SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly Period Ended June 30, 1995.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-7436
REPUBLIC NEW YORK CORPORATION
(Exact name of registrant specified in its charter)
Maryland 13-2764867
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
452 Fifth Avenue, New York, New York 10018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 525-6100
Not Applicable
Former name, former address and former fiscal year,if changed since last report
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 (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No __
The number of shares outstanding of the registrant's common stock was
56,096,186 at July 31, 1995.
<PAGE>
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Statements of Condition - Unaudited
June 30, 1995 and December 31, 1994 2
Consolidated Statements of Income - Unaudited
Six-Months and Three-Months Ended June 30,
1995 and 1994 3
Consolidated Statements of Cash Flows - Unaudited
Six-Months Ended June 30, 1995 and 1994 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis 6-12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 14
The information contained in the financial statements furnished in
this report is unaudited. However, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the results of operations for the interim periods presented,
have been included.
-1-
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
UNAUDITED
(Dollars in thousands)
June 30, December 31,
Assets 1995 1994
------ ------------- ------------
<S> <C> <C>
Cash and due from banks $ 671,959 $ 867,242
Interest-bearing deposits with banks 7,287,972 10,242,061
Precious metals 1,542,125 1,456,269
Securities held to maturity (approximate market
value of $5,878,509 in 1995 and
$5,614,248 in 1994) 5,853,028 5,887,672
Securities available for sale (at approximate
market value) 6,735,506 5,552,056
------------- --------------
Total investment securities 12,588,534 11,439,728
Trading account assets 3,983,185 2,543,637
Federal funds sold and securities purchased
under resale agreements 1,824,942 1,123,925
Loans (net of unearned income of $40,244
in 1995 and $47,109 in 1994) 9,652,814 8,913,490
Allowance for possible loan losses (314,330) (319,220)
------------- -------------
Loans, net 9,338,484 8,594,270
Customers' liability on acceptances 1,182,141 1,514,461
Accounts receivable and accrued interest 1,730,761 1,797,491
Investment in affiliate 642,574 607,818
Premises and equipment 440,279 428,017
Other assets 482,736 452,986
------------- --------------
Total assets $41,715,692 $ 41,067,905
============= ==============
Liabilities and Stockholders' Equity
Noninterest-bearing deposits:
In domestic offices $ 1,547,066 $ 1,701,667
In foreign offices 128,878 114,503
Interest-bearing deposits:
In domestic offices 8,601,099 8,534,562
In foreign offices 13,657,501 12,375,270
-------------- --------------
Total deposits 23,934,544 22,726,002
Trading account liabilities 3,260,690 2,087,594
Short-term borrowings 4,075,414 4,969,394
Acceptances outstanding 1,182,951 1,517,675
Accounts payable and accrued expenses 1,717,993 1,325,953
Due to factored clients 628,184 680,010
Other liabilities 182,206 134,792
Long-term debt 1,547,594 2,580,831
Subordinated long-term debt and perpetual
capital notes 2,406,401 2,406,266
Stockholders' equity (notes 1 and 2):
Cumulative preferred stock, no par value
11,952,500 shares outstanding in 1995 and
8,952,500 in 1994 747,500 672,500
Common stock, $5 par value
150,000,000 shares authorized; 52,577,585
shares outstanding in 1995 and 52,621,155
in 1994 262,888 263,106
Surplus 425,551 437,653
Retained earnings 1,513,025 1,457,609
Net unrealized depreciation on securities
available for sale, net of taxes (169,249) (191,480)
-------------- --------------
Total stockholders' equity 2,779,715 2,639,388
-------------- --------------
Total liabilities and stockholders' equity $ 41,715,692 $ 41,067,905
============== ==============
<FN>
<F1> See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(In thousands except per share data)
Six Months Ended Three Months Ended
June 30, June 30,
----------------------------- -------------------------
1995 1994 1995 1994
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 362,233 $ 337,092 $ 185,320 $ 171,786
Interest on deposits with banks 281,312 127,410 131,563 74,088
Interest and dividends on investment securities:
Taxable 442,447 440,376 214,838 221,933
Exempt from federal income taxes 46,396 36,080 22,215 18,581
Interest on trading account assets 23,925 32,556 11,041 14,109
Interest on federal funds sold and securities
purchased under resale agreements 39,022 27,131 18,530 15,819
-------------- ------------- ----------- -----------
Total interest income 1,195,335 1,000,645 583,507 516,316
-------------- ------------- ----------- -----------
Interest expense:
Interest on deposits 555,347 350,361 283,046 182,334
Interest on short-term borrowings 96,496 107,919 44,734 54,705
Interest on long-term debt 138,303 132,143 66,501 67,241
-------------- ------------- ------------ ------------
Total interest expense 790,146 590,423 394,281 304,280
-------------- ------------- ------------ ------------
Net interest income 405,189 410,222 189,226 212,036
Provision for loan losses 6,000 13,000 3,000 3,000
