CONFORMED 1.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission file number 1-2940
HSBC Americas, Inc.
(Exact name of registrant as specified in its charter)
Delaware Corporation 22-1093160
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Marine Midland Center, Buffalo, N.Y. 14203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 841-2424
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
All voting stock (1,001 shares of Common Stock, $5 par value) is owned by HSBC
Holdings B.V., an indirect wholly-owned subsidiary of HSBC Holdings plc.
This report includes a total of 16 pages.
2.
Part I - FINANCIAL INFORMATION
Page
Item 1 - Financial Statements
Consolidated Balance Sheet
June 30, 1996 and December 31, 1995 3
Consolidated Statement of Income
For The Quarter and Six Months
Ended June 30, 1996 and 1995 4
Consolidated Statement of Changes in
Shareholders' Equity For The Six Months
Ended June 30, 1996 and 1995 5
Consolidated Statement of Cash Flows
For The Six Months Ended
June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
<TABLE>
<CAPTION>
3.
CONSOLIDATED BALANCE SHEET HSBC AMERICAS, INC.
June 30, December 31,
dollars in thousands 1996 1995*
- ------------------------------------------------------------------------------>
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,133,577 $ 1,242,335
Interest bearing deposits with banks 1,182,367 1,488,101
Federal funds sold and securities purchased
under resale agreements 976,771 518,256
Trading assets 871,465 616,531
Securities available for sale 3,341,071 2,613,830
Loans 14,760,088 13,772,339
Less - allowance for loan losses 458,001 477,502
- ------------------------------------------------------------------------------
Loans, net 14,302,087 13,294,837
Premises and equipment 181,830 180,552
Customers' acceptance liability 23,253 21,671
Accrued interest receivable 175,693 150,335
Other real estate and other owned assets 67,019 109,758
Other assets 471,912 317,137
- ------------------------------------------------------------------------------
TOTAL ASSETS $ 22,727,045 $ 20,553,343
==============================================================================
LIABILITIES
Deposits in domestic offices:
Noninterest bearing $ 3,136,966 $ 3,433,016
Interest bearing 11,726,922 10,454,352
Interest bearing deposits in foreign offices 2,399,870 1,442,484
- ------------------------------------------------------------------------------
Total deposits 17,263,758 15,329,852
Federal funds purchased and securities sold
under repurchase agreements 1,184,039 1,136,476
Other short-term borrowings 1,411,848 1,401,634
Interest, taxes and other liabilities 296,415 257,094
Acceptances outstanding 23,253 21,671
Long-term debt 708,724 709,750
- ------------------------------------------------------------------------------
TOTAL LIABILITIES 20,888,037 18,856,477
- ------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock 98,063 98,063
Common shareholder's equity:
Common stock 5 5
Capital surplus 1,803,094 1,803,094
Accumulated deficit (61,585) (233,686)
Net unrealized gain (loss) on securities
available for sale, net of taxes (569) 29,390
- ------------------------------------------------------------------------------
Total common shareholder's equity 1,740,945 1,598,803
- ------------------------------------------------------------------------------
Total shareholders' equity 1,839,008 1,696,866
- ------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 22,727,045 $ 20,553,343
==============================================================================
The accompanying notes are an integral part of these financial statements.
* Restated to include the accounts and results of Oleifera Investments, Ltd.
combined with the Company on January 1, 1996.
</TABLE>
<TABLE>
<CAPTION>
4.
CONSOLIDATED STATEMENT OF INCOME HSBC AMERICAS, INC.
