET Git 0%TH ANALYSIS hme pronsson of $53 milhon, prmunty to increau its res rws to 6~
3937 eenspured as 1944 l'nuthensi WW h stesshe more than 55% of the loan exposure to lesser dewtoped countrws tLDC'sl. flecent detenoration m these world markets and industry ? 4* h@" 7 = 8-Chasse - Chemer m1de recognition of the problem meet considerations m the special ,m to in resern estabhshed to cowr espected losses on the planned sale of '.W Amerige purent Amorese perevet these aswts that reprewnt J4 of total loans and leases. As a result tataare Chance salance W@% N
" " " " " " """' Chaser "
of this special pronsum. the Corporation's rescrw for credit losses Jumped 51 taas pomts to 1.79% from the L28% at June 30.19N6. I /]-
"=uss n I".*m'"d C ermi heal estate
""*"' i m H6 i9. i n, 08:
""i.3 H el A
,,o ll, mean,mgful,m,,c,asures
, , , , , , oso,, o, , of,,,o c,r,ed,it,,qu,a,hty - h, e,o,,, ,, a,so , showed r,m,prowme,n,t u
W; w y instaHment, met Crede card W SS 22J 44 SM 82 m dollars despite a 15% merease 6n total loans and leases. Loans delm. 66 vluent ows 90 days decreased $23 mdimn in the same penad to Just
.47% c( June MI 1987 total loans and leases. het charge offs for the Mf y T.i
? $4;y wcond quaNH WHe just Wo. M basas pmnu imH than N p her knens and leairs t 6 1i Q is w steun .es s a.d Short4enn sweetmems es i,
co W7i i2 C2., 642 ll u.5 n. hid eersing asset growth $8IG 62% 44331
$ 913 647.56 6.3%
y?g
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9
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J .'. hble 3 Thble 5
~' '
FUNDS FUNCTION ANALYSIS *8' OTHt.R INCOME AND EAPENSE
SUMMARY
Suhsuaands) I"U' d For the 64s 8lanthe Endled June 30. 54s Moses
.V '
. 19e7 19ne End6ag g er g er . Jue* 38. pmeg asern Aserage g, esg g,,,,,
19R7 summe 1 9864 ammme Change summmme d i Amsone Assata Amoune Asues Ouwr inssew twiwimg munsats a summanus summmmme mammmmune 'me- transa:wmt
, inarne en earnmg assets kW.Js6 il 16% 587t' !Je 12.2tm income from nduciary acimius i 23 8 $ 20 7 15.os
',s .
inervest espense . 405 362 5.3m 465 556 6 57 Card procesama and serme mcorne 47J 42 9 11 4 m D"I'O -;- list inesseet insens 434.9n4 $ fa 444.570 same charan on deressi accounts 31 2 28.3 10 2 th, f.b Pronsson for luan ang 531 Mucellanrous income 34 1 30 4 12J t.7"E .' lease lasses -115 Sie 1 53 6n 762 A6 1stal ester lassaw st36 9 5122.3 ilM ,
- 53ts.4A4
, Itut funds Immeetse . 4 25% $343 lui 4 85t"
# Other enesmes:
9 Salerws and re!ated costs $1514 11374 10.2 % 4 L81WIDffY . het eccupancy apense la t 14.7 13 3 4 The Corporatsc4 June 30.19f17 net short.trem assets er *on books Eempment essunw 13.8 12.7 8.7 4 lequedsty' dechned shghtly en suond guarter 19tG tiev Table 4). Depmasten and artiseen Mh81'ns and dmlopment 203 143 to 6 %g Largeliabihty dependence ended the guarter at 20.34% of net earn. to 93 23 . Ing assets. within the Corporation) 25% pohc) hmst and Icmer than Outseer sumn a.id i mmed 34 9 30 3 12 3 ;9 ' l 1 the March 31.1967 ngure. Communicate and Iranspectation 254 24.8 62 i hare oths= than encome and perroll 13.9 11.4 21.9 gg, 4 Other esponses $1.0 3o 4 IJ t weas seher- --smJ sm i 9w w [M 4 LIQUIDITY aseraos ! 47 StanNamnst Setoed Aaaaallasd est other espeese j q? 3 Jens St. 1967 Starcti 31, Its? Quare,, 1987 as a poveset of enrage anests 2.17% 2.13 % On kuuka liquidity NET INCOME AND STOCMIOLDER$' EQUITY g/ Earams assets net af money markeg While net encome and net mcome per share dipped in the second s a snuestments R$.059 14.543 14.837 quarter tif 1967, third and fourth quarter 6gures are espec'ed to MP
,. Jrt ,
Large hattelses show improwment over prior year results. El full year LM7 results I I
- l et naimnal market habitan IJ79 ljlg should still be abow thoae of 1986. In the second quarter of 1987.
W As a percent of net earnag assets 1.333 A 85% 9 48 % 4.seg the convertible Series A Preferred shares assued en 1983 were called M[i; c D' fatal net larse habihins As a pment of net earnmg ansets S 3.063 203t%
$ 3413 $ 3.os6 for udempton. As a ruult all but approssmately 8.000 shares of the .l} )
20.72 % 20.30% 968.160 shares were converted to common stock wtuch roulted in is ;. ' l .
, the absuance of an additional 3.138.000 common atares in the sec. &
1 OfttER INCOME. 0THER EXPENSE AND FEDEllAL INCOME In1ES ond guarter. See Table 6 for an analysis of changes in net income per common share. *$
,M j 1
%, 7 . All categorws of other mcome grew at least 10% from the 6rst .%gs L
$ henths of 126 to 1987. outtacma the 9 6% rise in total othe,sd Table 6
+y-espenses (see Table 5L lietained servicmg on contmued sales of i.ty l7 g
credit card loans generates increawd card processing income while ANALYSIS OF NET LNCOME PER COMMON SilARE S 1
*y, mamtament appropriate loan lewls. Increased fee ancome from new 'n '
Sossed
' wr .
and espanded mvestment programs. brokerage actrnty. mternational Quarter Sie Meeske : M.M ' Jr
. trade facihtatmg. mortgage originaten and servicmg and trawl musui ummuus 3'"
ch' % agency activsty cauwd most of trw 12% ancrease m rmacellaneous he inceen,sveinsbes e asemen i,y rg; income. _ 6 ended 3. , fgf The Corporation) efforts to control expenses tema'ed total expense June 3e.19es $35 $1.07
- 1 I
s,; N'*1 to a 9.6% ancrease overaK for the 6rst sin months of 1967 owr 19146. Increase 4decret from chae enin; . '/d . 1htal expenses of the Indiana based af6 hates rose at a substantially lower rate than the encrease m mcome as cost control programs are l'armns asset volume het miemt matam 25
.07 33
.38
( P'ommn for loan and ime imes N
%.* dew vnented. additional other mcume sources are bem2 and dupbcate operatams are consohdated. Omse suome. escluding secuen wo 1398 ( 3 06 K
a M)t The year +Hiate provisen for federal mcome taxes has itsen from traruartens .04 .36 M
% 12J7% en 1986 to 22.25% en IM7 because arowth m tasable earnmg Secur:ters transactions .01 a.oss y Ar assets mon than offset the 6% dechne en the meremental tan rate. Othu apense Ol$3 4.386 -: ;/J Strong loan growth en the fourth quarter of 1986 and the 6rst ash Pro-n lar interal encome tases A2 009:
9gg months of IM7 bas been primardy concentrued an taxable commer. Canema of predemd stak .et et w , ciel and eetad areas. At the same time. runoff without replacement y%, af tas caempt assets has occurred, as mdscaded by a 20% decime m belances from Jurw 30.19416 to 1981* Tas law changes how made buying enempt assets less attractrve and dechning mterest rates have suhtutal (Nnge en amase remmun sham M 6mem 6 toyommes JI e oil J4 tou ? *'N - 5 .N, M."'N M -~~'d W precipitates more bond calls than expected. One program to control the rsse an the effect w taa du-miIW7 mwdves the sale of collat. #""' IE N QF[, J. eraliasd mortgage loans of accured af6 hates. These sales produce
'N' gpt pg) securstws gems to the Corporation while generating tax losses at euen an =swa se.
'" W gg accounting, were fiscounted at the merger date to produce muchthe af61satt holdm the low coupon assets that because ky, ~ of purchase * * * *
. g hagier canachdated yields to the Corporation af ter rte merset. E
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" RIBCUffv5 lehn B,INCoy John F. Fisher William C. letter
( OFFICEa8 Ctwrma Sensor Vice President Controller i '.[ [k') PYank E. McKinney. Jr. Pnsdent Wuliam P. Boardman Vice Pres 4ent Ceerge R. L. Meiling Treasurer Raman J, Cerber R. Patrkk Handley I gy Earcutrw Vice Premdent Vice Pres # dent n , i I l {= 17 l i
\ DIRECTORS W&s. M. Bennett Ctwirman .
John 8. McCoy Chairman BANK ONE. IMYTON. NA BANC ONE CORPOMTION g h Daniel C. Iloone W C. McCoy ( i'. w ' Dimetor BANK ONE. DGT3N. NA Chairman. Earcuuve Committee BANC ONE CORPORATION t' t Wulassa t Case" .
" . Partner Frank E. McKinnes Jr.
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W tyman Case Enterprises 14enard K. Firestone" President
. SANC ONE CORPORATION r v" Private Irmstot Rene C. McPherson
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- i W W Calbreath*
Corporate Director i e .".
, Owner Robert H. PvAin
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John W Calbreath & Company Chairrnan BANK ONE. COWMBUS. NA ' ? i . "b John R. Hall h* .lp , Chairman & Chsef Esecutive Officer Robert D. Mher . .j p
" Qf ' Ashlared Oil. Inc. Chairman & Chsef Esecutrw Omcer Cardmal Dutributen. Inc. ^
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,,y g John F. Haven:" .q Retired Chairmao William K. Mstwater" gj h,p';;. " IMNC ONE CORNMTiON Presedent
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s% Wstwater Company R. Edward H. Jennings j '
, g.&3 Presideat The Ohio State Uniwruty leslie H.W ner Chairman i
The limited. Inc. John W Kessler A
, , , Chairman
- Honosary Director '
( John W Kessler Company " Dweetor Emeritus Virginia W Kettering" f[d6 b$ c Chairman . ,ha. C.F. Kettenna. ine {6, r; IC.N} ., L*.}N w . M x bg p.. .a g
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a SANC OIN 00APORATIcef and Sutmase<es l B415 ONIO 4 N.. APFtlJAft$ SANK ONE. AKRON. NA Bruce S. Bailey a
*' fI* BANK ONE. ALLIANCE. NA i Andrew M. Marhmky
. [$ % RANK ONE. ASHLAND BANK ONE. ATHENS, NA Robert O. Stnne
- 8. T. Crowr. Jr.
pt IMNK ONE. BELLAIRE. NA r. K. IMNK ONE. CAMllRIDCE. NA Robert L. Byers James F. Imes
- - /y BANK ONE. CLt3TIAND. NA Karen N. Horn BANK ONE. COLL'MBL's. NA Donald L. McWhorter p(-
7 ., IMNK ONE. COSHOCTON. NA Jeffrey K. Urtun BANK ONE. DAYTON NA Willam M. Bennett i
+* BANK ?NE. D(ATR. NA BANK ONE. EASTERN OHIO, NA Carl E. Pusocra 4 M
RANK ONE. FREMONT, NA Jarnes A. Baker Rachard E. Conkim p
- i. J :- 8ANK ONE. LIMA NA b.
1 y IMNK ONE. MANSF1 Elm Cilbert J. Mllman Thomas E. HongH.i Q'1 'f '
,#. BANK ONE. MARION r Stanley N. Ponsmas ji- SANK ONE. MIDDLETUWN
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R. S. Matherwas BANK ONE. MILFDRO. NA .M-John B. Burtchaell. Jr. 4-SANK ONE, PORTSNOLTH NA John D. O'Shea E BANK ONE. SIDNEY. NA Jerome A. %gnr,t. fr. BANK ONE. WAPAKONETA. NA liebest C. liets %_ SANK ONE, MOOSTER, NA %- Itabert C. Seiwert f) 44 BANK ONE TRUST COMPANY. NA INDIANA C.Thon as Rice T
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3 4' SANC ONE INDIANA CORPORATION Frank E. McKmney Jr. # p-
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7 BANK ONE,8tDOMINCTON. NA BANM ONE. CARMEL BANK ONE. CRAWWNDSW11E, NA Charles A. Zebendon James M. Bagnoli Donald E. K4: hens ' f[i 47 BANK ONE. ELKHART Cerald K. Pilmore T '5N 4 DANK ONE. FRANK!JN BANK ONE. INDIANAPOUS. NA Patrick E. C1.esebrough Joseph D. Bamatta. Jr. MM' f' l BANK ONE. LAFAYETTE. NA Stanley J. Calderon .;;
- BANK ONE. MARION. INDIANA. NA Homer C. Wilson AANK ONE. MERRIL1FillI. NA James L. Dandurared
#.M BANK ONE PLAINFIE!D. NA larry D. Summers .y.i R*k, MICHICAN ,y,g BANK ONE, EAST LANSING H. James Fitzgerald
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.R KENruCKy Bemard A. Sikorsk!
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BANK ONE. LEXINCTON. NA James S. Mahc, it! MW-M' *~
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n.4.- 5 NONBANK .ev j% AFFILIATES BANC ONE BAOKEILACE CORPORATION BANC ONE CREDIT CORPORAT60N 3.AI" A
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- M IMNC ONE FINANCIAL SERYliT.S. INC.
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': rl;r IMNC Oh'E LEASING CORPORAti9N IMNC ONE MORTGACE CORPORATION QJ y ef l
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PENDfMC AFFILIATES Charter 17 Bancorp. lac. IRachmond, indanal s$ i?N The Northwest National Bank (Rensselaer. Inderal N. . The Manne Corporanon (Milwaukee, Wucorum) Ydr
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{gh$t h#) g CONSENT OF INDEPENDENT ACCOUNTANTS
$ We hereby consent to the incorporation by reference in the Prospectus constituting part of the Registration Statement on Form S-3 (No. 31-15702) of Banc One Corpor-ation of our report dated January 26, 1987 relating to the consolidated financial statements of The Marine Corporation, which appears in this Current Report on Form 10-Q of Banc One Corporation dated August 5, 1987. j i
d$f-., . PRICE WATERHOUSE Milwaukee, Wisconsin ! l August 4, 1987
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$ECURIT."ES AND EXCHAdCE Cottits!Det Washington. D.C.
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FH M 10-K ) e \ ANNUAL REPORT NR$t..sf TO SECTION 13 OR 15(d) CT THE SECa!!IES r;CRANCE ACT OF 1934
" )
For the fiscal year ent;ed December 31. 1986 commission file number: 0-990 TRE MARINE CORPORATION (Exact name of registrant as specified in its chteterl WISCONSIN (State or other jurisdiction of 39 0963011 incorporation or organization) (E.R.S. Employer . Identification No.) 111 MILVAt*KEE, EAST WISCONSIN WISCONSIN AVENUK. P.O. BOE 481 L (Address of principal executava offices) _
$3201 (Eip Code)
Registrant's telephone neber, including area code.
- __ 414-765-3000 Securities registered pursuant to faction 12 (b) of the Acts NONE 'l '
Securities registered pursuant to Section 12 (g) of the Acts
- commoo Stock, par value $2.50 per share (Title of Class)
[ , y Cumu1stive Convertible Preferred Stock, par value $1 per share
.. (Titis of Class)
J g Indicate by check mark whether che registrant (1) has filed all b reports required to be filed by Section 13 or 15(d) of the Securities Exchange , Act of 1934 during the ptscoding 12 sonths (or for such shorter period that the a d p 4 filing requirements for the past 90 days, registrant var required to file such esports), and (2 b ' Tes E No Y The aggregate market value of the voting Common Stock held by non-3 af filiates of the Registrant, based upon the closing price of the Common Stock on the NASDAQ National Market on March 6, 1987 was $268.515.191. The sagte- -- l i gate market value of the voting Cumulative Convertible Preferred Stock held by j { non-affiliates cannot be determined because there have been no reported sales of such class of stock to date. ; j 3 par value $2.50 per share, as of March 6,1987 was 6.317.878.The number of shares e e
- . ? DOCUMENTS INCORPORATED BY RETEREEM sre listed on Pages 2-3 1 7 The index to Exhibits is set forth on pages 20 through 22 i N -1
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Uy DOCLHINTS INCORPORATED BY REFERENCE PART I t O[ *. ltes 1 gusiness ! '1 Pages 16 through 19, 36 through 45 t h and 25 af Registrant's 1986 Annual , 1 I W Ites 3 Legal Proceedings Report to Shareholders. ' i h Page 32 of Registrant's 1966 (< Itse & Annual Report to Shareholders. g Submission of Matters to a Vote of Security Eolders Not applicable, L PART !! i gy Ites 5
\ <p:, Market for the Registrant's
_q Common stock and Related Pages ., 16, 29 through 31, 39 Security Holder Mattere and 68 of Registrent's 1986
~
Annual Report to Shareholders. ltes 4 J K, Selectsd Financial Data Papa 33 and 36 through 41 of h kegistrant's 1986 Annua] Report
$. to Shareholders.
pg Item 7 ^
~
Hanagesent's Discussion sad Analysis of Finantist Pages 16 through 19 and 36 threngh fjg &$ of Registrant's l'86 Annual
;.p . - Cond? tion and Results of Report to Shareholde.s. - >
Operations _- , Ites 8 - , Financial Statements and
~,. Supplementary Data 4o Financial States 4nts Pages 20 through 15 cf Regie-g ,. j C*-
;4 trant's 19f6 Ar.nps1 Report to Y,y' -
Sharahciders. Il *
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.M Supplementary Financial Information Pages 33 sad 36 through 41 of
, ['
Registrant's 1986 Annual Report h) y*4.. to Shareholders. ! y X PA%T !!! ,p .
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' Ites 10 Directors end Executive Pages 2 throuch 5 of Regie-Offitets of the e.egistrant trant's Prory Statement for ,
April 22, 19g7 Annual Meeting of 1'
@;, Shareholders.
h Ites !! taceutive Cooperation , Pages 6 thraugh 9 and page 15
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- of Registrant's Prr,xy Statement -*-;
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.for April 22, 1957 Annual Metting of Shareholders, g
.((h Item 12 Security ownership of w
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ee Annual Meeting of Shareholders. f 4. M n 2 i I Q% . j
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A Pages 26 and 27 of Registrant's 1986 Annual Report to Shareholders. j[' W ,k f
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CENERAL-N fl g g 4,
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, ri Registrant traces its origins to 1839.
7 ,/. National Exchange Bank, was formed. Marinee and Fire Insurance Cnepany, '
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as Marine Bank, National Association, and three other ban
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k.Y') , industrialized and populous area of the state. Registrant is located in s
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9 its industrial, commercial and financial center.ters y and of Registrant and its dN.1T north of 625,000, Chicago on Laka Michigan, Milwaukee has a population oflocated 90 miles ,- P*Q;jgp making it the 17th largest city in the United States necropolitan eres has a population of approximately1,400.000 andIts F q,
,g r ~ approminately 40% of the state's populatiou resides within a $0 mile radius of Milwaukee. ,,ssk 4
f' e- .
,3 f from approzinately 82.0 billion to approximately $4.1 billion.In th m![*)%
@lp"
- growth has resulted free the acquisition of banks and bank holding This ppQ, companies and from businesa development in the commercial bankingJy area. {
9e ~W-c' gig t
$ygr a there has also been substantial emphasisr-pt. aced Q on developin Qgm,j cial banking business in surrounding states, primarily norrhern Illinois.
gis concentrated in matkat areas served by Registrant's banks. Consumer bankingyG (( ' ', .99 ,'9'D g lr h",L - At September on assets among *
- M,1966, legistrant ranked seventh in size based x approminately 450 banking organizations in the .l 5 g- ,
Chicago.Milwauka, astropolitan area and 17th among the approximately Ng e ),500 banking organizations is the upper midwest sia state geographie g area. g d[
;o- Bank subsidiaries g 4 %-
l' R The follosing tstle sets forth information as of December 31 .- yT:h 1986. with respect to the assets, deposits, loans and shareholder y msm ce equity of Registrant's 22 affiliate banks: [ L I4 ut a
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,- December 38 -986 Bank Assets Deposits ,
,,,, M Equity *
, (esounts in yhousands)
Marine Bank. N.A. s
- g. Marine Bank West $1.695.554 (
635.974 81.144,309 81.041.275 895.043 544.635 (, K Peoples MarAna Bank of Green Bay Marine Bank South, N.A. 281.054 247.689 316.372 45.502 275.563 146.484 20.655 b rine Bank Appleton. N.A. 240.048 153.189 Community State Bank * ,242.090 198.108 21.183 i ? Marine Bank Dane county 214.431 195.826 115.106 21.020 o 199.678 92.341 16.170 Marine First National bank 168,303 150,646 110.700 14.765 Citizens b rina Nations 1 Bank 138,132 86.578 i
.~. i 106,b02 10.705 k rine Bank Southwest, N.A. 104,341 93.811 54,348 8,947 I
' W rins Bank Monroe 95,806 49,022 87,235 7,766 West Bend Marine Bank 40,380 39,449 86.062 6,395 Marine Bank Oshkoeh. W.A. 77,755 55.311 76,018 6,272 b rine Back of 3eaver Dam 66,891 47.696 5,504 74,542 68,315 e b rine National Bank of Neenah 69,857 40,705 4.833 e Fidelity brine Bank 57.424 37.457 4 57.626 4.853 Marine Bank Seymour, N.A. 49.514 33.006 7.833 b rine Bank Campbe11 sport 52.236 47.729 29,399
- 4.133 I
41.001 37,269 p "3- # . Firstar Bank Clintonville. N.A. 31.362 26.689 2.836 k rine Bank 1.arsen 19,839 28.025 15.879 2,682 i Marine Bank freedos 17.925 8.895 1.699 Marine Bank Mequon 16,503 15.163 13,256 9.444 1.117 11.540 11.163 1.628 acquisition consummated on February 20, 1987 . r- DE
, subsidiary banks pay fees for centralized and/or corporate-wideReg c ,.
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_w services of management. Registrant related to the accounting, audit. legal. F functions of the subsidiaries. insurance, marketing, operations and credit review . e these fees, which in 1986 It is anticipated that the payment of ary banks' gr>se revenues equaled approminately 3.0% of the subsidi-C , %* i;k' v111 continue in the future. Registrant b
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by independent third party agencias offering the same "
'# services. b MarineF1ssa.
Marina Bank. National Association also' rents office space in the ' o N 4 Marine Bank. Nations 1 Aamociation CC' Mg'M Corporation's lead bank, was established in 1839.h eine Bank. It is a regional ,. National Asso i commercial bank serving the depository and capital needs of both 9
,g. large and small business enterprises in Wisconsin and elsewhere by ** g
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' granting various types of loans, developing cash aansgement services,
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4 y+.p#, and maintaining demand and time deposit accounts. o.
, g, N.A.'s services to individuals include checking Marine Bank.
accounts, time and
' savings accounts, mortgage loans. installment loans soa credit cards. T
.~
i Marine Bank. N.A. was the third largest bank in Wisconsin and the 240th largest bank in the United States, asasured by deposit g(q, December s at F U ,, It has a loan production office located in Elahurst.31.1986 Illinois serving
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(based on info fr the Chicago and northern 1111acis area.
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s Marine Bank. H.A.'s International Banking Division provides
;'.lc ? import-export and project credits for Wisconsin-based businesses and 7lyc maintains banks. correspondent estationships with approximately 60 foreign f: o' Marine Bank. N.A. has an of fice in Nassau. Sahamas, princ1=
- pally to accept overseas deposits and to provide access to Eurodollar markets Japan. and representative s91ces in Mexico City Mexico and Tokyo.
A
, L' . .; ., lank-Related Subsidiaries .
2 Q
,., ,h In addition to the 22 commercial banks. Registrant owns.
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.s3 directly or indirectly. the following bank-related subsidiaries
# 9.3 Plass Suilding Management Corporation, which owns and operates the
'), Marine g located:Plaza in which Registrant's principal office and lead bank are s
- t
.g; Marine Bankcard Corporation, which provides the credit card #
!M' operations primarily for the Registrant's affiliate banks: Marinebanc
,rMs . Leasing Company Inc.. which acts se agent for Registrant's affiliated $,e,s spa banke in effecting leases of personal propertyg Marine Mortgage 4.
Company Inc., which serves affiliated banks of Registrant in the h.4 procurement of secondary mortgage commitments for conventional [' og. residential sortgages: Marine Bank Services Corporation, which A,dg d.i M ydi , banks and for third parties: operates the data processing facilities for Registrant's affiliated y[ ag The Marine Trust Company. W.A. a y y$, national banking association which engages exclusively in providing
.h* trust and related earvices at Wisconsin offices; Marine Venture j ' ;
l t Capital. Inc., a sas11 business investment coopsey which is licensed er
.J by the U.S. Small Busineas Administration , ? ,
C ,' * ; Marine investment Services
- Corporation which offers discount brokerage servicess and Marine . .
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.1 Tsnancial Services Corporation which provides management services for businesses that have foreign sales corporations.
.pg M
[
"1, Recent Developments h<M J. .? . s On December 16, 1986, Registrant announced that it had entered
[ h: into an agressent to acquire Banco di Rosa (Chicago). an Illinois teek and on February 20. 1987 it consummated the acquisition of j, f$'
' s Community State Bank cf Bloomington. Blocaington. Minnesota. Addi- yy tional information 1986 concerning 3 p 25 of Registrant's Annualthese Re acquisitions is presented on page
g incorporated herein by reference. port to Shareholders which is N'*W t
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, .. At December 31. 1986 )
2.776 officers and non-officer espiRegistrant and its subsidiaries employed J' r equivalent basis). oyees (computed on a full-time c-
)!
$g, l " benefits. and Registrant considers its uployee relations to beEmployees excellent.
2 ar All of the employees of Registrant and its subsidiaries 'J g,,' are non-unione g by Flass Building Management Corporation and ers engaged maintenance and Operation of the Marine Flass. 4,
# in theexcept for
/ Competition
+
gl h 4- The Registrant's two principal competitors both of which are bankReg g( holding companies based in Wisconsin. had total consolidated assets of $7.1 billion and 86.0 billion. respectively, at December 31. 1966, - 4 i f:ap 1 as compared with $4.1 billion for Registrant. Other competitors ! k include local cosesunity banka. money center banks. savings and loan -!
,, "a/ associations, credit unions. consumer finance companies, other L -
l
#7 " financial services institutions. brokers, noney market funds. re-tailers, and other non-bank providers of credit and services.
y ', Registrant anticipates that the United States banking industry will .E experiones continuing deregulation of banking activities, with the M%it result that there will be significantly increased connetition, both geographically a,nd as to product and rate. from both traditional and - non-traditional providers of financial services. /} l ,, f@iT fM M @g .g BANKIriC AND OTEER HCU1ATIONS i ,
? p d Registrant is registered as a bank holding company under the ,M[J !
federal Bank Company Act"). Holding Company Act of 1956. as amended (the " Holding ., ,,
'Q*)e broadThej Holdi 8 . ~ * *dE~
M f of the Federal Reserve fyeten (the " Federal Reserve Board gJA'" powers of supervision asesination and enforcement with respect to ! ) bank holding companies and their subsidiaries, and the authority to g* ' j als for acquisitions of new subsidiaries). approve or deny their proposed hk. activities (includin N@l i tif.I L 8 f9
, Id Under Visconsin law. Registrant is dessed to be engeged in the banking business and is subject to supervision by the Wisconsin p
# Conniasioner of Banking. w,j Registrant may be required to file reports a
;D.
9 and say be subject to examination by the Wisconsin Commissioner of
- Banking and the Minnesota Commissioner of Connerce. y_
g Change in Contrci ..t
,y The Federal Deposit Insurance Act prohibits any person fres y d,g . acquiring control of a bank holding company through the purchase of i voting stock of such bank holding company unless such person gives ,%,v T,g rt the Federal Reserve Board 60 days prior written notice of the pro- yg* -
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^ l y posed acquisition.
.h The Holding Cospany Act prohibits any company from becoming Tederal a bank Reserve Board. holding company without prior approval of the l company is itself dessed to be a bank holding company.Any company which con Regulation of Affiliate Banks k
l }/k federal and state law.. The affiliate banks of Registrant are separately regulated by [ l
% These laws impose requirements on the affili-(Q 3, Tp see banks with respect to reserves against deposits, restrict branch- "h, ing, restrict the types and amounta of loans which may be cad r s*
n.A%s' banka and . e by the restrict the type of investments and other activities cf y"' ~. the banks. [ jf,.
,.e In the federal 11aited or state law.States, banks may be organized under either
., including Marine Bank. W.A., are organized under , eleven federal lawTen of th&0 affiliate -
l Ay and one bank is organised under Mintasota law. affiliated k commercial ban I y charters are supervised and examined by the Comptroller of theThoes with W.E W~ federal y
-9 Currency and may be examined by the Federal Reserve Board.
% Commissioner of Banking.with Wisconsin chatters are supervised and Those g" s #
examined by the
$p bank is su Registrant's Minnesota chartered affiliate 4 e Commerca. pervised and examined by the Minnesota Commissioner of 4%
g
. All of the banks may be examined by the Federal Deposit % ik
{N :.w Federal Deposit Insurance Corporation. Insurance Corporation 'M.. inasmuch as all Interstate and Branch Banking %{r - p_.. k.. , { h a,* 4,, Registrant is presently lialted in the geographic expansion of federal and state laws.its affiliates' basic deposit-taking banking functions .DY.* by both
.y A provision of the Holding Cospany Act ((,#
rj permits the Corporation to acquire a bank in a st.te other than its '/> , g ll,91 home state of Wiscocain only if such other statt has enacted legisla- ,. 9e p* tion specifically allowing such acquisitions.
- f.T Wl N. of Illinois. Ohio. Michigan, Minnesota, and Kentucky have enactedThe neighboring :L- states f '-~
~
legislation allowing such acquisitions on a reciprocal basis. N*d M;;% l# Wisconsin enacted a law effective January 1.1987. which allows g, acquisitions ott a reciprocal basis, with the above sentioned states. 'M ; y$. If Indiana, Missouri and Iowa pass reciprocal 'egislation, they too U 1
~' V 1 lw y ., -
would be eligible for acquisition by Registrant under Wisconsin law. An additional federal statute provides that a nats,nal bank may esta- 9{d W (I I E-Q blish branches only to the extent petuitted by the laws of its home state. f N. * , d
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* ?b Wisconsin places no limits on bank holding company expansion g within the state through acquisition of additional banks. However. ' M. W branching by banks is limited to the county in which the bank's home T - j g[d. . office is lock..d. or to locations outside the county but wittiin 25 miles of the batik's home office. In addition branches cannot be :.i ;,4 g.g -
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opened within 1 1/2 miles of another bank's home office (or 3/t. mile l *& i i 7, g L: $ .' .V ,yy ( lW *
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., : allows it Registrant's current bank ownership s
y instely 70% toofplace branches Wisconsin's in areas of the state which cover population. prox- ap c.k
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- $ Under current Visconsin law, further expansion by RegCattant into the remaining areas of the st t j ae fVpE-can be made through the formation or purchase of additional banks and 4 branching from these new locations. Y.e -
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t sota through the acquisition of additional banks. Minnesota - Q;thi *Nplaces no li 1 Minnesota law limitsoffice, hoes branching by banks to two branches within 25 miles of aN.~ bank's ) r- 3 M- i
< *s Notwithstanding the barriers to interstate expansion of tradi h_
>g .y tional depositateking activities, bank holding companies are autho <
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- s,;.ip variety of activities determined to be " closelyg.crelated" to ba
% Ap%sg the activities which the Federal Reserve Board has e determin d n c
to be closely related to banking are nortgage banking, finance 4%_ company operations and the prosessing and transmitting of financial N-or economic data. Banks themselves also operate on an interstate !
- basis in limited ways through the establishment in other states of :* .
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loan production offices which may make commercial loans without ', ., I Qg. geographic limitation but which may not accept deposits. In addi-
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taries which may perform certain bank services, including limitedti
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.a deposit-taking, as long as their services principally involve inter-J']' ;
national transactions. ; i N
- Monetary Policy y j
7,, ' ' f Monetary policies of governmental regulatory authorities. ug ; v4- primarily the Federal Reestre Board, have a significant effect on the + operating results of bank holding companies and their subsidiary banks. g@g
';-g bank credit. The Federal Reserve Board regulsees the national supply of .p g J- g,a w
>3 affected the operating results of commercial banks in the r, past g j andFederal M ~ are expected to concinue to do so in the future. The long range & '
- 4 4
effect of enanging Federal Reserve Board monetary policies, which will be dependent on a variety of factors, make it difficult to {,p ; g predict bank the total holding effect of such policies on earnings of banks and compantes. J l
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ne a er,perties 4 l i l [ genk, M.A. are located in the Marine Plass atRegistrant's executive offices l J ** Avenue. Milwaukee, Wisconsin. 111 East Visconsin
- Marine Plaza is a 22-story building 1
[(,-- constructed in 1962 tion, a bank-related and owned subsidiary by Plass Building Management Corpors=s7 of Registrant, !
& f Management Corporation also owns the adjacent 11-level parkingplaza Building '
i l 4 g' pavilion, which is leased to an independent operstor. Registrant and c" Marine Bank. N.A. currently occupy approximately eight efloors of th i 1 1 Marine Flasa, with the balance being 1 steed to others. The Marine f~'fb,g Plass is subject to a mortgages the related sortgage note provides forprincipal of interestandat interest the ratetoof 5 Slat per annus and quarterly payments 1994 trincipsi of this mortgage was 83.9 At December 31. 1936, the unpaid 4 million. 3 i
, c. At December 31, 1936, M-
;k! Plaza and the 75 banking premises owned by Registrant's affiliatethe aggreg
' ,# banks includingand used as banking offices was approximately 834.9 million equipment. "
%rw- buildings used as banking offices. Registrant's affilists banks lease four of the Rental payments for leases of banking 1936. premises and operating equipment aggregated $3.0 million in k t Registrant. is a party to a lease agreesent, guaranteed h- by Regis-e y ;i
- owned by Market Strset Associates.trent, wi:h Market Street kaaociates to lease spe Tf ~{ July 31, 1996, The lease is for a term ending with two covers approximately optione of five additional years orth, and 123,000
$7.67 per square foot including leasehold improvements. square feet ofy space at a base rate 1
.tc.e Occupancy !
under the lease began in January 1932. ,y ' - i ,. - s te f ,_ w 4 9 ' ..? Nn g
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Part II
.C Ites 9.
.,e Disaareemente en Accountina and Financial Disclosure -
None. 4 Part III
.Ites 10.
Directors and Executive Officers of the Resistrant (a) Directors of Registrant A list of all Directoss' names, ages, position, term of office .!
