<PAGE> 1.
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended December 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 1-6152
THE BANK OF NEW YORK COMPANY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-2614959
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 495-1784
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ----------------------
Common Stock, $7.50 par value NEW YORK STOCK EXCHANGE
8.60% Cumulative Preferred Stock NEW YORK STOCK EXCHANGE
Preferred Stock Purchase Rights NEW YORK STOCK EXCHANGE
Convertible Subordinated Debentures due 2001 NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
Warrants to Purchase Common Stock
Class A, 7.75% Cumulative Convertible Preferred Stock
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant at February 28, 1994 consisted of:
Common Stock ($7.50 par value) $5,103,325,873
(based on closing price
on New York Stock Exchange)
The number of shares outstanding of the registrant's common Stock $7.50 par
value was 93,862,900 shares on February 28, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1993 Annual Report to Shareholders are incorporated by
reference into Parts I, II, and IV. Portions of the definitive Proxy
Statement pursuant to Regulation 14A for the 1994 Annual Meeting of
Shareholders are incorporated by reference into Part III.
<PAGE> 2.
PART I
- ------
ITEM 1. BUSINESS
- -----------------
The business of The Bank of New York Company, Inc. (the "Company") and
its subsidiaries is described in the "Business Review" section of the
Company's 1993 Annual Report to Shareholders which description is included in
Exhibit 13 to this report and incorporated herein by reference. Also, the
"Management's Discussion and Analysis" section included in Exhibit 13
contains financial and statistical information on the operations of the
Company. Such information is herein incorporated by reference.
COMPETITION
The retail and commercial businesses in which the Company operates are
strongly competitive. Competition is provided by both unregulated and
regulated financial services organizations, whose products and services span
the local, national, and global markets in which the Company conducts
operations.
Savings banks, savings and loan associations, and credit unions actively
compete for deposits, and money market funds and brokerage houses offer
deposit-like services. These institutions, as well as consumer and
commercial finance companies, national retail chains, factors, insurance
companies and pension trusts, are important competitors for various types of
loans. Issuers of commercial paper compete actively for funds and reduce
demand for bank loans. For personal and corporate trust services and
investment counseling services, insurance companies, investment counseling
firms, and other business firms and individuals offer active competition.
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, the Company is subject to the regulation and
supervision of the Federal Reserve Board under the Bank Holding Company Act
("BHC Act"). The Company is also subject to regulation by the New York State
Department of Banking. Under the BHC Act, bank holding companies may not
directly or indirectly acquire the ownership or control of more than 5% of
the voting shares or substantially all of the assets of any company,
including a bank, without the prior approval of the Federal Reserve Board.
In addition, bank holding companies are generally prohibited under the BHC
Act from engaging in nonbanking activities, subject to certain exceptions.
The Company's subsidiary banks are subject to supervision and
examination by applicable federal and state banking agencies. The Bank of
New York ("BNY") is a state-chartered New York banking corporation and a
member of the Federal Reserve System and is subject to regulation and
supervision principally by the Federal Reserve Board. The Bank of New York
(Delaware) ("BNY Del.") is a Delaware chartered FDIC insured non-member bank
and therefore is subject to regulation and supervision principally by the
FDIC. The Bank of New York National Association ("BNYNA") is organized as a
national association under the laws of the United States and therefore is
subject to regulation and supervision principally by the Comptroller of the
Currency ("Comptroller").
<PAGE> 3.
Capital Adequacy
Bank regulators have adopted risk-based capital guidelines for bank
holding companies and banks. The minimum ratio of qualifying total capital
to risk-weighted assets (including certain off-balance sheet items) is 8%.
At least half of the total capital is to be comprised of common stock,
retained earnings, noncumulative perpetual preferred stocks, minority
interests and for bank holding companies, a limited amount of qualifying
cumulative perpetual preferred stock, less certain intangibles including
goodwill ("Tier I capital"). The remainder ("Tier II capital") may consist
of other preferred stock, certain other instruments, and limited amounts of
subordinated debt and the loan and lease loss allowance.