Quarter ended June 30 Six months ended June 30
dollars in thousands 1996 1995* 1996 1995*
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans $ 300,853 $ 300,363 $ 610,567 $ 590,048
Securities 49,649 32,835 91,558 67,144
Trading assets 13,740 7,700 25,835 14,672
Deposits with banks 15,790 9,422 35,821 27,289
Federal funds sold and
securities purchased under
resale agreements 8,275 16,074 13,102 24,410
- ------------------------------------------------------------------------------
Total interest income 388,307 366,394 776,883 723,563
- ------------------------------------------------------------------------------
Interest expense:
Deposits:
In domestic offices 97,947 97,506 196,727 186,105
In foreign offices 18,200 18,239 36,162 31,481
Federal funds purchased and
securities sold under
repurchase agreements 16,897 5,643 30,488 11,649
Other short-term borrowings 17,240 13,052 33,875 30,281
Long-term debt 11,306 12,857 22,861 25,803
- ------------------------------------------------------------------------------
Total interest expense 161,590 147,297 320,113 285,319
- ------------------------------------------------------------------------------
Net interest income 226,717 219,097 456,770 438,244
Provision for loan losses 15,000 16,122 34,750 141,122
- ------------------------------------------------------------------------------
Net interest income, after
provision for loan losses 211,717 202,975 422,020 297,122
- ------------------------------------------------------------------------------
Other operating income:
Trust income 10,654 11,567 20,585 22,903
Service charges 21,895 21,499 42,745 41,428
Mortgage servicing income 3,963 4,375 8,434 8,885
Other fees and commissions 28,764 29,992 56,732 59,757
Trading revenues 939 1,430 1,354 2,831
Other income 8,201 12,724 24,204 21,911
- ------------------------------------------------------------------------------
Total other operating income 74,416 81,587 154,054 157,715
- ------------------------------------------------------------------------------
286,133 284,562 576,074 454,837
- ------------------------------------------------------------------------------
Other operating expenses:
Salaries 69,604 70,371 137,761 139,402
Pension and other employee
benefits 15,931 18,365 35,185 39,006
- ------------------------------------------------------------------------------
Total personnel expense 85,535 88,736 172,946 178,408
Net occupancy expense 18,692 17,697 38,409 35,182
Other expenses 53,421 72,192 100,358 123,267
- ------------------------------------------------------------------------------
Total other operating expenses 157,648 178,625 311,713 336,857
Provision for ORE and other
owned asset losses 1,293 1,635 1,824 1,635
- ------------------------------------------------------------------------------
Total operating expenses after
provision for ORE and other
owned assets 158,941 180,260 313,537 338,492
- ------------------------------------------------------------------------------
Income before taxes 127,192 104,302 262,537 116,345
Applicable income tax
expense (benefit) 38,100 40,280 87,500 (21,590)
- ------------------------------------------------------------------------------
Net income $ 89,092 $ 64,022 $ 175,037 $ 137,935
==============================================================================
The accompanying notes are an integral part of these financial statements.
* Restated to include the accounts and results of Oleifera Investments,
Ltd. combined with the Company on January 1, 1996.
</TABLE>
<TABLE>
<CAPTION>
5.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY HSBC AMERICAS,INC.
---------------------------------------------------------------------------
Six months ended June 30
dollars in thousands 1996 1995*
---------------------------------------------------------------------------
<S> <C> <C>
At beginning of period $1,696,866 $1,657,448
Net income 175,037 137,935
Net change in unrealized gain (loss) on
securities available for sale, net of taxes (29,959) -
Cash dividends declared on preferred stock (2,936) (2,937)
Return of capital to parent - (40,000)
---------------------------------------------------------------------------
At end of period $1,839,008 $1,752,446
===========================================================================
---------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended June 30
dollars in thousands 1996 1995*
---------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 175,037 $ 137,935
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation, amortization and deferred taxes 46,603 28,942
Provision for loan losses 34,750 141,122
Net change in other accrual accounts (25,511) (235,023)
Net change in loans originated for sale (42,428) (91,348)
Net change in trading assets (252,965) (107,311)
Other, net (42,202) (57,615)
---------------------------------------------------------------------------
Net cash used by operating activities (106,716) (183,298)
---------------------------------------------------------------------------
Cash flows from investing activities:
Net change in interest bearing deposits with banks 531,793 391,487
Net change in short-term investments (458,515) (873,295)
Purchases of securities (891,367) (308,732)
Sales of securities 15,396 13,981
Maturities of securities 183,367 391,840
Net change in credit card receivables (118,758) (72,743)
Net change in other short-term loans 99,077 10,162
Net originations and maturities of long-term loans 61,456 (170,016)
Expenditures for premises and equipment (9,460) (3,610)
Cash used in acquisitions, net of cash acquired (7,094) -
Other, net 59,334 128,153
---------------------------------------------------------------------------
Net cash used by investing activities (534,771) (492,773)
---------------------------------------------------------------------------
Cash flows from financing activities:
Net change in deposits 477,888 1,112,383
Net change in short-term borrowings 57,777 (578,182)
Return of capital to parent - (40,000)
Dividends paid (2,936) (2,937)
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Net cash provided by financing activities 532,729 491,264
---------------------------------------------------------------------------
Net change in cash and due from banks (108,758) (184,807)
Cash and due from banks at beginning of period 1,242,335 1,051,003
---------------------------------------------------------------------------
Cash and due from banks at end of period $1,133,577 $ 866,196
===========================================================================
The accompanying notes are an integral part of these financial statements.
