For immediate release

The Federal Reserve Board today announced its approval of the application of The Chase Manhattan Corporation and Chase Holding Delaware Inc., both of New York, New York, to acquire all the voting shares of Chase Manhattan Bank and Trust Company, N.A., Los Angeles, California, a de novo bank. Attached is the Board's Order relating to this action.

The Chase Manhattan Corporation Chase Holding Delaware Inc. New York, New York Order Approving the Acquisition of a Bank

The Chase Manhattan Corporation ("Chase") and Chase Holding Delaware Inc., both of New York, New York, bank holding companies within the meaning of the Bank Holding Company Act ("BHC Act"), have requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to acquire all the voting shares of Chase Manhattan Bank and Trust Company, National Association, Los Angeles, California ("Chase Trust"), a de novo bank. Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 40,087 and 41,387 (1997)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3 of the BHC Act. Chase, with total consolidated assets of approximately $340.3 billion, is the largest commercial banking organization in the United States and controls 5.1 percent of the total banking assets of insured commercial banks in the nation.1 Chase's subsidiary banks operate in New York, New Jersey, Connecticut, Delaware, Florida, and California. Chase also engages in a number of permissible nonbanking activities nationwide. Chase proposes to establish Chase Trust as part of a multi-step reorganization of existing businesses that Chase currently conducts through two California-based nonbank trust companies, and a branch in Los Angeles, California, of Chase Manhattan Private Bank, National Association, Tampa, Florida ("Chase-Florida").2 Chase previously committed to the OCC and the California Superintendent of Banks that the business of the Los Angeles branch of Chase-Florida would be conducted by a subsidiary of Chase headquartered in California by January 1, 1998, and consummation of the proposal would fulfill these commitments.3 Interstate Analysis Section 3(d) of the BHC Act, as amended by section 101 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of such bank holding company, if certain conditions are met.4 For purposes of the BHC Act, Chase's home state is New York, and Chase would acquire a bank in California on consummation of the proposal. The conditions for an interstate acquisition under section 3(d) are met in this case,5 and the Board is permitted to approve the proposal under section 3(d) of the BHC Act. Competitive Considerations The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly, or would substantially lessen competition in any relevant banking market, unless the Board finds that the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served. The proposal represents a reorganization of Chase's existing banking and related businesses in California. Based on all the facts of record, the Board concludes that consummation of the proposal would not have any significantly adverse effects on competition or on concentration of banking resources in any relevant banking market. Other Factors Under the BHC Act The BHC Act also requires the Board, in acting on an application, to consider the financial and managerial resources of the companies and banks involved, the convenience and needs of the communities to be served, and certain other supervisory factors. A. Financial, Managerial and other Supervisory Factors The Board has carefully considered the financial and managerial resources and future prospects of Chase and Chase Trust and other supervisory factors in light of all the facts of record. These facts include supervisory reports of examination assessing the financial and managerial resources of the organizations and confidential financial information submitted by Chase. Based on these and all the facts of record, the Board concludes that financial and managerial considerations, and all other supervisory factors that must be considered under section 3 of the BHC Act, are consistent with approval. B. Convenience and Needs Considerations The Board also has carefully considered the effect of the proposed transaction on the convenience and needs of the communities to be served in light of all the facts of record. Chase states that Chase Trust will provide certain commercial banking services that currently are not offered by National Trust and State Trust, and that Chase Trust will hire an officer to manage the programs and policies relating to the bank's performance under the Community Reinvestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The Board notes, moreover, that the proposal represents an internal reorganization of existing businesses that would allow Chase to comply with commitments to federal and state banking supervisors, and that consummation of the proposal would not result in an expansion of Chase's deposit-taking facilities in California. CRA Performance Record of Chase The Board has long held that consideration of the convenience and needs factor includes a review of the records of the relevant depository institutions under the CRA. As provided in the CRA, the Board has evaluated this factor in light of examinations