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CHEMICAL BANKING EARNINGS UP 59 PERCENT TO $381 MILLION; NON-PERFORMERS DOWN 15 PERCENT DURING QUARTER

 NEW YORK, July 20 /PRNewswire/ -- Chemical Banking Corporation today reported second quarter net income of $381 million, up 59 percent from $240 million in the same period a year ago. Net income per common share in the second quarter was $1.35, compared with $.83 in the second quarter a year ago.
 For the first six months, net income was $755 million, an increase of 51 percent from $500 million in the first half of 1992. On a per common share basis, net income for the six months was $2.70, compared with $1.83 a year ago.
 "Continued momentum across the board produced record quarterly earnings, a 21 percent rise in total revenues and significantly higher returns on higher levels of equity," said John F. McGillicuddy, chairman and chief executive officer. "This performance demonstrates again the advantages we gained from the merger, including sharply improved capital strength and broad-based product and market leadership."
 "We also saw a sharp improvement in credit quality," said Walter V. Shipley, president. "Non-performing assets decreased by $843 million during the quarter and have now declined by 26 percent since peaking in last year's third quarter."
 At June 30, total non-performing assets were $4,863 million, down $843 million, or 15 percent, from $5,706 million on March 31 and down $1,702 million from June 30 a year ago. The non-LDC allowance for losses at June 30 was 85 percent of non-LDC non-performing loans, compared with 69 percent on March 31 and 64 percent on June 30, 1992.
 During the second quarter of 1993, the corporation accelerated the disposition of $162 million of non-performing residential mortgage loans and foreclosed residential properties arising from loans originally extended several years ago under a reduced documentation mortgage program, which was discontinued in 1990. This action contributed $55 million to the provision for losses, and $20 million to foreclosed property expense, in the 1993 second quarter. The affected non- performing assets have been adjusted to an estimated net recoverable value and are in the process of being sold.
 The corporation's estimated Tier I risk-based capital ratio was 7.6 percent at June 30, compared with 7.0 percent a year ago. At June 30, the estimated total risk-based capital ratio was 11.9 percent, up from 11.1 percent a year ago. During the second quarter, Moody's Investors Services raised the corporation's senior debt rating to single-A3 and the long-term deposit rating of Chemical Bank to single-A1.
 Net Interest Income
 Net interest income for the second quarter was $1,175 million, up from $1,099 million in the same year-ago period. For the first six months, net interest income was $2,324 million, up from $2,214 million a year ago.
 The net yield on interest-earning assets was 3.76 percent in the second quarter, compared with 3.69 percent in the second quarter of 1992. The net yield on interest earning assets for the first six months was 3.79 percent, compared with 3.70 percent for the first half of last year.
 Average interest-earning assets for the second quarter were $125.6 billion, compared with $120.4 billion in the same year-ago period. For the first six months, average interest-earning assets were $124.1 billion, compared with $120.9 billion a year ago.
 Non-Interest Revenue
 Non-interest revenue for the second quarter was $1,042 million, an increase of 41 percent from $737 million in the same period a year ago. Non-interest revenue for the first six months was $1,967 million, up 28 percent from $1,542 million in the first half of 1992.
 The higher results in both the quarter and year-to-date periods reflected increases in total trading revenues, corporate finance and syndication fees, trust fees and commissions, fees for other banking services and revenues from venture capital activities.
 Combined revenues from all trading activities were a record $298 million in the second quarter, up 75 percent from $170 million in the same year-ago period. For the six months, total trading revenues were $550 million, up 38 percent from $398 million a year ago.
 Corporate finance and syndication fees were $84 million in the quarter, up from $79 million a year ago. Such fees for the first six months were $155 million, compared with $133 million in the same year- ago period.
 Trust fees and commissions in the quarter were $102 million, compared with $91 million in the 1992 second quarter, and $200 million for the six months, up from $180 million a year ago.
 Fees for other banking services were $272 million in the quarter, compared with $258 million in the year-ago second quarter, and $523 million for the first six months, up from $514 million in the same year- ago period.
 Other non-interest revenue in the second quarter was $204 million, compared with $59 million in the same quarter a year ago. For the six months, other non-interest revenue was $320 million, up from $136 million in the same year-ago period. The 1993 results included $44 million in the second quarter, and $100 million for the six months, from the sale of a portion of the interest due and unpaid (IDU) bonds received from Brazil in connection with the country's past due interest agreement. The 1993 results also included revenues from venture capital activities of $118 million in the second quarter and $146 million for the six months, versus $32 million and $79 million in the same 1992 periods.