-------------- ------------- ------------ ------------
Net interest income after provision for
loan losses 399,189 397,222 186,226 209,036
-------------- ------------- ------------ ------------
Other operating income:
Income from precious metals 27,763 24,393 12,347 11,212
Foreign exchange trading income 60,239 43,931 38,312 21,599
Trading account profits (losses) and commissions 24,706 10,582 15,517 (2,661)
Investment securities gains, net 4,967 13,057 3,288 9,969
Net gain on loans sold or held for sale 767 563 - 1,063
Commission income 28,287 32,269 13,042 14,769
Equity in earnings of affiliate 38,482 39,656 19,294 18,546
Other income 33,871 33,501 18,139 18,910
-------------- ------------- ------------ ------------
Total other operating income 219,082 197,952 119,939 93,407
-------------- ------------- ------------ ------------
Other operating expenses:
Salaries 119,660 115,616 58,152 58,825
Employee benefits 78,041 73,773 37,825 34,961
Occupancy, net 29,098 26,937 14,593 12,951
Restructuring and related charges (note 3) 120,000 17,000 120,000 17,000
Other expenses (note 4) 143,463 133,762 67,091 67,423
-------------- ------------- ------------ -------------
Total other operating expenses 490,262 367,088 297,661 191,160
-------------- ------------- ------------ -------------
Income before income taxes 128,009 228,086 8,504 111,283
Income tax expense(benefit) 29,405 68,879 (2,587) 31,855
-------------- ------------- ------------ -------------
Net income $ 98,604 $ 159,207 $ 11,091 $ 79,428
============== ============= ============ =============
Net income applicable to common stock $ 78,379 $ 143,790 $ 1,036 $ 71,095
============== ============= ============ =============
Net income per common share:
Primary $1.50 $2.73 $0.02 $1.35
Fully diluted $1.50 $2.65 $0.02 $1.31
Average common shares outstanding:
Primary 52,327 52,595 52,352 52,633
Fully diluted 56,094 56,415 56,114 56,432
<FN>
<F1> See accompanying notes to consolidated financial statements.
-3-
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)
Six Months Ended
June 30,
-----------------------------
1995 1994
------------- ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 98,604 $ 159,207
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization, net 32,049 31,350
Provision for loan losses 6,000 13,000
Investment securities gains, net (4,967) (13,057)
Net gain on loans sold or held for sale (767) (563)
Restructuring and related charges 107,298 16,395
Equity in earnings of affiliate (38,482) (39,656)
Net (increase) decrease in trading accounts (266,452) 180,564
Net decrease in accounts receivable and
accrued interest 30,850 307,440
Net increase (decrease) in accounts payable and
accrued expenses 312,059 (920,352)
Other, net (55,781) 25,218
------------- ------------
Net cash provided (used) by operating activities 220,411 (240,454)
------------- ------------
Cash Flows From Investing Activities:
Net decrease (increase) in interest-bearing deposits
with banks 2,954,089 (2,548,987)
Net increase in precious metals (85,856) (299,606)
Net (increase) decrease in federal funds sold and
securities purchased under resale agreements (701,017) 655,276
Net (increase) decrease in short-term investments (11,187) 41,413
Purchases of securities held to maturity (43,030) (22,870)
Proceeds from maturities of securities held to maturity 238,833 115,683
Purchases of securities available for sale (2,178,453) (2,800,204)
Proceeds from sales of securities available for sale 572,726 2,954,234
Proceeds from maturities of securities available for sale 471,054 1,748,152
Net increase in loans (908,600) (325,550)
Investment in affiliate 28,133 23,805
------------ ------------
Net cash provided (used) by investing activities 336,692 (458,654)
------------ ------------
Cash Flows From Financing Activities:
Net increase (decrease) in deposits 1,208,715 (343,556)
Net (decrease) increase in short-term borrowings (893,980) 800,805
Net decrease in due to factored clients (51,826) (13,825)
Proceeds from issuance of long-term debt - 297,802
Repayment of long-term debt (1,032,750) (279,900)
Proceeds from issuance of subordinated long-term debt - 200,000
Repayment of subordinated long-term debt - (66,000)
Net proceeds from issuance of cumulative preferred stock 72,563 146,062
Cash dividends paid (56,281) (45,989)
Other, net 3,210 1,804
------------- -----------
Net cash provided (used) by financing activities (750,349) 697,203
Effect of exchange rate changes on cash
and due from banks (2,037) (14,131)
------------ ------------
Net decrease in cash and due from banks (195,283) (16,036)
Cash and due from banks at beginning of period 867,242 636,633
------------ ------------
Cash and due from banks at end of period $ 671,959 $ 620,597
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 790,146 $ 527,986
Income taxes 61,185 71,419
Transfers from securities available for sale
to securities held to maturity - 3,357,161
<FN>
<F1> See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
-4-
<PAGE>
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COVERING THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
1. On June 23, 1995, the Corporation called for redemption on July 24, 1995 all
of the outstanding shares of its $3.375 Cumulative Convertible Preferred
Stock.