by the primary federal supervisors of the CRA performance records of the relevant institutions. An institution's most recent CRA performance evaluation is a particularly important consideration in the application process because it represents a detailed on-site evaluation of the institution's overall record of performance under the CRA by its primary federal supervisor.6 Chase's lead bank, The Chase Manhattan Bank, New York, New York ("Chase Bank"), was formed by the merger of the lead banks of Chemical Banking Corporation ("Old Chemical") and The Chase Manhattan Corporation ("Old Chase"), both of New York, New York, as part of the merger of Old Chemical and Old Chase approved by the Board in January 1996.7 Chase Bank has not been publicly evaluated for CRA performance since the merger. Before the merger, Old Chemical's lead bank received an "outstanding" rating from the Federal Reserve Bank of New York ("Reserve Bank") at its most recent examination for CRA performance, as of March 13, 1995. Old Chase's lead bank and Chase-Florida also received "outstanding" ratings from the OCC, their primary federal supervisor, at their most recent examinations for CRA performance, as of October 27, 1995.8 All of Chase's other subsidiary banks have been examined for CRA performance after the merger of Old Chemical and Old Chase, and have received an "outstanding" or "satisfactory" rating from their primary federal supervisors at their most recent examinations.9 The Board previously reviewed Chase's record of CRA performance in connection with approving the merger of Old Chemical and Old Chase, and more recently in connection with approving Chase Bank's merger with Chemical Bank, New Jersey, N.A., Morristown, New Jersey.10 In the Chemical/Chase Order, the Board considered a number of aspects of the CRA performance of both institutions, including their lending, marketing, and outreach activities, the services provided through branches, branch closing policies, and initiatives to increase lending in low- to moderate-income ("LMI") areas.11 Furthermore, in the Chase Bank/CBNJ Order, the Board carefully reviewed Chase Bank's record of closing branches after the merger of Old Chemical and Old Chase, the policies and procedures of Chase Bank and its predecessor institutions for assuring compliance with the fair lending laws, and the community development activities of Chase Bank and its predecessors. For the reasons set forth in detail in the Chemical/Chase Order and the Chase Bank/CBNJ order, and incorporated herein by reference, the Board concluded that the CRA performance records of Chase's subsidiary banks and their predecessor institutions were consistent with approval under the convenience and needs factor. The Board also has considered supervisory information concerning Chase Bank's record of CRA performance which includes information assessing the following aspects of the bank's CRA performance: (1) lending record and geographic distribution of loans throughout the bank's communities, including LMI areas; (2) efforts designed to assist in meeting the credit needs of the bank's communities, including affordable mortgage, government-sponsored and small business lending programs; (3) community development activities; (4) compliance record with fair lending laws, and fair lending law policies and programs; and (5) branch closing policies and procedures, and record of closing branches since the merger of Old Chemical and Old Chase.12 Comments on Proposal The Board also has taken into account comments objecting to Chase Bank's decision to close 18 branches in New York and Connecticut. The Board notes that these comments relate to Chase's branch closings generally, and that Chase has not proposed to close any branches as a result of this proposal.13 Federal banking law, moreover, addresses branch closings by specifically requiring an insured depository institution to provide notice to the appropriate regulatory agency prior to closing a branch,14 but does not authorize the federal regulators to prevent the closing of any branch. Furthermore, the BHC Act does not make approval of a proposal contingent on an applicant's commitment to keep open all branch offices of an acquired institution. The availability of banking services and offices after an acquisition must be reviewed in the context of the effect of the acquisition on the convenience and needs of communities served by the institution and is only one of several factors the Board must consider in assessing the effect of the acquisition on the convenience and needs of the communities to be served.15 Four of the 18 branches identified by the commenter are in LMI census tracts. The Board notes that each of these branches is a middle market business office that does not provide retail banking services. The other 14 branches identified by the commenter are in non-LMI areas.16 The Board notes that Chase Bank would continue to operate approximately 428 consumer branches in New York, including 97 consumer branches in LMI census tracts in New York, and approximately 46 consumer branches in Connecticut, including 12 consumer branches in LMI census tracts in Connecticut.17 In addition, the Board previously has noted that the branch closing policies