*Restated to include the accounts and results of Oleifera Investments, Ltd.
combined with the Company on January 1, 1996
</TABLE>
6.
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accounting and reporting policies of HSBC Americas, Inc. (the Company) and
its subsidiaries, conform to generally accepted accounting principles and to
predominant practice within the banking industry. Such policies, except as
noted below, are consistent with those applied in the presentation of the
Company's annual financial statements.
The interim financial information in this report has not been audited. In the
opinion of the Company's management, all adjustments necessary for a fair
presentation of financial position, results of operations and cash flows for
the interim periods have been made. The interim financial information should
be read in conjunction with the 1995 Annual Report on Form 10-K.
2. Pledged Financial Instruments
At June 30, 1996, securities, loans and other assets carried at $1,641,593,000
were pledged as collateral for borrowings, to secure public and trust deposits
and for other purposes.
3. Acquisitions
The Company's results have been consolidated with Oleifera Investments, Ltd.
(OIL), which was combined with the Company on January 1, 1996. The net assets
of OIL, an indirect wholly-owned subsidiary of HSBC Holdings plc, were
transferred to the Company through a contribution of stock. Assets of OIL
totaling $183 million at December 31, 1995, consisted primarily of commercial
loans and other real estate.
The transaction was accounted for as a transfer of assets between companies
under common control, with the assets and liabilities of OIL combined with
those of the Company at their historical carrying values. The Company's
consolidated financial statements reflect a restatement of prior periods to
include the accounts and results of operations of OIL as though they had been
combined as of the beginning of the earliest period presented.
On June 28, 1996, the Company acquired all eleven branches and $1.1 billion in
selected assets and assumed $1.2 billion in deposits of East River Savings
Bank for $93 million. The acquisition was accounted for as a purchase and the
results of its operations are included in the financial statements since the
date of acquisition. The excess fair value of net assets acquired assignable
to goodwill and other intangibles is estimated to be approximately $102
million and will be amortized against income over periods not exceeding
fifteen years.
4. New Accounting Standards
Effective January 1, 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 122, Accounting for Mortgage Servicing
Rights (FAS 122) prospectively. FAS 122 requires that a mortgage banking
enterprise recognize as separate assets the right to service mortgage loans
for others, whether acquired directly or in conjunction with the acquisition
of mortgage loan assets.
7.
As originated or purchased mortgage loans are sold, securitized or where a
definitive plan exists to sell or securitize such loans, their total cost is
allocated between servicing rights and the loans, based on relative fair
values.
FAS 122 specifies that servicing rights be evaluated for impairment based on
the difference between the carrying value of such rights and their current
fair value. For purposes of measuring impairment, which is to be recorded
through use of a valuation reserve, servicing rights will be stratified based
upon interest rates and whether or not such rates are fixed or variable.
The adoption of FAS 122 did not have a material effect on the financial
position or results of operations of the Company.
The Company is required to adopt Statement of Financial Accounting Standards
No. 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities (FAS 125), effective January 1, 1997. The
Company does not expect that the adoption of FAS 125 will have a material
effect on its financial position or results of operation.
8.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
HSBC Americas, Inc. (the Company) reported second quarter net income of $89.1
million, compared with a $64.0 million in the 1995 second quarter. For the
first six months of 1996, net income was $175.0 million, compared with a
$137.9 million for the first six months of last year. Net income in 1996
reflected improved net interest income derived from growth in loans, deposits,
trading assets, investment securities and lower operating expenses.
The financial statements include $1.1 billion in assets and $1.2 billion in
liabilities acquired from East River Savings Bank on June 28, 1996 in a
transaction accounted for using the purchase method of accounting. The
acquisition did not have significant impact on the results of operation for
the three or six month period ended June 30, 1996.
Net Interest Income
Net interest income for the second quarter of 1996 increased to $226.7 million
compared with $219.1 million for the second quarter of 1995. For the first
six months of 1996, net interest income was $456.8 million compared with
$438.2 million for the first six months of 1995.