At the conclusion of the redemption period on July 24, 1995, holders of the
preferred stock tendered an aggregate of 42,596 shares at the redemption
price of $52.025 plus accrued and unpaid dividends of $0.21563 per share.
Holders of 3,406,093 shares of preferred stock elected to convert, at the
conversion ratio of 1.03448, into an aggregate of 3,523,369 shares of common
stock. Fractional shares of common stock and shares not tendered received
cash.
2. On June 26, 1995, the Corporation sold, in a public offering, 3,000,000
shares of $1.8125 Cumulative Preferred Stock ($25 Stated Value) (the
"Preferred Stock") with an aggregate stated value of $75 million. The
Preferred Stock may be redeemed, at the option of the Corporation, in whole
or in part, at any time or from time to time, on or after July 1, 2000 at
$25 per share, plus, in each case, dividends accrued and unpaid to the
redemption date. The net proceeds received have been used for general
corporate purposes including payment to holders of the Cumulative
Convertible Preferred Stock who elected to redeem.
3. In the second quarter of 1995, the Corporation recorded a $120 million
provision for restructuring and related charges in connection with the
implementation of Project Excellence Plus, the Corporation's company-wide
project to improve operating efficiencies and reduce costs. The components
of this provision are as follows:
(In thousands)
Salaries and employee benefits $ 75,000
Occupancy, net 10,000
Other expenses 35,000
------------
Total restructuring and related charges provision $ 120,000
============
The following table summarizes the activity in the accrual of restructuring
and related charges during the second quarter of 1995:
(In thousands)
Provision for restructuring and related charges $ 120,000
Payments (12,702)
Non-cash writedowns (7,733)
------------
Ending accrual at June 30, 1995 $ 99,565
============
4. On January 1, 1995, the Corporation adopted SFAS No. 116, "Accounting for
Contributions Received and Contributions Made." This SFAS requires that
pledges to make charitable contributions be recognized in the period that
funds are unconditionally pledged. This change in the method of accounting
for charitable contributions resulted in a one-time expense in the first
quarter of 1995 of $7.5 million, included in other operating expenses.
5. Certain amounts from the prior year have been reclassified to conform with
1995 classifications.
-5-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Management's discussion and analysis of the summary of operations should be
read in conjunction with the consolidated financial statements (unaudited)
and notes shown elsewhere in this Report. In the following discussion, the
interest income earned on tax exempt obligations has been adjusted (increased)
to a fully-taxable equivalent basis. The rate used for this adjustment was
approximately 44% in 1995 and 1994. This tax equivalent adjustment permits all
interest income and net interest income to be analyzed on a comparable basis.
The following table presents a comparative summary of the increases (decreases)
in income and expense for the second quarter and six months ended June 30, 1995
compared to the corresponding periods of 1994.
<TABLE>
<CAPTION>
Increase (Decrease)
-------------------------------------------
2nd Qtr. 1995 vs. Six Months 1995 vs.
2nd Qtr. 1994 Six Months 1994
-------------------- ---------------------
Amount Percent Amount Percent
----------- -------- ---------- ---------
<S> <C> <C> <C> <C>
(Dollars in thousands)
Interest income $ 67,437 12.8 $ 196,495 19.3
Interest expense 90,001 29.6 199,723 33.8
----------- ----------
Net interest income (22,564) (10.2) (3,228) (0.8)
Provision for loan losses - - (7,000) (53.8)
----------- ----------
Net interest income after
provision for loan losses (22,564) (10.4) 3,772 0.9
Other operating income 26,532 28.4 21,130 10.7
Other operating expenses 106,501 55.7 123,174 33.6
----------- ----------
Income before income taxes (102,533) (85.5) (98,272) (40.1)
----------- ----------
Applicable income taxes (34,442) (108.1) (39,474) (57.3)
Tax equivalent adjustment 246 2.9 1,805 10.7
----------- ----------
Total applicable income taxes (34,196) (84.5) (37,669) (43.9)
----------- ----------
Net income $ (68,337) (86.0) $ (60,603) (38.1)
=========== ======== ========== ======
Net income applicable to
common stock $ (70,059) (98.5) $ (65,411) (45.5)
=========== ======== ========== ======
</TABLE>
Net Interest Income - on a fully-taxable equivalent basis amounted to $198.1
million in the second quarter of 1995, compared to $220.7 million in the second
quarter of 1994 and $225.8 million in the first quarter of 1995. For the first
six months of 1995, net interest income totaled $423.9 million compared to
$427.1 million in the six month period of 1994. The decline in net interest
income in the second quarter of 1995 compared to both the second quarter of
1994 and the first quarter of 1995 is partially attributable to action taken