,6 j- and a description of any arrangements or conttacts between then
<L' and the Registrant is reported on pages 3 through 3 and 9 _
O - through 12 ofby Registrant's rated herein reference. 1987 Proxy Statement and is incorpo- ____
,t' - ,
-[j. To the best of Registrant's knowledge there are no legal pro- y' ' '
9t coadings which occurred during the past five years which are r material to the evaluation of any Director. (, (b) Executive Officers of the Registrant t N,sj All executive officers of Registrant, showing name, age, all .t 4 positions and offices of Registrant for the past five yeare and y year first elected as executive officer of Registrant, are $* 4,y, Q'* b_
, f' listed on pages 12 and 13. There are no family relationships , .
.l*s~ . among them, all their terms of cffice expire at the nekt annual '
-$ meeting of directors following the annual meeting of sharehold- -
g era in April, 1937, and there are no arrangement or understand- .
*2 ings among any of them and any other person pursuant to which he f c_
('*! was elected se an officer. To the best of Regietrant's knowl- , ' " . edge, there are no legal proceedings which occurred during the i a past five years which are asterial to the evaluation of any P ~ officer. '^-
.e a To the best of Registrant's it.rowledge, during the year 1986 and '
,'M to date, there have been no disagreements at Registrant's v shareholder meetings not any substantial disagreements between
'JS Registran('s directors tod/or officers that would warrant 7,
';
- consideration it, this filing. t S e ,
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Name Poettien Officer of Registrant Age se of ' g7 Since (D 12/31/86 $,k George R. Slater . Chairaan of the Board. Chief Esecutive Of ficer . tad President
, 1976 62 f W1111aa J. Morriesey t Vice Chairman
? 1585 58 Daniel J. Cannon (2)
Forner Freefdent and Chief 0}erating Officer 1981 42 Alex J. Pollock Executive Vice President 1986 43 Ronald C. Baldvia Senior Vice President - Corporate Group 1982 40 Prederick L. Cullen Senior Vice President - Vaukesha Group 1981 39 James W. Eyster Senior GroupVice President - Br.ek Servtces 1984 43 Leila Praser Senior Vice President - Marketing 9 Department 1982 44 i Norman A. Jacobs Senior Trust Vice Group President - Censumer and 1979 49
, lanes C. 1.svo lle 1.j ,
Senior Vice President - Minneapolis Group 1981 # 48
- Jon R. Schumacher j Senior Group Vice President - Southern Wisconsin 1977 49 k [^
i Jon N. Stowe Senior Vice President - Pinancial
-[ -
institutions Group 1964 42 N. Otto H. Wirth Senior Grnup Vice President - Northern Wisconsin 1975 7' [ John P. Hickey, Jr. Vice President - Personnel and Product 51 Management Departments 1986 39
.D ";h i (1)
Principal officere of Registrant are elected by the Board of Directore ff L ,jt for a term from the date of their election to the annual meetteg of the
/ Board of Directore following the next annual meeting of the sharehold-ero of Registrant and until their successors are elected.
y Is (2) h./ - M1. Cannon resigned as Presisent and Chief Operating Officer and as a Director of Registrant on February 19, 1987 Y 4
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_______.,-__..__.----w--- - - - - - - - - - - " - -
4 l 4 M p:n [ l (c Coorge to 1985. R. Slater - Prseident ned Chief Executive Officer of Regist a r nt 1978 p Chairman and Chief Executive officer 1985 to February. 1987 Chief 1987 toExecutive date. Officer and Presideat of Registrant Chairsan. rQ 19;3 to 1985 and February. , I g,
;g .r Bank Group. Inc. 1979 to 19854 Vice Chairman 1985 to d.sta.
of RegistractWilliam n ependence g i J. N Q b 1964 Daniel J. Cennon - President of Marine Bank Services Corporation 1981
~
Vite President of Registrant 1981-1982 Ac
^
Registrant 1982 to 1985 and Senior Vice President of y& 1985 to February. 1987. President and Chief Operating officer of Registrant i WC
# Bank, 1982-1985 Alex J. Pollock - Senior Senior Consultant, Vice Helen. President.
Norton & Company, Continental Illinois National < Vice President and Chief Financial Officer of Registrant, 1985-1986, Senior . s l 1986-1987 President Registrant February,1987 to date.and Chief Opersting Officer of Marine Bank. N. A. and E
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N 1981 Ronald to 1982 C. Baldwin - Vice Free 1 dent Continental Illinois Venture Corporation A l Registrant 1985 Vice President of Registrant 1982 to 1985, Senior Vice President of to date. W 7 Pf
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gI Frederick 1981-1983 L. Cullen - Vice President / Regional Banking of Registrant. Vice President / Personnel of Registrant,
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President of Registrant and Chaituan of Marine Bank West 1985 to date1983 to 1985, Senior s Vice i
)
es. Minneapolis. Minnesota. James W. Eyster - Senior Vice President-Systsas. Norvest Inform 1981-19811 Planning, Marine Bank Services Corporation.1981-1984 Senior Vice President, Research and M M Nd
$f E,14A r
Marine Bank. N.A., July, 1984 to datel Senior Vice of President 'd h
.Mjjl,.j-of Registr to date. 1985 W)
- Leila Traser - Chief Administrator to the Mayor of City of Milwaukee 1977- .Y.-
1982 Vice President of Registrant 1982 to 1985: y?MY y trant 1985 to date end Senior Vice Presidest of Marine 1983Bank to dateSenior N.A., Vice President of :gj-f,'d Regie-p . j
,, Norman A. Jacobs - Senior Vice President of Marine Bank, R. A.,
President W of The Marine Trust Company. N. A. 1980 to 1984 f *79-1982: y a dont of Marine Bank. N.A.. 1980 to date. Executive Viet Presi-1982 to date, and Senior Vice President of Registrant g . N n; tdt -y.h{;__ date: James C. Lavelle var President-.:fExecutive VicetoPresident of Marine Bank. N.A. 1980, to Senior Vice Registrant 1981 date. j/ ~ , $3 ! g date: Jon R. Schumacher - Senior Vice President of Marine Bank. N.A., 1982 to Senior Vice President of Registrant 1978 to data. .
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r 7/D~ The 1984 Boatsens National Bank 1980-1982of St. Louis.Jon n ng.R. Stowe - Senior Vice Pr Presidert of Registrant 3 Senior Vice President 1982of Marine to dateBank. H.A. and Senior ViVice President - of Registrant. 1983 to date. ce
- Otto R. Wirth - Execut' 1'
Senior Vice President of .'egistrant 1978 to date.e ViceN.A.. President 1982 to of Marine Bank. dateg CroupJohn Ltd.: P. Hickey. Jr. - Vice President / Marketing 1981 to 1983 Principal President ofVice President Registrant 1986Private to date.Banking, Martne Bank. N.A. 1983 to 1983 3 Vice
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.k, PART IV e
.- .Ites 14 Exhib F anc e (a) 1. Financial Statements a s
thereon of Price Waterhouse dated January 16. L967. appearing on poses rated by reference in this Form 10-K With Annual Report.through the exception of the o- 35 of the accompan aforementioned information and the information incorporated in Itges 1 through 8 and as Itse a part of 13. thisthe 1986 Annual Report to Shareholders is not to be deemed filed report. ! 1986 ANNUAL REPORT __ REFERENCE Consolidated statements of condition. . . . . 20 l Consolidated statements of incese . . . . . . 21 Consolidered statements of chansee in l, stockholders' equity. . . . . . . . . . . . . 22 1 l' . Consolidated statements of changes in ' financial position. . . . . . . . . . . . . . 23 y .i m
- Notes to consolidated financial statoesnts. . . 24 g ,[F Parent Company statements of condition. . . . . 34 4i l' Parent Company statements of income . . . . . . 34 A'
Parent Company statements of changes in 'b financial position. . . . . . . . . . . . . . 35 m .M l i Report of Independent Accountants . . . . . . . 35 g i 2.
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Financial Statement Schedules Schedules have been omitted because they are act applicable or Y h the required information is shown in the financial statements or notes therste .' s-i $1. s i s \t O y s R, 4 Independent Accountants' Consent to Incorporation by #. 6 81 Reference in Forms 5-3 and S-8. Independent Accountants' opinion on Tota 11-K, The 97 Marine Savings & Profit Sharing Plan. M' ",4
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- 3. Exhibits e
*W- (10)(17) 44 ;
_..e Agreement Daniel J.made February 19, 1987 between the Registrant and Cannon. 23 l (13) Annual Report to Shareholders for the year ended December 31, 1986, t , 28 l7 l (22) Subsidiaries re Registrant. 80 (14) F Consent of Independent Accountants I ' 81 (28) 1
, Form 11-K Sharing Plan.Annual Report - The Marine Savinge & Profic 82 '
(b) Reports en Fors 8-K I ! e l
. A Fors 8-E Current Report dated January 14. 1997 die. l closed that the Registrant sold 222.223 shares of ite .!
conson stock to Primary Capital Investore C.V. for .
,i 810,000.035 in a private cronsaction. i A Form 6-K Current Report dated March 4,1987 disclosed 3
h
. that .#n February 19. 1987 Daniel J. Cannon resigned as
, Pre'sident and Chief Operating Officer and as a director JM of Registrant and Marine Bank. N.A. Ai Chairman and Chief Executive Officer ofGeorge R. Slater.
gistrant was I . ;jd '; l . elected to serve Officer of Registrant. also se President and Chief Operating , .(i N) Ales J. Pollock was elected to .3 ' ',;I I! i {eg . ths office of Executive Vice President of Registrant. g) j' h~#
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g;t +-h9 , \ 2-x [ SICHATURES-i #E Ii ' $[/f W {* .g Pursuar.t to the requirements of Section 13 or 15(d) of the Securities F Exchange Act of 1934. the kegistrant has duly caused this report to be si ued on its behalf by the undersig7ed, thereunto dhly authorised. F ThE MARINE cogponArgo, f f -
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ly: _/s/ Ceorae R. Slater George R. Sister , Chairman and Chief Executive officer
- f?
February 19, 1987 M. y L ATTEST: . /s / Frances C. Smyth , Frances G. Smyth is . Secretary
= -
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Pursuant to requirements of the Securities Exchange Act of 1934, this . 2 4 ' report has been signed below by the following persons on behsif of the Regie- i
'.. ? trant and in the capacities and os, the dates indicated. . k 6 .) l 1' l ,
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/s/ Cserne R. Slater s; a
., .r . George R. Slater Chairsea und Chief February 19, 1987 ^
N Eastusive officer - ~ - 2- (Principal Execu-tive officer) g i ,., ,. . .. 111e
- f t i John w. Auis
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, /s/ Charles J. Aschauer. Jr. Director February 19, 1987
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Frederick E. Baer Director February 19. 1987
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,'j; __/e/ Villies M. Berry William H. Berry -Director February 19. 1987 e
B-4 gl h/ Robert C. Buchanan Director Robert C. Suchanan , February 19. 198' - l _/s/ Frank C. DeCuire Director g-i Frank C. DeGuire February 19. 1987 ,a
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_/s/ John R. Ladish 4 .Y [ John H. Ladish Director February 19, 1987 IM
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/s/ Stephen H. Marcus gl$n N Director i e,. 5tephen H. Marcus February 19. 1987 q, .
, s. ~ 1- ive i./- _ /s/ W1111as J. Morrieser Director .. a William J. Morrissey February 19. 1987 f. g PEldq yhp .. ,, Z V
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- _/s/ Telet M. Othman Director g, Talat M. Othman February 19, 1987 j'g-41 r 'J
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, _/s/ Morrie W. Reid Director p ' 'y Iwrris W. Reid February 19. 1987
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54
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./s/ Frederick P. Stratten. Jr.
Frederick P. Stratton. Jr. Director February 19, 1987 m jjf 4*,3 .i j;/;g D Wr
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--- Donald Taylor Director .
February 19, 1987
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/s/ Alex J. Pollock Alex J. Pollock Senior Vice Presi- February 19, 1987 dont (Principal Financial Officer)
/s/ Clan F. Meelowskt [
Clas F. Maslowski Vice President February 19. 1987 and Controller < (Principal Account-ing officer) [, r !l l t
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TRE MARINE CORPORATION REPORT ON FORM 10-K FOR THE YEAA ENDED DgCEMBER
- 31. 1936 INDER TO EINIBITS l
(3) (1) Amended and Restated Articles of Incorporation of tesistrant filed with the Registrant's Form 10-Q for thereference. by guarter ended June 30, 1986 and incorporated herein (3) (2) ** By-Leve of Registraat as amended te date filed with 1 Registrant's Registration Statement on Form g-6 (File No. 0 3'
~~ 2-90887) and tacorporated herein by reference.
l (4) No exhibits are being filed with respect to long-tets debt of Registraat because the total enount of debt outstanding i' I thereunder does not escoed 10 percent of the total aseeto e , of Registrant and its subsidiaries on a consolidated basis. Regietreat agrees to furnish copies of all such agreements i to the Commission upon request. (10) ( l * (1) First Amendment of Lease, dated January 1,1984, between Registraat and C. Re11emen Brewing Company, lac.. esscessor in interest to Fabet Brewing Company, filed with Regis-( trant's Form 10-Q for the quarter evidad June 30, 1984 and l incorporated herein by reference. (10) (2) Amended 21, Noromber and1974 Restated bassement !acer.tive plan adopted sad amended threesh February 19, 1981, filed with herois by Registrant's reference. 1980 Form 10-R and incorporated (10) (3) Agresseet made k rch 1, 1976 betwees b rine National Exchange sank and coorse 1. slater, filed as Eskihit l 6(5)(b) to Registrant's Registration Statement on Form S-14
- i (File No. 2 66142) cod incorporated herein by reference. .
(10) (4) g Agreement made March 1,1979 between Registrant and George R. Stater filed as Exhibic 6(3) (1) to Registrent's Regis-tration Statement incorporated hereinonbyFors 5-14 (File No. 2-46142) and reference. j
'~ (10) (5) 1977 Stock option Flan, filed se Exhibit 1 (c) to Registrant's Registration Statement on Torn S-8 (File No.
- 2-51072) and incorporated herein by reference. d' (10) (6) 1981 Stock option Flan, filed with Registrant's Registra-
- tion Statement on Tora 5-8 (tile No. 33-4523) and incorporated herein by reference.
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. ;y 3, Dividend Reinvestment and Stock option Plan and Poet v c. g. Effective Amendment No. 3 to Registrent's Registration L.V Statement filed
.mg heas 4einForm S-16 on Fors S-3 2-65747)
(File No. and incorporated by reference.
'p * (10) (8) i
- Subsidiary Bank Director Stock Purchase Flan and Poet 3
?' Effective Amendment No. 2 to Registrant's Registration Statement filed se Fors 5-8 (File No. 2-72129) and incorporacud herein by reference.
(10) (9) Contingent Employment Agreement ande February 18. 1982 b-a between Registrant and George 1. Slater, filed with Regie-trent's 1981 Form 10-K u d incorporated herein by referente. (10) (10) p i-/g Form of Contingent Employment Agreement made February 18 1982 between Registrant and certain principal officare of
* ,I, Registrant filed with Registrant's 1981 Fets to-K and incorporated herein by reference.
i;p. (10) (11) j b p,p 's Severance Agreement made February 18, 1982 between Registrant and George R. Sister, filed with Registrant's <
"" M2k' 5 1981 Form 10-E and incorporated herein by reference. I
[, 97 > (10) (12) l j '
; Form of Severance Agressant made February it.1982 between )
a Registrent and certain Principal Officers of Registrant,
> . filed with herein by Registrant's reference. 1981 Totu 10-E and incorporated
( ' !
' (10) (13) .;
l Registrant 8avings & Profit Sharing Flan filed with Fors (; 8-8 (File Wo. 2-90887) and incorporated herein by reference, k%i (10) (14) a qP Securities Purchase Agreement, dated Detober 17. 1983 M g[ between Registrant and Primary capital Investore C.V. filed with Registrant's Current Report on Forn 8-E dated October &F
- 2 17. 1984 and incorporated herein by reference.
op- (10) (15) Q Standstill Agreement dated October 17. 1983 berveen Registrant and Primary Capital Investore C.V. filed with l 4p Registrant's Current Report on Fors S-K dated October 17,
. 1934 and incorporated herein by reference.
4 b.2S P (10) (16) k Form of toployment Agreseent made June 19. 1984 between 1
- .. Independence and cascain principal officare of Indepen- , !
.% dence, filed with Registrant's Registration Statement on "
qW*4 Foru S-14 (File No. 2-9e126) and incorporated herein by reference. '
$ (IU) 4
( * (17) Agreement made February 19. 1987 between Registrent and Daniel J. Cannon. gE y J f +g d
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':. Annual Report to Security Holdere for the year ended Decembe r 31. 1986.
(22) Subsidiaries re Registtant. (24) Consert of Independent Accountants (25) Power of Attorney (28) Form 11-K Annual Report - The Marine Savings & Profit Sharing Plan, O t
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6 M I I/ SNAM "h..W.+ y a 6Af*ffeD 1986 ANNUALREPOKT P#
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e3%' h\ e f;- (f%' j - l? L l Increased deregulation of unrid 6nancial markets,particularly in dx United Sinin, will result in our aggressively competing in a series ofnew markets not only against our traditional competition, but also against an expanded uniterse of new competitors.
, This environment willprovide signi6 cant opportwrities for institutions that can elfectitely manage change, respond to dx need for sechnologicalinnovation, and take advantage of market opportunities.
As a result ofour fnancial strength siza broadgeographic nettwrk, ditersifed customer hasg highty professional staff and brvad product and service capability, our unique franchise positions l us umil to lead.the competition in this challenging environment. !
., A ct@ %\n % C TW i
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i
CIASE FINANCIAL HIGHLIGHTS
" Perserit.qte lurease t Decrenei 14 n 1985 vs P
1966 t*d 1984 19R5 1946 For she Year (5in thousands) Net Imerest income. 52,996,185 52,748.'30 52,308,49I 9% 19 % Ikwison for Ibssible Loan losses . 595,000 435,000 365,000 37 19 OtherOpmrmg lacorne. 1,743,156 1.315,731 929,584 32 42 Other Opcantig Expenses 3,300,550 2,731,878 2,244,526 21 22 Ner income. 564,818
~
585J63 405,818 4 39 Per C - b re Primary Earniries. 5 6.63 6.39 5 5 4.51 4% 42 % Fully D4:ed Farnirgss . 6.50 6.15 4.32 6 42 CaA Dnh Dect. sed, Anrmally. 2.05 1.90 1.82 % 8 4 Cash Dmdends Decland,Qtunerly . .51% .47% .45 % 8 4 Common 5mckholdm* Epryar Year-end. 52.95 49.19 45.81 8 7 Market Price at Year.crui. 35 % 36 % 23 'b (2) 52 Aversy Shares Outstanding (in chausands) . 79,561 75,240 71,153 6 6 FiemaczalR ' Net income as a Phrocritage d: 1 AwrageToul Assets. .65% .65% .48% -% 35 % Awrape Common Sockholdm' Epiry . 13.2 13.6 10.1 35 (3) Cash Dividends Paid on Common Scock as a Ibcenrape of Net income Applicable to Carnar.m 5 cock . 30.8 29.6 40.3 4 (27) As Year.end(5 in millions) linerest Beanng Depours Placed with Banks 6,224 4,671 5 5 5 4,355 33 % % frnesonent Securwies arulTrading Account Assets . 8,278 7.467 6,600 11 13 Losas. 66,220 61,931 62,003 - P.esene for PossaNe Loan Losses . 1,065 908 761 17 19 Total Assets . 94,766 87,685 86,883 8 1 Depmars . 66,003 61,.s33 59,680 8 3 Long-Term Nomes and Debentures . 2,869 2,806 2,320 2 21 Redeemable Predened Stock. 62 62 62 - - Nmmkw.dk Presmed Stock 602 602 602 - - Common 5cockholders* Egary. 4,280 3,795 3,359 13 13 Capital Racsos at Year.ced Pnmary Caper-l as a Pertencay o(Total Gross Assm 7.0% 6.9% 6.4% 1% 8% Total Capital as a ibcencap of Toca! Gross Assets . 9.3 9.2 8.1 ~ 14 ; 1 I.
RNANOAL CHARTS O l NE f INT E RISTlWC*t t-T4 man.I Eut'isALENs Bass 5 l 1 e mellar. 8 Ownemt h r 1%meira Ofm a g.
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es 440NACOEAL ANDREDLKIDRATI 4 d g tf g, Nff lNf1ME AS A PkhCIN' C10F As F R E,1 TOTAL M AFV M2 COMMON $inCERDfAf f QL> TTY S en meansa e Narlesomr g g ,
$siakinakiers 1+ssrv (KE %
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Fit BAstDiwtads 5 m millams: S Chius Fws ti 9 Commer Bankmg fees " es
- Tmu ik Fabatur, Imestmers hws M leverurumal Busnre fees tJ65 g
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G RIKurt im PausEt LOLN L(r,5Ek PEG 11stNFG CJ WNLObsts AND bitTCnAact OMS e undmans g 8 Resurer b M b b E Pianmun kr Needdr Lamn Lortne PEarn(NDC4 MAL $ m munsmW 3 gg,l(,,,,3 8 Nor M e ww gga *===o= c as a e m g 3 01 t ot 1 23 1 47 16e Itne Caruna % 6 09 6 fB S it 9 23 9 27
I LETTER TO STOCKHOLDERS l 1 1 i l
)
in 1984,The Chac Manhatan . Net interest incinne un a . Global knking contmued to . Lorpraram earnal Si&T mil- taubic equivalen hasis buikt its inesement bankirq lim,up 4% fnwnihe Sini mil- wa 53.3 hllum,up trim psi presence anmrd the world. fion carned m IMt.This cyumes urder53 hilewon 1985 Tith the Jaegula Km d the to pr ornmon share earnitys . Other operming nunne L<wdon secuntx s rrurkets, d 56Abrnpared w nh 56.39 intreased to ilJ hilmm,up Chase became a nuior dealer m 1981 frtun 51.3 hllum m 1985,arsi in ver$ngderx1nmared While Chawi 1986carnings irshjed subsantulimreases securwies. In japart, a Chase. j nue a recewd itw the Orp wa. in virtually all fer hasal assocured etwnpany was me eiun,our resuiss tell below im(me catepnes as well da few firms afliluted with the .iggressne targets we had as kweign exchange traling kweign banks to recewe a
.c nw uurdes. %mhckss, ireme, trading account iccuntieslicense.Cmunuing the gar wa one ut substantal pntirs.ard gains m the sales d globalizarrn dfinancial pngnv.in sescral anas char uneurnent secunties and our markers has greatly enhanced me cnttal to ( hasc', turure, Cienputer nmer subsidiary the credit, nsk manasyment, in pastx utar, we male Ve.;itially, consumer bankirg and seantses pruJutis shar endes m unpkmunng our fee nume rose 15%; trust we can oder custamm around prent) wra:cgies,impnmmg and titucurv irnestrnent sen we the worki. Chase also began aws qualitpalenh.uung kn mercased 3%,and a subsrantui reahgnment dits enductnir3 thnughius nestment banking iec income internaxmal network to take the ( orp c.n e. imktd,n- nr.c '3% full aivantane ot new busmess claJmg a specuiihird.quarnt . Phmarv capual a wared oppwtunities and to enaximize expowc actrual,( lusch oper- increascd to 56.' Nilmin,tr its techinkgical capaNiars, sing npown wue unually 6.95% d gross assets. . Individual knking continued
<he ume m ihr wuws!, third, . Total opiul at 3 ear <nd to pcrt rm weilin 1986, par-and knanh yturters ne l%, nwreased to 58 9 hllion.or ocularly in credit cards, home udicsing our resoise to 9.2'%il gne,s asas. mortgages, pnvare banking mauge expenscuipinusiv. and trust services,ard brutsul highbgho se cowNEss HecHILH l's comurner k)ans thRugh our 19%nckskd: We connnued in 1996 to make rutuvul netwvwk d 1%nonal
. Return un stragr awts n a prngress in the fundamental Finarual Senres orkes.
( thegar was.6h umhanged strategies we embarked on in themh r. Chase inan 1981. sewral years ape-in Global, annoumed a ankactum m
. Return on serage unnmun ind.vdual,r.ml Narxwel its credu cant rmes and, a this sr<m Lhildm'apnv tir the Ibnking. wruing,is the card issuer gar wa 13 2%,J m n ihghtly odenng the highes value kr
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inun i16% a yar cartur. VISA ars! MasterCards arrwng i I _ _ _--_- _ - - - - - . I
I l' the nsninity ten bank ord nurs. Alvim 1% thaw H,wne %stpge Corporatam ; ( H NK j topped ihe 51 billm>n
. nurk in mortgage ongirutum uhwh.xkkd to its rra apge !
wn king portf<dui hat suuj m W billum at searm!.This aill he augmented tw anoiher SI hllum as a revilt of s H MC's agreement in earh
%~ to xpre the assets ot Fretdan Mirtgage Compam
.# Tampa. Rnda.
neernatuxulh welaurkki a marketing pngram for afflum
.onwmers m Hong Kong.
cean selhng imestment tunJs
- r Brazil,arxlintniduced 4.sidential mortgage pndutis n %m anJ the United ,
Kmphwn.
. Natu nul Banking .xquircJ l t he former Connre:tal Bancor i in suw sJak,whwh opern.J m Ocuher as thase Bank in Anr<wu. the 6fth largest bank m ihe state. We also xquired l
Wu a Ant >C. Ben HFR f ( hairman Tt* N asG LAsatt ut t IbiJen ______________.__-__m._-____ __ _
the kcner Park Bank d erki. High u S. buiget and the ess.w on page 6 explains, og chaners.The constraints Flonda m St. IViersburg, whth trale de&ns willcontinue to bank hddingcompaneslike on hank hokling companes opered in fettuary 1% as plague us, alJmg to uncer- Chase haw been dened such already hase weakened ihe U S. Chase Bank dFksda Wkh tainty in the irxmetary and acmites as underwrning cor. 6narruf wrxture. it would be these akinions Chase now econo ne erwironment. parare secunres,mortgay- ironse and unknuruce d banks has full 4cmce commeretil Tw> oth r areas d con- backed secunties,and mutual were iorced to drop Iheir hanks in fne srzes. rinuing conecrn for 6nnial furds. At the sane nme, non. banking charters m order to Also m 1986 Chase eached mairuckms are the cordinons banks-brokeray firms, prwxkessentul 6nancial i an agrervrent to punhase Clcrk in lesser Jewk> ped countnes insurance companes,and ewn servres to their customers. Ecpipment Cmfu Corpoution, tLDC)and the kgisture ard retailer >-haw been allowed Despite the econome and wh ch u illdouble Chase Less- regukrorv nutbok kw the to orier traditional knking regulatory uncertamtes that ing's receaubles to 53 bilhon. Jamesoc fir. areal smem. services such as taking depos- ckxd the honzon, we fully On he LDC situarum,one as ard inaking loans. expect that 1987 will be a ) car soa noor gxatc'osts encouraging rxxe is rhar all The issue isn't whether d solid progress for Chase. In Niv, Alexander a Hargraw d the countnes hw reduced banking will continue in the Our obiecuve,as summanzed reured txxh as chairman their appernes tw dett.Less Unned Scares but rarirr whetivt m the Chase Vision on the d Chase Lirxoin First Bank, encourarser,are unhelpful pro. hankslike Chase willbe cmcr,is to provxie our cusmm. N.A., and as a nemher d rhe posah in the U.S. Congress permuted to pamcipme. es mth quajiry sente,our Cbse (kaardNe pancularly and an inclination in some As the ftderal Rese = Bank comrmnines wxh integnty apprecute Mr Hargr3e's sountres to skw dmn debt d New York has pc.mted out, and leadership,and our stock. etkns to fuietaic:he integra- repsvmern W cont nue to bramleriing the opportunities toklers witha return on their tum d Chase iiradn First. helew th.m the best path kr bank hoklirg cornpanes to imestment consistent with the in December, we wel. cmsrd solvmgihe LDC sene the narion's Gnancial best companies in ourirdustry comed A. Alfred ToEman to situmwiis thmugh ahe growth- ends will bnng greater com- % haw great confderre Chase's ik 3rd of Directors. onmted pnncipks m the petarr to the marketplace, char ourpertrmancein 1987 Mr.Taubman is chairman and minatiw propo-d ty US. grezar benefes kw consunwrs, mil bring us closer to char spal. chricxacurneorkerof The Treasury SecretaryJames Baker arxla stronprand heakhier Taitunm Company. !nc.,a and in the continued partner. U.S. 6nancial system. lealun;real esta:e devekpment j shipof muiniateralinsnrutums. The lack dlegislatne and - tirm based in Michigan. the wwk!'s commercul banks, regulatory leadmhrp tegaired Ulkard c auccher oiamnan and and the host rutsons themselws. to severse inegnties imposed Chef Execursw ofe:er I LOOKING AHEAD With respect to t'r darr.es- by outdated laws has caused in 198"Ne expect moderare to 6nancui system, the U.i bank holding (umpanes, economac growth in ihe
-" f- * !
Gmgress connnues to drug n includingChase, rehrtantly to Nmm G Lahecer ) n Uristed $ rates arkj aruural the heels in alkwing de naxm's Presdent and i carisder givirg up thest bank. Chef Opeants 06ccr knks to c.ampete egially wnh Maith 2.19s? ! other 6nanculinstautums. As l t l l A L - ___ - _ l
THE CASE FOR LEGAUZED COMPETITION
\
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& bncuisexes aduury 6et thz,wahout mbuantul benefits when they p into the resuks:los pro &s, lost gipor- )
e driving, Advances in teduml- deregubrion d praires, conunercial paper market d tuuries,ard last bbs. ogyhoe cnmed mmdes prres,ard ycyapfw, Amem banks wre alkmal m com- The possibilny dlosing our on a skiniscale,and fruncul can banks m umNe io com- pete for the busness! hkl kakrWip poenon isis re-urvues irurwames hm 60ur- pete egnitably ash rxxvbanks mutual funds & cheaper arxl sened kr the discara future. ishedin fillingthm.The reairn and kneign banks. nxur cormm if banks wie Today,only rue dthe 25 larg. dtie p=ableislimard only Thisis usuaDy portrawd as permrtal m dhr them? hid en tanks m the world = ; by tedux&gcalcapabilines a tuf rssue piting commercul munaipalites pay less kr thir 8unerman,compc ed to M bu l l arxlinman anagmarn tun <sagamst imesmm banks borrowirgsif banks were at 30 years ap Ard arre 1973, 1 Amenca) ctwnmenial bank- rd other finarrial services kwed to urderwrse all krms kungn tunks haie irrreasal ers,howewr,& business m a companies impled in thisis d numcipal atu? We snongly char shm d the US comner-difiercre worki.Ours is dre the he!cf rhm markmm belew the answers ace yes. culkun busness from 8% so realm not of the posable,but alr a.ly scrwd efficeruly Ir=hship:is Arnenca's ready 22% Wah our naurul d the perme;sbie.Ourlimas But as kmg as the finarrial preeminence in fuencui ser- economyard global ecorxxnc aie defned by a set of asty servees irdustry rs aristranly vres a ruk? Fosegn banks = infkaence ;sicbsely toour scrutes passed by Congrss dwded into chsses dinstim- rapidly tiEirg the competxhe banking svum, we think this haK a century :gp. nons, some regubted far more vacuumin Amerran financial is bad Ex die c.trn Oi.ase,along wah the Amer- rigdly ibn ochm,it waiis servres,buymg Amerran in other wxds,the costs scan banking in&stry a lary, wort neady as efficently u et insitutionsard a4ering piod- and nsksin suscaming this 6 mE wry comperrne mday- could ard shoukt And an ucts = cauxx. Fificen famgn inecpicable sysem are real.So despue barrrss to open com- inefficm system raiscs br- banks enpy a gmndfahead a de berwin thm wouki petxxn We exten&d exempcun from GassArnall, emery 4 u-w.m.a banks reachirs 9.iesnons. How our dcuneur frarrhoelarply ccznmrted a we e rnakig enabling them aoolhr prod- woe aAowed m compete. thnxigh a comhnaerm d customer beneft the pal o' ucts and servces to Amerran Permrted to compete on an ) twonuntsm and enhghierrd our public poley? And how custamasthm Arnerxan ecprabie bass,Ouse ard the kgrstron a the state newl. u-...J are we to the hanks emnrrx. Amencan bankirg cornmunny Wre dewtopingihe inter- akes of comperron ard At the sane nme,rnany willcorrmue no achiew benefas narrul capreal markets cape- leadmhip? nanans, most prcutunerxly the kr che indivitals,entporze bleies reqr . : o do tusiness C+m Do Anuncans Unned Kr$bm,m opening atd pernmera cusawnus me
~
m a gkkel ..a@.e. And snll beleve tha a encourays inar capad markers,unkrtend so hghly vabe. Ard the w'e imested heimly in tie inrruzion, kmcr pnces,ard by the resmcuansimposed cm Unned Semes wdlmauram its pmdicts ard teshnakgy our unpad efrrrrry? LEbasai operanons.The pounon as the fwurral mar-cussonuss tred to nect hkicompanes gam fruncialservcts industry,long ketplace thm leais the worki. meresurgly compk x demands, hemipartend in the U'iaed j ear one accompiahments sc=es, nsks bemeipoted my ; i emd m bkar ile fundammtal uwani places thm o&r full a.- cess a the global nr.rter.ne l 6. I
- . 1
_ _ _ _ _ _ __ b
l GLOBAL BANKING )
)
1 I A mqior[Drre in the n'!A0lution to meet customer Tralironalcomrnercial the enablishment da new j banking has esched mio a disectors'and oeicers' needs with New and broadened product o[er/Mgs, fmancial wryces emironment liaNiry :rinsurance compary, where chary is the only con- and entryinto the Eumdallar ] Chase expanded its imestment b2nking and aant.roany at Chase, teams d maket fr.a us.neronal bank marbring odicers,inestment and a (1114 inaner. Domes securities tnsding presences in 1986. As a Imdn bankire prwirt specialius, ric financialinarutions e and traders collaborate to important cuanmers dChase's intheglo&>ti stionorrmancialmarkers, chase hnng ci.nt. a
. ,2,, d asser saies pmgram;in i,86, i cunom-tain med (mancial ser. the numberd these customers delitered innotutile imAestment, commercial, and vices-p4 ct faunciry, incnased by more than M.
swaps, syndications, asset sales. Owncas,ihe edation to electronic bankingproducts to the uorld's leading and merpreand accpisnons, swdt deinery dfnancial to name bct a few enpneenngtechniques and unj&ations and institutions through an in one n sable example d enhanced technoiogy teammxk o meet the needs d prompred Chase to realign ns i extensite global distribution netuork. caporse uaomers, Chase ens,w imernanonal net-l arranged a $1.2 bdhon enda wrt. In some cases,this I 1 ehar enabk d Internaronal reuructuring mearr buildinr, { PaperCompany to acquire imestment banking arength-Hammennall PaperCompany,a in London and 71 o90, for manuinctarer d high,palny exarnpie-to take advantap d J papers an.1 starionery. ircent dengulation,in other l i Like U.S.corporanons, cases,it meant irducing domestic Snancialinstrutxms physed pasences and stad. and wor %de insurance com- In every case,a meant scru- l panies hae long dep, nded on tinizing markets and products
)
Chase fit innmarne financial ) and transactional evees. l J In 1986, Chase foryd sewral fras for these customers- < a pnvat placement to finance C.
