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 March 31, 1998 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 15 pages.
2.
Part I - FINANCIAL INFORMATION
Page
Item 1 - Financial Statements
Consolidated Balance Sheet
March 31, 1998 and December 31, 1997 3
Consolidated Statement of Income
For The Three Months
Ended March 31, 1998 and 1997 4
Consolidated Statement of Changes in
Shareholders' Equity For The Three Months
Ended March 31, 1998 and 1997 5
Consolidated Statement of Cash Flows
For The Three Months Ended
March 31, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
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3.
HSBC Americas, Inc.
- - -------------------------------------------------------------------------------
C O N S O L I D A T E D B A L A N C E S H E E T
March 31, December 31,
1998 1997
- - -------------------------------------------------------------------------------
in thousands
<S> <C> <C>
Assets
Cash and due from banks $ 1,256,442 $ 928,691
Interest bearing deposits with banks 2,094,431 2,643,010
Federal funds sold and securities
purchased under resale agreements 1,758,449 497,992
Trading assets 885,005 979,454
Securities available for sale 3,732,292 3,998,773
Loans 21,587,229 21,622,232
Less - allowance for credit losses 406,733 409,409
- - -------------------------------------------------------------------------------
Loans, net 21,180,496 21,212,823
Premises and equipment 215,295 225,753
Accrued interest receivable 214,509 233,849
Intangible assets 472,823 481,953
Other assets 359,421 315,275
- - -------------------------------------------------------------------------------
Total assets $ 32,169,163 $ 31,517,573
===============================================================================
Liabilities
Deposits in domestic offices
Noninterest bearing $ 3,797,362 $ 4,195,248
Interest bearing 17,276,885 15,981,866
Interest bearing deposits in foreign offices 3,041,626 2,640,050
- - -------------------------------------------------------------------------------
Total deposits 24,115,873 22,817,164
Short-term borrowings 3,647,725 4,202,175
Interest, taxes and other liabilities 859,513 751,217
Long-term debt 1,499,512 1,708,064
- - -------------------------------------------------------------------------------
Total liabilities 30,122,623 29,478,620
- - -------------------------------------------------------------------------------
Shareholders' equity
Preferred stock - -
Common stock 5 5
Capital surplus 1,804,930 1,804,527
Retained earnings 213,235 205,112
Accumulated other comprehensive income 28,370 29,309
- - -------------------------------------------------------------------------------
Total shareholders' equity 2,046,540 2,038,953
- - -------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 32,169,163 $ 31,517,573
===============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
<CAPTION>
4.
HSBC Americas, Inc.
- - ------------------------------------------------------------------------------
C O N S O L I D A T E D S T A T E M E N T O F I N C O M E
Three months ended March 31,
1998 1997
- - ------------------------------------------------------------------------------
in thousands
<S> <C> <C>
Interest income
Loans $ 447,532 $ 384,268
Securities 58,949 48,049
Trading assets 14,338 14,094
Deposits with banks 29,641 17,126
Federal funds sold and securities purchased under
resale agreements 12,313 14,756
- - ------------------------------------------------------------------------------
Total interest income 562,773 478,293
- - ------------------------------------------------------------------------------
Interest expense
Deposits
In domestic offices 159,718 121,196
In foreign offices 37,202 18,328
Short-term borrowings 50,816 32,243
Long-term debt 26,667 21,572
- - ------------------------------------------------------------------------------
Total interest expense 274,403 193,339
- - ------------------------------------------------------------------------------
Net interest income 288,370 284,954
Provision for credit losses 19,500 18,400
- - ------------------------------------------------------------------------------
Net interest income, after
provision for credit losses 268,870 266,554
- - ------------------------------------------------------------------------------
Other operating income
Trust income 11,044 10,523
Service charges 27,836 22,545
Mortgage servicing income 7,071 4,976
Other fees and commissions 36,579 30,433
Trading revenues 1,389 1,406
Other income 29,365 10,142
- - ------------------------------------------------------------------------------
Total other operating income 113,284 80,025
- - ------------------------------------------------------------------------------
382,154 346,579
- - ------------------------------------------------------------------------------
Other operating expenses
Salaries and employee benefits 100,961 92,066
Net occupancy expense 22,281 22,621
Other expenses 69,489 68,051
- - ------------------------------------------------------------------------------
Total other operating expenses 192,731 182,738
- - ------------------------------------------------------------------------------
Income before taxes 189,423 163,841
Applicable income tax expense 66,300 49,300
- - ------------------------------------------------------------------------------
Net income $ 123,123 $ 114,541
==============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
<CAPTION>
5.