In addition, the Federal Reserve Board has established minimum Leverage
Ratio (Tier I capital to average total assets) guidelines for bank holding
companies and banks. These guidelines provide for a minimum leverage ratio
of 3% for bank holding companies and banks that meet certain specified
criteria, including that they have the highest regulatory rating. All other
banking organizations will be required to maintain a leverage ratio of 3%
plus an additional cushion of at least 100 to 200 basis points. The
guidelines also provide that banking organizations experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets. Furthermore, the guidelines
indicate that the Federal Reserve Board will continue to consider a "Tangible
Tier I Leverage Ratio" in evaluating proposals for expansion or new
activities. The Tangible Tier I Leverage Ratio is the ratio of Tier I
capital, less intangibles not deducted from Tier I capital, to average total
assets. The Federal Reserve Board has not advised the Company of any
specific minimum leverage ratio applicable to it.
Federal banking agencies have proposed regulations that would modify
existing rules related to risk-based and leverage capital ratios. The
Company does not believe that the aggregate impact of these modifications
would have a significant impact on its capital position.
Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
However, management is unable to predict whether and when higher capital
requirements would be imposed and, if so, at what level and on what schedule.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), which was enacted in December 1991, substantially revised the
depository institution regulatory and funding provisions of the Federal
Deposit Insurance Act ("FDIA") and made revisions to several other federal
banking statutes. Among other things, FDICIA requires the federal banking
regulators to take prompt corrective action in respect of FDIC-insured
depository institutions that do not meet minimum capital requirements.
FDICIA establishes five capital tiers: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized." Under applicable regulations, an FDIC-insured
bank is defined to be well capitalized if it maintains a Leverage Ratio of at
least 5%, a risk-adjusted Tier I Capital Ratio of at least 6% and a Total
Capital Ratio of at least 10% and is not otherwise in a "troubled condition"
as specified by its appropriate federal regulatory agency. A bank is
generally considered to be adequately capitalized if it is not defined to be
well capitalized but meets all of its minimum capital requirements, i.e., if
it has a total risk-based Capital Ratio of 8% or greater, a Tier I risk-based
Capital Ratio of 4% or greater and a Leverage Ratio of 4% or greater. A bank
will be considered undercapitalized if it fails to meet any minimum required
measure, significantly undercapitalized if it is significantly below such
measure and critically undercapitalized if it maintains a level of tangible
equity capital equal to or less than 2% of total assets. A bank may be
deemed to be in a capitalization category that is lower than is indicated by
its actual capital position if it receives an unsatisfactory examination
rating.
<PAGE> 4.
FDICIA generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of dividends) or paying
any management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. For an
undercapitalized depository institution's capital restoration plan to be
acceptable, its holding company must guarantee the capital plan up to an
amount equal to the lesser of 5% of the depository institution's assets at
the time it becomes undercapitalized or the amount of the capital deficiency
when the institution fails to comply with the plan. In the event of the
parent holding company's bankruptcy, such guarantee would take priority over
the parent's general unsecured creditors. The federal banking agencies may
not accept a capital plan without determining, among other things, that the
plan is based on realistic assumptions and is likely to succeed in restoring
the depository institution's capital. If a depository institution fails to
submit an acceptable plan, it is treated as if it is significantly
undercapitalized.
Significantly undercapitalized depository institutions may be subject to
a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and cessation of receipt of deposits from correspondent
banks. Critically undercapitalized depository institutions are subject to
appointment of a receiver or conservator.
The Company's significant banking subsidiaries are well capitalized.
The table below indicates capital ratios of the Company and its
significant banking subsidiaries at December 31, 1993 and 1992 and the
respective guidelines for well capitalized institutions under FDICIA.
<TABLE>
<CAPTION>
December 31, 1993
BNY
Company BNY Del. BNYNA
------- --- ---- -----
<S> <C> <C> <C> <C>
Tier I 8.87% 8.21% 7.53% 13.90%
Total Capital 13.65 12.82 11.00 15.17
Leverage 7.99 7.22 8.09 6.43
Tangible Common
Equity 7.00 7.74 7.87 6.48
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
BNY
Company BNY Del. BNYNA
------- --- ---- ------ Well
Capitalized
Guidelines
------------
<S> <C> <C> <C> <C> <C>
Tier I 7.59% 6.92% 6.24% 10.22% 6%
Total Capital 12.30 11.39 10.35 11.49 10
Leverage 7.11 6.35 6.67 6.21 5
Tangible Common
Equity 5.83 6.73 7.20 6.07
</TABLE>
At December 31, 1993, the amounts of capital by which the Company and
its significant banking subsidiaries exceed the guidelines are as follows:
Well Capitalized
BNY
Company BNY Del. BNYNA
(in millions) ------- --- ---- -----
Tier I $1,215 $753 $ 79 $167
Total Capital 1,545 960 52 110
Leverage 1,404 861 149 66
<PAGE> 5.