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J to avust ska the nu1 Jggieww pn.titahbrp4v. twes.The nwk his twn sk mv.utentan t<,,lients \
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poia ts IhWilerKmtintr1g(kse j pnska.es wtw f ormennmenul l paper,k un wnJutams andrme and surrm swan in 19%tkvpndats hdptd new atvment bankmg nw-nues at ( bsc ~ 1*. iaer 19&t l The I.un A4unn ettIJlpJper f( l'imarket has gnwn tnen 52 nellao to onwe ibn Skihilan:in mst a few nors, anJ( haw nim rank
- anwng the im sen Jeakts m the I( F market.In 1%< hm e arraned neur tw the $st f(?
4 pnigrams mnuini mYam. ANTHoN) P.T4 may orso Vset harman. I (,k6alliankmg l kk
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1 l poururungChase well kr tronic deinery capabilities. (reated nery day to sarisfy l k calcommercul paper busi- - In 1986, Chase conunued to tusanrm' appetites Ur nsk resa m de market. , irms substann.d sums to management and secunises C!use alsolanched hbyy Market Manayrin 1986,an k k b. dewk,and enhance gkibal products.
.~ ciectronc hanking pmducts. Ikduct mrowon will Ec mrrnrin micro-hased lyoduce Lw'.se focused the wx d the future kr ;
ELPclectanc raunce and - on meettrg the demands d
, Gkhd liankirg Drrung on treasury rnarugemeva sywem. . , , kxalmarketsaround the sophistczed fmancial l Ehewhne m the Gkhal I '
h wwrid by petwidirgin countrv egneenng skdis, a k;urdaran Bank,skhal syndications wpport and conrnda d dsold credit kdgnent, menun str,e reore than 90% owr 1985.an increase atinhut-
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the highen lewt dsecv&y specultzed industry krx>wledy, Customersin 25 courwries and unsurpused expenence able soaggressiw bedlingin a hae access to more than amund the workl, Chase's highly c(anpetrrne market and debtandecpn> secunres, 40 rransacturiinrriarm, Gkhal Bank wdlcontinue to unny financmg structures Chase trades a mukiplory d irxpiry, mkrmariun reportmg, break new gruund in the ewJv. thz won Chase numerous products,inchafing foreign and decrsion support mees mg work! d fmancui servces. mandees. exhang, gold, futures,ard relmed to vanous podxt Chasa aimincreased us oprunn.In kweign exchang, lines,ndadmg cash manap-f aa
;wesencein bcwh the IJiddlar tradmg mlume exceeded a half ( "
ment, paymerus, ende, neasury, , and cunency swws markets inflon .killars m 1986-an and securities. mIva6.The wiume dswaps mcrease drnw than 400% Financulprodue:s that war outstanding a year-end our the past thcee years. relairvely unimportant a few was 150% higher than the 19&S Chasci abih y co under- 3 ears ago-mterest rare caps,
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w war-end volume. wine kweign secuntes and to floors ard udlars, debtequiry
% ,, j.
Anorher ugnifcant global trai ard sell securnies, as well swap,-are texfan stock in hanking maiarne m 1986 was as to act as custodian, transfer
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trade, wnh new prtxlucts bemg -
' c'
_i trafing and secuntes.Today, agent,and portkdio manager, - Chase has a secunres business gnes n agrtwmg stake m ihe - m 21 markets. In addnim to gkhalsecunres huuness.
'lld Chase's skhal efkrts are bolstered by extensve ciec.
1 l i 11.
l l INDIVIDUAL BANKING 1 i i Across the United States and in 20 foreign coun- Chase tonk the lead in larysr programs dits kird 2 value amongnaronalcreda in ihe country. tries, Chase serws individuals tinaugh a leading card isun in n986 wieh ce Chase entit cards, personal perune pncirg;and a compre. lines d cxda,and rnoney mar- j credit card business, consumer lending offces, hensne pukap dcard ket accounts art snarketed enhancements. coast m coast by teleplune pritrate banking facilities,a student loan operation, Chase's credit canis-VISA, and dnrect mast while cxher MasterCard,and VISA Pre- conmarner products am sold I and1pecialized pmduct companies dellwring rnierCard--once again paced tbruugh mukiple distnbuton Irdrvwkza! Bankmg's earnings. channels,inckding mail, tele. j home mot tguys and discount brokerag services. Gose to one milien new phone and nanonwde oWwes. accounts hfred Chaislary hrsonal Financsal Services Individual Banking also owrsees Chase's sccuri- narmrua cuuomer hase m (PFS) reaches astomas l meil ocr four million card- thvuugh 37odicesin 17seares, lies-re/Jted n holtSJ!e trust,inwstmert,and hokleraccounts in 1986. wah 17 rrm cpenirgp slared Recewables rose to almoa 54 kr 191r2Odenng pmbo enor . I in[ormation services businesses, billion,and camings incremed pys,home equerv lines d ) by about one4hird c=r 1985. cmin,and auto and marine I Advarxag Cadic,a kuns to upscale consumers, rewivingline d credit kr PFS has caned out a peditable i upsialeir.dividuals,ircreased nche by praiding wality ) receivables to oe Si bilhon in servre,wek response tirne, 1986 and raised earnings by and caikned produtes. Afiluent almost 50%wr 1985. Simul. I caneously, Chase's naron** through the m.ul depost l gathenng edart bmught mmey market account balances m moreihan $800 mdlion m 1986, making it one d the il
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INDIVIDUAL SANKING llicustoners aisc employ discient brukerage sulmdiary, to pay od. In Hong Kong, Chase Gr such prnze banking had an outstanding > car m kw example,1% was a nar d ; semces as trust and estare 1%, benefining froen a banner aggressne expansum kr ehe enanagement,imestment year in the stock nurket. resadentul nortgage, VISA portkiio munagement,arx1 Armxher speaalimi product neder card,and pnnte bank-cusrodian semces. area,ihe Scudent Loan ing buunesses. ltwestrrent Chase cussoners nation- Dnisxm,uintinued to market , prolsts IIe the unit trusts wide h1ne access to residential aggressneiy and gnerare loans Chase mtroduced in 1% were ; marqpges and discount bro- on a natumwxle haus. well seterwd by pnvare bank-kerag services through Chase Helped tw :he n.wion's ing customers.Such fee.bavd consumer product companies. healthy appetite Er rrurtgages prodirts helped Pnnte Bank. Rose A'Comparw, Chase's m IW, Chaw Knr h ing International pnerate pp Corporatum(CH MC) strong earmngs in 1%. ongmated more than $1 Nllkm Elsewhere abro,xt. resilen-m nxwqpys chrough .10 tal mortgap buunesses were adices in 11 states, In early started in Spain arxlihe Umred i 19K7,CHMC a6tred to acquire Kingkwn,and equay and i
/ - .
the assets d Frectkwn Mort. fixed-income imestment funds gage Companj. dTampa, Flor- were launched in Brasil.
~
. da,an aapsitam that will Individual Banking's orher j bnns CHMC's nurtgage mars area is made up d the semcing portinio to approxi-mateiy 54.5 billum.
! Owncas, Chase's growing inestment m the miematonal
_ n sines,e .nnued i I 14. i ________________..______m_ _ _ _ _ _ _ _ _ _ _ _ _ _ _
e aritesucited whJesale trust. otstment.and informa- '~ 4 ewm senwes husmesses. ( hase currtntiv ha> more - - ihan Wind the(1 gkabal susa ds market and nwere than 5*)billsm m gk>bal custods am the intermediate t apnal Cnuth hmd(4 Chase (mestors Marugement Corpo. raram New York LIMC6 with - a returnof 31*o,ad first plAe m 1% among common- In IW7, quality senice will took funds admmntettd tw contmue to datmguish the nanks LIMC noped $20bil- Indaslual Bank's perforrturwe, lum in funds urxler nunagement fnsn hanJbng a student kun a.Npritoneduscif totake appia.ac.c m Cahforna to aJvantage of gnumg imesner nok mg i rm riscage in (YnnsyL
,nterest m pasmds managed varna to setthrg sei. unties trans-portblios.portit dw* .nsurance, Atuns kr mstitutonal armstors
;nd internatunal mwstments. Insn New brk toTokg).
In the miormaton en n.cs Nunesses.thase Etorxrnetru intenused us thrust meo ton-sultmg and specul reports while sontmumg us well-tst4Nlsht'd CLtmOTnst f0fe* gJArmg buvrK% Anim nF Rm
\ Ac( hairnun. /
l1 kink laII NPkmg,
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NATIONAL BANKING I V \
-I In J986 Muse enkncedits nationwide presence in ihe Uni,ed scares, i986 saw to capeirand independen the 6nalizzum d a new tn 6 nance companies. i by acquirmy regional banks in Florida and law and she continued taeak. Chase's real emme 6 nance
}
- down d barners toimenine opermion, which adm j Ariwna, expanding its profitable leasing business, hanking,ewens J unmficant snanemgsenues to mam (
mreres to Nzumal Banking, dewlopers rhmughout ik l continuing to nurturr its $did national real estate The new tax refonn taw did Unned Semes,made a sukan-nur alter the fundamerwal rialconenbution so corporare i portMio, and ending the year with presences in appealdleasmg asa heim earnires in 19s6. A new *e whkle forcorporme Amenca. opened in Mshingrort D.C., 3 inorr than 100 U.S. cities in 22 states and the Equm leasingis a key and the new practs group j clement dO.ase's naional mponded to changing cus- { amrneeAaisse resienae District ofCdumbra- hanking armesy. in 1986, Chase agreed to purchase finance business continued to Clark Equpment Creda emphasite F4 underwnring Corporzion,which 6 nances mandards, credit revew, i d irkkastnal and construction market evaluation,amtrol d equipnew.The acquisition nsk exposures,and prw ci will almon double the monnonng. ; receivaldes dChase Man- Forty maes rowallow wme hartanLeasi 4Company torm dir.rernme banking. (CMLCL a divisum dChase in 19s6, Chase added Chase CommercialCorporzion, Bank d flanda and Chase to 53 bdlion and giw Chase Bank d Anzona to irganal the third laryst bank- banks in Ohn, Maryland, -I atiikated leasing company and New York.In February, inihe country. Chaseacmired Ihrk Bank d Afterwarsdexpenence flonda in sc. FWersburg, with fundingand maruqpng high- 1563 million in assets. Chase wJume,small-ticket fmancmg Bank d Anzona, formerly I programs, CMLC enablished Continental Bancor,was
)
a Pbrtfolio Senting Dmsson acmired in Octaber. Wah in 1986 to presle adminre armiw andinck odice support i fb
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NATCDNAL BANKING 4 assts in e uw in SM N I nul- ( ndu Unam 1)nism wi to svAh
, invt it n ihe tifth larpst bank a n tsonwde market heit, an the vate. IrwestAadi p rth Jui nunage.
The NkineJitan( ommu- ment wTwc. mt> Lnk,whnh senn In Fhrd tOfmi,anJ Mary. udn duals anJ snull. and lard.whom: Chiw tin & my mtdium sutd busuwwes in tnaibkd inststutuww o pm Chiwi hvne reurket,is :he early entry into Jesirabic mar. larp st in thaw's regunul kets, etiurts amunued to turn hanks, withiner 511hilam in those carly entnes mto um-Jip uts.x .icar4md. Law year.the kmk hyan num. ,. Sunng us Ntw brk .irca net. wink to sne he ,ustinnot nmisit ihe 1990s. fhe ; I
' 19 '.
rnon%urata nt iewludes dung.s m bearx h Jesign, new l[~ . pn shis. p ul-purpow faih- "' _er
- its .mJ a nuior i nestment in <xsi ne.dunt.mn k hullmg wif wrac tetknolog). .awts and minducing new thaw aptal nurkeis ard pn da ts.
trAle pn sh tunhp.e ihe I he new pn Jus es new utirmg d ane nymwul hanks. nurktts,and new sustinuers At( hase1.itwoln hnt Nak, it im are bauJening tht-N.A.,m upstate Nw Wrk, tueurt harvon hr( hasci prnate plAetiwmt .iduriie N.itiivul itmk. ino r a d h 22".. m 1%, aiki thes s.aw Wnii etterid ( nsht Jul wvil. In iurn,t hiw I nuJn lint uwd Chasci Re et u: R.thit t.: aw het hurnun. Nat a sul Banking is
PINAPC1AL REPWI' s
- 20. MANAGEMTETSDESCU5! BON AND ANAIJB5OF FINANCIALCONDETION AND R15 ULT 5OF OPERATIONS
- 40.
SUMMARY
OF SCNIFICAPfr ACCOUNTING PCs rm THECHASE MANHATTANCORPORATION ANDSUB5tDIARIES
- 42. CWSammwrdCandman
- 43. CW Smerners dIncome
- 44. Samener dOmanys e Common Smockholdm' Eemy l
- 45. CWSammme dChenysin Finsanal1%uan THE CHASE MANHATTAN CINDORATION COMmHY ONLY)
- 46. Babumm9mer
- 47. Samenentdlncrune
- 48. Sussmas dOssosin FmannelPbenan THE CHASE MANHATTAN BANK.MA. AND SUBSIDIARIES
- 49. CWSansmmr dCondinan
- 50. Cannahdeux!SamementdIncome
- 51. CW Sammera dCnanys inul<AM Egiry
- 52. Cansaidamd Scamment dChanys in Fmancel Pbasinn
- 53. NOTES 10PINANCIALSTATEMENT1
- 63. INDEPENDENT AOCOUNTANTT REPORT
- 64. REPORTOFMANAGEMfRT SUPPLEMENTAL F".NANCIALINPORMATION (3. Cannalidend Summary d Assers.l imbilsies and Ssockhaldas' Equay
- 66. A=my Beinness,In==a and Aug Rass -
T=a E,imis
- 68. Summary Quaneriy Sememena d Income for 1986,1985 s.ui1964 -
69 Cansahdened Ansirms d Loan toes Expenmcr
- 70. Sdecsed Laen Marurums and Sennemrv as Changs in ineses Raes
- 71. Consaldssed Loan Balances byType and Pecmay Danburian
- 71. Cannahamed heny Loma Beinnces
- 72. FmancelRanos
- 73. SmockhalchrData
- 74. Cambmed Balance Sheer d Nanhankmg Subaden ws d the Company
- 75. Cominned 5:ssemme d income d Nanbanking Subendunes d j the Campany l
- 76. Stamments d Condsnan d Subsuhary Commercial Br.nks other than & Chase Manhanan Bank.NA j 77, h An Catectum dThe Chee Manhartan Lak.NA l
e l 1 4 m____________ ___ I
MANAGEME!F5 DECU590N AND ANALYSIS OF FINAND AL CONDm0N AND RESULTS OF OPERATIONS neche u-6 c., -dsa-6
- 22. th====andInununmulOm ,
- 23. Nu heum brune-Tamele14medan Bem 'j
- 25. honum br Rudde Imn immes and Na loan Owy<A !
- 25. Remrwhrhedertmetunes E OdurOpamagincome ,
- n. OdeOpusegEgernes I
- n. hunmankrImammeTams I a bessay and humor Senumry Mangenu
- n. cond " .
m tomhedos. i
- 31. lush Ehness
- 31. -Camary RM
- 15. -Navamd.RM Rae and ha De Imns
- 36. -tmanCanamnenans n.i s - l j
3s. 1,me=miennrg Depoon &md wah Banks G Dea == n fundssana.ed j
- 39. fasth Quener 1986 bus knb Quaner 19t5
.. *h
Rfh4AAA8m wa srTED FINANCIAL DATA j 1906 1985 1984 1983 1982 perse nur5in amMmed Meimummeluzemw..,........ .. . . ... . . $ 2.996 $ 2,749 $ 2,308 $ 2,169 Psanusa der haunte Lane Lasser . . $ 2.024 595 435 365 215 Odur Opmususlasumur. 263
.. . .. 1,743 J16 930 864 698 One Opuses Espiness ,, . 3 Jet 2.732 2,046 2.245 2,135-Nunimemme . .. ............ 505
. 565 406 430 307 MainemmeW mComunan Saxhieddes . 527 481 321 ,,,_ 377 260 Amusy Commen. $mmu Ommmmm6mg !in chammamed 79.Mi 75.240 71,153 68,744 67.157 per -mus, Na lusseme:
humery . . . . . $ 643
. . ., , . $ 6.39 $ 4.31 $ 5.48 $ 3.86%
Fuer Dibund . . . . . . .. . 4.50 6.15 r b4a-l . . ......... 4.32 5.22 3.64 Ces Dmenses 2.05 1.90 1.82% 1.75 1.70 r=-- Suecubeklers' Lpary ar %sr<sul. 5195 49.19 45.81 a3.91 40.71-h4mser hun as ilimrammi 35% mms 23n 22 % 24% Asilmur-enf Sim mutums) Lasse . . . . . . . 166.230 $61,931 5'1.003 $35,894 155J32 Temi Asmus . . . . . . . . ,,. . 94,766 87.685 86.843 81,921 80,863 Laseisna Nunes and Dubenreses. . Amesunder pedmed Smack . . . .
. ., 2,369 *W 2,320 1J76 1,046
. . 67 62 62 150 N'-W-=h hadmund Sack 150
. . e82 602 602 375 Comunam 5mckheiders' Leary. 375 4,280 3,795 3J59 3.051 2.761 MmmmasiRamos Assarn em Asump Toul Asma . . . . . . . . .... 43% .65%
i
.48% J4% .*0%
Ilmarnon Ammus'Canmann Saxthahiers'Egney. 13.18 13 64 10.12 humury C,ami a % of Tassi Genes Asmus. . 13.11 9.?9
. 6.95 6.87 637 5.44 TemiCasuala % of TamiGsons Asens. 4.73 9J7 9.23 El1 649 6.01 Cas=4d==1 rut uursne vis 155 malian dar 1986, up appnsamondy $20 Chamei Cas=4d==d $sannsras d Incenne br dw pian 1986,1985 and mann,or 4%, ham the 1565 nutum earned in 19ts,and up $379 mAnn 1984 me passmed an pp 415mmuumsy mcarne stammern by garser kr isen 1984'i nnel d $406 rnAnn. In a p=nson weh 1985, earnap inr 1986 1986,1985 and 1904 am pumanad on pay 68 The penausly A-4=d micimind mcsmsses m nur sumer micame and oder opmang snconic, sidad. j , udenman an sin a6eis d dumpus pnces (fASB 13)has mg admannel swnsees m vetusty a5 fee 4msed incour caerus, m kamen been dihaul as pannend by Sasames d Financed Aacinasesig Standanis erksmy aming unconie, m amedeur a casa psadin seul in tuns inse che Not IP, Finusual figureng and Oisqpig Prices aim af securums. Also seemind a 1986 nur incoww une psas Asumy med asses une 3RR$ bilian in 1986,a 49. manuse amm 19t5 Imam the sales d Compumur *wur.lmc.,me=A ry cnmpany scwan%due and a 3% micasse sur 1984. Oind unwn on ammy saml amas (1104, bened penaams servioes e the margy bankwg unbury, and Ommen ammmmg an na mosme, uns .69% for 1986 The IKM uns .65% kr L985 ana .40% Ear annunry ummer m Dumand Lasse Campey Lad.,Jgen. Incinded in 1985 1984.The sauen an ausy commman ==&d&=( eiprey (IER based as inconie ums a ymn inen the sair d a parnum aiOmee) manarey namen an mer inonne applicable e commann mock, uns 1118% hr 198L The 20E in Demand Lamac Campany Lal ami a pen fium the smie d seul esame br ces ums 1344% and br 1984 ums 11112% Cash dmdames per canunan in japset in adar==i,1986 and 1985 ser secome ums isembly abcmd by the shuse mammed a $2.05 in 1986, g 6am $1.90 in 1985 and $L82% in 1984.
apphaman d Financial A,xousung $ sanded:'aamd ruins appiscable e in January 1982 tar du namh consecuene yes, diesen husd d Duecmes inegui imme fins. cmes anung as d ahe abcnnn m indeed income iam appened an inoesme in the geremr enneman dmdsmL The 5% unemase e mass
enmend in 1986 and due 1985 subcnam in New Het income ran amis. 5.54 per duse apamms na an anummi nue d $2.16 par simme.
' ", e6mmig du is==ddr hears for 1986 une a hgher psonman in the Erst sinner d 1986, Our i kemed a new nananal bank, Chase int poember lasn lasen and imsessed apaams espames, indahms admann- Bank # Rands, MA. (Oimme (kri.sk which tihragh the Fudsel Doome
. emi ane<=ne expenas for de since e manranig d Chart donesnc in-Carpmenw scipmud admend amas wd annend cunen labders mal osasses adice nun erk, ahmsme lampi endinny aandanan admets an d Phik tank af Flanda,a conenmaal bank 6 '; :in 5s.!%senbuss espuma d omness adoes and theimpact d cupenses d recendy acup usu weh andamas d _
.- , 5d00 nmIsan. In du burch gasner d 1986, campanes Nar mcome tar badi 1986 and 1985 mesca du imE yer., unasct d Osse campimed as =ap=r==i af Ccannenal R=== Inc., a commacal the ampamuans d Nedehndne C=a=6-ik NV(NCB) mal bnenbi Firn bank hcedirg congsm3 weh malamms dappsummesdy 5600 aufban.
henks hr. fun; tan) whdr rue scorne int 1984 mchsemi de impact aner Canmassa.% 8 bank =l=d=rs landeserused in du poner r'hommx, Anzann the med.9 ear caruchdenans d the two asnnes, aus, uns summed Omme Bank af Annans (Chase Ansonsk Dunns 1986, On a per cammen shuse bass,connaisimmt ur motswr uns R63 in 1986, Omme sede oder =ar==-a, mechadsg Thini Camary bumsg. a . unmar g 4% casapared wah 56J9 m 19e5,and 54.51 in 1984. Futy dibed nm ap5-== imming compmay a Mehme nMasamn, and ampisand the acome. mmame per common shuse aus $6.50 m 19R6, up 6% angesed wuk $615 in aans of Imne, hetank 8c Cangssy med Simcm oc c a== secunne andsna 1985,and 54.32 m 1994. and = " " . campanes siehe Unsed Kissiaen. AE af these aczpsss. Nst maeme per cumnian ihme amomus masc the massice of connem amm une ====d int a pachmess. Semanam: of condenan er year.eul dans passers m: the Dmdend Rasummoner and Sadr Phidisse Finn, the 1986 for Omsch myanal berein, inchehng Chase Runds and Chase Arunns, permum in caamum shme d ammma on Plumag Ame 5mbambnsed N== me pummuniangay X Due 1996, de consnumi d comernide capsul noen med debenrusa, and slie ammer af much quan6 21. ___.m_ .m______
.g f
,1
- i d DORGESDC AND INTERNATIONAL OPERATIONS g, Ammay sua by ynysphs apa am shouviin the fidawing table:
L mEBLrY AssrT55FatYa AfHsC,a'dCEON
- Emmpe, thmini fAskNe Eam timern Taal Taral 6 musEssel _
5 emes As.a and Aince Hemaphere lesernananal Carparanne Caband Duetem Bambs' . 5 5,035 5 1.171 5 3.858 5 1.068 5 6.097
'5II.132 huummmmm 5mmer: ass . . . . . . . . . . . . . . . . .. 4Ji9 142 1.174 413 1.729 6.048
- 1. man (MurdiammlausRasern) . . .. 32.679 5.567 11.016 12.527 29.110 68.749
*Ldesran Aosgrascus . ... , 197 965 935 476 1.376 2.57)
Oulun Ammes. . . 3.969 626 2.953 748 4.327 8.296
. Imad Asmus-1986 . ,.,. .. . . . 546,159 5 8.47I $19.936 5t 5.132 543439 589.798 Rummusy d Test. . . 51% 1916 22 % 17 % - 49% test ,
Tesl Aanse-tm. .. ., ,. 542.008 5 9.302 518.929 515.552 544.283 586.291 ! ftmumuy dTemi. . 49 % 11 % 22 % W% 51 % 100 %
~
Toml Ammes-1984 , , ,. ., . 537.608 511.165 $19.884 5' e.684 547,73) .585.341 i Rummesy d Ters. , 44 4 13% 23 % 20 % 56 % 100 %
'butmim nummmvammuy, Dupens Mammi sah amih Neur: Me esmop commerv manused 6sr meer slum 9% af neuer consdalmud aul som m lies,145 ar 19st Aurragr marrsessed imentues,pnnoassity simpam, symummed fab mf muip immiIntshaus a tien,compend wwh 67% m 89s5 armi 65% e 190s.
2 DonsESTICF.ARNINC86 fepuesmung neuls d apmunans in the Unned Sasses, twTY.RNATIONAL f.ARNING5 , ,g;cg ;,g,g, ,g, gp,,,,g ,,,,g,, g unse $466 mmEinn in 1986,compuul wwh 1371 mdien ia 1985 and 1299 Chase's ocriens adius as wdl m insensnunsi bunness actmnes cwahscied amEinnin 1984 Darusnc sermny accounmed k apperimesh 30% of can- fmm the Head OAice m New York Gry.and aria domesne adices, use saidmul sur incasne in 1986, compmed wuh 66% in 1985 and 18% m 1954. 5119 million in 1986,compams wah $194 milben m 1985 and $107 miBen in in osapenson weh bush 1985 and 1904, darnesa: earmny iar 19E mese 1984. Innernanunal earnwy m IN accourned br apprunmesh 20% of ran-Anadir aEsend by hadier met inusser meane, menamed fee-bmed income, salidased ner invene m 1986, camgwed wah 34% m 19PJ mui 26% ia 1984. sus pas funn the miss 4imenmem secunrirs and the seie d Compuzer Further mkr am&m needies imarnanar al actmnes a camarmiin Name .I ftmaer,Inc.These '===& inc:ars wee partaly dher by menmud operums - 16 of Names m inern. al 5 anments u well as m ihe Courury Rask secten -
. mynwn and a higher psonmanice && loan lasses.Domeme carmry d this analyus. .
lar 19hs ame shunsiy unpacied by _ i 127 mason aherrases dae Imamational cammes for 1986 deca. sed campmed wah 1945,despee sa she m 'em 1985 mesp====is of the nyonal banks loaned m Ohm and mensmed arher apasus mcome, ese prmisruy to a higler penman b ben henryled. ,d m the firu quarar 1986 acapannan d Chase Finnds. bases and inensned garanns egenses. Nor insmeu income m 1986 mes Danuunc wr suses anammeinemmend in 1986 compend wwh 1985 and down fwan 1985 but up horn 1954.11ie d=r=== m ner mien meume in 1984 en pnavily se a Ngher wohnne af inusum eamug assets, mdudmg 1906 ctunpand wwh 1985 namend edumd lann wiume and nananer menest a shammalinc. see i: the vulunse of canamur loans, and so a Ngher inel of rue spreads while the incumme ear 1994 mes pnmanly ese so wider memem nummmm4ennrin dipcats. Bash of dune faciars neuised m waier mnemer rae spiends. truernaranni tee 4ased incons incensed sa in3 million in
~'
sur syneds. 1986 fmm 5253 mdian m 1985 and Imm 5215 nunen in 1984. Fee meame Demane arher 9:ranng sumie incnused 37% ar $294 mdhon, m 1906 (nzn imumnern bankirt and global maar and laicury actmnes cannrused m , m St#pl agen, campsed suh $7!P7 misan for 1985 and 1536 million for inemene asndicami; mer du 1985 and 1984 leda, sensctms ehe snumyc 1984. Damame fee 4ma? incane sicamed imm 1501 million m 1984 and emphases placed an these acemnes. Innenstanni canumer ke-based income
$656 nuinn in 1985 m $7tle milLon m 1986,pnmanly ese m the connnued and he wicame 6um *mnues af cada inensued while he sicane imm aocequ. l
' pam6 dOissen trust and Macina consumer cada cmd arad irmeermaw ances =-- " m dechne. Inumanansi nanise4ased income mcassed banksg actwass. Damenc nonse.$esed meame was 1303 mdison m 1984, m $319 miBian m 1986 nam 5266 smuian in 1985 and imm $D9 miRian in a mamme af $162 sullian mer 1985 and of $268 nn!!mn mer 1984. Dumeme 1984, ese larply to cannmed saarg losegn encheny trahng mcome, m-amadme4ased sicame br 1986 inctaned amt unamune securmes pairs of cuaned tradmg accouru psa6ts and incomed net wonermern secunnes pns,
$141 auka, g $51 nullian hasn 1985 amt up 5123 mann imm 1984. Also partnlly admer by net inseyi cachmy rendeman lasses an amemments m sdsdalin 1986 damsunc artur nonfee4med nuzwne was a gun af appmm- oasess hennches, abadianes and maaciusd compenses and in 1985, a lamer r,muir $100 nullum (560 mdien sier amenSam che ante of Campuur lewd of pns an inirs af asseis, fissur. lsc. llie irmemet. anal pnmmon for loan losus was $155 millum for 1986, The dement psonman ist han lasses for 1986 ums 5440 miRon, com. campsed wwh $105 maan sur 1985 and $150 milum for 1984.The inemane pund och tuo mann m 1985 and $215 nusen in 1954.T1:e mciennes of aer 1985 aus pnmanly ese sa che higher inel of inumananal nei ben SI'3 auten and 5225 nulsen, mapM asur the psevanas swa jenes une chary. ads and con wmng imcatan candsnans psemeling m cenan dnei.
psummnly due m sty; hgher Inal ed emment cansamr net loan chary <ms ,wg counmes, inmensenal operanns expenses incessed sa llJ14 mdlion
===r===8 wish rie caramed agud panch of the dameanc comumar loan m 1996 ham $1,0'3 mamm in 1985 and funn 3504 mdian m 1984.The partisim Osamme apamuqs expanas wussend sa $1,987 meBen m 1986 mcause m cupeses our 1985 ssAscud, in part,an . ---t 586 million han SIASP nuten m 1985 and feasn $1,361 nubian in 1984. E;cpenses of adien impmet oiissyi cuchuy use chariya en cupanses of oseriens mamme r my==d densanc campanus neceased 1986 apearms ecpmees by adices. Expenses af secently aaped inernse nnel secunnes truang and appemensuly $64 nuten. Indaded a 1906 gunnes expenses men appr su. - - -
. camp. anus in die Unned Kirigiam and a bankuis a: tied.ary sumir $7 augimi af ane ame disys ad==l na saisetsee iedsenons m m Spam menssed 1986 apeants expenses by appmomanh 540 mdlion.
CluerM---r aEre nonsek. Erdedmg these addammel cupenses a 1986, Also mchmied m 1986 apmanns expenses wue 123 minaan af aw nme emnasu eymenus apenas sucemmed 15% amr 1985 and $2% aar 1984. charys aimed so islectne reesctions m Chamehismem adix nanusk.
. See pay 27 in further adormsman an Odur Opmums Empman.