HSBC Americas, Inc.
- - ------------------------------------------------------------------------------------------
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S
I N S H A R E H O L D E R S' E Q U I T Y
Three months ended March 31,
1998 1997
- - ------------------------------------------------------------------------------------------
Comprehensive Comprehensive
Total Income Total Income
- - ------------------------------------------------------------------------------------------
in thousands
<S> <C> <C> <C> <C>
Preferred stock
Balance, January 1, $ - * $ 98,063
Redemption of stock - (98,063)
- - --------------------------------------------------- ----------
Balance, March 31, - -
- - --------------------------------------------------- ----------
Common stock
Balance, January 1, 5 5
- - --------------------------------------------------- ----------
Balance, March 31, 5 5
- - --------------------------------------------------- ----------
Capital surplus
Balance, January 1, 1,804,527 1,803,427
Capital contribution from parent 403 152
- - --------------------------------------------------- ----------
Balance, March 31, 1,804,930 1,803,579
- - --------------------------------------------------- ----------
Retained earnings
Balance, January 1, 205,112 60,630
Net income 123,123 $ 123,123 114,541 $ 114,541
Cash dividends declared (115,000) (1,468)
- - --------------------------------------------------- ----------
Balance, March 31, 213,235 173,703
- - --------------------------------------------------- ----------
Accumulated other comprehensive income
Balance, January 1, 29,309 10,852
Unrealized losses on securities
available for sale, net of taxes and
reclassification adjustments (Note 5) (939) (939) (17,290) (17,290)
---------- ----------
Comprehensive income $ 122,184 $ 97,251
- - --------------------------------------------------- ========== ---------- ==========
Balance, March 31, 28,370 (6,438)
- - --------------------------------------------------- ----------
Total shareholders' equity, March 31, $ 2,046,540 $ 1,970,849
=================================================== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
* $100 aggregate par value
</TABLE>
<TABLE>
<CAPTION>
6.
HSBC Americas, Inc.
------------------------------------------------------------------------------------
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
Three months ended March 31,
1998 1997
------------------------------------------------------------------------------------
in thousands
<S> <C> <C>
Cash flows from operating activities
Net income $ 123,123 $ 114,541
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation, amortization and deferred taxes 14,090 (6,769)
Provision for loan losses 19,500 18,400
Net change in other accrual accounts 134,213 67,336
Net change in loans held for sale (345,020) (133,671)
Net change in trading assets 82,681 (109,207)
Other, net (21,767) (3,897)
------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 6,820 (53,267)
------------------------------------------------------------------------------------
Cash flows from investing activities
Net change in interest bearing deposits with banks 548,579 (351,260)
Net change in short-term investments (1,260,457) 39,444
Purchases of securities (455,697) (226,159)
Sales of securities 196,241 70,652
Maturities of securities 529,092 111,564
Net change in credit card receivables 96,691 120,786
Net change in other short-term loans (42,421) (12,617)
Net originations and maturities of long-term loans 329,504 (617,610)
Cash used in acquisitions, net of cash acquired - (607,388)
Other, net (31,558) (168,976)
------------------------------------------------------------------------------------
Net cash used by investing activities (90,026) (1,641,564)
------------------------------------------------------------------------------------
Cash flows from financing activities
Net change in deposits 1,298,709 118,589
Net change in short-term borrowings (554,450) 1,879,782
Repayment of long-term debt (208,302) (145,000)
Redemption of preferred stock - (98,063)
Dividends paid (125,000) (1,468)
------------------------------------------------------------------------------------
Net cash provided by financing activities 410,957 1,753,840
------------------------------------------------------------------------------------
Net change in cash and due from banks 327,751 59,009
Cash and due from banks at beginning of period 928,691 967,249
------------------------------------------------------------------------------------
Cash and due from banks at end of period $ 1,256,442 $ 1,026,258
====================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
7.