The following table presents the components of the Company's risk-based
capital at December 31, 1993 and 1992:
(in millions)
1993 1992
---- ----
Common Stock $3,778 $3,302
Preferred Stock 294 369
Less: Intangibles 317 345
----- ------
Tier 1 Capital 3,755 3,326
Convertible Preferred Stock - 59
Qualifying Long-term Debt 1,489 1,452
Qualifying Allowance for Loan Losses 534 554
------ ------
Tier 2 Capital 2,023 2,065
------ ------
Total Risk-based Capital $5,778 $5,391
====== ======
The following table presents the components of the Company's risk
adjusted assets at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
------------------- -------------------
Balance Balance
sheet/ Risk sheet/ Risk
notional adjusted notional adjusted
(in millions) amount balance amount balance
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Assets
- ------
Cash, Due From Banks and Interest-
Bearing Deposits in Banks $ 4,780 $ 318 $ 5,739 $ 331
Securities 5,597 571 5,900 778
Trading Assets 1,325 270 736 292
Fed Funds Sold and Securities
Purchased Under Resale Agreements 36 5 265 53
Loans 30,570 27,954 29,497 27,864
Allowance for Loan Losses (970) - (1,072) -
Other Assets 4,208 3,425 4,145 3,673
------- ------- -------- -------
Total Assets $45,546 32,543 $ 45,210 32,991
======= ------- ======== -------
Off-Balance Sheet Exposures
- ---------------------------
Commitments to Extend Credit $19,463 6,167 $ 17,718 6,440
Securities Lending Indemnifications 15,005 - 13,676 -
Standby Letters of Credit and
Other Guarantees 4,643 3,685 5,316 4,329
Interest Rate Contracts 36,523 145 29,582 186
Foreign Exchange Contracts 39,877 225 52,987 389
-------- ------- -------- -------
Total Off-Balance Sheet Exposure $115,511 10,222 $119,279 11,344
======== ------- ======== -------
Gross Risk Adjusted Assets 42,765 44,335
Less: Allowance for Loan Losses not
Qualifying as Risk Based Capital 436 518
------- -------
Risk Adjusted Assets $42,329 $43,817
======= =======
</TABLE>
<PAGE> 6.
Subsequent to December 31, 1993, the Company redeemed $173 million of
preferred stock and BNY acquired the domestic factoring business of the Bank
of Boston. After giving pro forma effect to these actions, the Company's and
BNY's captial ratios at December 31, 1993 were as follows:
Company BNY
------- ----
Tier 1 8.33% 7.82%
Total Capital 13.08 12.41
Leverage 7.51 6.89
Tangible Common Equity 6.88 7.58
A discussion of the Company's capital position is incorporated by
reference from the caption "Capital Resources" in the "Management's
Discussion and Analysis" section of Exhibit 13.
Brokered Deposits
The FDIC has adopted regulations under FDICIA governing the receipt of
brokered deposits. Under the regulations, a bank cannot accept, rollover or
renew brokered deposits unless (i) it is well capitalized or (ii) it is
adequately capitalized and receives a waiver from the FDIC. A bank that
cannot receive brokered deposits also cannot offer "pass-through" insurance
on certain employee benefit accounts. Whether or not it has obtained such a
waiver, an adequately capitalized bank may not pay an interest rate on any
deposits in excess of 75 basis points over certain prevailing market rates
specified by regulation. There are no such restrictions on a bank that is
well capitalized. Because BNY and BNY Del. are well capitalized, the Company
believes the brokered deposits regulation will have no material effect on the
funding or liquidity of BNY and BNY Del. BNYNA is well capitalized, but has
no brokered deposits.
FDIC Insurance Assessments
BNY, BNY Del., and BNYNA are subject to FDIC deposit insurance
assessments. As required by FDICIA, the FDIC has adopted a risk-based
premium schedule which has increased the assessment rates for most FDIC-
insured depository institutions. Under the schedule, the premiums initially
range from $.23 to $.31 for every $100 of deposits. Each financial
institution is assigned to one of three capital groups --- well capitalized,
adequately capitalized, or undercapitalized --- and further assigned to one
of three subgroups within a capital group, on the basis of supervisory
evaluations by the institution's primary federal and, if applicable, state
supervisors and other information relevant to the institution's financial
condition and the risk posed to the applicable insurance fund. The actual
assessment rate applicable to a particular institution will, therefore,
depend in part upon the risk assessment classification so assigned to the
institution by the FDIC.