- m.4. i.n #a s. u m., %.a n.;
- 22. ' Sm.susus lasununnusikw aus
. _ _ _ _ _ _ _ _ _ _ _ _ _ _ = _ _ - _ - _ _ _ _ _
uvaan, marsu r EArr AND AHUCAth anminsum so 1986 insernmunal NET INTEREST INCOa4E -TA XA BLE EQUIVALENT BASIS' carmny lease apessrsons in this ases ass $12 vndban, compmed with 135 mil. Net inseme mcone m a taxable equrvalent tuses was 53,281 mdlon m 1986, han m ISg5 and $20 miEsan in 1984.& dedre in 1996 cartungs compared an increase d 10% <>cr 1985 and d 29% cxr 1984. Net ameres imarrr weh 1985 mai leyly the rendt dirnessed operanrg ad san up expenses, increased <xr 1985 pnmanly die to a hgher mlune d ininess-earnmg Operanrq emp:nses satened m 1996 compared wwh barh 1985 and 1964 assets,irrishng a sutsamsal mease m the wAnre d conmmer bans, ard pnmarih dae so adserse fasegn em:hary tranderum edbcts cm expenses d m wxkr imeres rare veeads resaking frun kmer findmg cours die o the amerseas <4m e seemerunng and snesarre expermes naard io sciectne drxhnmg waeres rar crmmnment T1v 1985 chang m h=ht incorre tax suertsans m caerseas e&:es and e expmses d reemdy acquued iruer- rues and the 19t$ chany m New York income tax rues appucabic asCnesen amonal sexanrurs todirg and and:'marray companrs in tir thmed Kirg- Inenyd lease partkdo had negarne impacts a.1996 and 1985 ret trueses dam and a ha d:irg so-hy in Spam. Net sucres mcome and ke4:esed mcome on a taxable exprvalera bens d approsenoudy 524 mdlun and 517 encome, pnmanly surs,urs banbrg, m....a l bankrg and gbbal trum mdlion, respectndy in 1996, a eray uueresearnmg assas =cr- 5723 bdlon, and lidreary actmry fees, mnenaud so mcrane cornpend wwh both 1985 up 53.1 inusan, or 4%, fmm 1985, and up 15.0 blIne, or 7%, mmpmed and tit 44. Irmernmanal crina,mer fee-based income also mcreased. Nonsre- wah 1984. based inctsrse, mamly lastign en:hsrge trading mcome, ttadmg accouru Die followmg table prescrits a reconcdsaron c4 net ancesest income cc a pedes and net swermrne securunes gamm, ixtrated in 1996 compared wnh taxable esprvaient basis and a firsancial staterr cru basis. , both 1985 and 1954. Earrungs fiam actwrrs m Swazertard increased I amipened wwh 1985 and 1994, while cansirgs in The Nethertards, France NETINTEREST INCOM E-TAK ABLE EQUlVALF VT ADIU5theENT l and kaly dedmed amnpared wah 1985 and 1964,in 1906, carnings frtrn 5 m mellansl 1996 1985 1984 a:tmraes in the thsed Kingsbm dedmed compared wnh 19t3 due pnnanly % og ,,, so sneased geranrq expanes idaed to the recently acquired securnes Nei timer, income endirg and =ai6b,, compenses, in alinn, canungs fmm actwurs in Taxable Emevalerw Bams. 52.212 51,914 5:.611 Wes Germany dedmed compsed wsh 1981 Tana* ten *m Adiu-a . 247 213 19s Nei Inreme income WESTIAN HEMISHERE (UTHER THA N THE UNTTED STATE 5h Operarians !Fmarrul5usemen Baus) . 51,965 51/'01 51,413 m this ases cxmmhaed $97 nuRion an.i.s --.J eamirgs m 1996, can- OwncasOdin es pand wah $109 millam m 1985 and 566 miRson in 1984. In 1m, net interes Na Irwews Income-n.come frurn this .ns dechned cornpared wrh 1985, but corwmued to rdlect . Taxatsic Em'valeva %ss 5 t,069 5 t,080 5 926 au @ nnent- 38 32 31 l< the irnprtmed collectsan d inenest on nunaccrual bans compend m Kh 1984.The psumaan kr ben bows br thes area menased in 1986 ctwnpated Na lanc imune
,rmancalharnmr Bass) 51,031 51,048 5 395 wwh 1985 but decumsed compared wth 1984. Fee 4msed irrome irrnmed from borh the 1985 ard 1984 leicis, pnmardy die to irricased fees from trust Corp =a Consdadard ard 'C'""'-
Na buses traume- ! Tanhie E@ walm Ba.as $ 3.281 51,994 52,537 l Nonlee4 ssed irrome m this ans decremed m 1996 compared wuh 1985 Taxable Emmient Adassnner . ~85 245 229 but mes higher thanin 1984,due pnmardy so fkactuarons m the ind d 3,g,,,,,,,,,,,,,, pse<ax nes kwegn exhany tranderum pms and bsses on irwserrrnes in ,Fmmacalkasemmr Bass) . 52,996 52.,*a9 52.30s awrseas branches, asbedianes and anoct.ned compann Operanns expemes m 1986 menssed compared wnh both 1985 and 1964, partial}y dr. to ieuructunrg ard mesance expenses related to sdectne redactsans m curseas b'Y,coM,,,, ,
,'",,'7"""N, n*NdM'tYarNk%rW acoss==r rhe 6 ann E . .mr eh. .enman in ams ,ncome dikes. In 1906,ennurgs ham actwitus m Brazil, Argmnre and Ptserio Rico '""""'"'""*
l mcc ased compued wah 1985 and 1984, while carmngs hem Chile orcnased i cirnpared wwh 1985 ard 1984. Eanurgs fmm actwars m Panama meremed O'* P'* * """" 'm me n a na pwalent a b l campered wah 1985 but decitased fmm 1984. iximed at a n ctrnp urd gmh rue as a M d W l higher net meerest rare spmds and chanys m the mix and volurne d 1 meesamng assen, indadrng mbuammhnames m consunur bans. AuAOperarums m the a::s cersminned $10 mdion so 1986 i-. l carnmgs,compend wxh 150 mdirm m 19tL5 and 521 mdium m 1984. Dunns ches % perni, net meest mcane as a peressay d gioss l irueresr. carn ng assets firtuamed between a low d 3.37% m 1982 and a high Ccrnpared wah 1985 and 1984, ke.bmeed income mctemed, pnmanly de m d 4.15% m 1986, whde the meray for the fne-gar penod was 3.1t*.. giahd cms and li&x ary etrysy fees, while tre h ruxrne der.nas d, adlects g nantnuer inseres rue srdesd6 Nonfre-based ixome decnased nnkrame4 wah unpaned tradsig accours perius and knegn ernar.s D Mtsman Nennmest ric ne rm a a grent % W
$2,212 millon m 1986, up 16% cornpend .,th 51,914 mdhan in 1915 and trading mcome, pemeDy dbating the kwer lead at gara on sales d assen m 1986 corneand wah 1985 In:ided m 1986 nandee-based exame wr, UPNmnd ,@ nuHum in IM N 1%=nau was pninas artnbu-a gam d 514 mdhoWE9 mdhan afser cues) from the sane ai Chasci remam-table m a higher wdurne at interest-eammg assers,irrkdmg, suostanrul
.rg miravy menes m Durnand L. case Comperw Lai,) span, compend increme m the eme cw mnanner bansh vnding cows and a hgher wah a pan d 522 mdhan (515 mdlum ainer cases) horn the sale d a porton W ""' *"Ed '" % "*' P"""Y "'"'""'d charys m merricax rares ,,'P da al 1986 and 1985 n t meen mccrne on a d the asuussed company m 1985 Nonfee-based mcome m 1985 also l ird=4=f a gam d 123 milion (515 mdison atter taes) frorn the sale of real taxabne ewe bass k appiaomedy 524 mdlon and 517 mills n, esame in )spart Operanns expenses a 1986 mcxamed campand wwh 1985
*"uA im werage enemanug ayen in darwnc slices was $35.8 bdison, up 15% from $31.2 biumm m 19t; .nd up 29% fxxn and 1864.Tue 1996 mcasse mchied ackne famgn exharp trar'staram on m 1984.Compmed wuh 1985 ard 1984, dameur net meest dircts on expenes d carness diices, in 1986, cammes ham actn es m hann decnassi compnad weh 1985 bur uae hgher than m 1984.
incone kr thW a nomer arnaum d cash anecmns d imaest Enidmg tir unnset d the pmmusiv disdaned sales d assers m 1986 and " O ""'8 1985,earmngs m Japan inciessed in 1996 compmed ash 1985 and lag 4, l Eaensip fxan actwrus an Hong Kant ac=usai n 1986 c<enpmed wzh 1985 ared 19543hile camings imm actmrws in Australs and Irdaneus ccrutraaed e dedsw cor9 par f wwh 1985 and 1984, 23.
f ormaIEA60FFICts: Net seats income on a sammlde esppunket bens exabd bdhon m 1984 Campend wwh !"%$ and 1984,(Mrseas ret nrerest arrame Sule suban si 1986,daarn 1% Isom $1,080 msRaon m 1985 and up 15% kr 136 mchdrd a low amours d cash collectars d meewsr on run. bom 95 saamn m 1984.The somme m oseness rur mesent mcome m pa Lrmansloans. 1996 n==p==wf wah 1985 namesad sedsad laen adume and nurminer aramst The knowir ; tabk prescrws rwr irmeres* mcome on a taxable cervaient { sete spetsis wlnic thL acutmee our 154 use prunardy due to waier wuerest bens and reisted erwerest rare sgutads kx the past three years for irrrstc une spetuk The 1986 aseray vahame of seneer4:arneg assess in cuerseas I aflices, oierseas aFaces araj the consoldaird Corporarum. j edmes aus $41.1 beson,cxngend wuh 5410 lmlum in 1985 and $444 i. NFTINTEAESTINCOkE ANDINTEAEST RATE SMtEALN-TAXABLE EQUlvALENT BASIS Ocnnenric C6cci 1986 1985 144 i
$ an amtans) Amouer Rae hwww Rae Anuww Rae Ismuest Eamed $3.972 11.10% $3.714 11.88 % 53.568 12.90 %
innaar Pent * . 1,760 6.96 1.800 8.10 1.95' 9 99 Nee lastrier f acesse $2.212 4.14% 11.914 ! ?t% 51.611 2.91 %
-asa% ef Csussi.- larmng Assets 6.88% 6. !!% 5 82 %
Owricas C6ees 1986 1985 1984 e al uru Rae Acimmaru Rae Armwir Rae inuses: Earrmi . 83,029 9.71 % 54.949 16.32 % $5.612 12.' 9% irasseur Pamit . 2.960 7.59 3.849 9 52 4 686 10 83 Nu lasmear lerame f 'f.069 2.12% $1.000 2.00% 1 926 I 75 %
-aso %of Geonlencestiarmrg Anets 2.58% 2.52% 2.08 %
C msciminalCarporaram 1986 1985 1944 l Amourw Rme Amouva Rae Amount Rae L; Eamni , 58.001 10.36 % 58.663 II 68% 19.180 1270% 1rweses: Past 4.720 7.35 5.669 9 02 6.641 10 57 Neileserea lemene $3.281 3.01% 12.994 246% 12J37 2 3%
-asO% of Gmas truesenfar'urg 8Lisers 4.25% 4 03% 3 11 %
*tresuks asisunner aunamnen sur the as of eme espoun scenoJ te ames atteds amusra um mi rte cuer uhkmesa mmes ranru kr var in menem aAe5 The knourwig table presenr5 the circts d changes in awray balances and interest rases d mayor carryJrrs M aEsets and l Labs lalles on tiet Interest arkone on a taxable cupmulent besss l
l NET INTERESTikCOME-TAXASLE EQUIVALENT BASIS BNCit E ASE .DECRE ASE,lEF TOCH ANCF51N AVER ACF P.ALANL [AND R ATl 5' 1986 n 1985 1985 a 1944 l 5 m millums) Balance Rae Toeal Balance Rae Total h.Eanung Assas: Irneren 4eanrg Depours Placed wch Banks - 5 ?8 5 (82) l 5 (4) 5(194) 5 '4i 5288) Federal Funds Sold and Secunties Purchased I thkr Resair Assuemerus (17) 20 3 43 <l ti 28 Trmbru kcauru Assets. 62 (28) 14 39 11, 28 frweimurn 5ecurves. 60 ;102) (42) 149 )? 186 taans-Donen Odices. 539 i214) 325 281 229' 42 0%erirasC4ms . (365) :613) '4 91 a '4 i (97R) 523) Taraline:reerfartney Assets 357 (1.019) 662) 209 ' 8 61 56*1 lauses. Searing Usblmss: Deposts. Dameux Ofices. 93 (123) st30) 252 328 ?6 Owncas Ofhcrs . ...... . (122) a666) (788) (2311 413' 644 Feierallunds hirthneed and 5ccuruns 5and thukr Rapuntese Agaments. 48 (60) (12) 40' 46i % ) (Mur Barmned Monty. 7i (90) 122; i15) <92: 214i toeTerm Names and Debewsm . 32 (II) - 74 21h 46 Tosalinesemenrug Ominimus 122 (1,071) :949) (37) T' 7 4, Nur Ismens lacumur.-Tamshte Egsnaher Bass 5 235 $ 52 1 287 1306 1 151 1 45'
'Chaques au m*t, en su tusman or as names auri kaw hasn Amauf comb to tuman auf ==rner rurs 50
. __________m_ _ _ _ _ _ . _ _ _
. PROVWON FOR,Pnsairm s LDANIDESES Tne pacednet aBocanon d the pnw. mon for p mmble lumn lames berwean p
AND NETLOANCHARGE OFF5 dameers and usernmeanni utwwes ha been psummed bued on subsectne ' T1e pummon for pasmMe lamalame 6 ICt6 menneed so 1995 milhan,up ennames, as further discumed m the fanawmg sectant Reane for IWdde SMO nation horn the 5435 nuEen scended in 19t5 and up EDO m,Asan I.annLaue5 from die SES mal lam acumind in 1984.The mousse m the 1986 pawinan for passNe loan lasses was pnmenh dise no che hgher ined af darneirr can. RESERVE FOR POSSIB(_E IDAN LOSSES sener nu inen chagr<ds asocised wah the cannined repul pawth d the impics m iendmg acuvries a che fact ther lasses ad be =d and that demame cansamer loan pardale and cannimars uncertam condmans the anmune of ash losses mE vary imm emne no ume. depending upon the pawuling m cataan dnakyuscomumes ndr clutactemcs d the pareble as adined by mridwide econonmc conde. Na loan chmywds inr 1986 ase 540milian, up 5115 mation and D60 nors and the founnel esperance d barmuers Tne rewrw for poemble loan remEust aanW warh 1985 and 1984, mapectne4 Damese nn laen chuy. lasses, whch pnmdes br it e tak dlasses mhment m the lendus pmaras,is
' As war 1347 miden kr 1986,a $113 emilum mcasse fnun 1985 and a scienned by the pumann ir pueble loan knees cheepd so expenes and Stas nuten incnuse han 1984,and sgmusnied 73% d exal .ue namn chary. decseemed by the amount of ner inen dumy-aA6.Thee a no picose merhad ads fu both 1986 and 19t5 aml 75% af smal nn lann chery ans for 1984. d padecems specific loanes or amovens whch uirunnedy mer be cheryd of Damrar conmanner net loan chey<ds, pnmanly strd===hir so cada cud an partcular seynerus d the loan parrblut The carAnnn ths a loan mar actmeses, mee the nution for 1986, g $133 mdhan ham 1985 and up become unconsenble, m whole ar in part, o a maner at pismen. Sunilarly, DOS mdison imm 1984, and nymmensed %% d dameur nei lann chary < dis the adspacy of ik senerw br poemble loan lasses can be desennmed only an for 1986. Damis an las chuy<ds and scamenes by loan rype may be a emismmesi bema, afur full wwww, irrhadire cumuhranan d:
bund ar: pay et en ima==l Analyms d Leen taas Espernmx. . Economio candmans and ther eiscts an pamctier coumnesarukernes Ner pre-seu gems er losses an both secunnes and nel ester pmpemes and speedic banauers; acpied in sensfaction d lamns pumausly caruracted ur not mArcied m ner + Banumers' femacial dan, sayrher wwh iruhasry due, comperman, the kun chary rWh. Inchssed m 1986 arher mcome une ner pie sas yms d bonomas' memyrnmu capsimimes, enhannom d the undstyirg colisserai 5J mdhan fram the dupaaren of secunnes acpied in sensfactum d loans br ucumi lauheig,inchading, when apprapnme,iruhpendent 4presais psmoudy contraned, campsed wah $11 mdlum m 1985 and $7 mdliun in d mal esse papemes,and arher facm; 1984. Net guns an the dnpasmoon of mal essee papertes acomed m . Carmuma k:m panth nands ampsher wwh behanaral panems, pas saubenan of loans, slur ishasrusi adpasrmous an pnyertars hdd a year. arid pesent,as ao payment ;-rfurmance, ddingssenews and M=Jr= for wher. end, mee 53 mdlum m 1996,campand wwh $12 nullion m 1985 and $18 car masons, nullen m 1984. Cans ami benes on dispamuons and ielusum adnurmenrs . A cantwwwg enhannan d the loan portfalso arsi dhbrace shes cadn d mal case peupertes acpied in sarminenon d loans ase narceed in exposums,swindang marumnsg by imding adiars and cxdn supervuory orlier expemes. personrul d loans which ase sierunfted as bearg d lus tun acceptable (palwy. Net loan chary <&, loan laas expenexe rarios and the esunamed in addman, permdsc _ - -,s ase coruhacued :n lendq amas by the aliacasan d the promison for pammhir han lasses attributable to domrec Cadet Audu Dwinan af Chseri General A adwing 4._, and insemsreanal actwurs for the paa fiie years ase summanned in the + h4arrhly in<hpeh appramal dioens which pesen a panetalny of loss. If, as fullowng falde, a neck of ash manrhiy appreenis, a loan a nadyd so k uncalleerdde, the cartyirig vehse of clw lann is rechaamd, m accoudentt wah irnernal poicy, so NET LCMN CH AaGE M5 AND LCMN LO55 EXPEklENCE RATIOS the portum aihich is conomised 80 he callectdde.
'5 m millams: 1986 15't5 1984 1983 1982 in addnean so time contuuawig mnemal assenernme d ihe loan parthino and NetLaan aAs af belence sheet cadet exposues, time cannoladmed financ al stammerws ase Dureree- mer* 1264 1131 'l 59 5 35 5 34 exammed by Oissek t - _E puble acccmnianes, whane exammanan
-Commnant edudes a avew of the adespiscy of the suasrw for possbie loan lanaes Also, and Orher . 83 103 103 121 I17 Tosal Dr=*rc.6s:. 347 nanasu d hh lam pardale and here hida pas 234 162 156 151 ase casuhrted penodually by the indsel bmkeg anhantus.
"""'""' '8 53 "
- The senerw frv pn==har han lasses is memtained as a emeral resere Total 5475 1320 1215 5255 1230 wuluait any mesmal h so tfw camporurus ai che loan partialio.
Laas loss Espansmet Ranes' When poemraallasses on specife laarm ase identdied, the porton deemed D=wncmu Car aumer* . . 2.30sb l.60 % l.07% .% B5% urrallectible is stiary61 afE Hceaewr, an allacerian d the neerw has been Total Darneers. ((h .38 1.05 49 80 48 60 M 68 63 67 prepand bened on suberctne estunates whrh uke mio account hrssancalloss data and Marisymmtli news as to the edanet: risk charactenstes of tk Irmemsumial . 43 .27 16 _32 27 partshot Cansaisierad . 76 .52 .36 47 44 Allacateamaf the propinaan lar peaside Laan lasses Damewic .. 5440 5330 1215 5135 1163 Inarmaianal . 155 105 150 130 100 T< mal 5595 5435 1365 5285 1263
*l uom so iml=6:. for rmoul E apemheum ami I J f smily Rende,wul Pmewents.
Tee tuen deser4A as a pm enuer of e=mer leers 25.
. T1e adbcmxm d the sesene br poemble bati bases a yeared 1966 OTHER OPERATINGINCOME comipesal arch de prnr br yeareds is piesmud m tk bibwmg taNc. Orher aperrms arrame unakd $1,183 mdlon m 19% up 32% fmm 51,316 rrdion m 1985 and up 88% from 5930 mdlum. .n 1984,as =Acceed m AUDCATEN OFTHE M50tVE FC A POSSIIILE LMN LD'M5 rk kdbwmg tade.
December 31, (I m ==Am==) 1966 1985 1964 1983 1982 OTHER OPER ATING nCOME
,w % g w 5 m nu!!mns; 1986 1985 1964 thmursrac. Fe-Band Incomr*
Real Lasse loe's . 1 50 5 25 5 25 S 20 5 15 Insemnianal Buarrs: Fm . 5 164 5 162 1 152 Caumanoni 200 235 225 t50 160 Tr as and Faksamry Irme wmmr Fws . 2u 193 154 Immus soindemkaads 261 227 160 Casun.e- lLankus fees . kr Ptriand Other Fweaned hcome. 4 30 327 250 g h Total Fw4ased lwomr 1,121 909 716 laurnersorad 450 eu0 375 300 4 75 Nui6er-Based I-Tota # Abe=nf ng ircone 223 173 1M Ponson. . . 1,000 850 720 535 520 TmingA ma M . . 68 31 3 uaA m aiPuruun' Inunrment m Gairu dases: 168 98 17 65 58 41 *9 38 Orlur Nanke 4amed irrume . 163 105 49 Laus Losses 11,065 1908 1768 5564 5558 T<mammiertaned innsne 622 407 2H Tacaloiber opezassiammer 51,743 13.316 $ 930 m gar <nd 1986 =lberon d the resene br paanHe bn bses d 5450 '""'"d 'a' """a'*' P*s"='5-rruRxm m - J bru mes up 150 mdban from yeared 1985 ard uducted connruurg unaertzen gkkel ectmame corxirmns prrrulady i,, l'EE-BASEDINCOME oertam dewbparg couernes,and tk cxxuning hgh but same<ahz reaxxd Irmerarnal busness kes war rdardy As m 1986ccrnpand wwh 1915 levd d.-=. J bans.& aEacanon m cbmeur consurrer bns was pnmanly diae m the ibw growth d unrmananal trade activurs and uncer-weressed by $100 mellem ao 1275 nullam ar yeared 1986 pnmanly in tain global ecorunns cordmons. In 1*% see mcome from truar ard fdziary antrianzm d hgher inds d chary cas associard wah the corrmued rapd 'rmermers servns arritaied J:'% mer 1985 and 72% mer 1964.h arrrease gewth d tk danzar conmimer ben parrbie ard cordricms cunerriy m 1986 reAccted an enhanced marker value d assas under trus n.anayment psevahng in the consmur aeds snarks Tir pared 1986 albcarni ard gmwth m Chase's skaal cusody servr.n and mutual furd activmes, en &mest - - -+2 bens decumsed by 115 mdlon frorn parcui 1985 m cridried pnmardy m cnerseas adres, ard fmm speciaky irwnmers services 1200 mdlon and ridecad eroderme impronmerus m certam uxbury a6med by Chase Irmesmrs Maruymers Corporarm New York.Cannsmer segmern & alberum o domesnc seal esome bns xas macami by 125 banbng kes mcreased by 15% compend wah 198haxi by 64% compared miBian from yeared 1985 so 150 nullon a yeared 1996 due pnmanly wah 1984,prunardy <ise m cortmued growth d Chasci VISA and Master-so aridswra currendy peneding in the real esame markers wnhin certam C.ud cnxin card busness.Other kr4nsed ncame irrkded income from pngaphe barxms m the thund Semes. neumox barmug actrvres, mbrmzon servres. nxrtype banhng and The albcatxn d tk resene accours wdl chany whenner Mangenna camnricial banbng actrvues. Imesment banking hes maeased 73% deserunnes thm rk nsk cha meansers d the bun partido haie changd. ard IT% compend wrh 1915 and 1964, espertrwh, due so urbaarnal k shouki not be canarued tha tk anuxus albcsed so a partrular segment 'rxwases m maar naeumers bankmg he urume czqpres, mckshng he o the ordy amount peJabh kr future chary-oAs tha might occur wxhm mcome from leasrg actrvers, ban sales,irmens rae and cunency swaps, de segment, once the asene a a yncral resene suadabie agans he teraj loan arranyment and svedexam acnvers, ard nurpr and acessrnan advi. bn partidn in aidman, the arruiurus w alkx:md by segment may exx be sary servres. & Irmestment Banbrqt Gmup consmunzed apprtaarnmely sdrzne d furure diary of nerds, in the opmion d Manapmmt, the *20 irmaen rue arxi cmss-curancy swap cransacturn aspeganrg +proso-raene kr possNe loan bases a Decante 31,19% mas =+rp=re o abcub mady $20 bdlon m rrronal pnncapal amours m 19% compared wah kases m th can partble anrripered a that dae. Chase's mdeperdent 3Rutmimardy 300 nrh tr i- agrqpring apper.samady $7 bdhan putdr axourraro hae cxrruned wrh Mampmerzi apmaan. m rxxmal pnncipal anxxirr m 1985. Other kes prrraad Imm mbrmzxm At Decenber 31,19% the belance m the resene kr possibk bn kmses servun, martipp banbng ard commercial barams a trvues mc' eased mes 51,0&5 mdlon. compared wrh 5908 miBau a yeared 1985 and $41 18% cner 1985 arid 45% our 1984.
?Jum at yeared 1964. As yeared 19% the seserw kr possNe bn kmses wpeewurd 1.61% d bns,cumpered wxh 1.47% and 113% at yeared NONFEE-IMSEDINCOME 198I5 ard 1964,44 Foregn exchany tradmg mcome br 1986 was 1113 mtBon,compend weh
$173 miuon m 1985 and $119 mdlum m 1984.Tk 87% urresse m kregn echany tradmg irrome from 1984 so 1986 rekcted the d -n d Chase) tradmg and cusamer servia capecry ard the efrency d Chasei gbbel tradirg nerwork. Chase is a maar market maker m 41 d rk workf's hedy traded cunenc rs and through es giobel retwrk d 46 traling centers m 45 ccurwres a alde to simdy and accurandy execute kreign erhany transacrons iar cuseamers and so arbaray the varxus spat, krward, futures ard opexms markas.
Traims accouru prdus, nuizhng profies from deakr band ard precxxa metah trahng actrvues, mee 568 miuon m 1986, compared wnh 131 md'un m 1985 and 129 m. Don m 1964. In aihtun m mcrened tradmg prdu, i 26 1
( ) , nebssarmel pans see adiarved in traderwritmg pnserre ard global woirres Salarrs ard errgdayee benr4s wee $1.752 mdlaan in 1966, up 1222 mdirm i durrinnun Co@m d OuseWp=mun d Laarr, M ihmk & fram 1985 ard up 5498 mdixm from 1964.The mciese m 1986 wm pnmar-N aypand Samum & Costs a the Urused Kangkan m the securid quarter dv dr o rKymal saff salary tracreases, the unprt d r:xxnr a:4nerrms d 1986 contributed to this experunus and the aherse kneign exdsary transimum ekcts an salary CFpemes d 14er unemnent securmes pasrs erw=W mabstanna9y to $MS mSrm, up oerseas afires, SM nupam fann 1.985 ard up app:acurundy $i52 mamm frorn 1964, All cmher a:ms d operarits expense, adding ner cauparry, egupment man:tsg dedanig sneeresr cars ard loorable marker carx' ara prevadirs cimes ard other expenses, mcreaud Ew 5287 nuilsm, or 23%n 1986 e timungiras maar d 199& See page J7 kar addmorial inkenatxe on 11.549 mdiran, ccmipared wah $1 M2 mdhan in 1985 ard $991 mals:m m huennurs Secuturs, 1984.The inacase m 1986 cxher opersmg expemes irdaid the unpact d Other rarifte. hand argume arides net gnirs (m the da+oins d assers, carwirmaed irivestments en equgwnent, sysserra technabgy and pmdet mno-rus kneign enhary transharrm guns and kmses, esury urome from asson-varam, and expenson m exisung and trw marbrs. whdy dunesnc med ctunpme. 00% m 50% owned by diaud ard miscdlaneous irrame. incerstare expansxrs unestmers banaang ard domear ard .- a cxm-Tir erumme m oeher rrndidased trarane, frtrn $KI5 an:llum m 19R5 to 5%3 maner actwurs, ele impact at recern acmarrus and the a: heme bmsn msEsan m 1966, srww e gen d $100 mJ1xm 560 mean aher taxes) ham cucharp tranderm ekcts on expenses d caerseas c6aes, Pa.naDy a&ws-de sak d Computer Pbuer, bu:. in adderm,in 1986,0 ase sold as remanurg ung these maemes wese sanngs realaed fran' expense marinymera psopams puestar m Diamond lease Ccmpany Laldspan kar a gam d $14 mdlKm irutaused wth erspect to less petdactne and rnargirul a tr.1nes ard de> S melbun aher camesurgment wrh a gam d $22 nullam 515 mdirm sher c.trrnary types d spendmg, tanes)isom the sale d a parmn d the assocuwd campany m IM Also The raarnbar dcinpbwes a wear.ed 1986 was higher hr 1,030 empbyees, arrW sn 1985 other is .L LJ urome was a gam d 123 mdhan $15 or 2%,than m 19t5 and by 3,810 enpiyrs,or 9%,chan m 1964. The nulum aher trues) ham tte sale d seal en:me m beart f4cr pasm, bebe EAwing tatic sets krth both the numtur o'dameste empknices ard a exanne taxes, from the depaurra d securves a:wurd m saisfactam d ragraphs onenbutxm d cmpknees m czascas offices, kans pnwndy arwracted axaled 128 mdlum m 12,ccznpand wwh
$11 m Bean m 19t5 ard 57 nwErm m 1984. Nes kneign exchany ransizzm Nuusta(w i urtor ri.s AT y tan tNo benes on Osase's - si omrseas branches, asbsidianes and assenmed 1986 1985 1964 mmpenses neve pusely 124 maan m 1996, ccynpared wah pms d Domest 06ces 15 nmHoon m 1985 ard bases d 54 mals:m an 1964 On an arter.can tems, rer 3 og, 30300 29,5'O en kungn exchange transinan kmses mere appetzumartly 512 millrws 19 mdlum Asia . .. ......... . 3,650 1,450 3.320 ard $15 mAsan m 1986,1985 and 1984, n spect4 Equay mcorne turn f umer, Widle Easr and Afnca . 7.760 7,030 7,00 assanard bankug msnmuurn unprowed by $16 md!rm ard $10 rndhan per 'em Hemaphere . 5,170 6,400 6,470 19t5 and 1984.i%,4 pnmardy 3 as a sesult dlaryr wrxe&mns an TacalOerum onces 16,580 16.880 16.800 cmam d Chase) uwestments taken m 19E5 and 1984, which were charyd fataltaspawees garam egnary carmigs 47.4eo +6.450 43.600 (IIHER OPERATING EXPENSES W ng thei impat d arent aansrums the rair iber d empbwes was Other geranng expenses utst 13J01 mdhan in 1986, up 21% funn 19&5 @h IM & %
- rmmedes the ner dmys in die ard 47% ham 1984, as afriwn m tir kAwing table. Ocher operanng inanbed W b sear.crd IW m warW N expmses in 1986 arreased compand wah 1985 portally dae en h knegn eschary transsanan diects on extenes d cnerseas diices d NrT CH ANGE 5IN NUMEER (w EMPL(7t EE5 appstmmady 586 rruila:m ard so expaises d recmtly ac+ind cornpanses d ' 85 8' appmumady $104 mdlun in niinum;,1996 operanrg expenses ud.ded BTanN' mar Sud 44450 4 A6% 17.230 ggutumardy 130 mdlzm dcrusime diarges reissed so selectrue redations A,4nsiisons . IJ92 545 5."60 m Ousei domews ard mascas adice nerwork. Driderg the impa6 e d W 5*sidiarv (270 - -
these pricased expenses m 1986,Chanci arter operanng expenses ursind inaeaw (nono N 35 610 hae s'aceased 13% ocr IM Irdded m 1984 other opermary expenws was a specud recocy d $49 mdlaan (120 mdlxEl aber tames) ab a resuk d Chase i N" Chmees t.030 2.850 g Emf of Year Sud 47.480 4 450 4Lem serttements wrh certam dederdants in the actum the hank hous,hc .q;amst Drysdale Securwes Carporarrn, Drysdale Goernment Secunces Inc. and c m! ret italiacd on ccrtam ather transaccan PROVt90N FORINCOME TAXES TWM-m@m-amb 1986 compams wah 1333 n. "-m m 1915 and $223 mdlei in 1964.The orHa R opt RATING Exrtmt? IM deatase m tk petwisam em mcome taxes from the 685 levd was S iri h tou urt5 su primarily r m a bee +d d psNax mcome and a wy m the mtx d ait* m Bme h
.trome.Tle te&ral - ,m 1986,and New Yors scare ard Cny, 5t it .4 !!
m g9R5,alopeed mw wrume tax laws whrh aficcted banbng asututaans.
%,.e,. a.,, m w e, - i s +rd,,m ,r m e w ase Drpieciarion ami Manerunce 27t 226 isa Other Expenses m incrayd lease finannrgs permuted C'me to boet its IN prtwison kr 947 ""9 582 1 1
Leaf Oedier Opersnat faq'immes 53.308 12.7M 12.245
% dim.a,= = pwp 1
a
- immane tamrs by m - - 1,126 nullmutSnrulark Chme had kwred UQUIDITY AND INTEREST the 1985 pwmmon kr inctime tames ty appsummmeh 122 mdtwm dae to the SENETIVITY M ANAGEMENT f4ew York urtsne tax rar charqps appkalde m inmipd lease tmancirst The central ruir d thas6 immhrv manaymme is so emure char Chase The anunna direxrne tax experne sidersed m the hnareial maremmrs has pmiessum d ard mess to sufficeu led funds to neer rte normal may cirase an ervansxass impseseum th:* Chase is astgect so a kur irrome transactum vetpiremenn d as cusicarris to take advaruar d snarket appcr.
tax l==Im than am calier types d inausness corptrartris. Actualh,Chme and tuneres recpinns flexdulrry and speed ard so peta ide a cushtm against cher cornmrscal bankirg instavtwres in efect pay aidetural amourws urineseealde ard unkwescen 1 9 ry drweds.The need kr a dnciphreJ ard which ase eguvulas so income cames by acapug kms yu4ds on federally compehensne program kr 14dev snaruymmt has trxn heig6xened sub-taxesmipe munscapelobiqpanns and by vunne d the exped mamemarre mannaRy by econrume &4.ms m secas years. Mc=cments m norunnes d inroes 4.e reserws wah faleval iteserw Itankt d enssar counmes around the m<nid are agnifcarwh rsare sytrhrenured The blawng talde pesars barh the duect ard iridiact 1996 taxes barne and skiral fnancial markers ase nume chely magrmed by Ome and the manirsg edectne income tax raic. In setinr wears the dengularum d iniaru rase ceilmss on nns: duneste depners dunder $100,000 arid the per nessson grarned so banks tw iederal WHLAll T FFICTtVE If(DMI TAXES-1986 aghartrs to dier rexwry market depour accourus, comhmed wah cshtne Pvc hui Net marketmg pmgrams to a. wire these depours hsw taucrabi) afircted 1+dery
!!*a=N"me imme Tas Imane maruyment tw experdng sources of furds. Also enhancing ChmeiImdry Fwinncul 5ememmes.as publutid 5 645 5258 5585 manaymers sucre the tsaAarxv m str fru, thud ard burth ganen d im Langs Oblipurus luipisar Tax . . . 260 260 0 d as Side bes Due l'% Thermg Rae hes Due 1991 ard 6k% Wes O'"E I"d""n H H 0 Due 19ffh w4 Chase has teen abir to unitze ttrse sources d furkis F-miisaammann,yo hanne H.168 5585 5565 m sakste rs tradrianal reharice on lary&urnmarum nrtaxsable certificates lasaw Tam Rasr SN of depo sr from an awerar d $1.4 tullion in 1984 to 1.9 tullam m 19&S and
- Computed uurgChane's average cast of domestac mierest.trar ng funds or.1990 1.6 tullion m :l%.
mallen rnamiamed by Chase m irnerest 4ree enerves with Federal Reserve ILanks As an essenrd part d its lupday mansyment,Chac cczwvues to pia c a hgh prinry an cksnefy maneronrg as g;kkel mix d asset arid I.alnley pw The Tas Re6 arm Act d 1986 is riar curwrufy antripered to hae a mnenal uwn ard mainuuning its afuhry to smiely adpu these powsarts Chasci edect on Onanch consalmisard rare mcome 611887 or on Chaseil@idas. plots! rutwerk ptwuies dnerse suurtes d furdng ard Irrdmg iha enalde Thine the federal tax rue wdl te mksced to 40% in 1987 fmri 46% m 1996 Chas to civxmc the nost cos Wiectne rneans to execuir husness siruegrs. Land is sduduled so dedme further to 34% m 19814 tie mkrtum d varums in skirum to as l@d assets ard shortarrm heininrs. Chase also talizes specsal tax bendas wil larply dinet the kwer 1987 tax rare.The Tax Rdrm mteresr rare futures contra:ts future rase agretmmrs mterest rare swaps Act supues thar (marcialinswuerms, arb as Chase, :ecapture mro taxable and meeren rare germs to marup imeres rue nsk exgxraare as part d as
.nc ere ener the next kur wears the resene Er kann loues prewausly tax gbbel asset /bimity manaymmt armegrs ad kr 1+sfiry maruyment, deducted This wdl te mciesengh punnne caer the phase.m penod ard is The kdkwmg talde dxws sciected aversy 1+d aucts ark! dort. term portrularly dimurtung so the bankmg nkistry fium a putisc palcy vww- tutulnies for the years 1986,191L5 and 1994.
prunt. In aldnwt in the past, Chase has accpued sair and nunripal iccuryws ard knarr, exernpr from lederal irumr tax and miend into lease si t EcTt D L SQUID a.55ET5 AND 5FsJftTTE RM LI AEULiTIES trarna turn peon ading snuramem tax credes, whch transeernd much d the .5 m millans- Aways) 1946 lalti P8fW ectuunnw teufus d the seized tax puderres back to the semes ard mung- s,g,,,,g g ,, l qimls es and the leswet because Chase accquid kaner trueest rues ard rental inanes Beanrg Deponts P* aced wah ILanks . 5 6.000 5 5.tw 5 'AU psymmes from them. Tax rebrm ehminned the imesmme tax credit afd us Tessury secunna t,900 1.800 1.500 , curtained tank mcomes to purchase taxemmpi obigerunt F""gn Gcannnem Secunnes . 1,300 900 500 l The vast scope d tfe tax rebrm changes and their efiects on ett markets kr hnarrral assas, depouts and odier Isahdrtes kr cxher liarmd mrrry M$"gn d
',",,,,,,, g, son goo goo Luans n B.uken and Dea 6m m snunirs e00 600 m:0 will hae an ardirect but curwrrly urxpatrifable efht on future buarrst ixr F.ankm's:ceptarses m nresain 500 100 4/4 exampir,the curtailmera d consumer mterest dedkctxms on rumnrrtgay A" ray Tma taso $89.8@ M6.h 585. W kan pr ukrts, and riew iennctums on the dedstitalry of IR A conenburnms sdened shur enn 14atalmes tw cuerners couki hsw an a; bene efitet. tknwwr, kwr taa raes ma, M Nun we4earug Danand Depcen I* I# I#
aire addaurut e,nauner savmp whrh couki nimulac demard kr bank
.kr t pnar,5, suie rnanciai proa. cts .hich compete wiih t.nk proa.