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accounting and reporting policies of HSBC Americas, Inc. (the Company) and
its subsidiaries including its principal subsidiary, Marine Midland Bank,
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 1997 Annual Report on Form 10-K.
2. Derivative Financial Instruments
The Company uses a variety of derivative instruments to manage interest rate
risk. These derivative instruments follow either the synthetic alteration or
hedge model of accounting. Interest rate risk is managed by achieving a mix
of derivative instruments and balance sheet assets and liabilities deemed
consistent and desirable given expectations of interest rate movements,
balance sheet changes and risk management strategies.
Under the synthetic alteration accounting model, the related derivative
contract is linked to specific individual or pools of similar balance sheet
assets or liabilities by the notional and interest rate risk characteristics
of the associated instruments.
Under the hedge accounting model, the related derivative likewise is linked to
specific individual or pools of similar balance sheet assets or liabilities by
the notional and interest rate risk characteristics of the associated
instruments. In addition, the asset, liability or event that the derivative
is associated with exposes the enterprise to price or interest rate risk and
the related derivative contract effectively reduces that risk. Accordingly,
there must be high correlation between the changes in market value of the
derivative and the fair value or cash flows associated with the hedged item so
that it is probable that the results of the future will substantially offset
the effects of price or interest rate movement on the hedged item. To the
extent these criteria are satisfied, the derivative contract is accounted for
on a basis consistent with that of the underlying hedged item.
For a derivative financial instrument synthetically altering an asset or
liability accounted for on an historical cost basis, accrual based accounting
is applied. Specifically, income or expense is recognized and accrued to the
next settlement date in accordance with the contractual terms of the agreement
as an adjustment to the income or expense associated with the underlying
balance sheet position. The derivative position would not be marked to market.
Derivative instruments that are entered into for the purpose of generating
trading revenues are accounted for on a mark to market basis. Associated
income and expense is recognized as trading revenue. For derivatives linked
to securities classified as available for sale, the mark to market is
considered a component of the market value of the related securities and is
recorded through shareholders' equity consistent with the valuation of the
assets. Derivatives used to limit the potential for loss associated with the
valuation of mortgage servicing rights are also considered in the valuation of
the related asset.
8.
Derivatives that do not qualify as synthetic alterations or hedges at
inception, or that cease to qualify as synthetic alterations or hedges, are
marked to market through earnings. Derivatives that are effectively cancelled
are marked to market prospectively with any gains or losses at that time being
deferred and amortized to earnings over the remaining life of the derivative.
If the altered or hedged position is liquidated the gain or loss, including
any deferred amount is recognized in earnings.
3. Pledged Financial Instruments
At March 31, 1998, securities, loans and other assets carried at $4.1 billion
were pledged as collateral for borrowings, to secure public and trust deposits
and for other purposes.
4. Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
Effective January 1, 1997, the Company generally adopted the provisions of
Statement of Financial Accounting Standards No. 125, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities (FAS
125), prospectively, and adopted certain other of its provisions on January 1,
1998, as permitted by FAS 125. FAS 125 primarily establishes criteria based on
legal control to determine whether a transfer of a financial asset is a sale
or a secured borrowing. The adoption of the provisions of FAS 125 including
those provisions where adoption was delayed until January 1, 1998, did not
have a material effect on the financial position or results of operations of
the Company.
5. Comprehensive Income
Effective January 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (FAS
130). FAS 130 establishes standards for reporting the components of
comprehensive income and requires that all such components be included in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income includes net income as well as
certain items that are reported directly within a separate component of
shareholders' equity. The Company has reported comprehensive income in the
consolidated statement of changes in shareholders' equity. The disclosure
requirements of FAS 130 have no impact on the financial position or results of
operation of the Company.
Accumulated other comprehensive income for the Company relates to unrealized
losses on securities available for sale summarized as follows:
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9.