in the second quarter of 1994 when the Corporation reduced its interest rate
sensitivity. Also as is shown in the tables on pages 7 and 8, a
-6-
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, NET INTEREST DIFFERENTIAL,
AVERAGE RATES EARNED AND PAID
UNAUDITED
(Fully taxable equivalent basis)
(Dollars in thousands)
Quarter Ended June 30,
------------------------------------------------------------------------------------
1995 1994
----------------------------------------- ----------------------------------------
Average Average
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
------------- ----------- --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits with banks $ 7,256,147 $ 131,563 7.27 % $ 6,670,388 $ 74,088 4.46 %
Investment securities:(1)
Taxable 11,037,959 214,838 7.81 12,619,588 221,933 7.05
Exempt from federal income taxes 1,249,754 31,088 9.98 1,178,579 27,208 9.26
------------ ----------- ------------ -----------
Total investment securities 12,287,713 245,926 8.03 13,798,167 249,141 7.24
Trading account assets(2) 795,843 11,041 5.56 1,054,558 14,109 5.37
Federal funds sold and securities
purchased under resale agreements 1,171,244 18,530 6.35 1,672,492 15,819 3.79
Loans, net of unearned income:
Domestic offices 6,656,862 138,223 8.33 6,449,452 119,220 7.41
Foreign offices 2,825,047 47,097 6.69 3,423,360 52,566 6.16
------------ ----------- ------------ ------------
Total loans, net of unearned income 9,481,909 185,320 7.84 9,872,812 171,786 6.98
------------ ----------- ------------ ------------
Total interest-earning assets 30,992,856 $ 592,380 7.67 % 33,068,417 $ 524,943 6.37 %
=========== ========= ============ ========
Cash and due from banks 636,519 671,153
Other assets 9,000,848 6,927,819
------------ ------------
Total assets $ 40,630,223 $ 40,667,389
============ ============
Interest-bearing funds:
Consumer and other time deposits $ 7,685,701 $ 80,920 4.22 % $ 7,996,732 $ 57,531 2.89 %
Certificates of deposit 907,151 12,849 5.68 610,927 6,020 3.95
Deposits in foreign offices 12,066,055 189,277 6.29 11,716,659 118,783 4.07
------------ ----------- ------------ ------------
Total interest-bearing deposits 20,658,907 283,046 5.50 20,324,318 182,334 3.60
Trading account liabilities(2) 49,314 801 6.51 166,247 2,962 7.15
Short-term borrowings 3,882,621 43,933 4.54 5,933,361 51,743 3.50
Total long-term debt 4,001,201 66,501 6.67 4,942,609 67,241 5.46
------------ ----------- ------------- ------------
Total interest-bearing funds 28,592,043 $ 394,281 5.53 % 31,366,535 $ 304,280 3.89 %
=========== ========= ============ ========
Noninterest-bearing deposits:
In domestic offices 1,472,368 1,325,748
In foreign offices 100,665 96,219
Other liabilities 7,762,452 5,333,510
Stockholders' equity:
Preferred stock 676,667 620,941
Common stockholders' equity 2,026,028 1,924,436
------------ -------------
Total stockholders' equity 2,702,695 2,545,377
Total liabilities and stockholders' ------------ -------------
equity $ 40,630,223 $ 40,667,389
============ =============
Interest income/earning assets $ 592,380 7.67 % $ 524,943 6.37 %
Interest expense/earning assets 394,281 5.11 304,280 3.69
----------- -------- ------------ -------
Net interest differential $ 198,099 2.56 % $ 220,663 2.68 %
=========== ======== ============ =======
<FN>
<F1>(1) Based on amortized or historic cost with the mark-to-market adjustment on securities available for sale included in other
assets.
<F2>(2) Excludes non-interest bearing balances, which are included in other assets or other liabilities, respectively.
</FN>
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, NET INTEREST DIFFERENTIAL,
AVERAGE RATES EARNED AND PAID
UNAUDITED
(Fully taxable equivalent basis)
(Dollars in thousands)
Six Months Ended June 30,
------------------------------------------------------------------------------------
1995 1994
---------------------------------------- -----------------------------------------
Average Ave
Interest Rates Interest Rates
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
------------- ------------ -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits with banks $ 8,380,642 $ 281,312 6.77 % $ 5,774,196 $ 127,410 4.45 %
Investment securities:(1)
Taxable 10,651,234 442,447 8.38 13,432,002 440,376 6.61
Exempt from federal income taxes 1,296,245 65,092 10.13 1,147,552 52,971 9.31
------------ ---------- ------------ ----------
Total investment securities 11,947,479 507,539 8.57 14,579,554 493,347 6.82
Trading account assets(2) 877,035 23,925 5.50 1,071,774 32,556 6.13
Federal funds sold and securities
purchased under resale agreements 1,285,294 39,022 6.12 1,515,486 27,131 3.61
Loans, net of unearned income:
Domestic offices 6,356,862 267,187 8.48 6,587,027 233,737 7.16
Foreign offices 2,763,031 95,046 6.94 3,546,986 103,355 5.88
----------- ----------- ------------ -----------
Total loans, net of unearned income 9,119,893 362,233 8.01 10,134,013 337,092 6.71