of the predecessor institutions to Chase Bank required consideration of a number of factors prior to closing a branch, including current market conditions, market potential, consumer satisfaction and product usage, demographics, and community needs. The most recent CRA examinations of the two predecessor banks also concluded that their branch closing policies were satisfactory and that their records of opening and closing branches had not negatively affected their communities, including LMI communities. Finally, the Board has reviewed supervisory information that assesses Chase Bank's current branch closing policies and the effect of the bank's branch openings and closings on all the bank's communities, including LMI communities.18 Comments also contend, primarily on the basis of 1996 data filed under the Home Mortgage Disclosure Act (12 U.S.C. § 2801 et seq.) ("HMDA") by Chase and its subsidiaries, that Chase's lending in LMI neighborhoods and to minority individuals in a variety of geographical areas is inadequate and violates the fair lending laws.19 The Board has reviewed 1995 and 1996 HMDA data reported by Chase in light of the comments received on the proposal.20 These data show that Chase's ratio of denials of African-American and Hispanic credit applicants to white credit applicants declined from 1995 to 1996 in each market reviewed by the Board. These data, however, also reflect some disparities in the rate of loan originations, denials, and applications by racial group or income level in certain markets. The Board is concerned when the record of an institution indicates such disparities in lending, and believes that all banks are obligated to ensure that their lending practices are based on criteria that ensure not only safe and sound lending, but also equal access to credit by creditworthy applicants regardless of race. The Board recognizes, however, that HMDA data alone provide an incomplete measure of an institution's lending in its community because these data cover only a few categories of housing-related lending. Moreover, HMDA data provide only limited information about the covered loans.21 HMDA data, therefore, have limitations that make the data an inadequate basis, absent other information, for concluding that an institution has engaged in illegal lending discrimination. In light of the limitations of HMDA data, the Board has carefully reviewed other information, particularly examination reports and other supervisory information that provide an on-site evaluation of compliance with the fair lending laws by Chase. The most recent CRA examinations of the two banks that were merged to form Chase Bank found that neither bank engaged in practices that would discourage individuals from applying for credit. In addition, fair lending reviews were conducted during such CRA examinations, and examiners found no evidence of discrimination or other illegal credit practices. Furthermore, no evidence of discrimination or other illegal credit practices was found during the most recent CRA examinations of Chase's other subsidiary banks, including those that have been examined for CRA performance since the merger of Old Chemical and Old Chase.22 The Board also has reviewed supervisory information assessing Chase Bank's record of fair lending law compliance, current fair lending law policies and programs, and initiatives to help meet the credit needs of all its communities, including LMI areas. The Board also carefully reviewed the fair lending policies and procedures of the two predecessor institutions to Chase Bank, as well as their affiliated banks in New Jersey, Delaware, Florida and Texas, in the Chemical/Chase and Chase Bank/CBNJ Orders. The Board noted that the banks that were merged to form Chase Bank maintained training, second review and other programs that were designed to ensure that the banks operate in compliance with the fair lending laws.23 Conclusion on Convenience and Needs Considerations The Board has carefully considered all the facts of record, including the public comments received, Chase's response to those comments, and the CRA performance records of Chase's subsidiary banks, including relevant reports of examination and other supervisory information.24 Based on a review of the entire record, and for the reasons discussed in this order, the Board has concluded that convenience and needs considerations, including the CRA records of performance of Chase's subsidiary banks, are consistent with approval of the proposal. Conclusion Based on the foregoing and all the facts of record, the Board has determined that the application should be, and hereby is, approved.25 The Board's approval is expressly conditioned on compliance by Chase with the commitments made in connection with the application. The commitments relied on by the Board in reaching this decision shall be deemed to be conditions imposed in writing by the Board in connection with its findings and decision, and, as such, may be enforced in proceedings under applicable law. The transaction shall not be consummated before the fifteenth calendar day following the effective date of this order, or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Reserve Bank, acting pursuant to delegated authority.