Before Tax Tax Expense Net of Tax
Amount (Benefit) Amount
---------- ----------- ----------
(in millions)
<S> <C> <C> <C>
Three Months Ended March 31, 1998
Unrealized holding gains
arising during the period $ 3.2 $ 1.1 $ 2.1
Less: reclassification adjustments
for gains realized in net income
during the period 4.6 1.6 3.0
----- ---- -----
Net other comprehensive income
(loss) $ (1.4) $ (.5) $ (.9)
===== ==== =====
Three Months Ended March 31, 1997
Unrealized holding losses
arising during the period $(22.0) $(7.6) $(14.4)
Less: reclassification adjustments
for gains realized in net income
during the period 4.5 1.6 2.9
----- ---- -----
Net other comprehensive income
(loss) $(26.5) $(9.2) $(17.3)
===== ==== =====
</TABLE>
6. New Accounting Standards
In June 1997, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures About Segments of an
Enterprise and Related Information (FAS 131). The provisions of FAS 131
require disclosure of financial and descriptive information about an entity's
reportable operating segments. Segments are defined as components of an
entity that engage in business activities that generate revenues and expenses,
whose operating results are reviewed by management in the determination of
resource allocation and performance and for which discrete financial
information is available. FAS 131 is effective for the first annual period
beginning in 1998. The Company is currently assessing the manner in which it
will disclose the required information.
In March 1998, the AICPA issued Statement of Position 98-1, Accounting for the
Cost of Computer Software Developed or Obtained for Internal Use (SOP 98-1).
The provisions of SOP 98-1 require the capitalization of eligible costs of
specified activities related to computer software developed or obtained for
internal use and becomes effective for fiscal year 1999. The Company is
assessing how the capitalization of these costs, which are generally expensed,
will affect its financial position or results of operation.
10.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
HSBC Americas, Inc. (the Company) reported first quarter 1998 net income of
$123.1 million, compared with $114.5 million in the first quarter of 1997.
Results for the first quarter of 1998 reflected the impact of core business
growth and an entire quarter of the fully-integrated First Federal Savings and
Loan Association of Rochester (First Federal). First Federal, acquired on
March 1, 1997, had assets of $7.0 billion and deposits of $4.3 billion and
significantly increased the Company's balance sheet while positively impacting
earnings.
Net Interest Income
Net interest income for the first quarter of 1998 was $288.4 million compared
with $285.0 million for the first quarter of 1997.
Interest income of $562.8 million in the first quarter of 1998 was 17.7%
higher than the first quarter of 1997. Average earning assets of $29.2
billion in the first quarter of 1998 were $5.8 billion higher than a year ago
and the average rate earned on earning assets was 7.83% compared with 8.31% a
year ago. Primarily as a result of the acquisition of First Federal, average
residential mortgages increased to $10.0 billion (rate earned 6.93%) in the
first quarter of 1998 compared with $5.5 billion (rate earned 7.56%) in the
same quarter last year.
Interest expense for the first quarter of 1998 was $274.4 million,
representing a 41.9% increase over the first quarter of 1997. Average
interest bearing liabilities for the first quarter of 1998 were $24.7 billion,
compared with $18.7 billion a year ago. The average rate paid on interest
bearing liabilities was 4.51% compared with 4.20% a year ago. The increase in
the rate paid on interest bearing liabilities was due to the acquisition of
First Federal that had a greater concentration of its deposits in higher cost
products and wholesale liabilities.
The taxable equivalent net yield on average total assets for the current
year's first quarter was 3.77% compared with 4.65% in the 1997 first quarter.
The net yields on average assets have declined primarily as a result of the
First Federal acquisition on March 1, 1997. Savings and loan associations,
such as First Federal, generally have narrower interest margins than
commercial banking institutions.
Other Operating Income
Total other operating income was $113.3 million in the first quarter of 1998,
compared with $80.0 million in the 1997 first quarter. Fee income categories
of trust, service charges and other fees and commissions were up 20.5% during
the first quarter of 1998 compared with the first quarter of 1997, as a result
of recent acquisitions and improved product marketing. Also, other operating
income included an $11 million gain on the sale of a $50 million credit card
portfolio in the 1998 period.
Other Operating Expenses
Other operating expenses were $192.7 million in the 1998 first quarter
compared with $182.7 million for the 1997 first quarter. The minimal growth
in operating expenses, when considering the acquisition, resulted from the
successful integration and company-wide expense discipline. The cost: income
ratio was 48.0% in the first quarter of 1998 compared with 50.1% for the first
quarter of 1997.
Income Taxes
The effective tax rate was 35% in the first quarter of 1998 compared with 30%
in the same quarter of 1997. Tax expense in the first quarter of 1997
benefited favorably from the recognition of deferred losses associated with
prior acquisitions of related entities.
