<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 5, 1999
REPUBLIC NEW YORK CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 1-7436 13-2764867
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) 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
<PAGE> 2
ITEM 5. OTHER EVENTS
Republic New York Corporation is hereby filing the document listed
under Item 7 below. Such document is hereby incorporated herein by reference in
this Current Report on Form 8-K and a copy of the same is attached hereto as an
exhibit.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
c. Exhibits
99 Press Release dated July 21, 1999, with attached financial
statements, Announcing Results for the Second Quarter and Six
Month Periods Ended June 30, 1999.
<PAGE> 3
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REPUBLIC NEW YORK CORPORATION
By: /s/ William F. Rosenblum, Jr.
------------------------------
William F. Rosenblum, Jr.
Senior Vice President
Date: August 5, 1999
<PAGE> 1
Exhibit 99
[LOGO] REPUBLIC NEW YORK CORPORATION
News Release
FOR IMMEDIATE RELEASE PRESS CONTACT: MELISSA M. KRANTZ (212) 525-3800
NYSE SYMBOL: RNB INVESTOR CONTACT: MICHAEL G. LEVINE (212) 525-8870
TO REQUEST RELEASE BY E-MAIL: [email protected]
PRESS RELEASES: http://www.rnb.com
REPUBLIC NEW YORK CORPORATION
REPORTS STRONG SECOND QUARTER
NEW YORK - JULY 21, 1999: Republic New York Corporation today reported net
income for the second quarter of 1999 of $143.1 million, or earnings per common
share of $1.33 basic and $1.31 diluted. This compares to net income of $118.8
million in the second quarter of 1998, or earnings per common share of $1.06
basic and $1.05 diluted and $114.1 million in the first quarter of 1999, or
earnings per common share of $1.04 basic and $1.03 diluted, before $67.6 million
of after-tax restructuring and one-time special charges. Net income in the first
quarter of 1999, including the restructuring and one-time special charges, was
$46.5 million, or 38 cents per common share, for both basic and diluted earnings
per share. The return on average common equity for the second quarter of 1999
was 19.7 percent annualized, compared to 14.8 percent in the second quarter of
last year.
For the six months ended June 30, 1999, net income was $189.6 million, including
$67.6 million of after-tax restructuring and one-time special charges, compared
to $236.3 million in 1998. Diluted earnings per common share were $1.69 for the
six-month period in 1999, compared to $2.08 in 1998.
Dov C. Schlein, chairman and chief executive officer, said, "The second
quarter's strong performance further demonstrates the validity of our business
strategy to grow our core private banking and special niche businesses. While we
grow these businesses, at the same time, we anticipate achieving additional
savings from our control of operational overhead expenses.
Our people remained focused during the quarter, while working on merger
activities and integration plans for the proposed acquisition of Republic by
HSBC Holdings plc," Mr. Schlein continued.
As previously announced on May 10, 1999 the corporation entered into a
definitive agreement providing for the acquisition of the corporation by HSBC
Holdings plc. HSBC is one of the largest banking and financial service
organizations in the world, with a network of more than 5,000 offices in 79
countries and territories. Pursuant to the agreement, each share of the
corporation's common stock would be converted to $72 in cash. The transaction,
which is subject to shareholder and regulatory approvals, is expected to close
in the fourth quarter of 1999.
In addition, HSBC has offered $72 per share for the outstanding shares of common
stock of Safra Republic Holdings S.A. (SRH), owned by shareholders other than
Republic.
<PAGE> 2
"As Republic and HSBC proceed to review our businesses and operations together,
I am confident about the success of the integration of Republic and HSBC. The
combination of our companies and our businesses throughout the world will surely
result in one of the premier international financial services organizations,"
Mr. Schlein concluded.
Highlights of the quarter include:
Net interest rate differential increased to 2.60 percent in the second
quarter of 1999, compared to 2.30 percent in the second quarter of 1998 and
2.52 percent in the first quarter of 1999. Net interest income for the
second quarter of 1999 was $271.2 million, compared to $268.4 million in
the second quarter of 1998 and $257.3 million in the first quarter of 1999.
The corporation realized a gain in the second quarter of 1999 of $69.8
million, pre-tax, relating to Republic's investment in the Canary Wharf
Group and the completion of the Canary Wharf initial public offering.
The board of directors declared dividends of 26 cents per common share,
30.5775 cents per depositary share on the adjustable rate cumulative
preferred stock, 45.3125 cents per share on the $1.8125 cumulative
preferred stock and 71.4375 cents per share on the $2.8575 cumulative
preferred stock. All dividends are payable October 1, 1999 to stockholders
of record on September 15, 1999.
Equity in the earnings of SRH was $41.9 million in the second quarter of
1999, compared to $36.8 million in the second quarter of 1998 and $30.5
million in the first quarter of 1999.