Interest income of $388.3 million in the second quarter of 1996 was 6.0%
higher than the second quarter of 1995. Average earning assets of $19.4
billion for the second quarter of 1996 were 12.1% higher than a year ago. The
average rate earned on earning assets was 8.06% for the second quarter of 1996
compared with 8.51% a year ago. Interest income of $776.9 million for the
first six months of 1996 was 7.4% higher than the first six months of 1995.
Average earning assets of $19.1 billion for the first six months of 1996 were
10.0% higher than the first six months of 1995. The average rate earned on
earning assets was 8.20% for the first six months of 1996 compared with 8.43%
a year ago. The improvement in interest income is due to a number of factors
including increases in consumer and core commercial loan volume, an increased
investment portfolio, and a reduction in commercial nonaccruing loans.
Interest expense for the second quarter of 1996 was $161.6 million,
representing a 9.7% increase over the second quarter of 1995. Average
interest bearing liabilities for the second quarter of 1996 were $15.6
billion, 17.0% higher than a year ago. The average rate paid on interest
bearing liabilities was 4.18% compared with 4.44% a year ago. Interest
expense for the first six months of 1996 was $320.1 million or 12.2% above the
first six months of 1995. Average interest bearing liabilities for the first
six months of 1996 were $15.3 billion, 15.1% higher than a year ago. The
average rate paid on interest bearing liabilities was 4.21% for the first six
months of 1996 compared with 4.33% a year ago.
The taxable equivalent net yield on average total assets for the second
quarter of 1996 was 4.43%, compared with 4.74% a year ago. The taxable
equivalent net yield on average total assets for the first six months of 1996
was 4.53%, compared with 4.76% a year ago.
9.
Other Operating Income
For the second quarter of 1996, total other operating income was $74.4
million, compared with $81.6 million in the 1995 second quarter. For the
first six months of 1996, total other operating income was $154.1 million,
compared with $157.7 million for the first six months of 1995. Other income
included $.5 million in gains realized on highly leveraged partnership
interests during the second quarter of 1996 compared with $4.6 million in the
1995 second quarter. These gains were $4.8 million and $6.6 million for the
six months of 1996 and 1995, respectively.
Other Operating Expenses
Other operating expenses were $157.6 million in the 1996 second quarter
compared with $178.6 million for the 1995 second quarter. Other operating
expenses were $311.7 million for the first six months of 1996 compared with
$336.9 million a year ago. The Federal Deposit Insurance Corp. (FDIC)
insurance premium decreased principally from the industry-wide reduction in
deposit insurance rates. This event resulted in a $13.9 million decrease in
other expense in the first half of 1996 compared with the same period in 1995.
These premiums are expected to remain at nominal levels throughout 1996.
Income Taxes
Contemplated in the merger of Concord Leasing, Inc. (Concord) and the Company
was the availability of net operating loss carryforwards and other temporary
deductible differences of Concord that can be used to offset future taxable
income of the Company. At January 1, 1995, Concord had net deferred tax
assets of approximately $206 million resulting from loss carryforwards and
deductible differences, which were offset in full by a valuation allowance due
to the uncertainty of Concord realizing the tax benefits on a stand-alone
basis. As a result of the merger, management determined that a reduction in
the valuation allowance of $73.5 million relating to Concord's operating loss
carryforward was recognized in the first quarter of 1995 since the realization
of such carryforwards was now considered probable.
The recognition of deferred losses associated with Concord has continued to
result in the reduction in taxes from a statutory effective rate of 43%; 30%
in the second quarter of 1996 (33% in the first half of 1996) compared with
36% in the same quarter of 1995.
The deferred tax asset at June 30, 1996 was $83 million, net of valuation
reserve of $279 million, compared with $88 million, net of valuation reserve
of $304 million at December 31, 1995.
10.
Asset Quality
The following tables provides a summary of the loan loss allowance and
nonperforming assets.