The FDIC is authorized to raise insurance premiums in certain
circumstances. Any increase in premiums would have an adverse effect on the
Company's earnings.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe and unsound practices,
is in an unsafe or unsound condition to continue operations or has violated
any applicable law, regulation, rule, order or condition imposed by a bank's
federal regulatory agency.
Depositor Preference
The Omnibus Budget Reconciliation Act of 1993 provides for a national
depositor preference on amounts realized from the liquidation or other
resolution of any depository institution insured by the FDIC. That act
requires claims to be paid in the following order of priority: the receiver's
administrative expenses; deposits; other general or senior liabilities of the
institution; obligations subordinated to depositors or general creditors; and
obligations to shareholders. Under an FDIC interim rule, which became
effective August 13, 1993, "administrative expenses of the receiver" are
defined as those incurred by the receiver in liquidating or resolving the
affairs of a failed insured depository institution.
<PAGE> 7.
Acquisitions
The BHC Act generally limits acquisitions by the Company to commercial
banks and companies engaged in activities that the Federal Reserve Board has
determined to be so closely related to banking as to be a proper incident
thereto. The Company's direct activities are generally limited to furnishing
to its subsidiaries services that qualify under the "closely related" and
"proper incident" tests. Prior Federal Reserve Board approval is required
under the BHC Act for new activities and acquisitions of most nonbanking
companies.
The BHC Act, the Federal Bank Merger Act, and the New York Banking Law
regulate the acquisition of commercial banks. The BHC Act requires the prior
approval of the Federal Reserve Board for the direct or indirect acquisition
of more than 5% of the voting shares of a commercial bank. The BHC Act
generally prohibits the acquisition of a domestic bank located outside the
Company's state of principal operations, New York State, unless authorized by
the law of the state of the target bank. Most states have enacted interstate
banking laws that permit the Company to acquire banks located in their
states, but some states (particularly in the Southeast) presently do not
permit entry by New York bank holding companies. The New York Banking Law
requires state regulatory approval before the Company can acquire more than
5% of the voting shares of a commercial bank in New York.
The merger of BNY with another bank would require the approval of the
Federal Reserve Board or other federal bank regulatory authority and, if the
surviving bank is a state bank, the New York Superintendent of Banks. With
respect to BNYNA, the approval of the Comptroller is required for branching
of national banks, purchasing the assets of other banks and for bank mergers
in which the continuing bank is a national bank.
In reviewing bank acquisition and merger applications, the bank
regulatory authorities will consider, among other things, the competitive
effect and public benefits of the transactions, the capital position of the
combined organization, and the applicant's record under the Community
Reinvestment Act.
Under Federal Reserve Board policy, the Company is expected to act as a
source of financial strength to its banks and to commit resources to support
such banks in circumstances where it might not do so absent such policy. In
addition, any loans by the Company to its banks would be subordinate in right
of payment to deposits and to certain other indebtedness of its banks.
Regulated Banking Subsidiaries
As a New York State chartered bank and a member of the Federal Reserve
System, BNY is subject to the supervision of, and is regularly examined by,
the New York State Banking Department and the Federal Reserve Board. As a
bank insured by the FDIC, BNY is also subject to examination by that agency.
BNY Del. is subject to the supervision of, and is regularly examined by, the
FDIC and the Office of State Bank Commissioner of the State of Delaware.
BNYNA is a national bank subject to the regulation and supervision of, and
regular examination by, the Comptroller and subject to regulations of the
FDIC and Federal Reserve Board.
Both federal and state laws extensively regulate various aspects of the
banking business, such as permissible types and amounts of loans and
investments, permissible activities, and reserve requirements. These
regulations are intended primarily for the protection of depositors rather
than the Company's stockholders.
Restrictions on Transfer of Funds
Restrictions on the transfer of funds to the Company are discussed in
Note 12 to the Consolidated Financial Statements included in Exhibit 13.
Such discussion is incorporated herein by reference.
<PAGE> 8.
FIRREA
A depository institution insured by the FDIC can be held liable for any
loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with (i) the default of a commonly controlled institution or (ii)
any assistance provided by the FDIC to a commonly controlled, FDIC-insured
depository institution in danger of default. "Default" is defined generally
as the appointment of a conservator or receiver, and "in danger of default"
is defined generally as the existence of certain conditions indicating that
a "default" is likely to occur in the absence of regulatory assistance.