The total of the corporation's and SRH's private client account assets,
both on- and off-balance-sheet, were $59.2 billion at June 30, 1999,
compared to $56.5 billion at March 31, 1999 and $55.6 billion at December
31, 1998.
Republic successfully introduced WebloanSM, a innovative new internet-based
system that allows its mortgage brokers, sales executives and retail
outlets to prequalify quickly a prospect for a mortgage loan from the point
of sale, significantly reducing loan origination time.
NET INTEREST INCOME
The net interest rate differential rose to 2.60 percent in the second quarter of
1999, compared to 2.30 percent in the second quarter of 1998 and 2.52 percent in
first quarter of 1999. The increase in the net interest rate differential in the
second quarter from the year ago period reflected reductions of higher cost
short-term liabilities and a corresponding decline in interest-bearing deposits
with banks, investment securities, and federal funds. Average interest-earning
assets were $42.7 billion in the second quarter of 1999, compared to $48.0
billion in the second quarter of 1998 and $42.5 billion in the first quarter of
1999.
-2-
<PAGE> 3
Net interest income on a fully taxable equivalent basis was $277.3 million in
the second quarter of 1999, compared to $275.1 million in the second quarter of
1998 and $263.6 million in the first quarter of 1999. In the second quarter of
1999, $3.0 million of past-due interest was received on previously written down
Russian obligations and $5.2 million of mortgage prepayment penalty income was
recorded. The second quarter of 1998 reflected $8.9 million of additional
earnings on the repayment of an international loan. The first quarter of 1999
reflected the receipt of $3.1 million of past-due interest on previously written
down Russian obligations. Premium amortization attributable to prepayments on
mortgage-backed securities was $17.2 million in the second quarter of 1999,
compared to $25.7 million in the second quarter of 1998 and $22.6 million in the
first quarter of 1999.
The net interest rate differential rose to 2.56 percent for the first six months
of 1999, compared to 2.33 percent for the corresponding period of 1998. Net
interest income on a fully taxable equivalent basis was $541.0 million for the
first six months of 1999, compared to $543.3 million in the corresponding period
of 1998. Average interest-earning assets declined to $42.6 billion for the first
six months of 1999, compared to $47.0 billion for the corresponding period of
1998, due to a reduction in higher cost short-term liabilities which had been
invested in interest-bearing deposits with banks, investment securities, and
federal funds.
PROVISION FOR TRADING AND CREDIT LOSSES
The corporation's aggregate allowance for credit losses, which is presented in
the table below, is available to absorb all credit losses:
<TABLE>
<CAPTION>
1999 1998
----------------------- --------
2ND QTR 1ST QTR 2ND QTR
(In thousands)
<S> <C> <C> <C>
Provision for trading and credit losses $ 4,000 $ 8,000 $ 4,000
======== ======== ========
Net charge-offs $ 4,615 $ 4,076 $ 3,940
======== ======== ========
Aggregate allowance for credit losses:
Credit losses $290,669 $292,125 $326,776
Trading accounts 17,485 17,516 14,857
Off balance-sheet credit commitments 7,216 6,718 10,000
-------- -------- --------
$315,370 $316,359 $351,633
======== ======== ========
</TABLE>
The aggregate provisions in the second quarters of 1999 and 1998 were related to
credit losses. The first quarter's 1999 aggregate provision consisted of $4.0
million related to credit losses and $4.0 million related to trading credit
losses.
The following table presents non-accrual loans and other non-performing assets
at periods ended:
<TABLE>
<CAPTION>
1999 1998
--------------------- -------
JUNE 30 MARCH 31 JUNE 30
(In thousands)
<S> <C> <C> <C>
Non-accrual loans $57,994 $86,589 $80,705
Other assets and real estate owned 10,785 7,374 9,000
------- ------- -------
Total non-performing assets $68,779 $93,963 $89,705
======= ======= =======
</TABLE>
-3-
<PAGE> 4
The corporation's Latin American exposure consists primarily of sovereign
securities. The mark-to-market value of these securities is fully reflected,
after tax benefit, as an adjustment to stockholders' equity through accumulated
other comprehensive income.
The following table presents information on the corporation's estimated
cross-border exposure to Latin American countries at June 30, 1999:
<TABLE>
<CAPTION>
NET FASB 115 NET OUTSTANDINGS
CROSS-BORDER PRE-TAX MARKET LESS FASB 115
($ millions) OUTSTANDINGS* VALUE ADJUSTMENTS ADJUSTMENTS
------------- ----------------- ---------------
<S> <C> <C> <C>
Brazil** $445 ($66) $379
Mexico 264 ( 7) 257
Argentina 233 (22) 211
Venezuela 93 (13) 80
Chile 67 1 68
</TABLE>
* Net cross-border outstandings include foreign office local country claims
on local residents less local country liabilities.