d",['g",n$,p,,, , l ow,em i,ix e, . 0 00 u00 0 00 irti m its markerpire m , te adwnd, asiected tw the cunailmem d special Feders Funes eurcsa,es n, seturu s
.:spaal pairn sax rues and tax shehers Corporstr ns tacmg an mcreased tax saidl' min Repurmic Ac.mmeus 5.M a.8# 520 hurden may mcrease their demand kr furds, aktough Ihere may be truwe bi an nmu en
,,mne io npry rir ncmg rah than da. finonen airman. soies a,d s,wn D,v, ,, L,,s c. um aan
'rounx spejars wdl 6Ke trw rearrians a finarm. irs wit h kwr co1r tax- Carnt imini Paper <w the Company 2,900 3.2w 1.800 exampt !xrnwings,and the firurual irscennve kr bank 6 to finarwe the mates Nerum/eCemfkain ut Desums ard munupaktr> tw purthaung thnt oblycarons has been sutwnnalh-cu,,u,d Q""y" g '"
u j HL u - In marwipngI nvdici, Managinent takes mio account bank regulsory limaarms on the atwirty d narunal 1:mks to pay divderds to aheir parert hakhng compames See We L3 d Wes to Finarual 5carements. Regulatory L.amnaxms. l 5 i
N CAPRALMANAGEMENT cornernbie securwas that msy spialJy as prenary capaat The anmune d Capaal menspanos a Omme a a cunmannes pmcess subsA ccmsins d pepmial debt and mardamsy carmemble murwes a innned o 20% d samal psendst cupmalInr tmwh cururu fumannelpassemurigaraf ancupsusf furuse pnmary capad. i%rpetual pneerved mod.pe perual dets and marrimary pourd6.Oimeh capaal paarum nr the inn thser pers, a defryxl 13 Omes carmanbie securves ase limmed so Dw% d scual pnmary caintal. Omsci prungel banksg aguissars, a down m the - - arg cahies. Key su piesers capualvrunuse inns met wniun the ww pdelues anhown m caped mensymer e inernal pnersum d prunery capaal thangh earmnp the saide an page 3a and rur encanes so the senerve for pasable kien kisses Dunrg 1% arwer. The Hlowmg table diaws chargps e primary and total capital darrig su% pnnaud pnmary sapsal samalmi 1506 miEmm, up imm the $454 mdlan 1986,1985 and 1984. pnamed m 1985 auf the $D2 mdien pa-r-rf m 144,and imhi a SH3 malban ner innense m the neerw for possible kann kmnes. The anreaal W M ARY OF CH AN2W CAPtTAL 300t IM6.1985 AND M4 sest dpnmary capualsmeranon imm ersynel sources was 8.3% m 1934 3 m mensamt 1986 1985 1984 campsed weh E.1% a 1985 and 74% m 1964. Pnmary Cgaat a Bqpnnig d Yeen 56.090 $5J80 54,446 in 1986, exarmg smensors pawdsd thsee exasrnal sounes d ecpsny horn ~ Pnmary Caymal r'h huse esmanar d shases d comnum sock punuant so: the Dmdend Reinnew'nmr lasernas sources mul 5 sock Punhase Manaonersson d the 4 %% Carnern!de Capaal heuned brmnes 4Nar d FX Trandanon) . 16 3 332 200 Noses Due 1991, which unse caned for redenpison a r@ 1984 and the Nrr Chary .n h h M 6%% Comanbh Subonimmed Debenruses Due 1996, and psymerr d imIms 4,, 122 H2 meses un Narug Rae U--- f_- ! Names thse 1946. Tasal Pnmary Casal mesn Imwnel saures 506 64 332 Dunns 1906, comman sedhaklers mroessed $45 mdison d devidermis e Pneary Gammaal hem 1.315,000 ihmees, wah a participarean rame d - fy 31% d ce,bie S*"'"' shoek Durwg 1985,commun soddues namened 539 mdinn.n T,000 ihmes, wth a partripasa rase d approomnsk T%. D[dd Aconsed k6smierus . . . . [ ..... 84 14 In 65 Chasci pnmary capsal mczased by if'l amloon so 56,661 mdjum a Net Gam rm Ranremes d Serus 8 and C pareid 1996 ham the %090 mdium inel at year <rx! 1985, as shown m the Pivened Sami . . . . . . . . , - - 28 mrquesyirg taines, As yeareuf 1986,Chanch pnmary capnal so anal gnas assers nuo mes 63%, unit us excess d the 5.5% mmwnum ran estabinhed D , $ D I , ,,,,,, g3,3 g,3 g man, R,e khang d Sam our 39e6 . . 03) 04) D6 ci 1984 by Oissei pnncipal bankms neulssors, and up eight bens pcarws Conmari !=asi lasued Pursusar m: ham Ar 6.8'% ruso a wareuf 1985. %ereuf 1906 sacal assets mere a an h"'"4 R'" 5"t"8ea'"d Nut ** urasassBy hgh Irwl composed wirh scareid 19E5, prunardy becaine kan mbame ernessed die to the hgh lewd d busness transactswa am.ummand j[d M ' ' Cumemm d CamamE Nusu in advante of the Tax Reftsm Act d 1986 becoming cdectne armiin the and Ortievrures . . , 42 27 8 prime rue long buer than der commernal paper rue Chase's 1996 awray Dendmd Ramesnum Pbm ,.... e 39 33 pnmary capual so average smas anons rarm era 6M%, up 33 hasa points mas e 5 g ",,d,, w fium the 644% ruso muerapsf for 1985. y ,,w ,, g g} Total capital itsaides, m addrian so the denents d pnmary caprcal, seasdary capstal which a compnsal d redeemaine preirrmi sock armi g yn,g W w h l % 65 % '62 kreerm dets. Chase augmerned as secardary capwal in March 1986 wwh N"
- C""K"'""" "" ni 50 :ou i the ensuarice cd $UO mdison d 8%% Names Due 1996.The twt iricaeanes PW ARYCAPtTAL AT M30 Mi RMO $W m secordary capstal, enmbined wah the tem irrusnes m pnmary asped, secondary Cend a Beginnmg at Year $2A06 51.527 51.034 venderJ m an iroesse m sotal capaal dirug 1906 d $m6 mdim Total Reomumi of seres 8 and C Pwhnd stack . - -
(881 tapsal at tear end 1986 ur.rs $8,M2 milson compared wwh $8,115 mdinn at Longterm Dehr ut ind bt udseries . - - 114 neareul 1983. At yearend 19tM,Chasch Rxal capstal e3 exal gross assets issumen:r at Neies and ses 249 462 886 rrso wm 92%, also nell in excess d the 6.0% mmunum rro cuabinshext m cm Nous. 144 hv Chanels pnrrspel bankirig regulanys and up 4 bem pcnnes inan fQan Pem and Rmrernme d Naves (221# 9
, ,)
- 10)
I1e 123% raio a irareuf 1945. (26) Fomen Ea:rsarger Tniranun Adan*menr 66 52 00) in Ncwemtur 1996,the Based d Goserruns d the Federal Resene $ruem tu, Term snes Exwed heanilm haded m nand remuns so as Capual Adespancy Gumidairs kr bank holdirg cornpe. Pnmary Cesai '2 3 03) nrs Perperud Jebr securves char erwer certain 6nsena are r=w treared ,s Nr Char, m secanaar, C.=4 135 559 a91 pnmary capital. In addnsort, these rettsed gusidines established Ismers cm the 51CONtMRYCAPtTAL AT YEAlt1ND $2.221 12.0be 11.?2' anw of perpmd debt securves, perpetual pudersed saxk and marsjmary TaulCapual er Begppmag of tear 14.316 $7,107 15.520 Net Capaal A:klasaru 1.0t,9 706 U87 TasalCapsialas Year Ead 58.882 18.176 17.107
.'9
l The framing taHe shows tk yeareti prunary capcal and vocal capaal in jam.ary 1987 the Boned d Coenors d :he Federal Resene Sysrem arrr==rdr 1986,1985 and 1984. rard, and mpesred comments ort a new imsed prgosal kr RMased l'nmary Capual GusMars. Chase urderuands tha these proposal gude-PWMtY ANDSECONtWtYCAMTAL* lires,, which atmkl incorporate some o%alarice sheer ctznmamerrs in deter-December 31. mmarg pnmary capital rawn, would be used in coripnctum wth the cuners 1996 145 1984 pnmary capnal 4nmary capaal to aral gross assets) guabes to measure (5suman=a rmnimum capaal respumerws. g The revned Federal Peserse idease has not been finalued and the ruk-Communin sexi3aMers' E,ry 5 4,280 $ 3,'95 5 3,359 wnanryhurm .a based capual ruum canrum be pecady detemuned a the curr. Oxaie's man-Came*lme! submannes 4 3 3 ammerz,Iv=eter,twices thm Chase's apaal is fully a&mme and that a j eryg 150 m 150 we wusid connrue no be so under ele newly proposed nsk based capual guade-
!=es.'f akved.
we d n=e rwuo . ut 2m Fkarug RaeSulundsrsmai Mnes Due 1996u . . . . . . 129 M2 396 LOAN POKTTOUO Reserve for Poemble Loan Loues 1,065 908 ~61 g,,,,g,,,,g, p,gy,, d Sasch W Chase'sloan part& was 566.2 bilson a gared 1986, compamd wmh 602 602 561.9 buon a war <nd 1981 Away ban balaires were $62.7 bilaan in Taral W W W 6m d 19% a $1.2 bilum incicase frtrn $61.5 bdison in 19&5.The away tame carned, S'C'""0"7 C apual on a taxabie ewrvaient bees,rm the han portiaiio darmg 1986 was 10.57% 1,86 2,8 2 compased wrh 11.83% kr 1%i See pays 54 a ul 71 Er aklitonal inkr-P* armi Debernuses . u,T_ m,- ,ns - he s.n - in Pnmary Carra . (710) C521 855) Dunng the last seseral years. Chase has substantially expanded its capacity Taral Secundary "antal 2,221 2.066 1.527 to sell bans through as Asset Sales Program. The 1986 sales mkame d sinxt aid rmedaarrwerm loans escre&d $2' balleart, up fxsti 524 bdlon in 1981 At TacalCapnal $ 8.832 58I6 $ '107 ar.enf 19% exal assets sacre rechred by mach laen sales d ww. 4 noensi narrw so.e .un. .w Na==her : sos. Pm rv c==ral cowns.nwnn " 151 bilumi campand wah $2.6 bilzsi a year <nd 1981 Asser Sales allow smckimw am mmwy meres eaa.ny dcm.used nahnaarm perpmmi p= err d suck. perperwal ete m.<run mandanrv cometMr arturwes (mdudg mumsawy suck Osase to mase ccznpetittwiv meer cuserwner credit needs whde furEnonirg as pwd., amm men m,= kr pomar ban k=sa see many apan; <===> d i ani a 6narrul intermediary berween supisen and users d fumis. 1.tr peer ed auxi armi n g<erm debs. er Pragel amnurn bis vakar J , seem russi e dem d conman mock d the Compen s ponno in h M ad b
$Z29 bilun a war <nd 1985 to 115.7 billion a yeareid 1986.The urrease i
~ ~ ~
was largdy dae to the menased loan mkame wa .n the damestac 5elecud rarx;s numred by w.,.,ww are shown beks. consumer secter, pnmanh because d Chase) connraung straripc consumer nurkenng thrum. At yeared 1986 Chases dcznesne consurner bans mere stLECTED CAMTal r AT905 $115 bllon, up H% from $1a1 bilian a searcui 1981 At war <nd 1996 Onember 31- _ domeser consumer barms cr penonalexpenditurm acre $1L9 bGon,up 20% 1966 1985 1924 from 574 bihan a par <nd 1981 The smy .nrerest raar camed on domesne censumer loans kr personal expendnures was 1125% kr 19% compared
~
Pnmar %vsal u a Ptscera d-La .... .... 10.06 % $ 83%
- 00% wxh 11% kr 1981incksled in scared 1986 domerr consamer bans for TotalGoss Auersu.. 6.95 6 87 6.j '
personal expenditures were $4.2 bllon os' credst caid loans, up 18% Inzn gi g 116 bllon a year <nd 19L5.The aucrag rate camed on cbmests: creda card o,, g 3,4g i3 29 ToralGau Amtso. 9.27 7.23 8.1 I uns was 1220% for 19% cornpared wuh im% lar 1981 Gunnum 5axikMers' Ecpry as a Penxrs or Total Gmas Assers* 4.47 4 26 )11 Tcat SaxikMen* E,ry as a Ptstou d Total Gross Austsu 5.16 10) 4 39 Tcesi Preterred Saxi as a Pester d Cornmon 5sockhouers' Egary . 15.50 l'.49 19 7 Marstan ry Carwernble Securrses and Perpetual Detu Securwws as a Ptaxru d iacal Pnmary Capaal . 10.66 12.84 15 33 haa Pusleried 5eock. Martisaary Camrrubir Smirries and Perpemal Debt Securwes as a Pticers
- Tcmil Pnmary Capazl 19.69 22.73 26. I l ;
'TomiGaus Amers an ar6nal a Tcuai Assetsphsihr Raerw km Pountse Lunn Lam.n l
10.
l i
. N-=- canamn mangy loans M J 6mmdy housag vee $46 W fonowmg table ses forth che dumbimon d asnemic and inser.
bainn a mur-sid 1986, up aggesamassy $1.9 bellen campsed weh ek normnel loans a December 31,1986 and 1985. based on ihe damcdrs d ti.- parrieus yeareuLTime ammer use emned on these 14 inmdy money loer 5 oHyn ame El.#% in 1986,compeed weh 10]E% in 1985. Chase has the <gman m arp er pusdisse mg mul W sII Isom or so stam m as consumer 'J MN5 BASEDON DOMICfLESOF OnLIGGILS YLAR.END lumn pardao andi amongys Dunng 1986,Giane opsed so stam most of us 5 m meses) :986 avus A===- caimaner money laens ese e the Imamble spreads amazed w,e to,,s: fueen the laser cour of fundug these amas darms 19tft 8---4-a.n Domnrc OIEces $ 34.940 52'.510 taal cause inans, cudadseg 1-4 fundy mongsgr loans, en &nanne osccs A:caladin Owncas OIEces . 4J70 '.010 ayugmed 454 inEmm a Decenber 31,1986, composed wwh 13.7 billson ar Esal Jameur Loans 19.210 32.520 Mr 31.1985. In 1994 audi seal emme noens m demiesuc osites aerayd !, dtosns: _ _ ", 54.4 biEmn,===p==vi weh appsrsomseh $3.0 binum for nacasdalm Denneur OdEces 740 400 145. For 146, die maner irer.est noe earned on these domesne mil enare accoudedincuenessoscei . 2en.270 29J_lo loanr was 140%, owipased weh 11190% tr 1985. Tasalinsemmensit omns 27.010 29.410 lAuer fuiencaps in domment onces ayugmed 12.0 beuson a December Tessitamus w na 54 t.930 31,1986, composed weh $1.5 baion a December 31,19Eiln 1986, lease fumancup a danesac oEcmaeraged ' $1.4inuson,campsed W meh appseenmuk 51.1 ImEara for 19853his partii was ese so Chase's
- M "* O M "'
smmupe dirve m dus empanant bueness segmeru. In 1986, tk mi ryuerson d inchadisg onns so dosugn abbyns bocdeed in domesnc cdices, mee 5215 Thisd Cessury W espmidad Chmen domsar leme Mg m bulian m 1986,daien 8% finni the 132.2 billen m 1981 A bevakdown of an der younng aEce espagname marier. For 1986, die mer pr insats rase aange M W he h nma munt emnand, on a casable opansient hans. on domesne lease fir.ancmss was - I IIM N* As peer.end 1986, the balance d crunrnescial and irmanrnal loans m N/EAACE INTER NATIONAL UMNS- BY TYPE domesrsc adices mes $30.2 tallen,compend weh $18 bsEson a year-end 5 '" ""3""d'"'d *" """"'""d W I N
- 1985.The year < rid inicsesse in 1986 commacul and indamnal loan waame is cas unnnaland lachastrid Inens Slf,s30 520.410 520.7s0 prmienly artrian==Nr so _ ' . _ u, br corporme borromers Jar so the
- 2.680 3.2 pnme rue imiig louer than the comnuunal paper rue and an incicased loan g 3.310 08irialinemurens. 3,680 3.910 3.000 unune semalring from mactions so the psevioudy discussed Tax Reform Act L:al Emme Loans . .... 2,100 1.8 M 1.570 d 190L Chase's prune rar aeraged 8 U% for 1986, composed wuh 993% for Leem m Orher Fmairiallnemazm, . 560 640 7"'O 1985 and 1104% for 1984. Inchided in merage loans in cieness dlices mas '""' " 3"d'M k W
_ , . ",152 lullson d imens ao di commacial bonuses, compared mwh 116 ImEmn d nach loans for 1981 Durug 1986,ik awray balance of g,,, orher Loans. I j 1.070 970 980 kuum whsdi uur emenpa f'iom US Federalincome tames,pnncipally loans e Tassilearnmaanal Loans,Gnns mee and polacal subdmmons, mes $1.8 bilbon, up appsaummely $600
$29.760 132.430 532.350 hss: thiemrned Ducouse 230 190 t50 andman fwun 1981The seraer tsee comed on these noens on a taxable Ts lisiaresensi Leans espavaient hans, mes appraummelv 13% and 14% lor 1986 and 1985 529 530 532.240 532c'00 94 Schsesles on selecasiloan meursnes and on penod-end and selected meraar luen belances by type ase pseemsed on peps 10 and 71.
ovEasEAsorrstr5 Chaseiloan waame in anerseas ofres decumsed imm
$34.0 nmBum a year-end 1985 no 1XL5 inihan a veer-end 1986. The decnese N MWTS m ioon wdurne m aancas a4ces was pnncapmNy dae m: Chaec newton d Risk einnents in the portfoiso an desenbed ir, the 'o8canns sectunu:
es psenence in certen camaranes, as pen d as psogram eo resructuse as Countr> Risk; Noneccrust, Reduced Rase and Pas Due Loarw, and Lien oerseas rreuerk, so Chase: esores not m mcmase as loan waame ese no low Corrawrarm.is. usuest me spseeds cm meness losm, so Cheath Asser Seies Piogram and so Char's ablectne of not mesennsg es loan wohnne m curtan drwkgnns COUNTRY RISK cxr:wnes, On an merage bans loans acosdad m ourness dlices, eschdity turnarsonal lending meines not only ek normal enda nsk analyes associ.
, _ .d,15.2 bdhon at kam so donnasne oldgsss, accourned for 44% me 1 wwh the decimon so emend inancng so a perncular cunnmer but also d Chamei eral han portfolio for 1986,cornpeed weh 50% for 1985 and an amenanmr d "courury ruk." Country c. sic anses fem econumac, social D% for 1984.The aurage yuid on loans baal =elin Chase's meness ofices and polaxallacsors the might adict a bonomeri ah lay so apsy m the um 104% for 1986,compsed wah 1141% for 1985 and 12.91% for 1984 cunern d rk ben. Cmes-tmsdur loans ase those which bonomen nuns Raul esame loem m perseas oEces seemind 13.5 Inten w icer<nd 1986, d apsy m e curancy arter then rhnr lo$al cunory or m irmier m a d Esent l .4uch _,_, _ d,12.0 telhon, or SM, mes for 1-4 immily mangys. courm one of the maior ruk incurs assoeumed wwh crus-btnder lauh g Fomen curuncy asnomirused noens ennmaused appaman.sndy 40% and 35% is the posebday char a courary : kneen echargr .veervs may be umffieuru d meal mereens loans a )eer end 1986 and year.end 1985, respectneh A ar unae isbir so perma eundy upsyment of cmas-bania-Icssns by bonuses bs=hn br types d loans aconied m seness dlices a year-end 1986 m domriied n ther countr5 can 4 the bonamen puenes anscime kxal cur-menerud an page 71, en in addamn, lasegn ynernmaw deasons and asaansed cents can adret huoness m;tmtus in a courury and adict a bonomari abilty to npsy es loans.
31.
- 1 Chase lies a sranname camary ruk ameasure process by whidi a mdn haal coutunes and econome urueruses The fin rahie prescres the enonses mal analyses the econanuc, secul and padecal awmannerrs m all dnenburm d imemasonal itans by crurwry dass6mrion, mchading loans a de camarus in windi it conducts huanas or in whch u' s barmuers reade. rnerseas adices and armernmaanalloans booked a domesic onlices, based on Thear ie<igsh ameasumus, perianned by a amm d econommes armi pahncal the dome-de d the uk.mme chigprs,a December 31,1986,1918 aris 1984, analyms in carganctai weh local Ouse annsyrnes, ase indized by Oune inpect =4y As evaleru:ed by the table, the maorry d Che's exposare b %
wahst as plannuig c1de far auch countras as nee as in Oimsn synem d bonomers m various induirnalized crmrenes and courures dassi6ed as asuuylg total country expommes, pnmary pm6hact cxponers.The diariourson by clumframm has nne subman. The datowing two tables Assirum Oised policy dpartiolio dnerslicaron rally chargpd caer the thseescar penod. y weiidi empwsrs ase psend oier a wide gectrum d pographr aqpans, htlRETURE OF NTEANTENAL LOAF 6 8Y WORLD ECONOMIC DIVIsaON5 1986 1985 1984 Fo egn Curmry loans l Local D "M "Y Local Cu taal Cu Cur. theder Our Pnnc geny Cur. Ihspeev fur thammy Sim aniEmsl
~
sery 1 %sr 3 Year ti s' Total ency ui si Tcral erncy us u Total M Cauntrus. , . 5 7,290 52,150 $ 2J00 $ 4.450 511.740 56.990 5 5.760 512,750 56,e60 ' 5 ?J60 514.0 5 4 CantaAr Planed Econonums . - - 40 40 40 - 30 30 - M 'O ; OskarCouncres: i Fusi Espones . . . , , 60 470 3.010 1.400 3J40 120 4.040 4,160 120 4380 4.'00 Pnnemy hedact E - . 3.130 1,150 4,060 f,210 6.344 ISO 5,790 6.640 '90 6.000 6.160 Espanne d Mmma 1,430 600 700 IJ00 2.730 1,440 1,330 2.770 IJ40 1.650 2,990 Servur millanscuece 110 100 SC 680 790 140 '80 .M 140 950 1,w0 Taast 510,030 54.5:3 510410 515,160 125,Is0 59J,0 117,730 52?,270 59,040 $20.490 529.530 Tommmy demnacanum are humed on lawrcenamed intonewy Fund dr6n nons,esceyi for cenerWbanesi esanosnees and cmain remewwn and dependencies whu h Jo am mamcam as6spsadua ter ryienduser reur The second emble ihases chose counrrks m which Chase had cmss-border oursrsndirus wh ch cu eeded 1% d Chase's tocal assers ar December 31,198di, 1985 and 1984, aupacmein inchadug; a WaMmm by rype d bananer awhm eah enumrs CflO6&4tORDE.R OUTTTAN0tNC5 WHICH EXCEED 1%OFTOTAL A55ET5 S an aute ns1
'-s Lnksand . Carnarxial Tosal *b dTotal and Orikial Other Financ,al and Other Other As d Diannher 31, Cauarry Name Oirmand_rrgs Anacts 'mrswoons Irmhasinsi twemes Ourmandugs inersunun(
1906 Ihemd Kingdome 52,940 3.1% 5 30 1 840 5 *90 5210 5870 Japan 2J50 3.0 - 1.450 1.310 'O 40 Einal 2,740 2.9 Il20 470 1,190 UD 80 Mammen 1,640 l.? 2T 540 790 - 20 M s Carunner 1J40 tJ - 240 790 I50 10 hasseds 1,ue0 1.8 230 160 660 20 to Argumens 960 1.0 260 110 550 10 10 1985 Japan 3,020 34 - t.2M 1,450 ~f20 1to tammi 2,820 32 500 v 1.300 '20 120 Unsed Kuybrn 2,740 3.1 40 690 1,2'O IN 5?0 Mrum I,600 1.9 320 4*0 840 - 30 mm Genneny 1,420 1.6 - 340 870 180 30
%nsumis 1,250 14 190 210 800 30 20 Fanar 930 ti 10 4'O 200 40 60 Asguinas 910 1.1 ISO 130 580 10 20 1984 japan 2,990 34 -
l.190 4.660 80 50 thamiKugion 2.840 3. ' $0 820 1,420 140 410 Saad 2,830 13 440 800 1,280 130 180 Menco 1,750 LO 340 443 Ho 60 50 Mar Gernasiy 1,690 10 - 300 1,160 l*J u0 Fiance 1,380 16 40 560 640 1 'O
%numsels 1.200 1.5 ISO 2M 810 to 20 IQume 1,230 14 10 840 a40 -. -
Nusr Came tarder ournandmes arr ds6med for the purpree to actudr forallaens unciudme accrued wwerval, acceptances,meerben.4 Mac:run, arher meerew fvang sweirnenen. and any I asher maaseery assers denommuned a datus or onwr non4ecal currw.:t Govenunera enneers r w ar masonryowned are cinnaded be type ud barmeer eened on the mduury 4he buunew "esrpnse M
The inBanig table pesents those coumnes in which Chase hai cross- ne folkwng table pment, addannul dreads on the extensna es d credit bmier assandergs d berne .tM and 1% d ws casal asseis .m year end mciuded in the aggngse outstandmgs a Deconber 31,1986. 1996,1985,and 1984 l 45 m mdisonsi Braul Menco Veneruela Arpnruna OKMmDER OUTSTA NDINC5 DETWEt N .7% AND ia' Puble:5cctar Euraisons OFTOTAl AMET5 dCsedn . . . 51.760 $1.200 SAen $700 December y' Pnvme Sector Externam (5 m metemmi d Cauda. 860 3a0 230 130 1986 19 0 1984
.%Thsmgh 1% Rareer $7 0 ml950 5as to 5 40 5650io $r BRAZIL r
f The 1985-1986 Hnenems Plan became edeciw on Sepermber 4,1986. Under hamar Italy the Plan,the 1985 marunrg amounts d crossarder medanrwerm debt ! "~ Tasic - '
~ 52.450 $sao $I.250 (Chase shase: $2.52 m:5sont the cruzaio upavaise d which v ss deposeed in the Central Bank d Brant, wig be repaid our sewn years wah a f=9est grace penod.The inenes rme on the di doller<hnonunmed dmosas is the Expewts funn h maxnioportire, hghly mdebeed Jminemg countnes ausnmed m 006 because d the damer pace ed gnwth m the mdasmalized London Inserbank OEpid Rae(UBOR) pha 1%% emectm so Jamsary 18 nanans 5'sh h demand kr imporn rectmg a famer pace d domest 1986 The 1985 depours ase available fcr edmding in ui &llars to pubine yewth, rhe balance.oherments poewsm d this smup d counrnes thus sector and pnvsee secar honomers at meneer rames d UBOR pl us 1%% and 7
I shamed no sendmcy so unpsome and, m certam cases, drienorased despur can. UBOR pb %W M caer sciai m M a Gw edsable charps m the once d od and loner mierew coin on cmss-bankr grace penod The cruzado ecpnenimr d 1996 msnmeg anounts d cross-M rrudium dds umme io k A=pa==i by the bonomers in the debt.Gauraty, the debi4ervxe capstuimes d brxh the nomWug cunmes and A hesnhr walebud al expunng coumnes draramd Cenrral Bank.' object so nach payman barg made, the Cawral Bank opened mesen-beanrg, uS. dollar-denormnamed, depoor accounts m the amouru l nas4e4 in this ammnmsw der was inmied pmgress m rnpler smns ihe d & pnsopd mounty in 6suor d the tender and paarnmed by the Federal - ( Pmgrarn for Sustained Gruwth (the " Baker Int.ane")innamed by the U.i Gawm.nar m ime 19RS. Republic d Braa:L The uneen rme on the risen- s, which ase nor avale for rdmams, is UBOR phas 1%%, diectw as dJonaary 18,1906. Serular amenm Timelviut 1986. Chase conrmund as cioec corverarxm werh A inter-nanonal t:enking comanunny,the1.- md Monetary Fund (IMfk anarpments are e diect for cross border muisim serm.'che marunns in the the Irmemmamal Bank for Reconanaction and De=clopnunt (!BRD) and oar few pne M982le a acceded ther & M85.W b losen made fiorn the proceedsk the 1996 deposes and the 1987 his cparter depours wiu be I nasinlaseral arramzsums m aidesrg the perusnng maior debr sence prob-j inckded m a trailrwest veschechahng ayeemerw.Under the r'.nancing Plan, lens dlarm Anwrun araf other countres Despue the close coopersxm the $5L5 billion (Chase shme: 5371 mdison) facdry for trale ftans and the and diorts no muhe these psmuni d#icuires, as long as uncertarves with 553 benson tChew diam 5118 mdlion) d u' nerte3h &posus see extended so sespect to these counrnes arnam,it is poimble thar mMaianal amourns d March 31,1982 Chase's cmedosder outsta dirgs so bonomers in these counerm:s could be On February M,1987 & Brard an yncrnment aksed the in emssonal ! Pi sced m or mumed a nonac malmanas l- The pnncipal courunes whch hae been arected bw such dche servre Gnancial community thm,so peer e ws exernallupadew and km a penod problens and m whrh,a Deconber 31,1986, Chae had cross-border out- chmns whe;h a permanew debr scheme muid be rugmased, allini ren paymous ,hae to lomen commercal banks on modesm and loretern dete mandmus caceedug 1% d in swal aswes are siswn m the followmg Wd k pad mio a new deparda day a the Cerwal Bank d Brad , inble. apiher wah an arelyus d the charys n aqsregate outmardings m a.o...a in the cunency d the debe and beanns meses at a rrer mi be
- l. cadicarwr%
neywiared Funher.the enernmme used ths: pnncipsi psymous to kw gn
$ m nunami unmnnt nks on each debt would contmur so be depomerd wah the t
Brud uenau wurucia Aryntma Cerwral Bank m accordance wah exarms mamm mesaam unni March 3 l
.1985 5).820 $l.680 11.250 5920
' '"" """'" * " * **C " "
jarnaary 1,1987 and isound hae mach other terms as mar be neyn.ated. N"M$[T'"" , ,g in Desenbng hse messas as pewd me noienunmormed a was r. pared to enser meo negonamns nnmedimeiv kr a permanern scheme to g"F' W " " " " 110 50 30 190 E "' U"' # # frueren irtome kcrued 19 0 140 !IJ (10 dmiands kw debt adlanan or concesmonal menen rares. OiMecreuns d: PHncipal* . til06 '40 t i 10, i<oi The nenarne impmet <m Chaie's net income for 1986 d Chme's csos> Acruedinmen . WO) 'l40 1001 t in-Oriur Chenys' border rumaccrualloans so bunouvers m Brazd wes not mmenal
- 20) 10 % .to' tr. light d the miiurmarm dacuued m the pieceedmg paragraphs and Assesse6 * , ar cantirr ag uncertamears reganhng Bra; L n a pusebie that addwional Daember 31.19e6* 51.7a0 $ t.6a0 $1Seo 5 %0 amounts d Chase's cross.burder outmandmqp to bor' omen ni Brard could "inctshes trade cadets and meertienk Jepmas with marurries d anc war <r ir$6 he piaed m rmaccruel usus.
Hrdelag marurnes Jepniwed ar the Cmrzi Ranks d Beard and Arunuma 1achaderg hamn sairs,.hary.ods and chargre d guaranetw, irinchedmg: Samaccrualourstandirgs d $ $ 105 5 25 1 51 9eriamn acr.andirgs d 4a0 e,0 10 100
*Les ehan 510 malain
!I
a hsINm . The duct on Chase d the penpana new meructunng apeement desenhed
& homim4ser Debt ilmenemmag speernous which became &ctw m P'emuh woukibe uppmumedy as folloum she fuer guarneraf 19W -- ' a)an anandmera d the 1983 $5.0 Inom use emner Gudr Aymsmma with Mexxo and a peuyosed pse. Pnncipal itinshral-serior wegheed-meraer paymmer d SL2 Inom pnmeipsi air <asus (hsee shase 130 manen) laened (5 in milhania veer at Marurwy insma name M Wihesuh>9earnumrmragd, -_2, $43.7 tuition gg, . '
. Khase shuse: appsummedy 995) nmEur0 of nurunres d Mexxan pubir escaeribbt a buibs imRug due Aarug 1985-1990 oner a 12M $a50 1998 UBOR plus t .2i%
puumi maing mi 194,and c)Ibe a4ssemers d inester rues on the nearuc- 1200 1989 Pnent Nus 1.125 % amud debt manecuse absury 1,121The idect d tir MuirWear Dds
.__, d pruscyul memermes and a4mement of int:sest tues on Meer Rasmactunes:
Omme) shoe a rhe MukQhar Debt Resmactunrg is appmommely as libus: Safo 2001 LI800t pbs .si% 1BJ 1909 LIBOR plus .81%
# 4had arer Weshad-menor aa ward usurwy in==== Rae in December 1906, a an insenm meanne, Mex co) cadmor banks ;no-gg,, % vided the Mexxan Goernman weh a 1500 rulho11aan fChme share: $18 millen) wwh a cunent marurwy of Apnl 30,1957 and maaese ar ik rue d 1510 1988 Pnner phs 1.83% W acr LIBOR which is pmposed so be indaded in the emactunng as a
$420 195B LIBOR pus 1.25 % part d tk M tzRson in new money frorn commemal banks.
Tie asemme impact on Ouse's ner incone in 1986 d Chase's cross-border AImr R88=www~ renaccrusi loans so barmuers m Meaco mes appmumedy $4 mdlion
$ f,g7 pn., pha t$ anercames.In Ight d ccmrumerg uncertamraes nysding Mexro, irc cunandy pmmingin the work! pamieum markers,is a pasuble char addmaral amounrs of Chase's c6 outstand ngs e barr:niers in i Hammer.che uneest emes and apaymmr sdvdales are suAt to further Mexro could b placed in renaccrunt starus.