<TABLE>
<CAPTION>
2nd 2nd 6 Months Year 6 Months
Quarter Quarter Ended Ended Ended
1996 1995* 6/30/96 12/31/95* 6/30/95*
(in millions)
<S>
Allowance for Loan Losses <C> <C> <C> <C> <C>
Balance at beginning of period $471.8 $571.3 $477.5 $531.5 $531.5
Allowance related to acquired
companies 3.4 - 3.4 .4 -
Provision charged to income 15.0 16.1 34.8 175.3 141.1
Net charge offs 32.2 65.5 57.7 229.7 150.7
Balance at end of period $458.0 $521.9 $458.0 $477.5 $521.9
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1996 1995* 1995*
(in millions)
<S>
Nonaccruing Loans <C> <C> <c.
Balance at end of period $387.2 $468.3 $625.2
As a percent of loans outstanding 2.62% 3.40% 4.75%
Nonperforming Loans and Assets**
Balance at end of period $454.3 $578.1 $870.1
As a percent of total assets 2.00% 2.81% 4.49%
Allowance Ratios
Allowance for loan losses as a
percent of:
Loans 3.10% 3.47% 3.96%
Nonaccruing loans 118.27 101.95 83.48
* Restated to include the accounts and results of Oleifera Investments, Ltd.
combined with the Company on January 1, 1996.
** Includes nonaccruing loans, other real estate and other owned assets.
</TABLE>
Provisions for loan losses were $15.0 million in the second quarter of 1996
compared with $16.1 million in the second quarter of 1995. Provisions for
loan losses for the first half of 1996 were $34.8 million compared with $141.1
million during the first half of 1995. Provision expense during the first
half of 1996 reflected the higher level of net charge offs in the credit card
portfolio, $39.0 million in 1996 compared with $20.6 million in 1995. The
Company recorded in 1996 significant recoveries in commercial loans previously
charged off which partially offset increased credit card charge offs.
The provision for loan losses in the first half of 1995 primarily related to
the assets acquired through the merger of Concord on January 1, 1995 as a
result of management's decision to accelerate the timing of control and
disposal of Concord's exit portfolios.
11.
The Company identified impaired loans as defined by FAS 114 totaling $328
million at June 30, 1996, of which $69 million had a specific loan loss
allowance of $40 million. At December 31, 1995, the Company had identified
impaired loans of $348 million, of which $117 million had a specific loan loss
allowance of $61 million. Interest income is not recognized on loans
identified as impaired.
Derivative Financial Instruments
As principally an end-user of off-balance sheet financial instruments, the
Company uses various derivative financial instruments to manage its overall
interest rate risk and to reduce the risk associated with changes in the
income stream of certain on-balance sheet assets. At June 30, 1996, $21.5
billion notional value of such positions, with an estimated negative fair
value of approximately $32.6 million were outstanding. At December 31, 1995,
$16.8 billion notional value of such positions, with an estimated negative
fair value of $10.7 million were outstanding.
The Company also maintains various derivatives in its trading portfolio to
offset risk associated with changes in market value of certain trading assets,
and to satisfy the foreign currency requirements of retail customers. These
derivatives are carried at fair value. At June 30, 1996, $2.7 billion
notional value of such positions with an estimated negative fair value of $1.4
million were outstanding. At December 31, 1995 $1.0 billion of notional value
of such positions with an estimated negative fair value of $.9 million, were
outstanding.
The Company's credit risk associated with off-balance sheet positions is not
considered material, since almost all derivative contracts are executed with
counterparties affiliated through common ownership. Collateral is maintained
on these positions, the amount of which is consistent with the measurement of
exposure used in the risk based capital ratio calculations under the banking
regulators' guidelines.
Liquidity
The Company maintains a strong liquidity position. Short-term investments and
trading assets were $3.0 billion at June 30, 1996 compared with $2.6 billion
at December 31, 1995. Loans at June 30, 1996 were 64.9% of total assets
compared with 67.0% at December 31, 1995.
Deposits at June 30, 1996 were $17.3 billion, compared with $15.3 billion at
December 31, 1995. Deposits continue to exceed loans and were 117.0% of loans
at June 30, 1996. The Company acquired the East River Savings Bank branch
network and deposits and selected commercial, residential and consumer loans
on June 28, 1996. This transaction increased deposits by $1.2 billion and
loans by $.9 billion.
Short-term borrowings, including repurchase agreements, were $2.6 billion at
June 30, 1996 compared with $2.5 billion at December 31, 1995. Long-term
borrowings of $.7 billion at June 30, 1996 were at the same level as
December 31, 1995.
12.