** Net outstandings exclude $636 million of sovereign risk assets, before the
FASB 115 appreciation adjustment of $3 million, funded with U.S. dollars
where the providers of funds agree that, in the event their claims cannot
be repaid in the designated currency due to sovereign default or currency
exchange restrictions in a given country, they will wait to receive the
non-local currency until such time as such default is cured or the currency
restrictions removed or such currency becomes available in the local
market; under limited circumstances, the providers may receive either local
currency or local market debt instruments. Also excluded is net exposure of
approximately $150 million, which represented the corporation's share of
SRH's net exposure.
OTHER OPERATING INCOME
Total other operating income in the second quarter of 1999 was $205.3 million
including a gain on a real estate investment of $69.8 million discussed below,
compared to $144.3 million in the second quarter of 1998 and $154.5 million in
the first quarter of 1999.
Total trading revenue, including associated net interest income which is
reported as net interest income, was $56.5 million in the second quarter of
1999, compared to $63.7 million in the second quarter of 1998 and $90.0 million
in the first quarter of 1999. The second quarter to second quarter change
reflected increased trading account profits and commissions offset by declines
in precious metals and foreign exchange trading income. For the six-month period
of 1999, such revenue amounted to $146.5 million, compared to $129.6 million for
the six-month period of 1998.
-4-
<PAGE> 5
The items of net interest income (expense) in the following table represent the
net interest earned or paid on instruments held for trading, as well as an
allocation by management to reflect the funding benefit or cost associated with
the trading positions.
<TABLE>
<CAPTION>
2ND QTR 6 MONTHS
-------------------------- --------------------------
1999 1998 1999 1998
(In thousands)
Income from precious metals:
<S> <C> <C> <C> <C>
Trading revenue (loss) $ (2,239) $ 254 $ 2,054 $ 3,620
Net interest income 15,096 16,516 30,552 35,438
--------- --------- --------- ---------
Total 12,857 16,770 32,606 39,058
--------- --------- --------- ---------
Foreign exchange trading income:
Trading revenue 28,586 41,979 91,268 72,222
Net interest expense (1,268) (2,213) (2,507) (2,831)
--------- --------- --------- ---------
Total 27,318 39,766 88,761 69,391
--------- --------- --------- ---------
Trading account profits and commissions:
Trading revenue 11,078 1,230 20,406 7,759
Net interest income 5,282 5,903 8,767 13,422
--------- --------- --------- ---------
Total 16,360 7,133 29,173 21,181
--------- --------- --------- ---------
Provision for trading credit losses -- -- 4,000 --
--------- --------- --------- ---------
Total:
Trading revenue 37,425 43,463 109,728 83,601
Net interest income 19,110 20,206 36,812 46,029
--------- --------- --------- ---------
Total $ 56,535 $ 63,669 $ 146,540 $ 129,630
========= ========= ========= =========
</TABLE>
Net investment securities gains were $11.0 million in the second quarter of
1999, compared to net gains of $12.4 million in the second quarter of 1998 and
$6.3 million in the first quarter of 1999. The net gains in the second quarter
of 1999 were realized from the repayment and sales of Russian securities. The
gains in the first quarter of 1999 were primarily from sales of Brazilian
securities and restructured Russian securities.
Commission income consists primarily of securities brokerage commissions, fees
for the issuance of bankers acceptances and letters of credit and retail
services. Such income was $24.6 million in the second quarter of 1999, compared
to $24.2 million in the second quarter of 1998 and $25.8 million in the first
quarter of 1999.
Equity in the earnings of SRH was $41.9 million in the second quarter of 1999,
compared to $36.8 million in the second quarter of 1998 and $30.5 million in the
first quarter of 1999. The second quarter to second quarter increase reflects a
$34.8 million pre-tax gain related to SRH's investment in the Canary Wharf Group
and the completion of its initial public offering in April 1999. The effect of
the gain was partially offset by $4.0 million of merger related expenses and
$4.5 million for professional fees and employee benefits. Client account assets
at SRH, both on- and off-balance sheet, were $33.9 billion at June 30, 1999
compared to $32.1 billion at June 30, 1998 and $32.7 billion at March 31, 1999.
-5-
<PAGE> 6
Other income was $90.1 million in the second quarter of 1999, which includes the
$69.8 million gain relating to an investment in the Canary Wharf Group and the
completion of its initial public offering. Other income was $27.6 million in the
second quarter of 1998 and $19.8 million in the first quarter of 1999. The
consumer financial services group and the private banking group generate fee
income through service charges to clients for deposit accounts and trust and
securities activities. Other income included revenues of $17.0 million from
these activities in the second quarter of 1999, compared to $16.4 million in the
second quarter of 1998 and $16.4 million in the first quarter of 1999. Other
income in the second quarter of 1998 included a gain of $4.4 million related to
sales of real estate.