11.
The deferred tax asset at March 31, 1998 was $50 million, net of valuation
reserve of $127 million, compared with $40 million, net of valuation reserve
of $131 million at December 31, 1997.
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<CAPTION>
Asset Quality
The following table provides a summary of the allowance for credit losses and
nonaccruing loans:
3 Months 3 Months Year
Ended Ended Ended
3/31/98 3/31/97 12/31/97
-------- -------- --------
(in millions)
<S> <C> <C> <C>
Allowance for Credit Losses
Balance at beginning
of period $409.4 $418.2 $418.2
Allowance related to
acquired companies - 40.3 40.3
Provision charged to income 19.5 18.4 87.4
Net charge offs 22.2 33.4 136.5
----- ----- ------
Balance at end of period $406.7 $443.5 $409.4
===== ===== =====
March 31, December 31, March 31,
1998 1997 1997
-------- ----------- --------
(in millions)
Nonaccruing Loans
Balance at end of period $314.0 $311.1 $342.0
As a percent of loans
outstanding 1.45% 1.44% 1.61%
Nonperforming Loans and Assets *
Balance at end of period $330.7 $322.8 $360.6
As a percent of total assets 1.03% 1.02% 1.12%
Allowance Ratios
Allowance for credit losses
as a percent of:
Loans 1.88% 1.89% 2.09%
Nonaccruing loans 129.52 131.62 129.70
* Includes nonaccruing loans, other real estate and other owned assets.
</TABLE>
Provisions for credit losses were $19.5 million in the first quarter of 1998
compared with $18.4 million in the first quarter of 1997. Although still high
by historical standards, credit card delinquencies declined to 3.38% of credit
card outstandings at March 31, 1998 compared with 3.77% at December 31, 1997
and 4.84% at March 31, 1997. The Company sold a $325 million credit card
portfolio in April 1998 at a premium. This portfolio maintained significantly
lower delinquency rates in comparison to the remaining credit card portfolio.
The delinquency rate for the credit card portfolio, excluding this sold
portfolio was 4.02% at March 31, 1998, compared with 4.57% at December 31,
1997 and 5.63% at March 31, 1997. Net charge offs in the credit card
portfolio were $25.0 million and $29.4 million in the first quarters of 1998
and 1997, respectively. This high level has partially been offset by
commercial loan net recoveries of $6.8 million in the first quarter of 1998
compared with net recoveries of $.5 million in the first quarter of 1997.
The Company identified impaired loans as defined by FAS 114 totaling $173
million at March 31, 1998, of which $57 million had a specific credit loss
allowance of $21 million. At December 31, 1997, impaired loans totaled
$153 million of which $54 million had a specific credit loss allowance of $21
million.
12.
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 and liabilities. At March
31, 1998, $10.5 billion notional value of such positions, with an estimated
positive fair value of $66.6 million were outstanding. At December 31, 1997,
$12.5 billion notional value of such positions, with an estimated positive
fair value of $64.0 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 March 31, 1998, $1.0 billion
notional value of such positions with an estimated negative fair value of $.8
million were outstanding. At December 31, 1997, $1.2 billion of notional
value of such positions with an estimated negative fair value of $.2 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. The size and stability of
its deposit base are complemented by its maintenance of a surplus borrowing
capacity in the money markets, including the ability to issue additional
commercial paper and access unused lines of credit of $300 million at March
31, 1998. Wholesale liabilities were $7.2 billion, approximately the same
level as December 31, 1997. The Company also has strong liquidity as a result
of a high level of immediately saleable or pledgeable assets including its
securities available for sale portfolio, mortgages and other assets.
Capital
Shareholders' equity was $2.0 billion at March 31, 1998, the same as at
December 31, 1997.
Under risk-based capital guidelines, the Company's capital ratios were 9.18%
at the Tier 1 level and 13.12% at the total capital level at March 31, 1998.
These ratios compared with 9.36% at the Tier 1 level and 13.38% at the total
capital level at December 31, 1997. Tier 1 and total capital includes $400
million in guaranteed mandatorily redeemable preferred securities issued by
subsidiaries of the Company. These securities are classified as long-term
debt on the consolidated balance sheet.