 Securities gains were $5 million in the second quarter and $75 million for the first six months of 1993, compared with $15 million and $47 million in the respective periods of 1992.
 Non-Interest Expense
 Non-interest expense in the second quarter was $1,312 million, compared with $1,184 million in the same year-ago quarter. For the first six months, non-interest expense was $2,588 million, versus $2,378 million a year ago.
 The 1993 second quarter results included $46 million of expenses associated with the federally assisted acquisition in February 1993 of major components of First City Bancorporation of Texas, Inc., by Chemical's affiliate Texas Commerce Bancshares. Such expenses for the first six months of 1993 were $113 million (including a one-time restructuring charge of $43 million).
 Foreclosed property expense was $85 million in the quarter and $156 million for the six months, compared with $44 million and $90 million in the respective year-ago periods. The current-year periods included approximately $20 million related to the previously mentioned disposition of non-performing residential mortgage assets.
 Non-interest expense for the second quarter and six months, when compared with the similar periods a year ago, reflected higher expenses associated with increased revenue generation, including investments in certain key businesses and significantly higher accruals for incentive compensation costs related to increased revenues in capital markets and corporate finance activities.
 Non-interest expense in the second quarter reflected approximately $125 million in expense savings related to the Dec. 31, 1991 merger of Chemical Banking Corporation and Manufacturers Hanover Corporation, up from $65 million in the second quarter a year ago. Merger-related expense savings for the first six months were $235 million, compared with $115 million in the same year-ago period.
 The ratio of non-interest expense to total revenue improved to 59.2 percent in the second quarter, from 64.5 percent in the same year-ago quarter. This ratio for the first six months (excluding the $43 million restructuring charge) improved to 59.3 percent, from 63.3 percent a year ago.
 As of June 30, 1993, merger-related staff reductions totaled 5,659 since July 15, 1991, when the merger was first announced.
 Provision and Allowance for Losses
 The provision for losses was $363 million in the second quarter, compared with $312 million in the first quarter of 1993 and $345 million in the second quarter of 1992. For the first six months, the provision for losses was $675 million, versus $720 million in the year-ago period.
 Non-LDC net charge-offs were $363 million in the second quarter, compared with $312 million in the first quarter of 1993 and $345 million in the second quarter a year ago. Such charge-offs were $675 million for the first six months, versus $720 million in the six months a year ago.
 The provision and non-LDC net charge-offs for both the second quarter and six months of 1993 included $55 million related to the previously mentioned disposition of non-performing residential mortgage assets.
 LDC net recoveries in the second quarter totaled $2 million, compared with LDC net charge-offs, including losses on sales and swaps, of $51 million in the first quarter of 1993 and $53 million in the second quarter a year ago. LDC net charge-offs, including losses on sales and swaps, were $49 million for the six months, compared with $54 million in the same year-ago period.
 During the second quarter, the corporation transferred $200 million of the allowance for losses allocated to the LDC portfolio to the non- LDC portion of the allowance. The transfer reflects the corporation's ongoing analysis and evaluation of its LDC loan portfolio, including the finalization of the Argentine financing program and progress in debt negotiations with Brazil.
 At June 30, the non-LDC allowance for losses was $2,421 million, compared with $2,211 million on the same date a year ago.
 The LDC allowance at June 30 was $570 million, compared with $1,009 million on the same date a year ago. Total LDC medium- and long-term outstandings at June 30 were $2.6 billion, versus $3.8 billion on the same date a year ago.
 Non-performing Assets
 At June 30, total non-performing assets were $4,863 million, down $843 million, or 15 percent, from $5,706 million at March 31 and down $1,702 million, or 26 percent, from $6,565 million on June 30 a year ago.
 Total non-LDC non-performing assets at June 30 were $3,955 million, down from $4,476 million at March 31 and from $5,100 million a year ago. Non-LDC non-performing loans at June 30 were $2,856 million, down from $3,218 million at March 31 and down from $3,453 million at June 30 last year. Assets acquired as loan satisfactions were $1,099 million at June 30, down from $1,258 million at March 31 and down $548 million from $1,647 million on June 30 a year ago.