=4===u umkr the ympoemd apemurs desenbad bek=
In Mach 1981,pagenners mes made of $250 maRic $ fOiane share: VENEZUELA 56 malumi d the manuta loaned under the 19h315.0 basan new mcary ?,-.-.caenng the arruerurirg d 121.1 Inlison (Chee sham approni. Cads Aymansas.The sensede d the paparmos (3950 miliun Oiane medy $7X) erukn) of %nenadan pubir seciar deir that mere sened on shme: $M aubnk which was expecsed a hoe been nude in 1985, had been February 26,1916 became edect= on October 3,190L These nyeernents ca8 pampaind so Oceber 1986 and a a madr d the psoposed sesmactunrg for a awn paymes d $750 mdlaan # Chase shme: _,, - _ ',127 rndiscm) synenes descnbad belasr would be amarnaed oier tk remmuung Ide d irs and tk astnacturns d an memnnes falling ese bueueen Masch 22,1983 casars speement (1989-19Mk ano December 31,195 (appmomuudy $20.4 inEsan), m be nymd oier a la sie thed genner d 1986, ele Meacan Gournman, the IMF, the IRD penod endug on kne 30,1992 Oume ucmied - f,125 miaion d and asier:==ird===l apncma, sayther wsh the Bank Advuory Gmup the & men permmt wi the hurth gaarer d ISOL The belance is dar br for Menan, aucunand ar===== in pnnegie whidi, amarg other things, paymmt m che fra paarter d 19tI11se muructund pnncipalis e be gmunde br: a) a sucumsg of air mentry of the difuned 9990 mabn nyrud en comarm does beynnmg m Neanber 1986.The dret cm papepnumt an the 1983 asw momer Cada Areamse ao gaarurly inuss- Quee's ihme m the astnactunrg a appocausely a biknes: meus e be pani fsam 1989 m 19M, wiuch as the puseu memrry smenue purtmang so the R$ bEun d new una money banomad ance medM Pnnceal %_ ansheed menor 19E2, b) de amednnu d due snaramunon schedule d the wy==a,nneiy t1 m millions) Year at usrurwy inses Rae
$417 ImEmn af mamactuad pubir sociar dds no enend supermet dames by
__ _ _f, seven pens weh a (sul niennry d 2006, c) RO tellson m new "'"'"'"* meer e de pubis 1 scar 6am connum..al banks, of which 1500 maison y,o ,,e6 Pne,ir would be pammaal by slee IRD ander a $1.0 tausan ccJmancug, d) a 1500 siso 19e6 UBOR pha .%% saama comnsecul bank courugury cc ' -- af whm.h 1250 miBean umuld be pannmed by the IRll c) e $1.2 bilban commemal bank con- Atur Acaructunig: - eugmacy fumaang in cannscuan wah a $600 nuBum IMF connnynes founcug inr the public secas,f) adamanos e unmen ames an the dds m 13e5 1992 L1BOR pbs 1 115% 4 tiutagh el about to psonde a mesprt, sentactm so January 1,1987 IE N ,," *
*M%
af 'h% aur UBOR ar a desusuc adrience eme, and g) other imednes so be ende meildne by der IMF and the IIstD m mapport of Mexxo's ecumnc *A.is c,6 4=o.A , ] peupon d,. L adamanent and wructural idurm. l Deeds of tie ayemwra,wiuch anast he appmed by Meiros endaar ) buks, mean m be mymammi.
]
>4
)
Dweg tie shed gasrer d 1986, sie Gaurnman d Wasuda =rr= ==4 Chasei pdry is m escannr.ue rk accrual dinsmen mcome or loans, the Bank Ademory Commeur for %nemsde ao cxmeder denys in the aiher than consumer louras, whee nasonsbie &ubt auss as e urnefy cd. urso d ahe puMic seciar numscturug ther unuid isigdum de marurars hetaminor 4 permes dpnncipui or neueur a ccen:actusily rest d se 90 mal mesr the ireense mee ipnads an the naructused dda. In dur con-durs or mar and ik loan a nor ud! secued and m the process d coPectum. necnan,an December a 1986 de Gomernnunt ==y===8 weh the avbne. Paar due conamner Lens ase pnedy charyd of accasdirg m an estallenhed sum d de Conensime, ther the msunry d aR pnnegui permen on the scheerle whai &es nor perma ddampncies e escued 180 durs sedushded ddw. iding en m the Erst ,sarur d 19E% be casended br dwer The fotourwg tkie sees forth the dern)= man d nonna:nant and reared auwahs b the due d thnt mysctne mourums. ame loans bened an the daariles d the obisyns in andman m tk irmnest accrued and catsced as A=4=wf m ele taine on pay A entsg pe6 Oinse nonsdsd Sm mdban dirynn secaned m cadi NONMERIML WD ptEDUCED fLATE LMNS on cnss>==br nisisocruelloans so banauers in be==k Daoumber 31, lhe assine innpact an Chaseis ner acome m 1986 d Ommen cidw4r a ,, ,g,,,,3 - r===rnumi inans e banames in %nesads aus not nummmL i,e6 1se5* 1964 ist3 16 in light d aminrams uncatasses agoning %nezuels, metadug con- n e t-duums cwuruk punedire in r aw world penoimm marines, a a pa==hi ther amiEsser Lamm 5 311 5 t99 5 174 5 133 5 64 adenonalamaums dOimehsomeosder = E 'so baroners m Lanns so Fuuncus benads could be pieced in nonscausi sanus. *
- e_ '"""'"'d" ARGENTTNA Indserasitoms. 565 551 Sa0 631 s33 Or%sr Lamas 13 17 17 19 9 in addamaa so the enument accrued and coNecand as desdoned m ik table art Tasi Desieser page R asrug 1986 Chase =n=hrt 520 nuuun dirmeen secened m cash Lassu 397 774 734 790 551 an cmseouler nonsacrusi laars e immuners in Asynesis.
Iemrasamed tanss-Rendag discuamars berueen the Guarnmmt d Asymnna and tk Bank RasiEmmr Lamas 38 5t 65 89 116 Advenary Commsnee d a 1986-1957 financuig pmgarn, Arynnias's ciedier Lamm m C-banirs aperd m rad ouer puble and pneue escscr pnncipal nurunnes inning 8"d N*I due berueen January 1,1986 and Marci 31,1987 The banks ayeed so sdl tosis asii ' auer pubir and prvvise secut maturre, isEsq dse hecueen Ociober 1,1936 orher Fmmacul and Masch 31,1987 br ISO durs a rise cues aprirshir m the !*S4.li45 lasinstmas . 39 95 87 68 77 Enancrg Plan. Hasseier, for nasurra hBmg in a tk frw gaarier d 1987 C3'"maculand theireenst rues estaaf be malgect to seucactise admastnarr iapememt a * " madud on a new financing psoyam by Masdi 15,1987 in addanan, the - M df0 Ocsober R 1946 maruriry under the 1983 new money agnemeru wiuch had t.027 L23I t,397 979 666 bem stand aber ao junasry 12,1987 anytbr warh the maturwy angmally ese jamasry 12,1957 utse sdied our so Apnl E 1987 The exar: rig rimie Temi h tamm mm 12,135 51.769 51.217 lemncing Intilries Casse sisue: _ - ---__ _^, 520 rruisan) arul apeemerws no N 8"' - - -P" "
- numruoun irmerbank ounsandings !Chame shasr: appuonomedy 153 maRu)ri) wese eunmded m)me 15,1982 The ingsrae unpact an Chasci net income in 1986 d Oumei cmas. bander 33-ruzisccnaalloam to barmisers m Aaywrira uns ror namermL 5 * 'niNuns) 1986 1985 1984 1983 1982 in Igiv dcorsianng uncurtamnes ngssdseg Asynnen,ir as posside char Reduced Rar Lamas:
asimonalamouwsdChaselscut ' oursand'ugs m bonomers m Dermes imus: Aqpanns couki be pinced in nonaccrust marus. "'",tamm 5 2 5 4 5 17 5 23 5 tp
,,,,a .
tnennsesans . ~ 7 1 54 61 NONACCRUAL. ILEDUCED RATE AND PAST DUE LOANS Carnemealand Nonaccruelleens, cm which innesse mcome actnaals hoe been asapended, _ 3"b""'I l'*ns . 4 19 9 7 1 arad seesced rare loans, on whids wapeur ancome is acenand a esses bdos, Tasal Domeste those whch the Carpasunon munid be un5ing so script for new loans wwh Lamns 6 m 27 86 171, compendde nsirs, enr l 4 appsaamssdy 51.9 Inlison ar jenreid 1986 and 52.0 lamenemnesi tasms: balum ar inar<nd 1985. At year <nd 1986 nonsecrusi namns attrJ===hir so . irnernananal Imdmg activmm, pnmanly in Laon Armenca, w 1204 and N ami malbre fium yeareid 1985,partelly ainer by an encsemme d $123 malban in Insraerswis . - 1 - 17 domeenc nonaccrualloans. Comerscial aid trubstr.al L anns . 10 - 4 15 16 Tamallmerrascunal Lanns 10 - 5 15 19 Tessi ah Rame innes 5 16 5 30 5 32 5 tot 53 l Tassi Nemanared and Radsmed tamrtamms 51.940 52.033 12.167 51.870 51.427
-m a % af Tammi Loans 2.9% 3J% 3.5% 3.3% 2.6%
F
11e inr===r si ele .ugene impact d nonscausi and mih-i me i loans perbrmmg loans, pernally offset by kar mie'ese rues and sh8 hrh kmer for 1986 omsyssed was 1985, as set inth m tir fuBosnns cabir, remaked rwnperformingloan wdumes premarb Ime a lesser amours d andt ccBectens d insment on non. MSCATIVE IMPACI OF WNACCIEIAL ANDfLEDUCED RATE LOAN 5 Tarallaans Daaric Loor s inserr'armnallaan;
$ = manns) 1986 1985 1986 145 5~~ 1985 lensmus Inasme Winich Wadd Iisse Seer. Racceded Under Onynal Terms. $160 5224 5 71 5 83 5 89 Siii n===== luomme Actus5y staanst d.
Ratsnamn m huesser incove: 30 105 6
] 24 87 esisse Taus. $130 Sitt 5 65 5 63 5 65 5 54 Adur addeTams. 67 58 34 .2 33 26 Agriawg louis whidi at cost tscussBy ,,mc Air % days or mase ase los"% ANALysisOFCHANGESIN AEAL ESTATF PROPERTIE5 ACQUIRED wisich age both ur 8] secumd or y asanneed tiy firiorminUy sesponmble thisd IN 5ATl5FACTKIN OF LOAN 5 Parnes and am an die psocxss al cth % loans pas due M days ;5 m misions) 1986 I985 19s4 1911 1982 A=s==rw as tessannes d Yser $100 5 90 5 70 1103 5 84 consumer accrusig loans pur ese 90 days or seine as pnmanly a sesuk g,,,,,,,.
d Osse's sumugsc emphans an and fa canrrased raped growsh in Chase's conscemianan dr====r antasmar loan pretkisco lher ese t'onsumer loans are generally d Act>ne'l chnged af acrasdag so an enabladed sche &de which does not perma 3 3 24 -- - dilisApsennes so essmed 18) days. dmhnhanes Assev 5=ups and Other, Net . 47 47 76 '3 57 LCCJILilNG LOANS PAST I4UE 90 Advances . I l 5 -- - 125CR MOlltE Decanhec 31 Ducasses b* N Mme . 74 41 85 56 38
===ner . ........ , 1135 1113 5 68 5 43 5 33 h n End esear 5 77 5100 5 90 5M 5103
- c. .J and Rai Emane. 81 23 25 a7 J Taed Damanc Lours . 216 136 63 60 86 The accompanrms cabie presents br the mcur recern five 3 cars the net Ismermsummi Lanns . 81 75 99 75 It3 effect on carmrgs d operaring expenses, ner d reisted income, wsh respec Taid % W Pam De, to seal estase psopes tes acrpsired m sausseton d loans se Durier Mme 5297 5211 1112 1135 5199 REAL ESTATE PROPEKMES ACQUIRED IN 5ATtSFACTtON OF I.OANS Ossei pairy, mmiist aa tta d most maior bank holdms companes, is 5 '" *d'nnst m 1m 1964 tm 1982 so daconormar the accrual ai meest mcame on kans as so yhch itasonable Dince Operm've Eximnus Repened doubt exacs wah respect m the tundy conscribdry d ireme nr pnnapmL
- 512 512 518 5 18 5 is Whar thme ase "veran s ensbrs" as so the abiley d the banc ur so crw ey 3,,cl",,7, s,,,4C .
web psesers ben apsrment arms, axh loans also ase pieced n nonsecrual downsa Rapaned in mm.m. Web sespect so loans whch ase cunent as so perments d pnnapal Othe Expoun - 5 14 25 .. and meesest, but hoe a samruhut hgher than rurmal ruk d be ornmg lacame(Expemest i nonsecrusi v i=ar=4 nur m the near furuse. Chase umuld esna me exh Real Enar Pmpenes loans as smalms %- =-4 $295 mdimn,or .4% d samt beni,a yeared g"fNa , , 1996, compend weh $DO m&on, or 4%,a yeared 1985. At 0 camber 31 in,. ,,,e Tax N,c (3) 4 c9) m 1986, apparsnar4y $195 nuumn d dese loans was amad by dan,we
""^
bcreamers m4-_ _ _- *, Sulo milien uns omed by inernsinor al banow-as in skinen, mtonnectum weh the acuppenan d nr=dd=4tbnis ' mantu-
'f""'" 5(4) 5i 53 5 #9) 5 (8) nons learmennd amo Omme Bank d MaryinndL --
_._Jr $113 miBum d
~-.. e m and adesacus e nel esame suised ernmes was acgauid m 1985. At yearco 1946 assas acomed in sa&mn d loans, <xh r than ital These amas, whrh wese =rv=i4=1 m esammed ner i==indde vahars a dme d "e p'UPernes, aggnyk ad $11 millam compmed wah $43 mal;on m 19t!.
aopnaarm, dedasud m $M nuRun a year end 199L Canmass wet pan Operanns expaws nr. horne earned from thue amers haj a agligible rnpersanca.Oase annapses that sune loans in nonacenasi or sease .d rue '*F"C' 0" "" " 7mus a year end 1986 unit be arenei so accrual surus or be npud in 1932 As down m the following talde, res! esame psopames acapaved m ists. LOAN CONCENTRATIONS lecten d kunns, whch ase mdaded m <wher assees, deemased approsamedy On a ghbal hans, rm engie iruknery group's agregne bort norgp from t'hase j
$23 mdhan m $77 mdimm a jaar-end 1986, fmrn $100 melbon a yeared eces ted 10% d the sotal loan portioiso a December 31,1986.
19E5. c l l 36 1 ____ _ _ _ _ _ _ _ _ _ . _ . . . _ _ i.
INVESTMDRECURITES senpecrvuelv See Nase 3 d Names en Fmencial Semenews br midxonal Na susu imm the sale d insiemies secunnes, urhided in annfre-based mdormesan on the merman secunnes parrfoisa. wmanne, une $M4 auten pse<ax 584 nution afeer camel m 1986, up The followmg raide peesents the arryms vakns, enunsed maket vahaes sabusariety hann Me mulian and $17 nullian pseau ($49 mdlum and $g and yudds d onesnnme secunnes at jeareal 1986,1985 and 1984. henip-miEsan aiur taurs) m 1985 and 1984, aquectsuuh includal in the 1996 sales d halances,inauest nunme and aerser muutst esses e=~d & the past thsee eneumuur secunnes wee pseaan guns an lli Tunsury securnes of $123 years ase psenermed on pays 66 and 67 nuuson conya-i wwh 567 meBian and $P mdison in 1985 and 1984, INVFSTMEfVT 5&Cl)RITIES AT DECEM0ER Jt. 1986 1985 1984 Afur t Afasr 5 bus Inst Wehm Walun Walun Afaar 5 m autaansi I Yr. 5 %s. 10 % s. so h. Tami Tomal Toral U.iTsussary Canyuq W . . , .
$130 $1.300 $ 92 $ $1J25 $1,839 Maher h . . . 131 1.237 92 3
1,M3
$1.735 Yadd . 3 1,907 1,748 787% 7.77 % 6.46 % 7.57 % 7.70e6 9.73 % 11.11 %
Falsal Assary Canywg h . . 64aska h .
$ 6 $ 4 5 4 $ 15 $ 29 5 330 $ 193 6 4 4 16 J0 YasW . 338 193 11.55 % 10.91 % 10.20 % 942% 10.26 % 9.92% 11.59%
Smaarand Ptdescalh Canywig h . . $150 $ 558 $1,012
$373 $2,058 64aska b $2,410 $2,103 til 586 309 1.009 2,095 2,292 1,843 Ysed .
10.15% 12.3946 13.49 % 14.52% 1L3d% 13.33 % 1440% Oulur Osuda Names and Debenroses Cartyg h . $577 $1,074 MaAa h -
$243 $ de $1.734 11,409 $1,071 578 1.076 247 39 1.940 1403 YuW . 1.0!?
9.3646 7.6 906 7.994 $.24% 8.2ee6 s.99% - 8.89% h nauwe menu a adummi for anurmanan of poemme auf semen af oncawu and d= del by mani arvywqs en a shn= rie vubk YsMs an mand an a sm
,amhnni imist sur and haal tes esse ei sprasnessey 51% ist ben 1886 and 145 and fu% e 1984. Tle muusbred meMr vomains adssummes for rim inur manavy mysemanamey $5 maRum Di m tum 115 mdban and Id8 medan r/spectneh Anemy idt kr 1986-4 puert 3 ammehst 1985-7 seers,2 muuhs; I906.-7 m 8 neusha.
Inchaled m the capnan Suse and Pbianal Subdrvisons are i nearments m E.mcupe for secunries d the LLiGamernrnau and d New York Ciry and erwvs maand by New Yosk Suse, New York Cny and their missed ageres New York Same,inchabg diair missed apncies and indsywient asthannes,
. and irepermienr mrharwes wah carryig ulues soenlirig 1569 mdlam and chse uns no indadalisaur whose unearmsw portfoim securses esaded
' 5613 emilmn a December 31,19116 and 1985, mapectneh The maurmes and 10% d Chase's hudmied Stock and Common 5sockhanders' Egany a cinmand marker vehans d nach New York obliyrerm hdd in the uneunnen Decanber 31,1906 pewt6alio a December 31,1986, ase set for$ in the fouarms table.
NEW YORK INVESTMENT SECL'RITIES l Carrymg %ime Afar i but Esemssal Walun Wehm Afeur Marlut
$ mendlem) i Year 5 Yews 5 Vren Taal hr Monsapel Asmeare Carpruerem . $~ S- $287 $2s7 SM3 irrurmus imased or Gaarmeerd bor l Ohigstg
% bok City . $ 7
$5 67 58
% vark seie mul hasncasily Raised Asmtsrs . .... 5 14 1 46 165 147 Aishariters 2 9 39 50 de Tassi $12 130 $527 1569 $5M J'
L_________.---_---------
.4 INTHESIMARING DEPOET3 PLM'ED WITH BANKS crsias ase condmanal upon the c Ascron d the checks, Chase is of the -
Cher pieces deposes weh asher banks, pnncapsfly ar cisness adim es, pn. opmum ther iha h:moncal pract e should be changed m petmde br the smanly (tr eersags and Impaahry purpasms insmas esmed on these deposes vedssaficaron d & pons Aost as an adhes agamer dipctait Chase beices
&- I 1% futun 5486 nuisan m 1985 m 5482 nu5 ion m 1984 pnmanly hee e amng aspport 6ar the poensus m rise bankug comrramery and, l
ese so a h=== m the merge meneur ame carned (som 940% io 101%, theehic, a hopeful that the appepnme accounnes and regubsory rule. l dgime an ecsume af $800 nullaan kom the meny balance for 1981 Year. makmg bodies win revww the muur agen si the near furure.The rutters d
- and 1986 depass baisnces piscad weh banks inciemd by appnzummely 5L5 domewie depose now would hoe inhi Chase's anal assas a December biBien m $6.2 b5an Imm the jesreul 1985 lewt d 54.7 inBian.The 31,1986, by appuswnsely $24 beer,. If Chase nened aposa nom, istsmus adde peerus the ensrurwy deer. bur on of oneness apoon pionnss as yeareal 1986 pnmary capani so sassi grams ansees rum umuld hae been 42 Datsmber31,1986 and 1981 714% radur than 6.95% and as ieturn an seray assm would hae been
.67% rarher than .65%
Oi/tjuit.A5 fNTEREST4 EARING DEPJYT3 PLACED WITH BANKS The baisaces and ensurwy desnbunans of cemficanes of deposa and TIME REM AtNING TO M AWRITY orher rinie depours m denommenons of $100,(X)0 or muse an prescrited in December 31. the 6allaunrg taide. S e nwEinsu) 1986 1985 AR RIMION N WE DEP 5tT5& 530&onoCR MORE 3 Masshsor bas ..,.... 55J00 53/*00 Oier 3 Thmach 6 Maruhs . eco 600 the= 31,1986 t Or, Oier 2 I g la'ssiousnessissnum-Benneg re S a nniiams) Depame Depours Tamil Named out emis u nan 54.500 co,,,,,,c om.; 52,460 5 1,2ao 5 3,720 3 M= min or tas . . . . . . . oiw 3 Timoigh 6 Mamhs . . . 280 50 no DEPOETS owe 6 Ilwaush 12 M=who 150 so 2)o Dipamis repuser Omes pnncipal saure d funds. Chase's & poor base our 12 Meuta . sas 14o 240 consmol denard apans cemficses d apoet, smings and money markn Tesi - Oscn 53.cio 5 t.53o 5 4.sao accourr.s and csher tune %s.Tasal dipours mee 566.0 billion a Decem. Toisiloiseismoens uJao sis,s70 u Joo bar 31,1986, carrymed wah 561.4 bdban ar yearesJ 1981 Total deposas assard $62.3 bilian for 1906, m suesse d Sit bdison fann the meray for 19t'.Tasal domanc depoens incassed appnaammely $15 tullion fmm war. FUNDS BOOLROTED and 1985 eo 136.1 billion a December 31,1986, pnncipeily Ase to mcuses m funds bcmowed prnepeay inchsde hderal furmk purchased, secunnes said e swy marier depouts and other doeguined depose accourns. Money under apuschase ayeernents, commacial paper, senn hdeal furth pur. irmhet accounrs and deesuissed conmimer certificates ai depose meressed to chased, nases payaNe. in. hading names apspsNe at the opnan d char holders, 5117 talhan a yeareid 1996 up (mm 512.4 b&on and $11.2 biBan at and noses sedescouned by aseness dices, yeareul 1985 and 1954, .; ,.w4 This smwth in doeguissed consumer Funds harmued in 1906 manged 512.7 labian, up 11% (mm 511.4 tellian dipoems has incassed the sabsiny d Chase) aserall % base. Total m 1985. Domesne many bonowmy naciumed 7%, pnmanly due so an disneanc apost tulances seraged $31.1 inuson for 1986, campend wwh mesesse m dederal fumk pechmed and securunes said undir nyushase 1211 tsBian br 1981 Chasei aersy oneriens deposts deciensed fmm 132.1 agnements, which mee up , _',1397 mAan so an eeny of 15.0 talhon m 1985 so131.2 bdhan m 1906.Oueness aposas wee pnmanly m t=Eiort amounrs in escens d $100,000 and geeserued depoets recened pntmapany funds harmued in meness adluss meraged appusummedy $1.9 tellen m fnsn carparue and inusunonal cumamers. 1986, up from 11.4 b4an in 19 tithe many armame rue paid on ihese barmwwgs was 18.14% in 1986 ctmpened wwh 22;al% sn 19 tithe DOMESTIC NONINTEREST4 EARING DEPOSIT 5 decienne of 460 bass pomes m the meray rue peal in 1986 rearcts t?e Decunbar 31. Dash Awruys dec!wie in the extraoudenanly ligh irwl of local inenest rues which prevealed 1986 1985 1986 19a5 1984 m 1985 in certan South Amencan counenes Funher m6armanon an Chase's 5 es metems) bonowings a paesewed in Nase 9 d Notes so Fmancial Scmements: Other c,,,, % near eg Deposts , 515.843 st3J00 $11,646 19,822 $8.843 M "'% bes Durimm Banks and Cash tier < n the PoucessalCourction L810 4.114 3.299 2.864 _2.,8 ] Nu th== '4emammnse. ensnag Depass $12.033 5 9J86 5 8.347 56.958 55 973 Akhaugh : ash mems in the pmcess af collection are tunected on a ret hans e the praedmg tabic,sch mems as mebieri as assets and habaisses m Chasei francial maements on a smas bens, in neem years,rhne has been canambraNe discusman benneen the maior bankmg mesutons and the sc. counnes pudesman wwh mpect so the hinancal practre d nemms cash i esms e the pecess d collection anerg fmm checks ended so depossor accouras (temed % pose nour") as an asses armiletalny ewn though ach 3L
'!he indowns table ammumnaes Fedaal Funds Pluchased and Seconnes mcome tax casa Also, mchaird m net mcome for the fourth < pas ser d 1985 Sdd Under Repundine Agnonnus,Commscimi Paper d the Company and was a $15 macn aherdax pn (mm ek sair d ital esame m ) span Term Falast Funds Pasdissed in 1986i1985 and 1954. Net maaes income on a rnd4r epivoime bens br the knh <p .tv ef 1986 was 5826 mdison, compend wah 5-'99 minen for the fourth
=e===d and Senenms mcome on a tatable espmeient bens of appsaummedy 524 mdison ($17 mdlen Said thider pe-6== Assammes on a financial stasement band The fourth spaareer 1986 net menen rue Raimmea End d hmad .. . 55,405 R132 54.400 pend was 4.09% (4.2D% arimhng the abme mennoned adpiument appica. Diense %sr ..... 55J)9 R804 55.204 lie 80 tk Irwrayd leme Ponkiisol, crvnpand wah 4.25% for the fourth Mammense a.a=.,,r- - ,g gasner d 19815. Insees carmng asons murayd 58a2 bdlum for the fourth Ag MesMad Dunus %st . 57,430 Klos 55.675 <pareer d 1986, compased wuh 5'M.6 bellen br the fourth cpaarser d 1981. Dmir samen Rae The fourth paner of 1986 peersson for pasable loan loanes was $140 . B.4 M6 9.61 % 10.52 % meAson carpand wah $125 nilum for the fourth paner d 1985. Net loan a End d %mr 14.3896 14.69% 830% chasy cis mee 5I23 milscm ar=3 5104 miGaon for the fourth <paaner d to86 Cossed Paper d due Wy and 1985, respectneh Damese ret loan chary.oris for the knh warm d 8denara Endd Amod . . . 53.010 53,352 54J41 l06 mee apprwmmuh 591 nNen,an umane dappsmommeh 511 nilacm Dadr Anemy talmue Owamdug awr the sounh cynener d 1985. Domesic connamer rur loan charyds for Disrug Veer . . . .... 52,874 53.163 53.824 the brth <psener d 1996, pnmanly artn6mriddr se cada cani actrymes, mae [ o,g% g,,,,,, g,, y,,,"' $3J68 RI15 R8, 568 m'llian an mcit88e d apProsumsedy $19 mdison o er the fourtn cpaarter d las war. insernarsonal net loan chery ons mee 532 nullson in the founh Durng %er............ 6.81% 3.19% 10.4 % cpsarter of 1906 composed wwh 524 mason m the comparable 1985 penod. Asersgr lasses Aase re Balmace Other operanrg income for the fourth cpaarter d I'd6 mes $415 nuuson, a End d %er 7.2646 ' 83% 8.56 % g 1% ham the 5381 msNam carned in the same posod d 1981 lie-bened Term Fedend Funds Purchased mcume was 5320 mdison, up 22% compased wwh 5262 mdison for the Ba;snce a f ad d Renad . 5 700 5 400 1 164 bnh paner d 1985. Founh rpinner 1906 fee 4en d inoame uncksled in. h'""$,8 senna Mg 5 500 5 389 5 40 come from trust and fuhaciary activars d 572 m:5mm, up 35% ham ehe 153 Maxwnum Balmace Carmasehg a d... nilson acoided in the same penod d 1985 and unemmern bankmg ir-Any ManMad Dunsg %sr . 5 714 5 562 51.107 mcume mcstasai 94% compend wwh the same penod in 1985. Foseign t>uir Aarser trames Raue Dag %er echany tradng income was 545 msNam, cornpased wwh 546 miDion for the . 741% 830% 11.1 N ,,,,,, fourth parw d 1985. Trading accouru pants mee 119 mJlson, compared a End d %er 7.0896 9 49 % tor % weh $11 rmilson for ehe bnh paner d 1985. Na pse-tax pns on sales d unessment secv was mese 530 mdlen, compend wah 520 mdLcm for the fourth parter d 1985. Inchmied in founh spiarser 1985 orher operums - POURTH QUA RTER 1986 VERSUS FOURTH QUARTIR 1985 income mes a 523 million pre can 1515 millson aher cames)pn hum the sale Resulrs d opersums for the brth paner d 1986 and 1985 ase shown in d seal esse m }apan. thetablebelow - Other gensms expenses dor the knh paner d 1986 mee 5831 mdlon, Pol /ftTH QUARTER ENDED DECEM BER 31. up 587 rmlhon, or 12%, ham 5"M4 nilum m the founh parter d 191Lt ggy ,g 4 g gg , 8 '" *b haar pemes by appumimmedy 531 nilion for the fourth paner d 1986.1he " '#85 OyinE adwne irnpact d foreign echariy rase chenys on expenses d merseas Na invers lacome . . . . ...... 5763 5733 4% dlices amnunsed to appronomssdy $18 mdlion for the fourth warter d 1966. umdn [oun . other Opereirg Expenses . ,, % [ 744 12, Exchaing the m. pact of meseau expenses appicable so recendy ac@ ired 131 12 companes and aherse kuegpi euch=ny transiersons,Oisse's other openring terame Taars . 49 94 ,44) experties would hase erscreased ordy 5% rier the hurth gaarser of 19t!. Na leaume 515e 5t51 5% income tazes decreamed 545 mdium,ur 48% in the fourth warter d 1986, g,n,,,, ,,, 3,,,,, 4,,,, . . 67% 69% ' "Ped nah the same penod las war, chse pninanly to a loner lewi d Raum an Awesy common Pruam sncome and a chang m the mia dincome. In zhlman, the cursia. ssudiadJun' Einsay IL7se6 t 4.31% cne nnpact d the pievoudy menrenad federalincome tax rue red 6s:tson appiscable to irwrapd lease fmancirgs mhred Chase's founh (paaner P sam for unennames by appamunamh $26 nDum. ( Connoialmed not auxmee for the fourth casanur d 1986 was $158 mdison, I up 3% ham the 5151 nullson emmed in the fourth parter d 1985 and up 14% fun the $138 nBion emmed m the thed spaner d 1986. In com. pannon weh the founh spearter of 19ti, dounk earur 1986 na mcome erdecsed higier nu unmest sncome and irrieness in other operums mcome, pnncgisily ise tuned irrenie,tradwg account psalits and pns funn sairs d aenmen acumus.These Imorande hcen ==e penmer o#wt by a hgher pnmaan for r==ed loan loess arms menmand opermirg experines. n an-rean, knh q aner 1906 not mcome mes (persidy adscind by aggnanmsseh 39 mdison, deer temas, die to the cunnaissne unpact on Oiase's lewrsyd lesse fmancog panfaiso usuirug Isom secondy enamed rakserions in 6deral r9
SUMMARY
08 SIGNUEANT ACXJOUNTING POUCIES nr ai- m hmma cap am andsdud.nm INTRODUCTION TRADING ACCOUNTASSETS
& 64sweg ammmary d the spancaer accounreg; paizus d The Chase Temiss account mens me vahad a esnmmed curma marker pnces, ilmhsmen Carpa==== the CampmW and as subadures, mdming as Obiesnans so ddmr securves said but rme ver punhaned ase irh m puncgmi =d=Am The Osse Manhanan Bank, NA. and its shadenes 8nccounis Payable, Accrued Espenses and Other Liabsres. Gams and kmses the beskra pummansi e amn the umsrin " .the(m micini naimed fxan todug account actmnes and un= shred vahamion adysmmes maruses, nr es ri=== and asher des casamned in this apart.11mosgh- a= nyaned in Tadsg Acrours Pmfas (Loued as the ripsut, die amm "Carposanon" adus so 11st Onse Manhanan Cary==== and as =4==Imras, INVESTMENTSECURHTES Inesanes securmes me camed a cosa, mimmed for amommarum d pc.
' GENERAL ACCOUNTINC POUCIES nams and acennon d 4-=m Pmnaams and decounts on unestment
& Copasumn lobus ymsmBy =w= 8 accoureng pnnciples.and, secmancs me macetund or === 4 . .y.m.4,io Innees Incone on in.
whee =prarde the accumung and sepansg gumbhns puencnbed by the emmera Sec.uruus assg the stragiw4ine meriod ouer the permd so marurwy Secennes and Emmary Comunmaan and bank aguinary unhonnes. kzB das,if endur,weh aspra e piernanw d the reissed securmes.
& Canyn==n cames as asas and lid =l== pnnespmBy on the hasancal immen and <bruieuk on vmenment secunnes = mponed in lassest . cost hans mui logans the accnnel immind dm:counarg, Income. Gems and knees amined on sales d swestmers securves = yner.