----------- ----------- ------------ -----------
Total interest-earning assets 31,610,343 $ 1,214,031 7.74 % 33,075,023 $ 1,017,536 6.20 %
=========== ====== =========== ======
Cash and due from banks 597,408 712,592
Other assets 8,136,067 6,993,250
----------- ------------
Total assets $ 40,343,818 $ 40,780,865
=========== ============
Interest-bearing funds:
Consumer and other time deposits $ 7,712,145 $ 156,882 4.10 % $ 8,033,908 $ 115,017 2.89 %
Certificates of deposit 863,805 24,252 5.66 609,101 11,153 3.69
Deposits in foreign offices 12,358,161 374,213 6.11 11,402,513 224,191 3.96
------------ ------------ ------------ -----------
Total interest-bearing deposits 20,934,111 555,347 5.35 20,045,522 350,361 3.52
Trading account liabilities(2) 43,022 1,472 6.90 165,559 5,233 6.37
Short-term borrowings 4,195,380 95,024 4.57 5,945,599 102,686 3.48
Total long-term debt 4,193,177 138,303 6.65 4,929,676 132,143 5.41
------------ ------------ ----------- -----------
Total interest-bearing funds 29,365,690 $ 790,146 5.43 % 31,086,356 $ 590,423 3.83 %
============ ====== ============ ======
Noninterest-bearingdeposits:
In domestic offices 1,475,269 1,309,968
In foreign offices 104,827 118,561
Other liabilities 6,721,219 5,617,749
Stockholders' equity:
Preferred stock 674,584 588,683
Common stockholders' equity 2,002,229 2,059,548
----------- -----------
Total stockholders' equity 2,676,813 2,648,231
----------- -----------
Total liabilities and
stockholders' equity $ 40,343,818 $ 40,780,865
============ =============
Interest income/earning assets $ 1,214,031 7.74 % $ 1,017,536 6.20 %
Interest expense/earning assets 790,146 5.04 590,423 3.60
------------ ------ ------------ ------
Net interest differential $ 423,885 2.70 % $ 427,113 2.60 %
============ ====== ============ ======
<FN>
<F1>(1) Based on amortized or historic cost with the mark-to-market adjustment on securities available for sale included in
other assets.
<F2>(2) Excludes non-interest bearing balances, which are included in other assets or other liabilities, respectively.
</FN>
</TABLE>
-8-
<PAGE>
reduction in average interest earning assets from $33.1 billion in the second
quarter and six month periods of 1994 to $31.0 billion in the second quarter of
1995 and $31.6 billion for the six months of 1995 contributed to these declines.
An increasing cost of interest-bearing funds and a reduction in the
Corporation's local currency investments in Brazil contributed to the decline
between the first quarter and the second quarter of 1995. In the first quarter
of 1995, the Brazilian local currency investments contributed approximately
6.0% of interest income while in the second quarter that contribution was
approximately 2.6%. In the second quarter of 1994, such assets contributed 0.8%
of interest income.
At June 30, 1995, the Corporation's total exposure to Brazil, consisting
primarily of Brady bonds, medium-term government bonds and short-term
government bonds was approximately 1.01% of total assets, down from 1.39% at
year end 1994.
As previously announced, the Corporation has received the necessary approvals
to open a banking subsidiary in Mexico. It is anticipated that this
subsidiary will begin operations in the third quarter of 1995.
Provision for loan losses - was $3.0 million and $6.0 million in the second
quarter and first six months of 1995, respectively, compared to $3.0 million
and $13.0 million for the corresponding periods of last year. The credit
quality of the loan portfolio remained at a high level, as non-performing loans
declined from both year end 1994 and first quarter 1995.
Net loan charge-offs were $7.8 million in the second quarter of 1995, compared
to net loan charge-offs of $2.2 million in the second quarter of 1994. For the
first six months of 1995, net loan charge-offs were $11.5 million, compared to
$10.6 million in the corresponding period of last year. Reflected in the
results for the first six months of 1994 were net recoveries of restructuring
country debt of $6.7 million.
The allowance for possible loan losses at June 30, 1995 was $314.3 million,
compared to $319.2 million at December 31, 1994. The allowance for possible
loan losses as a percentage of loans outstanding, net of unearned income, was
3.26% at June 30, 1995, compared to 3.58% at December 31, 1994.
The following table presents summary data related to non-accrual loans for the
periods ending:
<TABLE>
<CAPTION>
June 30, March 31, Dec. 31,
(in thousands) 1995* 1995* 1994
---------- ----------- ----------
<S> <C> <C> <C>
Non-accrual loans:
Domestic $ 35,724 $ 44,233 $ 43,392
Foreign 17,311 14,698 14,734
---------- ----------- ----------
Total non-accrual loans $ 53,035 $ 58,931 $ 58,126
========== =========== ==========
Non-accrual loans as a percentage of
loans outstanding at period end 0.55% 0.65% 0.65%
========== =========== ==========
<FN>
<F1>*Includes impaired loans with book values of $31,858 at June 30, 1995 an $35,768
at March 31, 1995.