OTHER OPERATING EXPENSES
Total operating expenses were $251.4 million in the second quarter of 1999,
excluding merger related executive pension and incentive accruals and certain
other merger related expenses of $20.3 million further discussed below. Total
operating expenses in the second quarter of 1998 were $243.4 million and $248.8
million in the first quarter of 1999, excluding restructuring and one-time
special charges of $104.0 million. Included in total operating expenses were
Year 2000 expenses of $3.5 million in the second quarter of 1999, $8.6 million
in the second quarter of 1998 and $4.7 million in the first quarter of 1999.
Salaries and employee benefits were $141.1 million in the second quarter of
1999, excluding the charge of $16.5 million related to the implementation of a
Supplemental Executive Retirement Plan to retain the services of certain
executive officers. Salaries and employee benefits were $133.8 million in the
second quarter of 1998 and $139.7 million in the first quarter of 1999 excluding
$5.8 million related to the one-time charge. The second quarter to second
quarter increase was due to higher levels of incentive compensation accruals.
Occupancy expense was $17.8 million in the second quarter of 1999, compared to
$18.1 million in the second quarter of 1998 and $18.9 million in the first
quarter of 1999 that included $0.6 million related to the one-time charge.
The restructuring and one-time special charges of $104 million in the first
quarter of 1999 consisted of a previously announced $97 million pre-tax
restructuring charge, resulting from the corporation's lines-of-business review
and its plan to grow its core private banking and special niche businesses, and
a $7 million one-time charge primarily related to the termination of selected
employee benefits programs. The $97 million restructuring charge is related to
workforce reductions, branch consolidations, outsourcing certain data processing
functions and related network and communication operations and the decision to
exit certain activities. All employees affected by the restructuring have been
notified. The migration of the corporation's data centers has been delayed at
the recommendation of the outsourcer due to telecommunication constraints and
will not occur until 2000. To date, approximately $43 million of the $97 million
restructuring charge has been expended.
-6-
<PAGE> 7
All other expenses were $92.5 million in the second quarter of 1999, excluding
$3.8 million of merger related professional fees, $91.5 million in the second
quarter of 1998 and $90.9 million in the first quarter of 1999, excluding $0.6
million related to the one-time charge. Excluding Year 2000 expenses and the
special items noted above, all other expenses were $89.0 million in the second
quarter of 1999, $83.9 million in the second quarter of 1998 and $86.2 million
in the first quarter of 1999.
The corporation is on target for the timely completion of all of its Year 2000
Project efforts.
Amortization of goodwill and other intangible assets was $6.8 million in the
second and first quarters of 1999 and $6.7 million in the second quarter of
1998.
INCOME TAXES
Income taxes were $57.7 million in the second quarter of 1999, compared to $46.4
million in the second quarter of 1998 and $8.4 million in the first quarter of
1999. The effective book income tax rate was 28.7 percent in the second quarter
of 1999, compared to 28.1 percent in the second quarter of 1998 and 15.3 percent
in the first quarter of 1999.
CAPITAL
The following table presents return on average common stockholders' equity
(ROAE) and return on average total assets (ROAA), based on net income applicable
to common stock - diluted:
<TABLE>
<CAPTION>
2ND QTR 6 MONTHS
----------------- ------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
ROAE 19.67% 14.77% 13.30% 14.96%
ROAA 1.15% 0.80% 0.75% 0.80%
</TABLE>
The book value of the corporation's common stock was $26.87 per share at June
30, 1999.
At June 30, 1999, the corporation's total intangibles were $312 million, of
which $212 million was goodwill.
The following table presents capital ratios at periods ending:
<TABLE>
<CAPTION>
1999
----------------------
JUNE 30 MARCH 31
<S> <C> <C>
Common stockholders'
equity/assets 5.41% 5.35%
Leverage 6.70% * 6.56%
Tier 1 "core" 13.35% * 13.55%
Total capital 21.70% * 22.26%
</TABLE>
*Estimated
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 SRH on a consolidated
basis in accordance with the requirements of the Federal Reserve Board (the
"FRB") specifically applied to the corporation. These ratios do not reflect the
effect on stockholders' equity related to the FASB 115 valuation of the
corporation's portfolio of securities available for sale which is included in
accumulated other comprehensive loss, net of taxes.
###
-7-
<PAGE> 8
In connection with the information relating to the Year 2000 and the anticipated
savings from the line-of-business review, this press release contains statements
that constitute forward-looking statements and are subject to certain risks and
uncertainties that could cause the actual facts to differ materially from those
contained in this press release. With respect to the Year 2000, uncertainties
could include unanticipated events relating to work on the developments or
modifications to computer systems and to software, including work performed by
suppliers or vendors to the corporation, and the satisfactory resolution of such
events may be beyond the corporation's control in responding to such events.