Under guidelines for leverage ratios, the Company's ratio of Tier 1 capital to
quarterly average total assets was 6.71% at March 31, 1998 compared with 6.68%
at December 31, 1997.
<TABLE>
<CAPTION>
13.
HSBC Americas, Inc.
- - -----------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES*
First Quarter 1998 First Quarter 1997
Balance Interest Rate Balance Interest Rate
- - -----------------------------------------------------------------------------
in millions
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest bearing deposits
with banks $ 2,007 $ 29.6 5.99 % $ 1,221 $ 17.1 5.69 %
Federal funds sold and
securities purchased under
resale agreements 885 12.3 5.64 1,152 14.8 5.20
Trading assets 942 14.4 6.10 968 14.1 5.83
Securities 3,870 59.0 6.18 3,161 48.1 6.18
Loans
Domestic
Commercial 7,995 178.6 9.06 7,272 168.9 9.42
Consumer
Residential mortgages 9,967 172.8 6.93 5,513 104.2 7.56
Other consumer 2,916 85.7 11.92 3,339 99.8 12.11
- - -----------------------------------------------------------------------------
Total domestic 20,878 437.1 8.49 16,124 372.9 9.38
International 592 11.0 7.56 751 12.1 6.53
- - -----------------------------------------------------------------------------
Total loans 21,470 448.1 8.46 16,875 385.0 9.25
- - -----------------------------------------------------------------------------
Total earning assets 29,174 $563.4 7.83 % 23,377 $479.1 8.31 %
- - -----------------------------------------------------------------------------
Allowance for credit losses (408) (419)
Cash and due from banks 1,113 957
Other assets 1,198 994
- - -----------------------------------------------------------------------------
Total assets $31,077 $24,909
=============================================================================
Liabilities and Shareholders' Equity
Interest bearing demand
deposits $ 2,086 $ 5.9 1.14 % $ 1,841 $ 5.3 1.18 %
Consumer savings deposits 5,514 36.8 2.71 4,687 35.8 3.09
Other consumer time deposits 6,285 87.8 5.66 4,862 61.4 5.12
Commercial, public savings
and other time deposits 2,750 29.3 4.31 1,900 18.7 3.99
Deposits in foreign offices,
primarily banks 2,823 37.2 5.35 1,499 18.3 4.96
- - -----------------------------------------------------------------------------
Total interest bearing deposits 19,458 197.0 4.10 14,789 139.5 3.83
- - -----------------------------------------------------------------------------
Federal funds purchased and
securities sold under
repurchase agreements 1,134 16.0 5.74 1,307 16.9 5.26
Other short-term borrowings 2,444 34.8 5.77 1,198 15.3 5.18
Long-term debt 1,615 26.6 6.70 1,362 21.6 6.42
- - -----------------------------------------------------------------------------
Total interest bearing
liabilities 24,651 $274.4 4.51 % 18,656 $193.3 4.20 %
- - -----------------------------------------------------------------------------
Interest rate spread 3.32 % 4.11 %
- - -----------------------------------------------------------------------------
Noninterest bearing deposits 3,721 3,804
Other liabilities 613 423
Shareholders' equity 2,092 2,026
- - -----------------------------------------------------------------------------
Total liabilities and
shareholders' equity $31,077 $24,909
=============================================================================
Average earning assets
- Domestic $26,941 $21,257
- International 2,233 2,120
- - -----------------------------------------------------------------------------
- Total $29,174 $23,377
- - -----------------------------------------------------------------------------
Net interest revenue
- Domestic $275.3 $268.9
- International 13.7 16.9
- - -----------------------------------------------------------------------------
- Total $289.0 $285.8
- - -----------------------------------------------------------------------------
Net yield on average earning assets
- Domestic 4.15 % 5.13 %
- International 2.48 3.24
- Total 4.02 4.96
- - -----------------------------------------------------------------------------
Net yield on average total assets 3.77 4.65
=============================================================================
* Interest and rates are presented on a taxable equivalent basis.
</TABLE>
14.
Part II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a)Exhibits
None
(b)Report on Form 8-K
None
15.
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: May 13, 1998 /s/ Gerald A. Ronning
Gerald A. Ronning
Executive Vice President & Controller
(On behalf of Registrant and
as Chief Accounting Officer)
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