GOVERNMENT MONETARY POLICIES
The Federal Reserve Board has the primary responsibility for monetary
policy; accordingly, its actions have an important influence on the demand
for credit and investments and the level of interest rates.
<PAGE> 9.
<TABLE>
ADDITIONAL FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
Average Balances and Rates on a Taxable Equivalent Basis (dollars in millions)
<CAPTION>
1993 1992
======================================================
Average Average Average Average
Balance Interest Rate Balance Interest Rate
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
- ------
Interest-Bearing
Deposits in Banks
(Primarily Foreign) $ 452 $ 24 5.42% $ 753 $ 76 10.14%
Federal Funds Sold
and Securities
Purchased Under
Resale Agreements 3,149 97 3.06 2,379 85 3.54
Loans
Domestic Offices
Consumer 8,046 792 9.84 6,708 687 10.24
Commercial 12,211 755 6.18 11,951 772 6.46
Foreign Offices 10,170 485 4.77 11,686 651 5.57
------- ------ ------- ------
Total Loans 30,427 2,032* 6.68 30,345 2,110* 6.95
------- ------ ------- ------
Securities
U.S. Government
Obligations 3,732 215 5.78 3,611 240 6.66
Obligations of
States and
Political
Subdivisions 1,070 110 10.29 1,224 135 11.04
Other Securities,
including Trading
Securities
Domestic Offices 1,358 64 4.74 1,190 91 7.65
Foreign Offices 192 14 7.36 177 17 9.44
------- ------ ------- ------
Total Other
Securities 1,550 78 5.06 1,367 108 7.88
------- ------ ------- ------
Total Securities 6,352 403 6.36 6,202 483 7.79
------- ------ ------- ------
Total Interest-Earning
Assets 40,380 $2,556 6.33% 39,679 $2,754 6.94%
====== =======
Allowance for Loan
Losses (1,045) (1,057)
Cash and Due from
Banks 2,735 2,522
Other Assets 4,574 5,083
------- -------
Total Assets $46,644 $46,227
======= =======
Assets Attributable
to Foreign Offices 24.37% 28.63%
====== ======
</TABLE>
<TABLE>
<CAPTION>
1991
==========================
Average Average
Balance Interest Rate
--------------------------
<S> <C> <C> <C>
Assets
- ------
Interest-Bearing
Deposits in Banks
(Primarily Foreign) $ 761 $ 87 11.45%
Federal Funds Sold
and Securities
Purchased Under
Resale Agreements 2,389 138 5.79
Loans
Domestic Offices
Consumer 7,453 902 12.10
Commercial 12,878 1,021 7.93
Foreign Offices 12,388 999 8.06
------- ------
Total Loans 32,719 2,922* 8.93
------- ------
Securities
U.S. Government
Obligations 1,987 156 7.85
Obligations of
States and
Political
Subdivisions 1,497 173 11.55
Other Securities,
including Trading
Securities
Domestic Offices 1,006 74 7.37
Foreign Offices 186 17 8.86
------- ------
Total Other
Securities 1,192 91 7.60
------- ------
Total Securities 4,676 420 8.97
------- ------
Total Interest-Earning
Assets 40,545 $3,567 8.80%
======
Allowance for Loan
Losses (1,216)
Cash and Due from
Banks 2,389
Other Assets 4,899
-------
Total Assets $46,617
=======
Assets Attributable
to Foreign Offices 30.19%
=====
<FN>
*Includes fees of $103 million in 1993, $96 million in 1992, and $98 million
in 1991.
Nonaccrual loans are included in the average loan balance; the associated
income, recognized on the cash basis, is included in interest.
Taxable equivalent adjustments were $54 million in 1993, $66 million in
1992, and $77 million in 1991, and are based on the federal statutory tax
rate (35% in 1993, and 34% in 1992 and 1991) and applicable state and local
taxes.
</TABLE>
Continued on page 10
<PAGE> 10.
