Chase Manhattan Corp., parent company of the country's third-largest bank, yesterday announced plans to invest $125 million in Equimark Corp., a Pittsburgh bank holding company -- with an option to purchase its commercial banking subsidiary, Equibank.
Chase thus is positioning itself for the day when federal laws, which now prohibit interstate branching, may be modified and the New York bank could do a full range of banking in the Pittsburgh area.
The New York company, with assets of $76.1 billion, will buy $25 million of nonvoting preferred stock in Equimark and a like amount in Equibank, Chase Manhattan Bank also will advance $75 million to Equibank for five years at an interest rate of 14 1/2 percent. These transactions are subject to approval by the Pennsylvania Secretary of Banking.
In addition, Chase would receive a transferable 15-year option to purchase all the common stock of Equibank for $75 million. This only could be exercised if the law is changed.
Equimark Corp., which has assets of $2.8 billion, suffered a net loss in the last quarter of $33 million. The Pittsburgh banking firm, ranked 82nd in the U.S. according to assets, said the loss was due to an increase in reserves to cover possible loan losses, including the establishment of a specific reserve of $15 million against notes receivable from FSC Corp.
Equimark's president, Richard W. Plumb, said yesterday "there wasn't a bank in Pennsylvania" that could provide enough cash, so Equimark turned to Chase, with which it has had a correspondent relationship for years. Plumb expressed "excitement" about his affiliation with Chase and added that he would be "disappointed" if the acquisition did not ultimately go through.
Chase Manhattan does business in more than 100 countries. Unlike its two larger rivals, Citicorp and BankAmerica Corp., it is not widely representated in the United States. A Citicorp spokesman said yesterday that Chase has offices in perhaps 10 states. The other two giant banks are engaged in such nonretail banking operations as corporate lending and small loans in virtually all states.