Capital
Shareholders' equity was $1.8 billion at June 30, 1996 compared with $1.7
billion at December 31, 1995.
Under risk-based capital guidelines, the Company's capital ratios were 10.56%
at the Tier 1 level and 15.76% at the total capital level at June 30, 1996.
These ratios compare with 10.89% at the Tier 1 level and 16.39% at the total
capital level at December 31, 1995.
Under guidelines for leverage ratios, the Company's ratio of Tier 1 capital to
quarterly average total assets was 8.31% at June 30, 1996 compared with 8.36%
at December 31, 1995.
<TABLE>
<CAPTION>
13.
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES* HSBC AMERICAS,INC.
Second Quarter 1996 Second Quarter 1995**
dollars in millions Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------
<S>
Assets
Interest bearing deposits <C> <C> <C> <C> <C> <C>
with banks $ 1,186 $ 15.8 5.36 % $ 614 $ 9.4 6.15 %
Federal funds sold and securities
purchased under resale agreements 635 8.3 5.24 1,042 16.1 6.19
Trading assets 910 13.8 6.07 434 7.7 7.12
Securities:
U.S. Government and
federal agency obligations 3,060 44.0 5.78 1,916 29.7 6.22
Other securities 248 5.7 9.20 223 3.2 5.63
- ------------------------------------------------------------------------------
Total securities 3,308 49.7 6.05 2,139 32.9 6.16
Loans:
Domestic:
Commercial 6,256 129.8 8.34 6,543 143.4 8.79
Consumer 6,606 163.3 9.93 6,002 149.0 9.95
- ------------------------------------------------------------------------------
Total domestic 12,862 293.1 9.16 12,545 292.4 9.35
International 518 8.6 6.70 546 9.1 6.68
- ------------------------------------------------------------------------------
Total loans 13,380 301.7 9.07 13,091 301.5 9.24
- ------------------------------------------------------------------------------
Total earning assets 19,419 $ 389.3 8.06 % 17,320 $ 367.6 8.51 %
- ------------------------------------------------------------------------------
Less - allowance for loan losses (466) (567)
Cash and due from banks 987 870
Other assets 726 1,012
- ------------------------------------------------------------------------------
Total assets $ 20,666 $ 18,635
==============================================================================
Liabilities and Shareholders' Equity
Interest bearing demand
deposits $ 1,631 $ 5.2 1.29 % $ 1,575 $ 7.5 1.93 %
Consumer savings deposits 3,883 29.7 3.08 3,730 30.1 3.24
Other consumer time deposits 3,277 43.5 5.34 3,065 42.0 5.49
Commercial and public savings
and other time deposits 1,937 19.5 4.05 1,671 17.9 4.28
Deposits in foreign offices 1,420 18.3 5.16 1,419 18.3 5.15
- ------------------------------------------------------------------------------
Total time deposits 12,148 116.2 3.85 11,460 115.8 4.05
- ------------------------------------------------------------------------------
Short-term borrowings 2,707 34.1 5.07 1,136 18.7 6.60
Long-term debt 709 11.3 6.41 712 12.8 7.24
- ------------------------------------------------------------------------------
Total funds borrowed 3,416 45.4 5.35 1,848 31.5 6.85
- ------------------------------------------------------------------------------
Total interest bearing
liabilities 15,564 $ 161.6 4.18 % 13,308 $ 147.3 4.44 %
- ------------------------------------------------------------------------------
Interest rate spread 3.88 % 4.07 %
- ------------------------------------------------------------------------------
Demand deposits 3,020 2,970
Other liabilities 285 597
Total shareholders' equity 1,797 1,760
- ------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 20,666 $ 18,635
==============================================================================
Net interest income $ 227.7 $ 220.3
Net yield on average earning assets 4.72 % 5.10 %
Net yield on average total assets 4.43 4.74
- ------------------------------------------------------------------------------
Net interest income/net yield on
average earning assets:
Domestic $ 219.6 4.81 % $ 211.0 5.25 %
International 8.1 3.12 9.3 3.09
==============================================================================
* Interest and rates are presented on a taxable equivalent basis.
** Restated to include the accounts and results of Oleifera Investments,Ltd.
combined with the Company on January 1, 1996.
</TABLE>
<TABLE>
<CAPTION>
14.
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES* HSBC AMERICAS, INC.