By order of the Board of Governors,26 effective September 29, 1997. (signed) William W. Wiles William W. Wiles Secretary of the Board

Footnotes 1 Asset data are as of March 31, 1997. 2 The Chase Manhattan Trust Company of California, N.A. ("National Trust") and Chase Trust Company of California ("State Trust"), both uninsured nonbank trust companies in San Francisco, California, would consolidate with and into a newly established nationally chartered trust association under the name of Chase Trust. Chase Trust would obtain full commercial banking powers from the Office of the Comptroller of the Currency ("OCC") and deposit insurance from the Federal Deposit Insurance Corporation ("FDIC"), thereby becoming a "bank" for purposes of the BHC Act. Chase Trust would then acquire the Los Angeles branch of Chase-Florida as the last step of the reorganization. The OCC has approved Chase's applications to charter the new trust association, consolidate National Trust and State Trust into the new trust association, and obtain full commercial banking powers for the new trust association. Chase Trust also has filed an application with the FDIC to obtain deposit insurance. 3 Chase made the commitments in connection with the merger of Chemical Bank FSB, Palm Beach, Florida, with and into Chase-Florida in November 1996. The Los Angeles branch was a branch of Chemical Bank FSB prior to the merger. 4 Pub. L. No. 103-328, 108 Stat. 2338 (1994). A bank holding company's home state is the state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 5 See 12 U.S.C. §§ 1842(d)(1)(A) and (B) and 1842(d)(2)(A) and (B). Chase is adequately capitalized and adequately managed. On consummation of the proposal, Chase and its affiliates would control less than 10 percent of the total amount of deposits of insured depository institutions in the United States and less than 30 percent of the total amount of deposits of insured depository institutions in California. In addition, all other requirements of section 3(d) of the BHC Act would be met on consummation of the proposal. 6 The Statement of the Federal Financial Supervisory Agencies Regarding the Community Reinvestment Act provides that a CRA examination is an important and often controlling factor in the consideration of an institution's CRA record and that reports of these examinations will be given great weight in the applications process. See 54 Federal Register 13,742 and 13,745 (1989). 7 See Chemical Banking Corporation, 82 Federal Reserve Bulletin 239 (1996) ("Chemical/Chase Order"). 8 Chemical Bank FSB also received a "satisfactory" rating from the Office of Thrift Supervision at its most recent CRA performance examination, as of March 6, 1995, prior to its merger into Chase-Florida. 9 The following subsidiary banks of Chase have received the indicated ratings from the OCC, their primary federal supervisor, since the merger of Old Chemical and Old Chase: Texas Commerce Bank, Houston, Texas, rated "outstanding" as of September 9, 1996; Texas Commerce Bank-San Angelo, San Angelo, Texas, rated "satisfactory" as of August 8, 1996; Chase Manhattan Bank USA, N.A., Wilmington, Delaware ("Chase USA-Delaware"), rated "satisfactory" as of October 8, 1996; and Chase Manhattan Bank USA, N.A., Jericho, New York ("Chase USA-New York"), rated "satisfactory" as of September 5, 1996. Following these examinations, Chase USA-New York merged with and into Chase USA-Delaware in December 1996. 10 See The Chase Manhattan Bank, 82 Federal Reserve Bulletin 1139 (1996) ("Chase Bank/CBNJ Order"). 11 The Chemical/Chase Order also specifically discussed the CRA performance records of Chase-Florida and Chemical FSB, as well as the subsidiary banks of Old Chase and Old Chemical operating in New York, New Jersey, Connecticut, Texas and Delaware. 12 This supervisory information includes information developed by the Reserve Bank during its regularly scheduled examination of Chase Bank's record of CRA performance, which commenced in March 1997. The Reserve Bank's report of this examination is not publicly available at this time. 13 Chase Trust would continue to operate the Los Angeles branch of Chase-Florida. 14 Section 42 of the Federal Deposit Insurance Act (12 U.S.C. § 1831r-1), as implemented by the Joint Policy Statement Regarding Branch Closing (58 Federal Register 49,083 (1993)), requires that a bank provide the public with at least 30 days notice and the primary federal supervisor with at least 90 days notice before the date of the proposed branch closing. The bank also is required to provide reasons and other supporting data for the closure, consistent with the institution's written policy for branch closing. 15 Two commenters also maintain that Chase Trust will not assist in meeting the credit needs of its local community. As discussed in this order, the Board has considered these comments in light of Chase's overall record of CRA performance. 16 One commenter contends that Chase improperly failed to disclose the 18 branch closings in connection with the Chemical/Chase merger. In connection with that merger, Chase announced that it would close seven branches in LMI census tracts in New York City and provided the Board a preliminary list of branches in non-LMI areas that it expected to close. Chase previously has stated that its announcement regarding proposed branch closings in LMI census tracts did not include middle market business offices or other specialized facilities, such as private banking and private access corporate locations. As noted above, the four branches in LMI areas identified by commenter are middle market business offices. The remaining 14 branches identified by commenter are in non-LMI census tracts and, as noted in the Chemical/Chase Order, Chase's list of proposed branch closings in non-LMI census tracts was preliminary and subject to change. 