With respect to the contemplated savings in operating expenses, the actual
results may differ due to, among other things, the fact that the expected cost
savings may not be fully realized or realized within the expected time frame,
competitive pressures among depository or other financial institutions may
increase significantly, regulatory changes not presently proposed may be enacted
and technological changes may be more difficult to accomplish or expensive than
anticipated. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only to the date of this report.
-8-
<PAGE> 9
REPUBLIC NEW YORK CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30,
--------------------------------
1999 1998
------------ ------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 901,766 $ 1,066,843
Interest-bearing deposits with banks 5,654,600 8,626,903
Precious metals 785,048 782,266
Securities held to maturity 5,589,260 7,979,192
Securities available for sale 16,546,090 16,788,744
------------ ------------
Total investment securities 22,135,350 24,767,936
Trading account assets 2,966,059 4,242,167
Federal funds sold and securities purchased
under resale agreements 1,495,985 2,218,397
Loans, net of unearned income 14,193,813 13,816,426
Allowance for credit losses (290,669) (326,776)
Customers' liability on acceptances 44,128 72,187
Accounts receivable and accrued interest 998,684 2,538,509
Investment in affiliate 821,093 838,274
Premises and equipment 430,170 467,964
Other assets 1,043,626 807,986
------------ ------------
Total assets $ 51,179,653 $ 59,919,082
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits:
In domestic offices $ 2,971,844 $ 2,668,278
In foreign offices 223,130 231,632
Interest-bearing deposits:
In domestic offices 10,613,420 11,573,799
In foreign offices 18,621,045 19,746,916
------------ ------------
Total deposits 32,429,439 34,220,625
Trading account liabilities 2,741,941 3,982,668
Short-term borrowings 6,525,422 10,214,634
Acceptances outstanding 45,391 72,794
Accounts payable and accrued expenses 919,772 2,206,174
Due to factored clients 669,222 639,165
Other liabilities 156,222 213,307
Long-term debt 1,449,337 1,883,884
Subordinated long-term debt and perpetual
capital notes 2,624,700 2,650,000
Company-obligated mandatorily redeemable
Preferred securities of subsidiary trusts
holding solely junior subordinated debt
securities 350,000 350,000
Stockholders' equity:
Cumulative preferred stock, no par value
7,501,250 shares outstanding in 1999 and 1998 500,000 500,000
Common stock, $5 par value 150,000,000 shares
authorized; 104,798,914 shares issued
in 1999 and 108,087,878 in 1998 523,995 540,439
Surplus 118,037 122,083
Retained earnings 2,496,221 2,428,203
Accumulated other comprehensive
loss, net of taxes (282,977) (101,318)
Common stock in treasury, at cost
1,788,706 shares in 1999 and 54,970 in 1998 (87,069) (3,576)
------------ ------------
Total stockholders' equity 3,268,207 3,485,831
------------ ------------
Total liabilities and stockholders' equity $ 51,179,653 $ 59,919,082
============ ============
</TABLE>
<PAGE> 10
REPUBLIC NEW YORK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------
June 30, March 31, June 30,
1999 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 261,695 $ 248,193 $ 289,354
Interest on deposits with banks 32,663 42,268 77,785
Interest and dividends on investment securities:
Taxable 343,185 345,990 386,210
Exempt from federal income taxes 17,994 18,515 20,030
Interest on trading account assets 18,250 16,923 25,380
Interest on federal funds sold and securities
purchased under resale agreements 24,959 21,872 52,380
--------- --------- ---------
Total interest income 698,746 693,761 851,139
--------- --------- ---------
INTEREST EXPENSE:
Interest on deposits 286,304 295,186 368,459
Interest on short-term borrowings 76,014 74,799 137,618
Interest on long-term debt 65,208 66,477 76,708
--------- --------- ---------
Total interest expense 427,526 436,462 582,785
--------- --------- ---------
NET INTEREST INCOME 271,220 257,299 268,354
Provision for credit losses 4,000 4,000 4,000
--------- --------- ---------
Net interest income after provision for
credit losses 267,220 253,299 264,354
--------- --------- ---------
OTHER OPERATING INCOME:
Trading revenue 37,425 72,303 43,463
Investment securities transactions, net 11,038 6,283 12,430
Revenue from loans sold or held for sale 239 (157) (161)
Commission income 24,647 25,785 24,210
Equity in earnings of affiliate 41,887 30,516 36,780
Other income 90,062 19,751 27,594
--------- --------- ---------
Total other operating income 205,298 154,481 144,316
--------- --------- ---------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 157,554 145,545 133,818
Occupancy, net 17,810 18,850 18,115
Restructuring charge -- 97,000 --
Other expenses 96,309 91,454 91,453