</FN>
</TABLE>
-9-
<PAGE>
At June 30, 1995, non-accrual loans were $53.0 million, compared to $58.9
million at March 31, 1995 and $58.1 million at December 31, 1994. The decline in
non-accrual loans from March 31, 1995 and December 31, 1994 is primarily
attributable to a domestic non-accrual loan which became "Other Real Estate
Owned". This decline was partially offset by an increase in non-accrual foreign
loans. See "Statement of Condition" below for information on total
non-performing assets.
Other Operating Income - totaled $119.9 million in the second quarter of 1995,
compared to $93.4 million in the year-earlier quarter. For the first six months
of 1995, such income was $219.1 million, compared to $198.0 million in the
corresponding period last year.
Income from trading activities increased to $66.2 million in the second quarter
of 1995 from $30.2 million in the second quarter of last year. The principal
elements of this change were an $18.2 million increase in trading account
profits and commissions, primarily in derivative products, and a $16.7 million
increase in foreign exchange trading income resulting from increased activity
in foreign exchange markets.
For the first six months of 1995, income from trading activities was $112.7
million, compared to $78.9 million in the same period a year ago. This change
reflects the factors mentioned above as well as an increase in income from
precious metals.
Investment securities gains were $3.3 million in the second quarter of 1995,
compared to $10.0 million in the second quarter of 1994. Included in net
securities gains in the second quarter of 1994, from sales of securities
classified as available for sale, were gains of $52.0 million realized on the
sale of Argentine equities acquired in a 1990 debt-for-equity swap, gains of
$26.9 million realized on the sale of all the securities received in connection
with Brazil's debt restructuring and net losses of $68.9 million on the
disposition of securities, primarily those sold as part of the Corporation's
asset/liability management program. For the first six months of 1995,
investment securities gains were $5.0 million, compared to $13.1 million last
year.
Equity in the earnings of affiliate was $19.3 million in the second quarter of
1995, compared to $18.5 million in the second quarter of last year. This income
represents the Corporation's share of the earnings of Safra Republic Holdings
S.A. ("Safra Republic"), a European international private banking group of
which the Corporation owns approximately 49%. For the first six months of
1995, these earnings were $38.5 million, compared to $39.7 million for the
corresponding period of 1994. Client portfolio assets, both on- and
off-balance-sheet, increased to $15.6 billion at June 30, 1995 from $12.4
billion at June 30, 1994. Most of this increase came in the form of client
deposits.
Commission income amounted to $13.0 million in the second quarter of 1995,
compared to $14.8 million in the corresponding period of 1994. For the first
six months of 1995, commission income amounted to $28.3 million, compared to
$32.3 million last year. These declines reflect the de-emphasis during 1994 of
certain businesses related to the Corporation's securities subsidiary.
Other income in the second quarter of 1995 was $18.1 million, including a gain
of $1.3 million on the sale of a New York retail branch. Other income in the
second quarter of 1994 was $18.9 million, including a gain of $2.4 million on
the early extinguishment of long-term debt.
-10-
<PAGE>
Other Operating Expenses - totaled $297.7 million in the second quarter and
$490.3 in the first six months of 1995, compared to $191.2 million and $367.1
million in the corresponding periods of 1994. These amounts include the
Corporation's provision for restructuring and related charges of $120.0 million
recorded in the second quarter of 1995 in connection with the implementation of
the previously announced Project Excellence Plus, the Corporation's
company-wide project to improve operating efficiencies and reduce costs. During
the second quarter of 1994, the Corporation implemented a limited restructuring
program related to the de-emphasis of certain business activities in its
securities subsidiary and incurred certain other operating expenses which
resulted in a $17.0 million restructuring charge in that period.
Salaries and employee benefits were $96.0 million in the second quarter of
1995, compared to $93.8 million in the second quarter of last year. For the six
months ended June 30, 1995 such expenses were $197.7 million, compared to
$189.4 million in the year-earlier period. These increases reflect general
increases in staff compensation and increased costs of employee benefits
partially offset by staff reductions in the second quarter of 1995 which
resulted from the implementation of Project Excellence Plus.
All other expenses were $67.1 million in the second quarter of 1995, compared
to $67.4 million in the second quarter of last year. For the six months ended
June 30, 1995, other expenses increased $2.2 million, not including the
one-time expense of $7.5 million for charitable contributions reflecting the
adoption of SFAS No. 116 in the first quarter of 1995.
Total Applicable Income Taxes - have been adjusted (increased) to reflect the
inclusion of interest income on tax exempt obligations as if they were subject
to federal, state and local taxes, after giving effect to the deductibility of
state and local taxes for federal income tax purposes. Total applicable income
taxes declined $34.2 million, or 84.5%, in the second quarter of 1995 and $37.7
million, or 43.9%, during the first six months of 1995 when compared to the
corresponding periods of 1994. These changes are a result of the decline in
income before income taxes due to the effect of the restructuring charges and
normal permanent differences between book and tax income. The effective tax
rates, total applicable income taxes as a percentage of income before income
taxes, for the second quarter and the first six months of 1995 were 36% and
33%, respectively, compared to 34% and 35% for the corresponding periods of
last year.