 LDC non-performing loans were $908 million at June 30, down from $1,230 million at March 31 and down from $1,465 million on June 30 a year ago. In April 1993, Argentina completed its financing plan with its creditor banks, which resulted in a reduction of approximately $281 million in the corporation's Argentine non-performing loans during the second quarter.
 CHEMICAL BANKING CORPORATION
 Non-Performing Assets
 (Dollars in millions)
 6/30/93 3/31/93 6/30/92
 Non-LDC non-performing loans $2,856 $3,218 $3,453
 Assets acquired as loan
 satisfactions 1,099 1,258 1,647
 Total non-LDC non-performing assets 3,955 4,476 5,100
 LDC non-performing loans:
 Brazil 563 594 734
 Argentina 41 316 322
 Other LDC countries 304 320 409
 Total LDC non-performing loans 908 1,230 1,465
 Total non-performing assets $4,863 $5,706 $6,565
 Allowance for Losses
 ($ in millions)
 June 30 1993 1992
 Total allowance for losses $2,991 $3,220
 As a percentage of total loans 3.8 3.8
 Non-LDC allowance for losses 2,421 2,211
 As a percentage of non-LDC loans 3.2 2.7
 LDC allowance for losses 570 1,009
 As a percentage of term outstandings
 including previous charge-offs
 with claims retained 53(A) 56
 (A) -- 22 percent excluding previous chargeoffs with claims retained
 Stockholders' Equity and Capital Ratios
 ($ in billions)
 June 30 1993 1992
 Total stockholders' equity $10.5 $9.6
 Common stockholders' equity 8.7 7.6
 Ratios (expressed as a percent):
 Total equity to assets 7.2 6.7
 Common equity to assets 6.0 5.3
 Tier I Leverage 6.6 6.5
 Risk-based capital:
 Tier I (4.0 percent required) 7.6(A) 7.0
 Total (8.0 percent required) 11.9(A) 11.1
 (A) -- Estimated
 Other Financial Data
 Net income for the first six months of 1993 included a $35 million net favorable impact from the Jan 1, 1993 adoption of two new accounting standards relating to the recognition of tax benefits and the costs associated with postretirement benefits. Income before the effect of these accounting changes was $720 million ($2.56 per share) for the first six months of 1993.
 The corporation's effective tax rate was 29.7 percent in the second quarter and 30.0 percent in the first six months of 1993, compared with 21.8 percent and 24.0 percent in the respective 1992 periods. Tax expense included an income tax benefit of $54 million in the second quarter and $117 in the six months of 1993, and an income tax benefit of $65 million and $120 million in the respective periods of 1992. At June 30, 1993, the corporation's unrecognized tax benefits (valuation reserve) totaled approximately $196 million.
 Total assets at June 30 were $145.5 billion, versus $142.4 billion on the same date a year ago. Total loans at June 30 were $79.2 billion, compared with $85.0 billion a year ago. At the end of the second quarter, total deposits were $94.6 billion, compared with $92.8 billion at June 30,1992.
 The return on average total assets was 1.04 percent for the second quarter and 1.05 percent for the first six months, compared with .70 percent and .73 percent in the same year-ago periods.
 The return on average common stockholders' equity was 15.97 percent for the second quarter and 16.22 percent for the six months, compared with 10.48 percent in the year-ago second quarter and 11.80 percent for the first six months of 1992.
 Book value per common share was $34.47 at June 30, versus $31.03 per share on the same date a year ago.
 Texas Commerce Bancshares
 Texas Commerce Bancshares (TCB) reported net income of $44 million in the second quarter and $73 million for the six months, versus $45 million and $89 million in the similar year-ago periods. Excluding the one-time restructuring charge of $43 million ($30 million after-tax) related to the First City acquisition and net benefits of $14 million resulting from the previously mentioned accounting changes, earnings for the first six months of 1993 would have been $89 million.
 Non performing assets at TCB were reduced for the 20th consecutive quarter, to a total of $351 million at June 30, 1993.
 -0- 7/20/93
 /CONTACT: press, John Meyers, 212-270-7454, or John Stefans, 212- 270-7438; investors, John Borden, 212-270-7318, all of Chemical Banking/
 (CHL)


CO: Chemical Banking Corporation ST: New York IN: FIN SU: ERN

LG-OS -- NY063 -- 3431 07/20/93 13:56 EDT
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