The blows of investor concerns have rained down harder on Chemical Banking Corp.'s stock than on that of any other money-center bank.

Shares of the New York bank have fallen 20% since Oct. 13. The group is off 12% during that time.

Chemical's shares traded Monday at $36.125, off 75 cents, just a hair above book value. The prolonged selloff has taken the share price down 6% from where it started the year - again, the worst performance among money-centers.

|Persistent Questioning'

Apparently, investors are still debating whether the merger that formed the new Chemical will pay off. At the heart of the matter is whether Chemical's unexpectedly big gains in trading are sustainable and can cover up some of its spending sins.

"There's been persistent questioning about whether the revenue growth is sustainable," said Frank R. DeSantis, an analyst with Donaldson, Lufkin & Jenrette Securities Corp. "A lot of the success in the merger has been related to the revenue in the capital market area."

Chemical Bank declined to reply to analysts' comments or discuss its stock price.

Earlier in the quarter, investors were concerned that interest rates would rise and hurt profits. Now rates are rising, and investors are questioning how Chemical's trading business will fare.

The trading businesses have been very good for Chemical this year. Mr. DeSantis said he expects revenue growth overall to be up 14% in 1993 versus 1992. He forecasts that trading revenues are expected to be up 25%.

"What people are worried about is that this growth engine will shut down in a rising rate environment," said Mr. DeSantis.

The third quarter results gave an indication that trading revenues are vulnerable. In the second quarter, Chemical's trading revenue was a record $298 million. Last quarter, it was $268 million.

Chemical's defenders on Wall Street express confidence in the bank's ability to continue to show strong growth in trading revenues, which include its derivatives business. Standard & Poor's Corp. recently upgraded the credit rating on Chemical's lead bank to A-plus. Business in swaps and other derivatives flows to the higher-rated banks. The market for swaps has been growing at a double-digit pace for 10 years, with no signs of slowing.

Other Growth Sources Seen

Money managers cite other sources of revenue growth. The Texas Commerce Bank unit, for example, has booked nearly 50% of the commercial loans in Texas, a growing economy.

"The market doesn't give the stock credit for TCB," said Harry Keefe, a New York-based money manager. "This will be the fastest growing part of the bank," he said.

The growth in trading revenues and other sources has partly offset the bank's growth in expenses since the merger. Chemical is two-thirds of the way through realizing a promised $750 million in expense savings from the merger. Nevertheless, expenses have grown at a compound rate of 4% since the first quarter of 1991.

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