17 These data reflect all notices of proposed branch closings received by the Federal Reserve System through August 18, 1997. Consumer branches do not include limited access specialized facilities, such as private banking, middle market business offices, and private access corporate locations. 18 One commenter contends that the preliminary branch closing information that Chase submitted in connection with the Chemical/Chase merger misled the Board because it did not categorize proposed branch closings in middle-income areas that are adjacent to LMI census tracts as closings in LMI census tracts. The branch closing information submitted by Chase was presented based on the census tract location of the branch proposed to be closed. No additional categorization was required. Moreover, Chase continues to operate a number of branches in LMI census tracts, as discussed in this order. 19 One commenter objects to Chase Trust's pending request to be designated as a wholesale bank under the CRA regulations jointly promulgated by the federal financial supervisory agencies. See 60 Federal Register 22,156 (1995). The OCC, Chase Trust's primary federal supervisor, is responsible for acting on the requested designation, and such actions are not reviewable by the Board. See 12 C.F.R. 25.25(b). 20 The Board's review includes 1995 and 1996 HMDA data reported by all Chase subsidiaries for the New York City Metropolitan Statistical Area ("MSA") and several other MSAs in Chase Bank's assessment area, the Los Angeles MSA, and the MSAs in the service areas of Chase's subsidiary banks in Texas and Florida. 21 These data, for example, do not provide a basis for an independent assessment of whether an applicant who was denied credit was, in fact, creditworthy. Credit history problems and excessive debt levels relative to income--reasons most frequently cited by a credit denial--are not available from HMDA data. 22 One commenter contends that the proposal will result in foreclosures that will adversely affect the local community. This commenter also contends generally that banking institutions, including Chase, use improper practices when foreclosing on properties. The commenter does not provide, and the record does not otherwise contain, facts to support these contentions. 23 One commenter reiterates the contention that Chase violates the fair lending laws and HMDA through its activities involving the New York City Housing Partnership ("NYCHP"). The Board previously addressed this issue in the Chase Bank/CBNJ Order, which noted that, following discussions with the Reserve Bank, the NYCHP agreed to provide adverse action letters to applicants that are not eligible for NYCHP-sponsored programs. 24 The Board notes that the Equal Employment Opportunity Commission recently filed suit against Chase alleging that certain restrictions contained in the long-term disability plan offered to Chase employees violate the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.). Private litigants also have filed an employment discrimination lawsuit in Delaware against one of Chase's subsidiary banks. Both of these lawsuits are pending adjudication, and no finding of wrongdoing on the part of Chase has been made. The Board previously has stated that its limited jurisdiction to review applications under the BHC Act does not authorize the Board to adjudicate disputes involving an applicant that arise under statutes administered and enforced by another agency in areas such as employment discrimination. The Board also retains sufficient supervisory authority to take appropriate action if a lawsuit or an examination determines that Chase is not in compliance with applicable laws and regulations. 25 One commenter has requested that the Board hold a public hearing or meeting on the proposal. Section 3(b) of the BHC Act does not require the Board to hold a public hearing on an application unless the appropriate supervisory authority for the bank to be acquired makes a timely written recommendation of denial of the application. In this case, the Board has not received such a recommendation from the OCC, Chase Trust's primary federal supervisor. Under its rules, the Board also may, in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the proposal and to provide an opportunity for testimony, if appropriate. 12 C.F.R 225.16(e). The Board has carefully considered commenter's request for a hearing or meeting in light of all the facts of record. In the Board's view, commenter has had ample opportunity to submit views and has, in fact, provided written submissions that have been considered by the Board in acting on the proposal. The request fails to demonstrate why these written submissions do not adequately present commenter's evidence, allegations and views. After a careful review of all the facts of record, the Board has concluded that the commenter disputes the weight that should be accorded to, and the conclusions that the Board should draw from, the facts of record and does not identify disputed issues of fact that are material to the Board's decision. For these reasons, and based on all the facts of record, the Board has determined that a public hearing or meeting is not required or warranted to clarify the factual record in the proposal, or otherwise warranted in this case. Accordingly, the request for a public hearing or meeting on the proposal is hereby denied. 26 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, and Meyer.

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1997 Orders on banking applications