--------- --------- ---------
Total other operating expenses 271,673 352,849 243,386
--------- --------- ---------
INCOME BEFORE INCOME TAXES 200,845 54,931 165,284
Income taxes 57,719 8,429 46,447
--------- --------- ---------
NET INCOME $ 143,126 $ 46,502 $ 118,837
========= ========= =========
NET INCOME APPLICABLE TO COMMON STOCK - DILUTED $ 136,669 $ 40,111 $ 111,852
========= ========= =========
Net income per common share:
Basic $ 1.33 $ 0.38 $ 1.06
Diluted 1.31 0.38 1.05
Average common shares outstanding:
Basic 102,541 103,335 104,691
Diluted 104,086 105,041 106,652
</TABLE>
<PAGE> 11
REPUBLIC NEW YORK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1999 1998
---------- ----------
INTEREST INCOME:
<S> <C> <C>
Interest and fees on loans $ 509,888 $ 548,894
Interest on deposits with banks 74,931 146,310
Interest and dividends on investment securities:
Taxable 689,175 785,322
Exempt from federal income taxes 36,509 42,816
Interest on trading account assets 35,173 44,147
Interest on federal funds sold and securities
purchased under resale agreements 46,831 91,697
---------- ----------
Total interest income 1,392,507 1,659,186
---------- ----------
INTEREST EXPENSE:
Interest on deposits 581,490 749,258
Interest on short-term borrowings 150,813 228,740
Interest on long-term debt 131,685 152,552
---------- ----------
Total interest expense 863,988 1,130,550
---------- ----------
NET INTEREST INCOME 528,519 528,636
Provision for credit losses 8,000 8,000
---------- ----------
Net interest income after provision for credit losses 520,519 520,636
---------- ----------
OTHER OPERATING INCOME:
Trading revenue 109,728 83,601
Investment securities transactions, net 17,321 3,949
Revenue from loans sold or held for sale 82 3,504
Commission income 50,432 48,168
Equity in earnings of affiliate 72,403 72,726
Other income 109,813 54,964
---------- ----------
Total other operating income 359,779 266,912
---------- ----------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 303,099 266,649
Occupancy, net 36,660 37,007
Restructuring charge 97,000 --
Other expenses 187,763 191,472
---------- ----------
Total other operating expenses 624,522 495,128
---------- ----------
INCOME BEFORE INCOME TAXES 255,776 292,420
Income taxes 66,148 56,109
---------- ----------
NET INCOME $ 189,628 $ 236,311
========== ==========
NET INCOME APPLICABLE TO COMMON STOCK - DILUTED $ 176,780 $ 222,272
========== ==========
Net income per common share:
Basic $ 1.71 $ 2.11
Diluted 1.69 2.08
Average common shares outstanding:
Basic 102,929 104,795
Diluted 104,564 106,694
</TABLE>
<PAGE> 12
REPUBLIC NATIONAL BANK OF NEW YORK
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30,
--------------------------------
1999 1998
------------ ------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 841,534 $ 1,029,143
Interest-bearing deposits with banks 5,511,168 8,603,188
Precious metals 784,107 781,083
Securities held to maturity 5,277,866 7,604,532
Securities available for sale 15,234,866 14,968,911
------------ ------------
Total investment securities 20,512,732 22,573,443
Trading account assets 2,678,291 3,971,014
Federal funds sold and securities purchased
under resale agreements 1,495,985 2,222,481
Loans, net of unearned income 12,954,902 12,716,232
Allowance for credit losses (267,281) (299,159)
Customers' liability on acceptances 43,194 71,386
Accounts receivable and accrued interest 920,912 1,192,608
Investment in affiliate 821,093 838,274
Premises and equipment 409,182 413,334
Other assets 797,468 636,172
------------ ------------
Total assets $ 47,503,287 $ 54,749,199
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Noninterest-bearing deposits:
In domestic offices $ 2,852,636 $ 2,574,534
In foreign offices 224,840 232,832
Interest-bearing deposits:
In domestic offices 10,371,445 11,348,164
In foreign offices 18,891,053 20,108,507
------------ ------------
Total deposits 32,339,974 34,264,037
Trading account liabilities 2,546,756 3,647,439
Short-term borrowings 6,072,717 9,270,099
Acceptances outstanding 43,274 71,888
Accounts payable and accrued expenses 857,993 1,234,573
Other liabilities 127,596 174,265
Long-term debt 1,349,120 1,773,639
Subordinated long-term debt with parent 950,000 950,000
Stockholder's equity:
Common stock, $100 par value 4,800,000 shares
authorized; 4,000,000 shares outstanding 400,000 400,000
Surplus 1,634,540 1,637,092
Retained earnings 1,416,553 1,414,482
Accumulated other comprehensive
loss, net of taxes (235,236) (88,315)
------------ ------------
Total stockholder's equity 3,215,857 3,363,259
------------ ------------
Total liabilities and stockholder's equity $ 47,503,287 $ 54,749,199
============ ============
</TABLE>
<PAGE> 13
REPUBLIC NEW YORK CORPORATION
AVERAGE BALANCES, NET INTEREST DIFFERENTIAL,
AVERAGE RATES EARNED AND PAID