Assas bdd by commacial banksg =d==i= us and by man and nuest. a5y daermand cm the speedic idenncaron method and ase spaned m mes adswory suhadenes in an gncy or 6dmanry capocry ase nar amas d inusonst Securuus Gesns(f a=d the Corp ====i and, ===lingh ase ruz ud bri in the accurrgnmyng h==ad sammans. INTEREST RATE SWAPCONTRACT3 PWar pun'linancel same unes hoe been adandied m condorm wah the NCarpoumon amen wao irmnes rme swap contracts as part d es cune Esanaalitsasemt pnmensrums. amaesimbry rnensyrman pmenm and as swap codes posaaons. Asser4mbeiny rnensyment sump cosuracts a accourned kron a CGM IMT10N POUCIES tusencal cour bums and the named seg mcome and expense m reponed in
& a==ral==4 Enancal namensnes inciale the accouns d the Company frames Egense.
and ins abedenes, pnnapsBy the Bank, der eiunmanon d meenal user. Inames rue sump canreacts held a trading pa=nans a vahaed a rher unsynny nansactanz. curma einmard madur ekse. Gans and losses realised fr:wn these posnions, huemmaus in amur===i compenses 00450% osmerd, sweest) ase urucaEzed vaimmum adysmars and the nimed sosp income and expense accommed br under the egasy nurhod and ase uponed in Other Assas.The ase upcried in Tradsg Accours Pro 6:s(tossed C8F"="=6 equary meanse in the earnsngs d these assocused compones AB yuid-aissal permerus or ncepts assocuous wrh insats rue swap rol guns and knees enhand an depourens d unestments in assocamed contracts ase ac:nnd mer the term d the conrmcts. A%..,a fees cmganies ase uponed in Other Inconw. m =ccgnard in cuners income. I======= in canpanes which m less than 20% oimed a camed a cour sul ase aponed in Fedad Ressne Bank and Other 5 sock Irnesrmerus. INTEAEST RATE RRURES Cah dmdeds seomed on these usemmaus a sported in Dmdeds & Corporance uses i useer aar furums conreacts so mensy as aerall on Fedaal Res sw Bank and Other 5sodt beestmeras, Gans and knees meses ese nei, egasuse kr assaladminy mansymme purposes armf as part sealmed on the dispounon d these unearnenes ase aponed in Irmestmme d as trahrg scours actmnes.Gans and losses on furums contracts used kr Securmes Gans(I a=M asser4sbilny rreragenen purposes a debrred and amortund cur the hde d the hedyd smers or lisbileus and ase mchaded as alpsrmmes to Irmees TRANSLATION OF FORDGN CURRENCY MNANCIAL Income or Inneren Egense as appupnme. S'IATEMENT3 Cans and kanes funn the chang ir, the mariner vehes d futures contracts Assers and labstrus d amness anzus a transised irmo (11 dallen a the used in connection weh tradug accours acmurs ase recognized in curnw sepecme year-end exhany rues. Income and expenses an transized mcome armi an apweed in Traing Accourr Pidirs(Losses). nusuely a p=vedma cues d exchary. Fampi enhenge trandenon guns md to ns maki, from the Corpora-runs vae:rmees m aeries, ersus, asupt nr rhme lac =-4 in hghly mastanary ecer.amus, ner d abend hadyrg transactions and mcome tax circus, aar cadmed or chnyd duecdy su rhe mockhoides' eminy a:courr, fougp Exhary Transbrun ." - . Fosays exhory tensisen pen names pertarme m aiuns iar==i in hghly inannonary econamnes ase suponed m Other inmme. O
. 00 APE PREMISES AND EQUIPMENT lomas me apared a char prinegini amours outmandms, na d unear ied Pnmmes and ewipman, cuaming land, ase aparsed a orgral con las dmoown, d argt l==== incasse an loorm not nuele on a decount bens is ao:umuksed dupsecseen armi muorn===rt Land e aparmd a orgnal cost.
cademi so momme based an namn pruripal amou.us ammandwg a appmpn. Depsecmaan is chayd e aparanns expenas our de esunned undul lms an insmer men usear mi ducause an loans made on a A===u tems d ahe nimod amees.1mmehold ungstnerness me enamned our the eram d a aedes' e mamme an a bass whd asuhs in f, ined rmes d che mapectne lenses or the csammed uudullnes d ahe aqueurnmis, which. mesm<ner the arms d theloans. .. eur ase shonerbp-r===i and amornaamm a pnerally omnpund an lacandel in loans ase huse financuss wha consta d duect fmancus the and massh:4ine maled. leenged lenses. lneneur mcome an lease financuss udades che amours d " m apaus and menor unpumamenn me dingd e opeants irmestems is: andas on duect financug and leursyd lesser amaruzed apeems as mcursmL Masar snpanenmis a r=p=l==4 darau che jes _ loers an whd tir accrusi d insmen has bem ._'------- ? me dag FOREEN EXCHANGETRADENGINCOME need as nonacenasi hans. Ioans, edur than canamar loems, a placed m
& Corporsson fobows rise ynmal practar abehang asonthly as 6asagn nurseccnasi semes 4 sessanabir doubt exm s as so esmdy cabecedulay or if adery nadsg paurens, udadsg ipar and forunni edary corumcts,at paymem dpnnopel or immes is conmactusily pas ese neery esys or mee esammed cunent mador rases and aparnes due mahara psodirs or lames in and the loan a nor wel seemed and in the pmaess d coEscrum. Any accrued Fasagn Enhany Tradmg laconne.
but unpad meses psevumasiy scanled an nach loans a russed guna surrsu penod semes scorne. Inimes income on nonacened loers a acos- PEN 90N PIANS runed =e ay=ndy only in the penod amined. Loans ase neurned so accrual maus when the callecteniwy d bosh pnnapel and manner on a m' air bens is & Corposexsi has in===( nunconmbaary penson plans coierug
.a.,=nnsBy a5 fulanse and pan <une empic.)ees. Cost d the plans, beed smaanaih asmsed and al ddmourw pnncipal and inames ase inaught curnen or %e loan becomes ud secured and m the pmoems d callectan' an acusansi computanons d cursms sul funse beefes for empir== as-chmyd m apawns apenses and ase geimeBy funded a acenami. Pnor Canames loers = creyd odF asemer the amene for pasable ben bees accoedmg n> an +=iit=hed ddim+smcy sche &ile.
savice cons aners inrn ansubiurus so the piens ase ansatsted our the amessy 6mwr service Ises at pumcipants. Lanns wha ime been nrugmased br economic or adar seasons nissed so debsors'linancel ddlicuines m rues below those whrh she Corporanan INCOMETAXE5 unmaid be wiEng e accept for new loans wah comp =& nek ase dngnmed as 1 rue loans. Inames on nach loans is accrued at the seneymaned & W ud coton d irs =di=d=rus Se corumi.,a= d Fainsi, New rmes. it umanshie doubt exars wwh aspect m coEscubilary d inames a the M Scme ad New M Ciry ma suurin.Odur abadians file spise nmpiad rams, mch kans a rnmdmed e nonacaual mann h %,g g,,,,,,,p a 3ppinia,taas dthe andmd-arrarupman call for akhnanalirnema e be pad on a cann: yrs bens, asch usi campanes ase pnanEy dermmed on de hans d Sug separase nrurm. immes a rux neogruzad unwil deemed n=Lrn Amoums e lie pad w ended weh po curser mas L.d br ad==Awa uddd in omsddssed as muns ase pad m> ar seassed from RESERVE FOR POSSELE LOAN LOSSES theCampov The Resene for Pasable Loan Losses pandes be ruks d losses anhennt m h a mde br ddened mim on nansanans wha me npored br - finened unemess purposes m &Emein jean than br tax purposes. Isens the lmang pecess. This sesene pnmarh nimes to the loan portaal* d uscame or experme enenrg ddened ex panoons admie depsecanon j but m also nined so other alI4selarre duet commaments udming comm"' and rmarnaancm d posiumes and ecpupmmu and lese inancus egagsamt, J mmrs e exand neda,guaransees and sandby letters d cada.The sesene undarnbused earnsgs d meness =4'=&=ies and assocised comparues. l is mensmed by pnmuons charyd o egenses and decumsed by chary. eiffs, net d sectmenes- pamaan for poemble ben base 6 and innser on nonaccrusi bans. Irmesiment tax ciudas on agupman owned, acher then lease financus The Pmnmon for Pbsable Loan Losses is band on Mansymou's ashia. eppment, ase denned and amornsed so wroene a seernons d tax rum drhe adapucy d the Resene be Posable Loan f - which evehiaron expense. encompa== canadmanon d pam ions expenmce and other ineson, incha&ng chanys in the carnpostum and iolume d ahe partilain the mistanslup d the resene to the porthino and maridwule econome conderrn. REAL ESTA11 PROPERTIES ACQUIRED IN SATISFACilON OF LOANS Real came psoperties acpsed in sensincemn d loens, which ase nponad m Other Asaees, me aconded at the laser d cost or eenmoed far marka value on ther acommon does and at the louer d such innial amounc or curmu rut nahashie vakar chaeafser. Opasas expenus d nrh pmpemes, ret d rehmed mcame, arul gairs and lomacs un ersar depomeon a npaned m Other Expermes. 41 I
W frwTFDSnTIA4ENTOFCONDITION
, n.our nema.nu con-- ma sah.amm
(
\
m n, ! 5 h shamudd 1986 1985 Ces amiDue ham Banks. .. .. ... .. ... . . 5 6,188J95 5 5,574,055 i
" ., Depass &ced weh Baras . ...
6.229J45 4.671,048 ) fuemal has Seal sul Seewees Puschend tkuler llamle Agnementr. ... . 909,227 1,174,371 Tedag Am=== Asmuts. . .
. 2,567 421 1J44,495
]
i
" Seew mes (LSTammary secsarmes .
1,525,497
. . 1,839,207 huled AemcySeewees . . . . . 29,065 330,259
' isme ami Pohtical Sukevisan Secwines . . 2,05s,050 2,410,373 Oiher Sands, Names and Dubaumes . . . 1J33,537 1.408J4 t Fodsud linserw Sank and Other Saxk Imestmous . .
164J95 134,012 i Taul knessment b .. (Martue wh= cd $5,825,000 and $6,091D04 Itcupectnely). . 5,710,744 6,122,392 lamu. . ... i 66,219,546
, . 61,930,527 Ims: Pemere for Pbeside loan i.ammes . 1,064,764 907,672 Lamma,Nor. . ....... 65,154782 6 t.022,855 ri 'I i.a=y an A n= prances . .
I,::!8J45 2.820,471 Aacnsd homes Racenable .
. . 946,454 1,028,986 .i Pasmus and Equpmau 1,177,109 913,580 )
'Oihar Assues. . 3,263,189 3,013,189 l Total Assas $94,765J15 587,685,442 1=hih== and $nar*baarrs' Equey D'Pam's-fh=aar 05ces: i Nannummweennry .
. 515,8424 31 513,499,638 l km-s4carug . 30J46,456 19,130,313 1
j Ousmens OEces: ' Nanummest4ennns .. . . 2,437A43 1,939,120 immen Beanns . 27,475,914 26,783.968 Tand Deposts . u nrn med 6IJ53,049 Fedaal hads Puschseed and Seewmes Sold Umkr Repuschase .b. ~ . 5,405,098 4,131,793 r - -. - d Paper.. .
. 3,049,891 3,483,501 Other Bonomed Mancy. .
5,007422 4,671,994
/- , _ -- Ounemndag .
2453,283 2,828,6 % Accrued benen Payable . . . 677,938 668,961
,Acumanes Papide, Accrued Espenses and Odur I =&=I-nes 4,155J67 3.282,175 46,952.493 80,420,169 lengTenn Nomesmid Debenrwes 2,469J87 2,806,499 Totall 6=i=us 89,821,880 83,226,668
- c. and C ._,_ i --'-M (Noors 4,21 and 22) l
)
Panned Saxk (Wuhaus ra h Audsmaed Shmes d 50,000,000 and 20,000.000, R+ ..Jri. . Amhamable Pndened 5eads: 6ad,3795haus e '.. 61438 61,638 Nansedeemsble Pudened Smack: 12.03gp37 5hmes O- - ' ' . . . 401,987 601,987 Camnian Saxtholders'Egury-Comnum 5sode (Par Whar $12.50 hr Shasub 1996 1985 Amihanand Sheses 250,000,000 125,000,000 ! Ounemi.tng shams 80,843,953 77.157,724. 1,010.549 964,472 Suryhas , 276,288 352J84 Fancen EadiaryTranslunar * =- . . f13,724) (22,265) Russed Earrung: 2.940.901 2.576,654 l Tatul Camnian 5exsiahkrs' Equay 4.280Jto I,795,la9 l l Tatal I h and Seckholders' Egry 594,765Jt 5 587.685,442 ; ) nr == ,.ar=, an== an e M pen dite womi m==ams 42.
CCMf'18 ffMTED STATEMFNTOFINCOME ne o.e mehensa c.s,-mm ma sm6ms6mn. j Yearr w D m d a 31. l 5 n ahamummis. .-,, per commian esse dural 1986 19t5 1984 lumssailmuser l===a= and Fees an Lassa . . . . $6,490J26 $7,173,915 $7,657,578 lemmest an Depcmes Pleaal wish Banks . .. 481,916 486,230 749,072 lemmes .msf Dwminah an beestmau Seewees. Irmeest an415.Tasmsry $scuntas . 160,751 191,447 170,556 Fedesi AsmcySeawmes . 17,575 25,371 21.226 Some med Pdnical %ecirrusan Securums Emmipt imm Fedaal income Tames . 160,055 150,102 115,162 Odser hands, Names med Debenruses 177,824 197,865 89,075 Dwelends an Fedessi Raser = Bank and Other Sexi L---= , 10,482 10,241 5,438 5M,687 575,026 401,457 insmus am Fidemi Funds Sold sad Secunnes hchased thder Rassie ? . -. 108J67 105,417 A 77J89 l==== an Tedet cxxmar Assets . . 109,402 76,917 45,982 _%siinsmes *- 7,716,498 8,417,505 8,951,678 Imuseer Espense ' Dipaars . 3,358,592 4,275,695 4,997,270 Fided Fands Pu duced and Seewmes Sold thder Repushese Asseernmes 450,046 4 1,796 547,672 Ccumnuscui Paper. 198,883 265,596 408.002 Orks 5anomed Money. 425,644 472 #74 496,338 Last T Nams and Debaruses . erm 240,118 240,044
~ 193,905 l Tassiinumes E , - 4,720,513 5,668,775 6,643,187 Nan imament t=m- 2,996,185 2,744,730 2,308,491 Penman Imr beible Loan Lasses. 595,000 435,000 M5,000 Nut lasmus t=rrar Afar Pmesmos ist Possilde Lamm 1 Asses 2,401.185 2J13,730 1,943,491 Osher % 1mosme Feesand O . , , . .
1,120,826 908,805 715,886 j Ftsegn Escher.seTaming taxune . 223,197 173,385 119,462 l Tadsg Aaxmnr N5 s(tosses) 68,251 31 / 15 29,M4 { imesmeer Secunnes Gans(1 w 168,781 98,106 16,704 1 Odser income . I62,601 104,020 48,168 f TatalOtherC, ,Inaame 1,743,1 M 1,315,73! 929J84 ) Other Openmut Eapensus l Snamnes and Empiojme 8mdits. Selenes 1,327,507 1,113,322 945,771 N6r 9tenry . 92,107 83,432 61,702 Other Ernsdayee Benents 332,213 272,914 2 4,592 1,751,827 1,M9,668 1,254.065 Na Occupancy , 331,03) 256,603 221,29) E4,ugment Ransn'is, Deprecanon and Marnensrox . 270,701 225,768 I87,558 Oder Expenas 94,989 581,608 779.839 Total Other Opmanns Expcina 3,300J50 2,/31.878 2.244,526 t,- Benase Tames . 843,791 897,583 628,549 Aardrdih IncomeTams . . 258,428 332,765 222,73i
~
Nur lar=== $ 585,M3 $ 564.818 5 405.818 Ns Imessar Appiscsher io rmna.== 5ssch
$ $27.266 5 480J73 $ 320,700
% 9mmes Ommandarg 79,561,005 75,240, % 4 71,152J44 Earrwisi1%rCornman Shase:
Pnrm Based an Ansate Slissa Omuardint $ 6.63 $ 6.39 $ 4 5t
*asumiry Full Desraan $ 6.50 $ 6.15 4 32 Cash Omdmds Dedssed Per Comsrson Shme $ 2.05 5 1.90 $ i 82 %
The scangssnrm8 nous me aa :amummi part of the 6nsnrul steeremnrs I 1 43.
- 1. _ _ _ . _ _ _ _ _ - . - - - -
STATDGNT n o.m use OF CHANGES IN COh000N STOCKHOWERS' EQUITY
., cm,ma- ed s.a-here dne a m % c- % %)
%st Ended December 31 Cim ihmmmuhl 1956 1985 1984 Commem feed .
3 dame a tsyme g d Vow (7L137,724 Shares, 36459453 Shs.um aan 34,740331 Shams, Respectnely) - 5 964,472 5 458,246 5 434,262 Commann d Gyismi Nous sad Debammes G,472531 Shaus, 465JUI Sumas mal 144,727 Shams head,1tgectnely) . 18,470 5,819 i,809 F===e d 5mxk Oyame (253,140 9mses, M14813 5heses and 123 9musirammi," ", ) . . . . . . 3,164 1,260 65 Shaun Ismaal hiemmu m D=minul 8 *lan (1,Iml,927 Shans, 716,312 9mse sul 7XI,3el Shams, * , -
", ;. , 13,386 8,960 9,628 Shees immed hemme m 1984 Aapasuun (484,663 Shams). . - - 6,058 Shases immed humuss e being Itar Subesdamed Names Due 19955435 Simmes,636073 9mmes mal 513,862 Shases, Rgectnely) . 11,057 7,951 6,424 Summ lamed Annunne m Tse Fuone Saxk 5sde Ordand )senaary 15,1986 DI54,8629mmed . . . - 432,236 -
Edmur a End d har (50,843#53 Shases,77,157,724 ' 9mus ad M'#M15hmes,Itaspectnedy) 1,010.549 *64,472 458.246
~
SurphBe . Beisur a Bgunarg d %sr.
. 276,288 678,342 594,195 )
Comcman dCapaniNames and Debennues 23434 20,788 6,140 Eammme dendr Opmans 3,141 3,151 161 9 muss Isand hiauant e Dwulmd Itarmesneer Plan 26,106 29,617 23,672 Shams lassed humanns e Aapasunon . - - 12,79i Shases Isand humaass e therg Rase Subarkneed Naas Due 1996. 23,415 26,616 13.221 9mses Imad humaser o Two4u Orie Sexe Sphr Dedmed Jamwy 111986 - t 482.236) - l Gan an Itanamura ditadsemster hikend Seock . - - 28,162 Balance a End d %mr 352,544 276,288 678,342
~~~
Fesugs Emdump Trundaman A4mammme beina a Beynning d %mr (22,265) (18,730) (22,341) Agngme Tanaisnan Gan (Lass) Afear Appis:sini income Tmes (Benenn) d SG3,90BL 502.164) and 1242st, itapectmey (6,412) (5,445) 8,187 Ammunt Tsudmed me Nar income Aler Appi '& Income Tues (Smdes: d S4,546 50,44) and $360,ltampectnely . 4353 1,910 (4,5761 balance a End d %er ~T12.265) (18,730)
'13] 24) name-d Earmsy 8sinnce s Bepaang d War. 2,576454 2,241,199 2,044Jo9 Ne lacane . . . . 585,363 564il8 405,818 Cash Deidends Dedmed Itahamshir Padmed Seck. (4,432) (4,432! t6,038)
Nansedamshie Padmed Seock. ($4,166) (82,659) t74,122) Common Seodt (162,518) tI(2,2721 (I29,168) Osinnte cc End d %er
~
2,940,901 2,576454 ^ 2.241,199 TessiCamanam banNnders* Egmiry $4.280,310 53,795.149 6 359,057 ne amsayenng nous en an uusynipari d rier 6nenusi marumanrs l l 44
QMarm4TED STATEAENT W CHANGES IN FINAM3AL POSITION
.11=Omme h Capumma med $mbedens
%sr Ended December 31,
$indummmmh4 1986 1985 1984 FamtiFemended Ne imix-w. .. . .. . .
S 385.363 5 564,818 5 405,818 Add W Na=r=di inmus imdmand in Nu incisne-W and Amaremmens d hammesand Egupms 171J12 138,440 108,010 hunama imr Pennise Lamn L1mus . . . $95,000 435,000 365,000 .I Assenmuuan d h as LangTenn Naas and Other Bar sand Mnney . It,405 9.782 8,478 Didined IsomerTuman(tended . 99,370 69,239 104,165 Funds hormhulimmanp 1,464,450 1,217,279 Immmune d: 991,471 ! Camamm 5eadr , !
.... ... . . 122,373 104,172 79,969 W hedened 5sodt.Mmmeg Rane Senes F. - - 226,987 Gem om Amtmascu d Raimummier hdmed Seodt . -
Femmes F=4==ge T==4===i * * -- 23,162 3,611 lucummesin: W .
. 4,649,795 1,673,038 3.380,454 hdmmi hands hechased and Secunnes Sold thuler Rgnudase Ayeemeras 1,273J05
. - 739,597 r- ist hyar . - -
122,408 Osbar Bonound Money . 315,317 1,435,377 - Accnsed laureur Psymble. 9,027 127.817 Annamnis Mspuble, Accnssi Espenses and Other Labilmies. .,. . 774.222 644 3 41 673,962 1meTens Names mal Ddiennues I10,293 512.983 955,304 Dnammesin: Cah mal Due frein Bardis . .
. - - 242,407 hunmedarine Deposes Maced weh ILanks. . . - - 4,303,454 Fulaul FuncL Said mul Secunnes Purchased thaler Resale A,,,-_ . 265,144 118,834 -
Tedas Account Assas . . - 10,076 - Insesonov Secursus . 411,648 - - AcxrundIreneur Reaerimble 82,528 162,963 - Oiber-Nu . . 146,131 15.446 140,427 EFunds Pardid $9,644,333 15A95,t09 512,016,0M
' Fames Und Cadi Dwahnds Dudmed Redsmunk hidined Seadr . $ 4,432
$ 4,432 5 6,038 N==4=,dde Pudined Seock.
54,166 82,659 74,122 r.mnmen ssode . 162,518
. 142,272 119,168 Comunum d Capsal Nones and Dr!anruses muo Common Sexk 42,109 26,615 7,952 Ransenen d Rahendie Pndmed 5 sock . -
Runen Enchsgr Tandman Adpasimnus 88J62 1.459 3,535 - lacesses in: Cah and Due faam Bedes . 1,376,254 614.540 - Ireues.8emneg Deposes Maced weh Banks . 1,558,297 315,857 - Funnel Funds Sahi and Secunnes Purchmed Unds Resene Agreements - - t,115,082 Tadug Acamant Asmers . 1,223,126
. - ' t,075,023 Immument Secunnes . -
876J86 1,827,697 Lamas, Bedose Oiergeoss 4,863,235 344 S 70 6.388,392 humanes and Egmpment 436,841 158,4h 356,814 Axnsed insmes Recenable - Oder Assets , , 118.979 250,000 1.054,828 527.015 Daaemus m: Faded funds Pachased and $scunnes 5dd Lbder Rapusehene Apeaments - 348,497 - Camnumul Paper . 433,610 925J45 - Odur Benumed Monre. - - 298306 Acxnud toisen nydee. , 134.769 - Tessi Fundslhed !
$9,644J33 $5,895,109 $12,016,030 j Die ac. genymq notes are as swayalpan of the fansecal ammnemi.
l l i ( 4s ' __ _ .- - - I
BAI.AM G SEEET l , Thommum*mnmcepamarm e o l
. Demmber 31, S5 thmummade) 1986 1985 Assur Cseim Emmas-Damned Dipons.
The Chase Mh Bank.KA.. 5 1,289 5 6,013 l Oder asshe . . . . . . .... .. . 10 4,77: Shanism hhany headerInsmmmess. Imamm tures Nra== Ptsend weh Benia: Tir Cher Madman Bank,MA. . . . 966,953 2,744,369 l Osir8mbs. . . .. . 215,012 64,216 l tiilmmary Securses . . 2 43s - l Tsan terriens Masuty Mader humanmes . IJ10403 2,814,585 Nams Miman % Subarianes 3,212,727 1,649,793 l Amasses Ramms6de isoin Tlie Omme Memheten Bank, RA. . . 52,436 5 t,937 l OestSand tausunaus .. .. 59,662 41,360 l feamusmand Du6anasse Reismbie Isan The Chase Manhattan Bank, RA.. 400,000 400,000 I h==== m Sendenes ist Eeny in Na Assea): l Budus h TheOuse Manhamm Bank,MA. . 4,714,283 4,454,725 Oder Rodrug Seahnnes . 1,067,991 705,971
% 5mdensras . M2451 343,571 Acxsumi hamnsr peransMe-Bushug % 10.207 26,865 l
F' '
.% .. 19,202 21,643 Oder . . . . 3,210 1,822 Oder Assess. . 73,294 94,149 l Tassi Amman 511.Jr7,%5 510.817.2i3 Lashamm and W Egerry ra=====1 Paper. $ 3,010,259 5 3,351,756 Odur Bernmed Mcmry. . 430,771 573,644 Aaanman Passue. Acensed Espenses and othe- Lahlen . t42,859 290,683 A984.089 4,216,087 LangTuna Names and Deberwes 2.359.541 2,142,351 l
Tassitaduires 6,343430 6J58,438 J 6mmaanimu and Canurgent iid=hnes (Noors 2) and 22) Penned Seck (Waleur Par % hse- Aushortaed Shams of 50,000,000 and 20,000,000, Respectnely): l M Padmed 5seck: Gla,379 5hmen t i, . . 61438 61,638 N==4==inMr Padried $ sock: l 12A98,737 Shases Ouseendry 601,987 601,987 Consum Snodholdm* Egesy: Common Seock(Phr %he 112JO Per Shase 1986 19t5 Assrharined Shases m ann nnn 125,000,000 Outuandug 5hases $8,842,953 77,U7.724 1,010.549 964,472 )' Surpha . 352,584 276.288 Faseign ExhangeTandenan * * . (23,724) (22,263) Matamed Earnap 2.MO,901 2J76.654 Toimi Common 5sockholdes' Epsy 4,780,310 3,795,149 Toual tambines and $eadha6 hrs' Egary 511.287.565 110,817.2I2 The accompegus names me an sagsmi pan of ihr inancmi ramenerus l 1-l
._-___m____m. - _ _ _ _ _ _ _ _ _ _ _ - - -
$1RTBGNTWINCOME Tiso- maammcm,-m r , ,ois
%sr Ended A ' _31, Sieihammadd 1986 1985 1984 huseme theuema Encsised:
The Omme Mahanum tank, NA. . $250,000 $300,000 $30o400 Oshetuskas5dadenes . .. . . 12,000 -
% Sendimm .
. - - 2,500 OderSamd h . . . . . 3,299 4,549 344 humuurn= -
hemma onny- Maced =mh Banks:
- TheOmme Meannum B.,a s N.A. . . . .
. I23.062 215,755 3!8,380 Oder Budag %d=& wies -
171 504 Other Banks. . . . . . . . . . . . II.236 6.010 6,196 111Tammuv Secorums . . . . 1,700 122 295 Badmus'W . .. . 108 Namsasonneddehuna t89,328 W ne===%Reornele 44-4=nes Isom The Omme Manhatan Bank, N.A. , 34.472 150,688 M,137 146,802 11.300 Odern ==* .
. 664 7,291 1,748 Tessi kamer 625,751 720,924 828,155 Eguma
!amms E=ene e-d hyer . .
195.544 259.168 400,268 Odier Barsemi Money. . 51,099 39,985 35,206 tengTerm Namesand Debemuses 193,987 183,389 143,588 ras het >Theom= Madenen aank, NA . . . 2,090 2,75 3,232 Nashushme44-h-us 10,407 26,M9 25,654 Oder Egenses . 18J71 10.203 9,519 Total Egemes 471,44B 521,992 617,% 7 haasne Bar. incomme Tax Sandes ni Epay m LLM income (14aseda(Sahadsenes 154,303 198,932 210,718 AgehrAir Incinueline Bendies j Fedeal. .. (44,164) (42,895) (31,096) Samesailocal . i (10,058) (9.830) (20,414) Tasal Amyknder hiconic Tau Benedits il (54 " M ($2,725) (51,510) ] luumme Sainee Equay in Iimaartmund laeomme (Immes) j miGeh=&arist .. 3DB,525 251,657 262,228 E,sry in thmbseribund laceme (i.emmed of 4J-d=rms Bankus 44=A=us. TheOmme Manhanan Bank NA . 223,119 192,798 83,493 Odmer asamq1mbederus 108,098 79,345 49,127 Nedankug Seedones 45421 10,970 40.978 Nmlasmee $545,363 1564,8I8 5405JlB The ==y-yag una me a magpal pan of ihr Gnsnami maanses I c.
- STATEMENT OF CHANGES IN FINANCIAL POSITION TneOmar Memhmt.m Ce # Company only)
O icte Ended th:mber 31, 15 m shommunis) 1986 1983 1944 FumsPrended Naincuc=. . 5 585J63 5 (M818 5 405,818 Add (Duk) Nonosh Isma Inchaied in Na income: Esparpn Under,inand 1.ones (Income) d knkm8 Subsuhanes The Chur Manhartan Bank, N.A. . (223,119) (192,'98) ;83,493) Oulier Banlag5ubadsrus (106,tM4) F9J85) 449.12) Espwy a thodstnound temnes (Income) d Nonbankirs Subediares (45,621) < 40,97R) (10,97t)) Amioruusum o/ Discours an tagTem Nous anc' W Sorromaj Money 11,405 9,782 8,478 tmsmed Inxene Tames (Baudies) 1,481 1.120 2,503 huidsIWnded nom Operammis , 221,411 262.559 273,209 lemaance d: Cramman 5 sock . . 122,373 104.172 M ,969 P- % Pndened 5 sock, Ronnig Pme Senes F. - - 226,987 Gas on Rensemsa d Radeemsbie Pufened 5 sock. - - 28,162 Fosegn Exhege Trandsnun Adpremaws - - 3,61I Irtuesmes in: Secunnes Said thder Lpun:hme .'w.w.. . - - 48,98.) Commescal Paper . - - 184,168
% Bonomed Money . . 257,012 247,83t) -
Accourus Payatde, Accrued Exposes and W Liabdmes. - 32,uS2 4,320 torgTem Noues and Debenrun:s. , 248,204 425,0:10 T'9,035 Decumsesin: Cah n Banks-Demmd Depours 9,492 10,531 - Innses4canrg Depours Placed wth Banks. 1,o32,620 840,628 233,443 (11Treamry Securvus. - 49,066 - Bankers' hcaptances - -- 9,827 I Other 5 sock Inuerments - 13,970 Accrued Interest Recemble 17,711 414 4,184 h-Nei 20,856 - . T< mal Funch Provaled $2,529479 51,986.222 51,875,898 Funds Used Cash Drrdends Ceclared: Rakenahie Preferred Seock 5 4,432 5 4,432 5 6,038 Nonsedecr,ahle Preierred Stock 54,166 82.659 74,122 Comman ssoci . 162,518 142,272 129,168 1 ~,.. ,4. in subaduirus-The Ome Manhatan hnk, N.A. 36,439 33,181 482,683 W Banking Subo.harrs 253,922 159,331 310,042 Nanhenturg 5ubadannes 71,459 15,755 16.815 Crsiernan d C =al 4 Nases and Debermires armo Comt,un Stock 42,109 26,615 7,952 Reinement d bdeemside Preicmd 5 sock . - - 88.362 Fumen Exhnnge Trandsrean Mpumeras. 1,459 1,535 - lautanenn-Other Sinck Irmesmenrs 18,302 - 5,330 Osh in knks-Demand Depos rs. - - 10,361
* *i Treasury Securwes.
. . 28,638 - 3,690 Subar%ssed Debenture Recervable nom The Chme Manhartan knk. NA - - 400,000 Nrmes Recemble horn Nanbankug Subedanes . 1,362,934 4'2, 81 284,05 t kcanws Recemhie 6r.nn The 0,ue Manhattan Bank, N. A. 499 f,226 M,7 M themes m:
Securves said Under Repurchase Asseements . - 48.983 - Communal Paper . 141,497 989,29 -
% Banound Money - - 3,900 Accourus Psynik, Accrued Expmses ard W l.abilers 149,305 - -
Oder-Net . - 6.123 12,627
~~~ ~
Toud Funds used 7 2,I29,679 ~~~ 51.986.222 ~5'II75.898 ne acconganyirs notes = an irresrni part 4 ik 6nsacal maeneru6 l l l 48.
CONSOUIMTID STATEMENTCf CONDETION
. Two .e u d.am r.4,RA.ad5dm4mm I
Ow. A 31, 5md===M 846 ses Asnes Cash and Due from Banks. 5 5.732,052 5 5,208,200 lemas4ennsg Depours Psal weh Banks . 5,965,'39 4,566.219 fedmal Bands Said and Secunnes Puschased Linda besle ?,,_. .
. 2.M4,948 2,458,090 Tadsg Acznunt Amets. .
2,561,108 1,331,638 house Secur== l (11Tsensury Secunces. . .. 1,349,852 1,721,697 Fedual AgencySecunnes . . 198 290J91 Seme and PolirkaiSubdmron Secutars , 1,970.916 2,185,798 Odwr Bands, Names and Debausses 1,871.587 1,357,862 _Fedaal keene Bak ami Odwr Seock Inemnsus . 87.7N 82.509 Tasal inmesman Secunnes (Marber wiur of $5,.96,000 and 15,N6,000, Miy . 5,280J27 5,634,257 tmns . ., 52,060419
.. 52,176,137 lem: Rescrie kr Pbseshie tan I =,a .