STATEMENT OF CONDITION
Stockholders' Equity and Capital Ratios
At June 30, 1995, stockholders' equity included a deduction of $169.2 million,
which represents the after-tax unrealized depreciation in the valuation of the
Corporation's portfolio of securities available for sale and approximately 49%
of Safra Republic's unrealized depreciation in its portfolio of securities
available for sale, compared to an unrealized depreciation of $191.5 million at
December 31, 1994.
The Corporation's leverage ratio, Tier 1 capital to quarterly average assets,
and its risk-based capital ratios, Tier 1 and total qualifying capital to
risk-weighted assets, include the assets and capital of Safra Republic on a
consolidated basis in accordance with the requirements of the Federal Reserve
Board specifically applied to the Corporation. These ratios do not reflect the
effect on stockholders' equity related to the valuation of the Corporation's
portfolio of securities available for sale.
-11-
<PAGE>
In accordance with regulatory guidelines, the Corporation excludes Republic New
York Securities Corporation's assets and off-balance-sheet contracts from the
Corporation's capital calculations. The guidelines require the Corporation to
deduct one-half of its investment in this subsidiary from each of Tier 1 and
Tier 2 capital.
In September 1994, bank regulators issued proposals to amend risk-based capital
guidelines related to derivative contracts. The proposals, which are still
pending, would change the factors used in calculating potential future exposure
of derivative contracts. The Corporation has determined that the proposals, if
issued in final form, would not have a material effect on its capital ratios.
At June 30, 1995, the Corporation's leverage ratio was 6.34% compared to 5.87%
at year end 1994. At June 30, 1995, risk-based capital ratios were 16.95% for
Tier 1, or "core", capital and 28.65% for total qualifying capital, compared to
16.17% and 27.49%, respectively, at December 31, 1994. These ratios
substantially exceed the minimums in effect for bank holding companies.
At June 30, 1995, the ratio of the Corporation's total common stockholders'
equity to total assets was 4.87%, compared to 4.79% at December 31, 1994. The
improvement in this ratio was primarily attributable to an increase in retained
earnings and a reduction in the net unrealized depreciation of the
Corporation's portfolio of securities available for sale.
Non-performing Assets
The following is a summary of total non-accrual loans and other non-performing
assets at periods ending:
<TABLE>
<CAPTION>
June 30, March 31, Dec. 31,
(in thousands) 1995 1995 1994
---------- ---------- ---------
<S> <C> <C> <C>
Total non-accrual loans $ 53,035 $ 58,931 $ 58,126
Other real estate owned 28,222 23,678 23,479
---------- ---------- ---------
Total non-accrual loans and other
real estate owned $ 81,257 $ 82,609 $ 81,605
========== ========== =========
Total non-performing assets as a percentage
of period end total assets 0.19% 0.20% 0.20%
========== ========== =========
</TABLE>
Financial Instruments
At June 30, 1995, the net fair value appreciation of the Corporation's
on-balance sheet financial instruments, including related off-balance sheet
interest rate hedges, was approximately $210 million. This represents an
increase in the fair value of such instruments of approximately $230 million
since December 31, 1994.
Not included in the information above is the fair value of deposit liabilities
with no stated maturity that are required to be reported at their carrying
value. These deposits have an increased value to the Corporation during periods
of rising interest rates since they can be invested at more favorable spreads.
-12-
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Corporation's Annual Meeting of Stockholders was held on May 16,
1995.
(c) The following matters were voted upon at such meeting:
(i) Election of the following nineteen persons as directors of the
Corporation, with shares voted for and withheld indicated:
Nominee Shares For Shares Withheld
------- ---------- ---------------
Kurt Andersen 42,551,933 241,173
Cyril S. Dwek 42,551,620 240,746
Ernest Ginsberg 42,551,620 240,746
Nathan Hasson 42,551,620 240,746
Jeffrey C Keil 42,551,620 240,746
Peter Kimmelman 42,552,672 239,694
Leonard Lieberman 42,552,727 239,639
William C. MacMillen Jr. 42,552,042 240,324
Peter J. Mansbach 42,552,627 239,739
Martin F. Mertz 42,552,452 239,914
James L. Morice 42,552,672 239,694
E. Daniel Morris 42,552,727 239,639
Janet L. Norwood 42,551,335 241,031
John A. Pancetti 42,551,620 240,746
Vito S. Portera 42,551,620 240,746
William P. Rogers 42,552,067 240,299
Dov C. Schlein 42,552,577 239,789
Walter H. Weiner 42,552,627 239,739
Peter White 42,550,223 242,143
(ii) Approval of the 1995 Long-Term Incentive Stock Plan. The number of
votes cast for or against, as well as the number of abstentions and
broker non-votes as to such matter, were as follows:
For Against Abstain Broker Non-Vote
--- ------- ------- ---------------
39,615,387 2,785,327 391,651 -0-
(iii) Approval of selection of KPMG Peat Marwick LLP as the Corporation's
auditors for 1995. The number of votes cast for or against, as well as
the number of abstentions and broker non-votes as to such matter, were
as follows:
For Against Abstain Broker Non-Vote
--- ------- ------- ---------------
42,715,279 47,276 29,810 -0-
-13-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Computation of Earnings Per Common Share
27. Financial Data Schedule
(b) Reports on Form 8-K
(i) On May 5, 1995, a report on Form 8-K was filed submitting the
Corporation's press release dated May 5, 1995, announcing the
beginning of the implementation phase of its previously announced
company-wide project to improve operating efficiencies and reduce
costs.