(FULLY TAXABLE EQUIVALENT BASIS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------
JUNE 30, 1999 MARCH 31, 1999
-------------------------------------------------------------------
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 $ 2,894,968 $ 32,663 4.53% $ 2,975,242 $ 42,268 5.76%
Investment securities:(1)
Taxable 20,996,437 343,185 6.56 21,515,126 345,990 6.52
Exempt from federal income taxes 1,330,929 24,105 7.26 1,333,174 24,837 7.56
---------- ------- ---------- -------
Total investment securities 22,327,366 367,290 6.60 22,848,300 370,827 6.58
Trading account assets(2) 1,241,788 18,250 5.89 1,236,677 16,923 5.55
Federal funds sold and securities
purchased under resale agreements 2,057,333 24,959 4.87 1,840,354 21,872 4.82
Loans, net of unearned income:
Domestic offices 10,461,297 189,887 7.28 10,043,053 184,404 7.45
Foreign offices 3,755,721 71,808 7.67 3,548,183 63,789 7.29
---------- ------- ---------- -------
Total loans, net of unearned income 14,217,018 261,695 7.38 13,591,236 248,193 7.41
---------- ------- ---------- -------
Total interest-earning assets 42,738,473 $704,857 6.61% 42,491,809 $700,083 6.68%
======== ==== ======= ====
Cash and due from banks 918,170 945,447
Other assets 3,898,983 4,468,688
----------- -----------
Total assets $47,555,626 $47,905,944
=========== ===========
Interest-bearing funds:
Consumer and other time deposits $ 9,982,356 $ 80,164 3.22% $10,100,760 $ 82,282 3.30%
Certificates of deposit 654,344 6,564 4.02 768,005 8,297 4.38
Deposits in foreign offices 15,858,709 199,576 5.05 15,905,021 204,607 5.22
---------- ------- ---------- -------
Total interest-bearing deposits 26,495,409 286,304 4.33 26,773,786 295,186 4.47
Trading account liabilities(2) 318,465 594 0.75 383,313 895 0.95
Short-term borrowings 6,596,960 75,420 4.59 6,405,131 73,904 4.68
Total long-term debt 4,345,990 65,208 6.02 4,463,837 66,477 6.04
---------- ------- ---------- -------
Total interest-bearing funds 37,756,824 $427,526 4.54% 38,026,067 $436,462 4.65%
======== ==== ======== ====
Noninterest-bearing deposits:
In domestic offices 2,918,842 2,843,470
In foreign offices 204,607 229,898
Other liabilities 3,388,111 3,732,909
Stockholders' equity:
Preferred stock 500,000 500,000
Common stockholders' equity 2,787,242 2,573,600
----------- -----------
Total stockholders' equity 3,287,242 3,073,600
----------- -----------
Total liabilities and stockholders' equity $47,555,626 $47,905,944
=========== ===========
Interest income/earning assets $704,857 6.61% $700,083 6.68%
Interest expense/earning assets 427,526 4.01 436,462 4.16
-------- ---- -------- ----
Net interest differential $277,331 2.60% $263,621 2.52%
======== ==== ======== ====
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------
JUNE 30, 1998
----------------------------------
AVERAGE
INTEREST RATES
AVERAGE INCOME/ EARNED/
BALANCE EXPENSE PAID
----------------------------------
<S> <C> <C> <C>
Interest-earning assets:
Interest-bearing deposits with banks $ 4,900,070 $ 77,785 6.37%
Investment securities:(1)
Taxable 23,061,629 386,210 6.72
Exempt from federal income taxes 1,359,317 26,791 7.91
---------- -------
Total investment securities 24,420,946 413,001 6.78
Trading account assets(2) 1,256,439 25,380 8.10
Federal funds sold and securities
purchased under resale agreements 3,789,488 52,380 5.54
Loans, net of unearned income:
Domestic offices 9,683,560 200,490 8.30
Foreign offices 3,989,617 88,864 8.93
---------- -------
Total loans, net of unearned income 13,673,177 289,354 8.49
---------- -------
Total interest-earning assets 48,040,120 $857,900 7.16%
======== ====
Cash and due from banks 896,245
Other assets 7,493,606
-----------
Total assets $56,429,971
===========
Interest-bearing funds:
Consumer and other time deposits $10,507,775 $ 99,927 3.81%
Certificates of deposit 1,281,931 16,293 5.10
Deposits in foreign offices 17,211,301 252,239 5.88
---------- -------
Total interest-bearing deposits 29,001,007 368,459 5.10
Trading account liabilities(2) 408,373 5,918 5.81
Short-term borrowings 10,114,149 131,700 5.22
Total long-term debt 4,764,732 76,708 6.46
---------- ------- ----
Total interest-bearing funds 44,288,261 $582,785 5.28%
======== ====
Noninterest-bearing deposits:
In domestic offices 2,613,450
In foreign offices 246,061
Other liabilities 5,745,263
Stockholders' equity:
Preferred stock 500,000
Common stockholders' equity 3,036,936
--------------
Total stockholders' equity 3,536,936
--------------
Total liabilities and stockholders' equity $ 56,429,971
==============
Interest income/earning assets $857,900 7.16%
Interest expense/earning assets 582,785 4.86
-------- ----
Net interest differential $275,115 2.30%
======== ====
</TABLE>
(1) Based on amortized or historic cost with the mark-to-market adjustment on
securities available for sale included in other assets.