Six Months 1996 Six Months 1995**
dollars in millions Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------
<S>
Assets
Interest bearing deposits <C> <C> <C> <C> <C> <C>
with banks $ 1,310 $ 35.8 5.50 % $ 896 $ 27.3 6.14 %
Federal funds sold and securities
purchased under resale agreements 498 13.1 5.29 812 24.4 6.07
Trading assets 856 25.9 6.06 410 14.7 7.17
Securities:
U.S. Government and
federal agency obligations 2,801 80.1 5.75 1,985 60.7 6.15
Other securities 260 11.6 8.95 228 6.5 5.75
- -----------------------------------------------------------------------------
Total securities 3,061 91.7 6.02 2,213 67.2 6.12
Loans:
Domestic:
Commercial 6,336 270.0 8.57 6,553 280.3 8.62
Consumer 6,521 324.7 10.00 5,928 292.8 9.94
- -----------------------------------------------------------------------------
Total domestic 12,857 594.7 9.30 12,481 573.1 9.26
International 517 17.6 6.84 547 19.2 7.09
- -----------------------------------------------------------------------------
Total loans 13,374 612.3 9.21 13,028 592.3 9.17
- -----------------------------------------------------------------------------
Total earning assets 19,099 $ 778.8 8.20 % 17,359 $ 725.9 8.43 %
- -----------------------------------------------------------------------------
Less - allowance for loan losses (471) (555)
Cash and due from banks 995 891
Other assets 731 972
- -----------------------------------------------------------------------------
Total assets $20,354 $ 18,667
=============================================================================
Liabilities and Shareholders' Equity
Interest bearing demand
deposits $ 1,629 $ 10.7 1.32 % $ 1,573 $ 15.1 1.94 %
Consumer savings deposits 3,817 58.8 3.10 3,775 59.7 3.19
Other consumer time deposits 3,254 87.9 5.43 2,965 78.6 5.35
Commercial and public savings
and other time deposits 1,933 39.3 4.09 1,589 32.7 4.14
Deposits in foreign offices 1,392 36.2 5.22 1,340 31.5 4.74
- -----------------------------------------------------------------------------
Total time deposits 12,025 232.9 3.89 11,242 217.6 3.90
- -----------------------------------------------------------------------------
Short-term borrowings 2,564 64.3 5.05 1,334 41.9 6.34
Long-term debt 709 22.9 6.48 713 25.8 7.30
- -----------------------------------------------------------------------------
Total funds borrowed 3,273 87.2 5.36 2,047 67.7 6.67
- -----------------------------------------------------------------------------
Total interest bearing
liabilities 15,298 $ 320.1 4.21 % 13,289 $ 285.3 4.33 %
- -----------------------------------------------------------------------------
Interest rate spread 3.99 % 4.10 %
- -----------------------------------------------------------------------------
Demand deposits 3,000 3,000
Other liabilities 288 650
Total shareholders' equity 1,768 1,728
- -----------------------------------------------------------------------------
Total liabilities and
shareholders' equity $20,354 $ 18,667
=============================================================================
Net interest income $ 458.7 $ 440.6
Net yield on average earning assets 4.83 % 5.12 %
Net yield on average total assets 4.53 4.76
- -----------------------------------------------------------------------------
Net interest income/net yield on average earning assets:
Domestic $ 440.6 5.01 % $ 417.4 5.32 %
International 18.1 2.57 23.2 3.06
=============================================================================
* Interest and rates are presented on a taxable equivalent basis.
** Restated to include the accounts and results of Oleifera Investments, Ltd.
combined with the Company on January 1, 1996.
</TABLE>
15.
Part II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Report on Form 8-K
A current report on Form 8-K dated June 5, 1996 was filed with the
Securities and Exchange Commission on June 6, 1996, reporting that
Oleifera Investments, Ltd. (OIL), was combined with the Company on
January 1, 1996. A Supplemental Annual Report for 1995 was provided
restating financial information to include the accounts and results of
operation of OIL as though the transaction occurred as of the
beginning of the earliest period presented.
16.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HSBC Americas, Inc.
(Registrant)
Date August 9, 1996 /s/ Gerald A. Ronning
Gerald A. Ronning
Executive Vice President & Controller
(On behalf of Registrant and
as Chief Accounting Officer)
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<FISCAL-YEAR-END> DEC-31-1996
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