On June 26, 1995, a report on Form 8-K was filed submitting the
calculation of ratios of earnings to combined fixed charges and
preferred stock dividends-consolidated and amended Articles
Supplementary, classifying shares of the Corporation's $1.8125
Cumulative Preferred Stock ($25 Stated Value), in connection with the
filing of a Prospectus Supplement dated June 20, 1995, relating to the
offering of 3,000,000 shares of such preferred stock.
-14-
<PAGE>
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.
REPUBLIC NEW YORK CORPORATION
Dated: August 14, 1995 By Walter H. Weiner
----------------------------
Walter H. Weiner
Chairman of the Board
Dated: August 14, 1995 By John D. Kaberle, Jr.
--------------------------------
John D. Kaberle, Jr.
Executive Vice President and
Comptroller
(Principal Accounting Officer)
-15-
<PAGE>
FORM 10-Q
QUARTERLY REPORT
For the fiscal quarter ended June 30, 1995
REPUBLIC NEW YORK CORPORATION
EXHIBIT INDEX
No. Exhibit Description
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
<TABLE>
<CAPTION>
EXHIBIT 11
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
UNAUDITED
(In thousands except per share data)
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------- ---------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Earnings:
Net income $ 98,604 $ 159,207 $ 11,091 $ 79,428
Less preferred stock dividends (20,225) (15,417) (10,055) (8,333)
--------- ---------- ----------- -----------
Net income applicable to
common stock $ 78,379 $ 143,790 $ 1,036 $ 71,095
========= ========== =========== ===========
Average number of common
shares outstanding 52,327 52,595 52,352 52,633
========= ========== =========== ===========
Net income per common share $ 1.50 $ 2.73 $ 0.02 $ 1.35
========= ========== =========== ===========
Fully Diluted:
Earnings:
Net income applicable to
common stock $ 78,379 $ 143,790 $ 1,036 $ 71,095
Add dividends applicable to
convertible preferred stock 5,822 5,822 2,911 2,911
--------- ---------- ----------- -----------
Net income applicable to
common stock as adjusted $ 84,201 $ 149,612 $ 3,947 $ 74,006
========= ========== =========== ===========
Shares:
Average number of common
shares outstanding 52,327 52,595 52,352 52,633
Add shares assumed issued upon
exercise of stock options 198 251 193 230
Add shares assumed issued upon
conversion of preferred stock 3,569 3,569 3,569 3,569
--------- ---------- ----------- ----------
Average number of common shares
outstanding as adjusted 56,094 56,415 56,114 56,432
========== ========== =========== ===========
Net income per common share (1) $ 1.50 $ 2.65 $ 0.02 $ 1.31
========= ========== =========== ===========
<FN>
<F1> (1) Fully diluted earnings per share as calculated are $.07 for the three-month period ended June 30, 1995.
Since fully diluted earnings per share can not be anti-dilutive, primary and fully diluted earnings per
share are the same for such three-month period.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUNE-30-1995
<CASH> 671,959
<INT-BEARING-DEPOSITS> 7,287,972
<FED-FUNDS-SOLD> 1,824,942
<TRADING-ASSETS> 3,983,185
<INVESTMENTS-HELD-FOR-SALE> 6,735,506
<INVESTMENTS-CARRYING> 5,853,028
<INVESTMENTS-MARKET> 5,878,509
<LOANS> 9,652,814
<ALLOWANCE> 314,330
<TOTAL-ASSETS> 41,715,692
<DEPOSITS> 23,934,544
<SHORT-TERM> 4,075,414
<LIABILITIES-OTHER> 182,206
<LONG-TERM> 3,953,995
<COMMON> 262,888
0
747,500
<OTHER-SE> 1,769,327
<TOTAL-LIABILITIES-AND-EQUITY> 41,715,692
<INTEREST-LOAN> 362,233
<INTEREST-INVEST> 488,843
<INTEREST-OTHER> 344,259
<INTEREST-TOTAL> 1,195,335
<INTEREST-DEPOSIT> 555,347
<INTEREST-EXPENSE> 790,146
<INTEREST-INCOME-NET> 405,189
<LOAN-LOSSES> 6,000
<SECURITIES-GAINS> 4,967
<EXPENSE-OTHER> 490,262
<INCOME-PRETAX> 128,009
<INCOME-PRE-EXTRAORDINARY> 98,604
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,604
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.50
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