(2) Excludes noninterest-bearing balances, which are included in other assets or
other liabilities, respectively.
<PAGE> 14
REPUBLIC NEW YORK CORPORATION
AVERAGE BALANCES, NET INTEREST DIFFERENTIAL,
AVERAGE RATES EARNED AND PAID
(FULLY TAXABLE EQUIVALENT BASIS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
6 MONTHS ENDED JUNE 30,
--------------------------------------------------------------------------------
1999 1998
-------------------------------------- ------------------------------------
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 $2,934,883 $74,931 5.15% $4,552,310 $146,310 6.48%
Investment securities:(1)
Taxable 21,254,349 689,175 6.54 23,217,833 785,322 6.82
Exempt from federal income taxes 1,332,045 48,942 7.41 1,457,550 57,522 7.96
---------- --------- ----------- --------
Total investment securities 22,586,394 738,117 6.59 24,675,383 842,844 6.89
Trading account assets(2) 1,239,247 35,173 5.72 1,133,182 44,147 7.86
Federal funds sold and securities
purchased under resale agreements 1,949,443 46,831 4.84 3,328,292 91,697 5.56
Loans, net of unearned income:
Domestic offices 10,253,328 374,291 7.36 9,286,899 383,880 8.34
Foreign offices 3,652,525 135,597 7.49 3,975,497 165,014 8.37
----------- --------- ----------- ---------
Total loans, net of unearned income 13,905,853 509,888 7.39 13,262,396 548,894 8.35
----------- --------- ----------- ----------
Total interest-earning assets 42,615,820 $1,404,940 6.65% 46,951,563 $1,673,892 7.19%
========== ==== ========== ====
Cash and due from banks 931,733 847,726
Other assets 4,182,264 7,883,968
----------- -----------
Total assets $47,729,817 $55,683,257
=========== ===========
Interest-bearing funds:
Consumer and other time deposits $10,041,231 $162,446 3.26% $10,532,463 $203,623 3.90%
Certificates of deposit 710,861 14,861 4.22 1,410,929 35,926 5.13
Deposits in foreign offices 15,881,737 404,183 5.13 17,546,361 509,709 5.86
----------- -------- ----------- ---------
Total interest-bearing deposits 26,633,829 581,490 4.40 29,489,753 749,258 5.12
Trading account liabilities(2) 350,710 1,489 0.86 394,711 8,850 4.52
Short-term borrowings 6,501,575 149,324 4.63 8,469,768 219,890 5.24
Total long-term debt 4,404,588 131,685 6.03 4,753,623 152,552 6.47
----------- -------- ----------- ----------
Total interest-bearing funds 37,890,702 $863,988 4.60% 43,107,855 $1,130,550 5.29%
======== ==== ========== ====
Noninterest-bearing deposits:
In domestic offices 2,881,364 2,602,652
In foreign offices 217,183 257,654
Other liabilities 3,559,557 6,219,883
Stockholders' equity:
Preferred stock 500,000 500,000
Common stockholders' equity 2,681,011 2,995,213
----------- -----------
Total stockholders' equity 3,181,011 3,495,213
----------- -----------
Total liabilities
and stockholders' equity $47,729,817 $55,683,257
============ ===========
Interest income/earning assets $1,404,940 6.65% $ 1,673,892 7.19%
Interest expense/earning assets 863,988 4.09 1,130,550 4.86
----------- ---- ----------- ----
Net interest differential $540,952 2.56% $ 543,342 2.33%
=========== ==== =========== ====
</TABLE>
(1) Based on amortized or historic cost with the mark-to-market adjustment on
securities available for sale included in other assets.
(2) Excludes noninterest-bearing balances, which are included in other assets or
other liabilities, respectively.