773421 699,054 Loans Net . , 51,286,998 51,477,083 Cussanurs'O.armley an Acceptanari . 2410447 2.810,159 Acuurd Innesent kczweble 1,002.649 852J40 Poemmes and U ' .- 949,535 753,834 Other Assas. . 1661497 2,474,067 Total Assers 577.720,1 % 5MJ05,431_ i Ah'~s and $scr*bMn) Equay D,ome-Dameme Os'm Nanmmes 4eenrg . 514472,439 512,677,180 trueres4eants . . 15.227,547 14429,437 Oumens Odices: R. 4carmg . 2,437,843 1,939,120 Imaesrecanrup- 28,437,096 29,500,685 Total D%. 60,774,925 58,746,422 Federal Funds Pusdiesed pai Secunnes Sold Urder Repushese ?,_,~ a 4,7434314 3.972J97 Odwr Barsomed Funds 3,160,191 2J43 Ace Acceptances Oursuandmg 2445,7.3 2,818,384 i Acuved irunest PapuHe SP2J42 611,150 Accourus Pavsbie, Accrued Expenses and Other Laibdines 2,925,095
]
3.523.182 1 75,213,256 72,233,639 toreTerm Nomes and Deberrurs . I' 877,892 1,031,832 Toralimininus 76,091.144 73,265,471 k s,... ..and Ccennpent Lab,laus(Nases 4,21 and 22) Saxklunder) E,wy: Caporal $ sock (Par %kar $15.00 Ihr Sharer ! J 1996 1985 Authartsed Shens 61,744,445 61,7 +4,445 Outmandug 5hans 50,509A26 50,009,247.. 757 447 750,139 surpius. 1,802,933 1,7 2,407 Furegn Exhsrger T l. con kipements (13,940) 22,345) LMmdrd lio6rs . 2,177,643 1,954,524 kaal 5mckhtideriEqusy 4.714.283 4,454,725 Total I =hdrus and Satu:ihanderi Epery 580.805,431 577,720,196 The a6,ompenng names ase an mugral part of the inannel asemenes, Member F kral Dup en truursnce Ccuparson 49
l l C# .a4TED STATT.MENTOFINCOME
- Thr(A Wunsmand.NAmnf 5dedans: I Year Ended Decernher 31, 8aM 1986 1985 1984 immsma hanume homen mal Fues an tamra. , 54,941.951 56.092,577 57,03 t,4 t tj homem amn5-== Maced wwh Banks . 466,919 483,682 'f 2,096 bumma and Dmemak on tr====== Securums.
benes on-lliTeasury 5scunnes 145,200 180,933 163.606 Fuduni Ayncy Secunnes 13A30 18,019 13.910 t Some sul Aduzal 5ubdmoon Securmes E.nempt fem f%ral income Tames. 149,179 I32,157 106.055 l Other Bonds,Nases and Deberwes 174.072 189,252 85.647 i Dwahads an Fedesal Raserw Isak and Odur Snod Irmemmerus. 6.396 5,228 4,750 l 408,757 525,589 373,968 humes an hdmal hands Sold and Secursws Pusdissed Under Resale fr..a. . Is5ASI 96,571 '8,384 homent an Tzuing Amounr Amess . 108424 75,893 45.270
~
Tammi kmsest inconw 6,195.132 7.274.312 8,295,136 humans Espose Duquests 8.143,409 4 4,129,669 5.205,575 4 Fedsud huse Pusdumed and Secunnes Sold Underitspuschase Apeemerrs . 434A52 446,031 528,729 ! Odue Bmed Funds . . 322,516 334,192 416J41 L<mstT enn Naas and Debauuns . 78,185 90J34 60,386 lead inmuss Espanse 1,778,242 5,000,226 6,21i,231 Nut i===== incase 2.216,890 2,274,086 2 883,905 honorm
~
larItamide loan Losses . 270,533 218,663 293,228 I Nar h imonese Afeer horemon ior Poembie lmen tammes 1.946J57 2,055,423 1,790.677 OsherOpesumes laammer Fem and G-- . 8118,2 0 3 687,984 589,757 FcueignEndianyTradetI runne. 222,381 I72,865 119,016 Tadug Account Pm6:s(Losses) . 65,996 28,774 28,328 inuesanen Secursus Gans(I-l. 166,465 /6.290 16,149 Other laconne 136,425 d.794 41,781 TeselOder Operunig income !J99,470 1.032,707 3 5,031 OsbarOperanes F=r === Saisnes and Employee Ben 6ts 5sinnes . 1,125.217 964,498 852,331 Pmie Sharug 83.200 75,810 37,531 Other Emploise Berents 304,265 252.134 233,481 1.512,6T8 l.292,442 1,143.343 Nie Occupere:y 287,118 227,108 203,925 Eosgenent flestais, cepescanon and Mamtenance 239,182 203,428 174,971 Oder Expenas 656,778 579.S66 458,376 TanaiOther Opennig Expenses 2.615,760 2J02,844 1,980.6I5 . Inctane biase Tames . 650,067 7 5,286 63573 I Appbaitdr Irtmme ".ames . 176,948 292,488 221.600 Nat income $ 473.119 5 492.798 5 383,493 The accompenrms runes an an mayal pan af rhe finwwal suam en Memba Federni Depass insurarre C:rporwar l l l l l J l
- 50. \
l
l CONN HMTED SRTEMENT OF CHANGES IN STOOCHOLDER'S EQUrry j De Ousse Manhamn Sad,NA mal 5shoulunes I I
, I Year Ended December 31, l
S in thc_ e 1986 1985 1984 Caymml5m d Beisne s Bagswurg d Year. $ 750,139 5 740,005 5 738,591 h :=md Nmre m Rourg Rae SuW Dekruie Due 19% 000J79 Shases,675,%3 9mes and 94.2% Sham, Regectnedy) 7.50s 10.134 1,4I4 ) E= a End d Yest ~ 757,647 750,139 740,005 Surytes Bassice a Bayrwurg d Year, 1,772,407 1,745,409 1,268,012 9isses Ismard busent e Ibering Rac 5ubudinmed Debernuse Due 19% 26,964 24.43) 2,175 Capstal Conmlamans by The Chase Manhatan Corporarm . . 1,562 2,372 475,195 Tax Bendr Rmalurg imm the 1:xen.x d 5 sock Operwn . - 191 27 Balmace a End d Year 1.802,93)
~
I,772,407 1,745,409 Faseugn Farhamp Temadanan J@msamarges ~ Esinnce u Beynnus d Year. (22,345) 0 8,394) (22,266) i Aangue TransLeim Gain (lama Afier Appla:alde Irrome Tars iBendusi d
$04J 31),5(32,389t and 129,385, Rewdy (6,548) (5,77) 8,448 Annous Trandmed so Net income Afeer Appid ..some Tues : Bendrs1 d
$4,546,5(IJ14)cnd1360,Respeernefy . 4,953
~
I,846 <4,576) Beisnce a End d Year (23,940) Undprodud Pea 6es ~ (22.345)~ (I8,394) Belana a Bqpnsrg d icar. I,954,524 1,761,726 1,678.233 Net income - 473,119 492,798 383,493 Cmh Dmdenas Dedaad (250,000) t300,000) (300,000) Belarte a End d Year 2,177.643 s,954,524 1,761,726 Tasal%adrhauerWpury $4,714.243 54,454J25 54.228.746 The % - m .r5 nores aie an meegni pen d ihe nnancal usemmes Member Fe&ral Depour Inne rante Carparmaan i l, 4 I i l T1 , i _ _ _ _ _ J
!- ) l l l l CGeln NWITD STATEMENT G CHANGES IN FINANCIAL PosnoN i
-* nrQuar Medunam temk,NA anl5mbadonn i Year Ended December 31, 6 m desusadal 1986 1965 1994 J Fushhussend N u btr==r.. . $ 473,119 $ 492,798 5 383,493 Add (Dsent Nuncadi hmms Inchaded in Nu income- )
Dysecamson med Amarn==== of PWmmes and Egmpmers 151,476 124,808 101.180 l Passmumint Pbsmide Lamm Lamas 270,533 218,663 293228 DuisnudlammeTousM 54,131 34,830 93,775 r Fisids Ptaridad isam n ===is . 949,259 B71,099 871,676 i Isamsue of Capiral 5sode Ptsemies so Ibanrg Rase Subanhnmed Debenruse Due 1996. 34.472 34,367 3,589 i Csysel Camrdasens by The Omme Manhenn Carpanson 3,562 E72 475,195 h- = == a: Thra== . . . . .. 2.028A3 - -- Fahsal Funds Pedissed and 5ecunnes Sold thider Repurdune ^, ._., 771.141 - 718,689 Oder Bonomed Fweds. .
- f00,280 -
I agTem Nous and Ddunrums. .
- 87,984 543,593 Thrmarcs m:
Cwm and Due Isma Banks . .
- - $15,580 4 Depasas Placed wirh Banks. - - 4,366,207 Tadsg Account Assas . - 10,423 -
Ir=====u Secursus . , 357,930 - - tomus,Bedue Chesy46 - 3.806,557 - Odw-Na . m ,497 - 434,723 Tami funds Peonded 55,125,364 55.613,282 57.929.252 Funds Used Cash Dmdends Declared . $ 150400 $ 300,000 $ 300,000 hr=== in: Cash and Due fiern Banks . 523.852 1,305,131 - lemmes4canrg Depanis Fisced wah Banks. IJ99J20 194,643 - Fedual Funds 5and and Secunnes Puschased under Resale Agnments. 446J58 1,203,755 1,055,214 Tadsg Account Asams . 1,229,470 - 1,062J13 Imesman Secunnes - 1,032,042 1,290,430 losm,Beime Chery-Olis 174J50 - 2,867,244 Posneses and Egupmes 347,177 215,07 228,253 rwrm-nu m: Ikpa== , - 653,267 424,909 Fedmal Funds Pum: hand and Secunnes Sold Under Repurchue 4 .we - 461,985 - Ocher Bormned Funds. 616,387 - 700,689 lxseTerm Noses a=1 Debewures 137,550 - -- Othe - N u . - 246,752 - Nel Funds thed $ 5.125,364 15,613,282 $7,929,252 Thececompanyirs notes are an nuegral part of the 6nancial uarements. Member f ederal Depoest imurarn e Corporanon i n l 1 l 1
f NorYsToFINANCIALSTA71.MENTS n.cher umhan.n cx assi snai.a.n,s NortE 1.GENEILAL w corpormsun's nn urame nr ik em t cel Desember 31,1986, The axourang polices kilomed by Tk Chase Manhartan Corpormum .the Deten her 11,1985 and Decemher 31. 984 mouki run hm been udnaancially Caipeny; mal as subumissnes,irdshrg ws pnnc pal manadiarx The Chae shanped had the onnbmed awnniuns d Chase Fkrula aral Che l Manhosan Bank,N A.and as ad-unes (the Bankt me dischned m Anzona and the combmed apesawms d Chme Marylarmiand Chme Ohm the accompermng Sumtrary d $grufu23 Accourums ibis;ies on pages 40 ken ndiected on a pm kama bam a d)sruary 1,1985 ars! January 1,1954, and 41 This msnmary is an mespui pen d the f nencial usensmrs and mpectn4 6auki be read m care.ncton mich dwie noses. Themehour the runes. the semements d Condsum kr these banks can be kiund on pese xi. ana "Carporanan'sders so The Oisse Manhartan Corporarum and ns Dunes 19ei> armi 1985, the Corponnion male wher ac,ierens venading
=d-bus.The sarm "Nanbankmg Subadsenes' uwd in ik hnarrial mae. Larne, Mdbank & Company smj Swnon & Cos=s d the Unnaf Orgdom nunes ind nous thesseo ades no ad edsenes d the Company nur chanemi and Sanco de Brunaas d Malemi, Spen, wwh ional macrs d 575 m 8 son a cremnacial banks. Such mber'ws me enssyd ir mrrissy hankira, as! Sh5 mdlion,seupecimk dhaum bordmy, commacul and consamer fr.ancirqs umemem in the second paner d 1984, Chase Manharran Owness Bankirg adveary and crher thancisi services.
Corporwoon r!.MOSC"1a whally owned abadiary d the Bank, x,imt kr cash whatanrmlly aH d the outstandmg ihmes nor almady hekt bv CMOGC, or appianimady 68.5%, d Nederbruke Cadserbank N.V. NortE1 ACQ'JISITIONS rNCB"1 a Dunch bank wwh healpaners en Amemmism, N Naherlands. In rise line parar d 1986 Chase Manhattan Naronal Holdmss Corpo. T5r aceimum d the addanmal emaem coar CMOSC 545 millum and raren FCMNHC"k a whn5y asyned asbed ary d the Camperw,(through the muined in ownenhap d 996% d the shases d NCB. Federal Dipaar insrance Carpannon) accued sedecsed assers and auumal in the thud paner d 1984, Chase Manharian Namnal Corporurum anam liabilmes d Park Bank d Rorsis, a bdmg commesnel bank wah FCM NC"t a whnlly omad whndiary d the Comparw. aceired bncoln total assets d appsamammely 5600 mdisun and renamed a Chme Bank Bra Bank N A. (anamed Chene bncoln Fww &ank, N.A.L a commacial d ibnds, N.A. rchase Rarnis"1 In the fourth paner d 19e6, the bank m Rodwiser, New York, rhsonagh the rneryr d ns pans company, Carparsam compined 'as acquarnon d Corumental Barror, Inc. Uncdn Firm Banks ino.rt wrain~k inso CM NC.W cour d acemrian FCanrwurnal"1 a commacial bank hakhng company weh samal assers d u=W 551 meRan m cash,518 tr..sian d commar snock d the Company, _ 4 5600 malhan.Connrunuirs bar k anbedtary, hemiganem!m 525 mellion (cand takar)d Pwhrved 5 sock Finarirg Rae Sere F d the the ensur 1%erux Anzans meu, was anamed Chase Bank d Anaona. Company and 510 mdhan d opm market purshases d Uncan shases m the in the wcond paner d 1985. che Camperw acpued ex Chio sa my fru caner d 1984. malloan manurums wwh sotalassets of appnaamsidy $450 mdian us! can. Both the Uncd, and NCB acesurumu mer accou ned for as puschmes, uned chan mso a commacal bank named Chase Bank d Ohio rOnse and the assees and linhainan une sconded a char esur.ased imr values as d Ohm"1in the inunh parwr d 1985,CMNHC acewed thsee Ma v'.and the dnes d aconsnan. Goodwill and an nierudied core depour meanqphie savmy and loan msreurions wah sotal aswes d appmusmaselv $90 mdiam asset amoune,mf so , -_ _..f, SIM mdl on and ase hans amarnaed mal cornened them ano a commercial bank rumed Chae Bank d Marybnd agenw nei mcome eser permds nor exceed.ng 20 ests N fearnial results 3 FChene Maryinnf*1 d b-ah NCB and CMNC w _ = so1 be fully consoledmed in the Nse mwwueens mese accind kr cash armf accourwed for as purchases, C sporsron's fmarrial muerrsus in the ihad parter d 1984. and assets and haewlers wee econded a their enimmed har vakses as d the Pro kwma comtuned net ire:ome kw the year ermini Deconber 31,1984 does d aceisten.The caers kr the 1986 xpasnions Chase Ronda and d $418 mdlem gnes efbc io the bncoln and NCB acemnons as J tlwy had Chase Anzonaj and the 1985 apsenons fChase Ohm and Osase Maryland! heen conummered on i mary 1,1964 and a not necessardy unhcane d une 114 mdlion and $45 mauson, ;..,.sa Goodwill nianns no the the muks the wouk! hoe actually occuned had the acessmens taken place acwarmns am amed so 5129 emBum and 53 mdlam sr 1986 armi 1945, a ihan asie.
,,w. 4, and as bang amamaed ap:nw ner acome owr penods nor OIceedtry 20 pears NOTE 3. INVESTMENT SECURITIES .
%wn bekar me the canyms armi esimased market alues d Imesmme secursws a December 31,1986 and 1945.
1986 1985 Carrymg Emirrused Larrvity f wimased
? "' " "# * #**
- Ci rsessary 5ccurses .. _ _ _
N U ** u ._ . - -.. -. 11.325 $1.563 11.859 $1.90" Federal Agence Securwes . . 2ir 10 110 334 irar and Pul1xallubdmanan $ecursies 2.058 2,095 2,410 2.292 Orter 8 wide. Noen sch! Detenrums . I,934 1,940 1.4W l.*)3 Nderal Rewrw Baak ami Ochre 'unch Imesiments 165 197 1 14 :58 insal lanesamm: 5rturwars* $ $,711 $ 5.821 16.122 54.(*8 {
*The market rahars of usurum ase esimmed unliairy mdeperstrne priorg ser an and me nesed on averlaNe marke. daa whth miten At trama nuns al retanch small un l armi ase ma necessank andwarne of Nr prso a shsh lary ar'ounn un partsular ruurs snukt he inkl.
Ii
l .' 1 l !WTE MOANS Lease Firwongs a December 31.1986 and IES consisted d the folkunry
- Lamas ar Dh 31,1%6 and 1985 ase smunenud bdow:
l _1 n rkmando 1986 49ts ) 5 m ehuessmed 1986 19R5 LMese hvianrire Leases . 58.532.633 11.,>A882 -
. r -OGom. Las: Unearned Dncaum . 2*0.272 '
H2[>64 Raul Emme Lames: 1.%2.Mi 1.2'8.818 Leal thrett Fmamirs Lemes med Lmd Dndipmeu $ 1.568.9% 5 2.427.411 gg ,.
. 37 3 -- ;gny, Rememunui hepamar, .
Odier Real E.stsee Loans . 4482,110 2,0's,609 2.668.866 . l"' "d" ' ' II 52M2 1J43.639 Taal Lewnqurd I. cases
- 466.487 248.153 Lamm e Fusmcullnuunmens 2,200J23 1.683,152 Qg, gg3,g4g imms e Pusdune or Carry Securwars. m gg,3y g 7, PrmapsBy w tsakers and Deniers . 467.412 502 %~ *RcLaed dr6ermbmome taxes Axaird 5177.455 thiusand and 516'0 to rhous mf.
CounseernalandladusmalLoans . 10.223.888 8.754.'52 mpectneht Lamms e,inderuksds for hrsonal E .; -- 1.oam made bv the Corponeson ibnng 1986 and 1985 to dmsciars. Cmhr Casd Imum 4.216.218 3.584.41) ener urne adicers, or pnnnpel holders d cyry securars d th Company Orter . 4? 04,424 1822.8 M andhr the Bank.nr io am assocwe d asch persons as Mrre ty the Othe Lans 7h 411,450 654.856 Securwes and Emchary Commmmm.m no time excmled 5% d ihe irmal d Pretened Suk and Comrram 5eackhalders' F4ry
~ TussiDanemeOiraza Cmus. M.',46.166 28.499.871
""'I 'd " I""' # 3I* I 'I '"d I 8 ass: thearned thscouru . 690.054 580.51,, etxaled $1,%3 mdison,12,015 mdison and 12.167 mdison, mpect"e4 Intercsr -
~~
Leal tbmesuc Odics 35.676,112 27.919.33j war dized and % an dese 65 % respatne p & Dexember 31 was as 6allom: Itemi Emate Lasns . . . . ...... 3.498.044 2.818.483 r W and lemhwr allasne . 17.845,439 21,932.% 6 b " *'N" " '*
- Lease Fuuntmgs 504.978 316.800 inrrms imome Wbch Would Haw See.
Otherloans 8.952.061 9.118.392 Recosded Lksder OrynalTerms $160 5224 Sr8
~
Total Ouersess Ollices.Gmes 30.800.522 M J.26.HI insrine law Re AM M 105 tu las:lbustnad Discoun . 257,0s8 214.449 Rehacrian m Inserra inconse: Total Owrseas OEces M.543,434 34.011.El ApplNames . 51M 19 5156 Aher AppkableTames 67 58 ,6 Tasal Loans ~546.219,546 % l.910.52* At December 11,19116,191L5 and 1984, enused, cordaronal commaments to irrd m barrtmers whose loans were m nanaccrual or redia ed rare status The kJiouriry table ses farth the tsrreman dinans a December 31. agrepred $43 mdhan,59 mdhan and 512 mdlon. respectnr.h 1906 and 191L5 based on the darmciles d the obigprs: 5 mhousan@ 1986 W NOTE 5. RESEAVE FOR POSSBLI LOAN LOSSES l8'"' m D=snc m ars a Charws m the Rmw for Ibushie lmen Le for the thm . ears ended O= mess Oscri . ' . 3 December 31,1996,1985 and 1984, stipectrw4 are shrmm bd w: W 39.205.295 _ ]tlf. 3 n rusands; Im 194t' 1964 Odic 737,371 404.050
,M ""
l
- *a um.0 29.*3e s,_ m,,rd u,en,es . 5,5 415 u5, lural 2' 014.251 29.40 .923 Reserwsof % red 5utns& anes . 13.764 24.120 64,912 )
s E Touallnaris $66.219.546 kl.9 30.42 ((.Ods 574.216 417.829 T8.5 34 I ess. Resnerrs . . . 99,476 9 '.4 ' 5 61.172 Net Charged ... 4 f4,740 120.354 215.162 Fomen E whary Trandarum Adaarnents . 23.069
- 46 '
. 17.241)
~
dalame at Er.d c4 Near- 58,064.764 590'.6'ISE4T9 ) I 1
$4
NCTIE6. PREMISES AND EQUIPMENT FW7TE 9.OTHEn BCOROWED MONEY
, A assunary d PWmmes and Equyrnerr O December 31.1986 and 191LS h A manvrury d Cher Iknxwed Mancy a l htrnber 31,1986 and 1985 knws:
5 m chum mid 1986 19tts ,5 in ilvmarais)
- 19e6 ists Dommuns %:ss: Maunng Wahm One Year:
Land . $ 65,254 5 41.859 Bank. Buddags 4G8.979 4 9.13* tkrnesa Olfurs 1 *=f-ellmpsuunnsus 2?5,961 2311 3 Eipurnes Term faleral fursh 5 !56.530 $ 231,11) 514.567 459384 %nn suurd to to Treasurv Imal Danwar Ofites Oierseas 0Gurs: 1 284,761
- l[3
- 1. tie *[
W.irm i nan Mart ams
"*" "M
\ siaiaror. -
123400 Land . 75.005 no.561 Other Burn mngs $406 18,248 ilankimigs . 219.715 i ~2.324 Wencas OIE.cs. Lesselund Impeernerus . 107.038 88.520 Espapmers RedmounteJ Notes 126.202 2J7,111
~
298.201 205 895 Orlur B.svonnrigs 754,244 1.152,675 LealOveneas Ofres 699,959
- 3 JI305 M "4h h d (^""P"*
b Pnennes and Epapmou,Gmes . 'rudrew L.asn Marketru Asuuaram 642,500 611,250 1,964,*20 1.600.441 Less: Acunadsurd Depser amn Other Buram wss . 617,842 293,543 Newebankms %hudiann udaanpany 112,50s 100.675 and Amamsaruse . 907.611 686.3*3 Maturms AfterOne Yeae: TasalPnsruses and Lessnew SI .17*,109 _% 911.500 C'""P""U 6 W N<wes(Due 1989) 250,000 - PRmencs ard cuppmers strides capstaL2cd leases, prira; pany (hme birg R.are Nuees (Due 1990 . 250 000 - se and so buddmg5 wkch amouncxl to 133 rr5 an a Deccrnbcr 31,19% bg ""'"I'd' N""" , D- ana _._.. s - ammem u
- years 1986,1985 and 1984 arumrued as $173,312,9xi. $138,440,000 ard n,,,m, ,,e t.,,,,laN, Nu,,,
,,3 gy ilhar 1997) . . 249.86) 249,746 5'08,010,000, respecmg hms Rme Nunes (I Aar 1999) . 22.072 24,118 tank-Ikmrum Olimss. 869 866 NOTE 7.OTNER ASSETS Overseas Offines . 425,154 344.168 u,g waris d cm A surnmrary d Other Assces a
Dearnber 31,
1986 ard 19L5 fulle hiers ima Markenns Assa urum 182,500 18,730 5 wi thousarsis) 1966 1915 _ _ . . _ . mes 49,26 42 N Acounts Raewalde. . . 11.392,412 mal Orher Sommd Marry 15.007,622 54.673.994
$ 1.188.1 +
Dur kr Secursees Sdd . 981.995 sh.4 4 5 Real Emane Pmpertes Aquimi. . . .
.rt WIMfum ci Loaf 11 *6.821 IL Bl.480 linemmenn m AsaanaredCampares 116.011 116.9*4 GoodwdlarslintaryNe Aiacts . a49.102 2*8.622 Other . 644,828 ***_. t *8 Tocalother Assets 53.263.189 S t.I'l I.l P'8 NOTE 8. DEPOSITS A sur.nury of Deposas a Detanocr 3:,1986 ard 19mulkm:
1 m rtanasands) 1996 i#5 Durnews Olhces: Nanmartem Scantig Depours $1$.842,631 il3.4 W.t il8
%rgs Depours . .
1.461.641 1.t f.141 Newna Order ud WalsitzmW Depmus .
+89 %' ~>2. l Wngs C.:rt urcs amd Neu Em Aauory Depouts . 642,4*1 4W **l
.%swv Market Depours .. 10,1*1.148 6.4 a 2. 8 **
NeyxiaNr < emtrares of Depout . **8.f 58 H* 211. N=r na= *Pa"' . .. . 6 > d " _ _. M '4
--room,nco orres . . -w.u .c.os7 . . c. 29 %
Owncas Ch.
%n.rnereu&anrg Depoens 2,41?.84) 1.*49.120 Wegs Depma+ . 1,295.128 *18..l1
- Wrgs Caridunes armi New Em scourn Depours . . 114.363 Iao eri Mary Marker Depoems 24 f.981 fl8M
- Neymuoir Cemttmes of Depuus 1,562.179 f.441.l*8 Orher Tinw D_upar_s_ . ;4
_ 2_4.254.061 _ _ .054. ...
. 982 Tura!Ovceseas Ofus 29.913,717 21.*23.088 Total Depoirs ~ $66305.'864'~seUt159 Depours by astgn deposeurs in damestic offices a lh ember 31.19% 1936 and 19H mew $4,lt7pon.og),49-*,Lolwoard R684,00t),000 rapectndy.
55
Imammar ums en de hommuup hun sheimment lamn Mademig The Cmqueny les ruo 1300 miemn FaasndaAmr Reinawwg C.,tr Ayme. , h shirk me ammmad by under lasms bdd is ihr Banki per:6iha ments awh poups d banksg usemunes, one equrug Febnaary 28,1989 sad um de Flusmsg Amr F===de Nams(Dum 1993 md de itsemig fume and one agurwg Fdruary 2E,199a thdre the anns d emen gamment, che Numm (Due 19PU)me dummmad bF tuummhm humed in de ynd d tinue. Camqur.sr nimy bevant mare 6 symy and ediaruus horn t.n. so near,510 summh 1113 mummy 656 Thr amma mee un she mang Rame Nams mden er a reirgde ihnead, unh sipsyrnen Aar m thser v ma nomsha, as Eksr 1998)is dummmed hand igsam ihr nuum d landen musrbank a6med clue Carsmir elects, Bonomwip under each syremme bear erumma a the ad bid mass amammind symmmi e she summa rukqde d Yo d 1% The pesar d Ianidra muerbuk cased emes (LilKIfu pLs % d 1% per anraun, imman mar a shr Fkumms Rar F.mm-de Mars (Due 19F7)les been feed or 6% fach gsemment respmes paymme d amennemern fars d % d 1%. c SUBIb ihsmgb Lee H,1957 med shamatur wil be adesmed an endi Sah fees ase spaned as weeses experme. Thee eue er turvounnes uMer juer 15, manus a 195% e a mar, or e a ame so be dessnaard pumaene so a rhe=e cr mmler gseceneres denrg 1986,1985 or 1984. M h by she Conguagt The summer ums mi sect an these hammemy a N=h=r 31,1986 and 1985 kamen erranastmAru 1986 1985 femina laam had==r W ,, , 6.4m s.70 % Ramme Raw Nams Our Spy . . . . . . . . . 6% - fhamugg Rar 8=-Mae Nams(Der 1993 6JP 7.82 l Ramong Rar 8=-Mar Nams(Der 19Fr) , , 9AB 9.00 Rummes Rar Nams(Dur 19FP) . 6J5 835 NOTE 31 LOP 8G-TERM NOTT.5 AND DEBENTURES A summary d laseTenu Names med Debueuses <====u14 m Decunhr 31,1986 and 1985 and curton arrdraurnu 6Amus: Innsuur Ammunn Oimuwksg Ortera, Se ehammare unsre, Der Rar* 19e6 iges Dess Smuk: TheOmme Maulanes Isak,' .A.: CapelNames , 1996 8%% 5 - 5 200/Xlo 5 i CapesINams 1990 4.e0 - 3J33 5 fhmmmg Ramr bh==a=-4 Dukemuse 1996 8%f8%) 400,8W 4m0.000 kP Omme Muhsman Oimens amikas Corpuenan Rase Nams . . . . . . . . 1993 6N8%) ISCA00 150,000 G Mak Emmer lands . 1993 6 30,9:40 32J00 G.F Su es Finac Bands . . 199) 4 %,548 10,208 GF Omme MaduremmiAa inachlume ihmmes luar task . l*v2 * %(9 Sus I It. lF* 97.485 LG Feuch Fumac Remug Rae hands . 1993 7.74(10J0) >4,221 45.493 KG Nuestandse C=d=6==ik ME K5 Nams and Duh=====a 1987 2002 *%.12% 89,954 ?2.433 5 Teumf 877.392 1.031 A12 Other Submenrus-Chase Mankneten NuransiCaniamemn: Oshemmes , 1992 6%% 7.250 1.250 F W ..... . ..... 1996 0% 2tA90 IIA 90 CF Ouser Lacets Fue Bank. N A., Capsul Ness 1987 1999 4.70 3414 3,94 F Tomi 31,954 32JI6 _ r-p-p Zaso Campen Namm . ... ... 1992 l4u% 81.726 T2.964 Name immed s sh Dundiddr Egery Camacts 1992 15 % 150Ae0 150A00 P 44
- 7,245 Camurtder Carnal Nams . . . . . . 1993 - 5 Remus tar 5mbasdamed Nues 1995 6WI bl 144,9t3 148A41 1.P i Romme Amr Subandemed Nees 1996 8WI%) 395,764 198 4 32 kP Cassender sehemenesd Duhanrums 1996 6% 21425 17.282 5 Nams . ... ...... 1996 8% 249,001 -
RaummeAmr h Nams , 1917 6% 8%) 175AW l?f000 5 Runems karsh.=a--a Nams 2000 6W8 Yiel 150AOC bu.c 5 Rounse Rat 6h==ma==d Nous . 2009 6WIh) see,0re M10.000 5 lbaums Ret Nams . . 2009 6.5th8.20) 282JI7 282Jt3 F imikas Famd Dahmenues , 2009 tw it - F Tasmi 2J55541 2,142J51 tame lammmam hr aire -emer a Amansg Rae bd-e===d n=h==== af ihr Bank . 40 keep a00.000~ ~ immf lame 4mm Numa med Dabeimeums 12,869.E1 11 806.499
~
(11 The ammus mass shree for essass sue mamm ase theer a efect se (2) inners subcmed by: Desamter 31,1986 and, a pumashamas,er thh- 31.1945. Such mwreer rares 5"-Suborduumed en rglie of pement to daems e d deposson and/or certswi em dummmad by femadus, ashens: to carium numamme rears. The rear shame orher em6 sors, as appimable. far she ZareCampen Nases, which do mas hear meanne, reprewms a te,v4 ymbi tu "P*-Consulered primwry capuelint Urured Su res barak ruedarorv surpoers. maammy em eher carryag salma, stuch unrvums a the decomuu on the "G"-Generensoud as to psyment luy tier Cosnper v. Nasus o amarased to mourum esyssue. The pnmegimi enount of eine Zero Ccupen "f'- subsect to suikus fund regwrements. Numa a $!'5 =&== (1) Detessed se juer l'.1906. (4, ONed for redenuption at June 25,1996.
,h
I Entgn br the Nams of the Campany nosed weh deenchstde cr m part,a the oprson d the Carparmson, pnar to marurry F4my C wmacts, the Orae bncoln Firs Bank, N.A. 4.M% Capaal The pnnaps! mnaunts d menarres and ankirg fund mpsimanrs br Neues, she CangiumpWs% Names and the NCB Names and Debmrums,
- l. ant T erm Notes and Deberuses amng each d the fne years corru1mcarg i
al of the begTerm Nases and Dahmutses ase sedeerruble m whole, Juranary 1.1967 kdk=: l . Fiench Finne Dnesche 9mse Capasi Assesse Flaseng MmL Beser Fram afNCB Neues Rme Bands Bands 16% Bandsi4% Nases and Sin denssmuld (430% Due
<Dur 1973) Due 19e3) Due 1993) Dehenruses 19871999) Tamal 1987, , - -
$ 2.150 5 5490 $ Mt 5 8.201 19W . -
$ 3.929 2.150 5490 %1 12.130 1989. . . . - 5,153 1.150 7 B9 2.892 10.074 1990.. .. -
3.153 2,150 6,128 - 1991. 13.431
. 118,074 5.151 2.149 6.566 -
31.940 Fur 4 ser Tami . 118,D74 519.38A $10.749 131.95) 53414 $B3,776 The par shee prie a whsch the Casmert hie Subisdmmed Debenrures ase hebre appiscable inceime taxes, in 1996,1985 and 1984, respectrue4 These asummWsmo cinemmm noch d ahe Company m 12175 per ihme. sair.s ase separad in Other inccme. Derug 1986,6sugn eschary tendenar " _ perimnirs mihe The pnncipal of the Floarms Rme Suhonhnseed Names (Due 1995)is ao Dansche Met Beaur Bands and due Seus Franc Bands wen $7,519 be speed weh the ner pen-rla imm the issue af shases of ccnnman thousand and $8,120 d======l myscrash In addman,5829 :housand sock or .. i. a pedared smck d the Campany whsch hoe been praiupsi annunr of the Dansdie Mak Bemer Bands and $1.060 thousand ha==arem a "Name Fund" armed purmaatu so ehe mderwe under pnanpel anaww of the 5snes Franc Bands wue apunchased durms 1986. whsch the Nases wee usurd.The Name Fund a eyected so petwide a source Pnsstheses of cartanWag-Tenn Names and Deberwures,a a discomu, d funds for the payment d the thes, but does not consnruse securry sesulad in pers of $75 risuusand, $187 thousand and 12571 tieauiand, br the Names. N(ym11.REDEIMABliPREFERRED STOCK A asemary d Radeemsbie Pi dened 5 sock d the Campmar (stared wahae $100 Barh the Senes B and the Senes C shmes mer be adesmed, as a whole ar in per short) acusandug a December 31,1986,1985 arsi 1984 is as bNous: part, a any twr, a the option d the Campmiy a $100 per ihme phas accrued and uegasid dwnhndt Beynnsig an Apnl 15,199% and on each Apnl 15 Sused W $in thousands) 1986 1985 1984 theenfier, the Caigsmiy a em sedeem, through annual snhing funds,32,000 64% 5snes B (2F7.23 Shsessi . . . . $29.758 129.7!1 529,758 shases of Senes 8 and 43,000 shams d Series C, u,rd aR asch shases ase 740% Senas C 018,M6 Shamsk 31.800 31.se0 31.as0 adremed. Shoes d Sene B and Scres C remed m any manns arher then Temi Radsensder hidsnud 5 sock purnannt so :he ankirs fund insy be ciedwed agenst the myectne sinkirg _l646J'9 9mmest . 161418 WI438 Ml438 fural segmemmus. Duneg 1984, the Corporanan ensed ihmugh a cash Dwahrak .si duas d Senes B and C s e ,,w able <paaneriy and me cumulerne. ender afkr 342,417 shams d Senes B and 541.204 shmes of Senes C 9mses d Seres 8 mal C hae lupedsian pndee ices d $100 per shme, phas 588 mdien smed inhae), nadnes iri a $2s miEion son rhm was emhnid socrued and wgined dmdemis. Haides d shmes d Senes 8 and C parraBv msurphat hoe anir canrvynr wang rghn,1 hew me no iedenpc.an seipsinr ierus far esiwr senn d pudmed isoch dunrg the next fne lears. NOTE 12. NONREDEEMAIK.E PREFER RED STOCK A sammary d Nanadt maler hdened Srack of ahe Campany (amed wahae share, pha xcrued and unpaa dwidemio Hinders d dunes d Series D, E and i
$50 per share) aurnandes a Deannbar 31,1986,1985 and 1984 m as follows: F pnerally hoe edy connrysw vuowg rghts.
8*' Scrws D The shmes of Sees D nwy be edesrud as a whair or m part, a any time,a the apnan of the Carquerig a 150 per sher: phs a pannaam d Sand %hn 10%% Flasrug Rae Flastmg Rae Tassi Nan. 1U0 per share urird bly 1,19tt .ledswg rhmenhur, and wwhaut premaim 3 00 7F on and afeer kiy 1,2000, phes acausd and unpad drndmd6 Pnor so July 1, o ,ansah,g m Shaus Shase Shmus samc6 1990, the shmes af Sarus D ine' nor be sidsened by umig the pmceeds of Ossashur 31.1986 . $125.80D $250.000 5226.957 W01.987
"*" -"W""""' d' "" "
Ossmuhar 3L 1985 123.000 250.000 23.98' 601,98y less chan the dwidend rue ai shuses d Senes D. " Duasseber 31.1984 125.000 250,000 226.987 601.987 Scrw E:The shans dSene E ase nor edumshir ursd kne 1,19s', whr.:- Ashamsidr D,ndend they wil be adsanabir,as a whale or sn part, a the aprem d the Camgura,a kans!
~
151.50 per shee urmi kne 1,1992, and thesenher a 150 per shme, m each i ame; - 16 I came p is acenedand unpad dsndandt m ,,4 Senea F: In canemenon wwh the mayr d Un:aln erno CMNC,4J3%U7 Annemav arIrel: thmes d Seus F mese usues in kiy 1954.The shoes of Senes F ase nor D soutu 31,19e6 10.5% ? 95% 7.10% sedrumside urinibly I,190% winen thry wdl be mbemshie,a a whde or m rammh 31, lea 5 Io.5 11.30 rw A.,31.19n4 9 75 ,, part, a the opnan d the Gunpuny, a 150 per sham, phas accruni and lo s 13 15 unpaa ldmdends. u.e d herNI$kY.u dme meic j Tle sham af Senes D, E and F me not malgect so any anking fund or cxhw
,,,u=h. - mi nent de. - d rhe C-Dnuhmis an shoes ci 5erum O E and F ase payshie spann}}