<TABLE>
Average Balances and Rates on a Taxable Equivalent Basis (dollars in
millions)
<CAPTION>
1993 1992
==========================================================
Average Average Average Average
Balance Interest Rate Balance Interest Rate
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Liabilities and
Shareholders' Equity
- --------------------
Interest-Bearing
Deposits
Domestic Offices
Money Market Rate
Accounts $ 3,666 $ 91 2.48% $ 3,468 $ 108 3.11%
Savings 8,379 198 2.37 7,189 216 3.01
Certificates of
Deposit of
$100,000 or More 1,189 36 3.00 1,709 64 3.75
Other Time
Deposits 2,701 119 4.39 2,965 152 5.15
------- ------ ------- ------
Total Domestic
Offices 15,935 444 2.78 15,331 540 3.53
------- ------ ------- ------
Foreign Offices
Banks in Foreign
Countries 2,829 93 3.28 4,018 204 5.07
Government and
Official
Institutions 1,306 57 4.34 1,270 61 4.81
Other Time
and Savings 3,752 107 2.87 4,716 200 4.24
------- ------ ------- ------
Total Foreign
Offices 7,887 257 3.26 10,004 465 4.64
------- ------ ------- ------
Total Interest-
Bearing Deposits 23,822 701 2.94 25,335 1,005 3.97
------- ------ ------- ------
Federal Funds
Purchased and
Securities Sold
Under Repurchase
Agreements 3,467 102 2.94 4,001 136 3.40
Other Borrowed Funds 2,348 86 3.66 2,045 85 4.13
Long-Term Debt 1,729 117 6.79 1,386 94 6.77
------- ------ ------- ------
Total Interest-
Bearing
Liabilities 31,366 $1,006 3.21% 32,767 $1,320 4.03%
====== ======
Noninterest-Bearing
Deposits
Domestic Offices 8,946 7,797
Foreign Offices 69 105
------- -------
Total
Noninterest-
Bearing
Deposits 9,015 7,902
------- -------
Other Liabilities 2,366 2,153
Preferred Stock 334 409
Common Shareholders'
Equity 3,563 2,996
------- -------
Total Liabilities
and Shareholders'
Equity $46,644 $46,227
======= =======
Net Interest
Earnings and
Interest Rate
Spread $1,550 3.12 $1,434 2.91
====== ======
Net Yield on
Interest-
Earnings
Assets 3.84% 3.61%
==== ====
Liabilities
Attributable
to Foreign
Offices 19.74% 24.91%
===== =====
</TABLE>
<TABLE>
<CAPTION>
1991
===========================
Average Average
Balance Interest Rate
----------------------------
<S> <C> <C> <C>
Liabilities and
Shareholders' Equity
- --------------------
Interest-Bearing Deposits
Domestic Offices
Money Market Rate
Accounts $ 3,594 $ 189 5.25%
Savings 6,535 342 5.23
Certificates of
Deposit of $100,000
or More 2,788 179 6.42
Other Time Deposits 4,057 268 6.60
------- ------
Total Domestic Offices 16,974 978 5.76
------- ------
Foreign Offices
Banks in Foreign Countries 5,539 392 7.08
Government and
Official Institutions 996 67 6.67
Other Time and Savings 5,183 357 6.89
------- ------
Total Foreign Offices 11,718 816 6.96
------- ------
Total Interest-
Bearing Deposits 28,692 1,794 6.25
------- ------
Federal Funds Purchased
and Securities Sold
Under Repurchase
Agreements 3,196 177 5.55
Other Borrowed Funds 1,414 93 6.61
Long-Term Debt 991 76 7.65
------- ------
Total Interest-Bearing
Liabilities 34,293 $2,140 6.24%
======
Interest-Bearing Deposits
Domestic Offices 6,862
Foreign Offices 115
-------
Total Noninterest-
Bearing Deposits 6,977
-------
Other Liabilities 2,300
Preferred Stock 395
Common Shareholders' Equity 2,652
-------
Total Liabilities
and Shareholders' Equity $46,617
=======
Net Interest Earnings and
Interest Rate Spread $1,427 2.56
======
Net Yield on
Interest-Earnings Assets 3.52%
====
Liabilities Attributable
to Foreign Offices 28.82%
=====
</TABLE>
<PAGE> 11.
<TABLE>
Rate/Volume Analysis on a Taxable Equivalent Basis (in millions)
- ----------------------------------------------------------------
<CAPTION>
1993 vs. 1992
----------------------------------------
Increase (Decrease)
due to change in:
------------------- Total
Average Average Increase
Balance Rate (Decrease)
------- ------- ---------
<S> <C> <C> <C>
Interest Income
- ---------------
Interest-Bearing Deposits in Banks $ (24) $ (28) $ (52)
Federal Funds Sold and Securities
Purchased Under Resale Agreements 27 (15) 12
Loans
Domestic Offices
Consumer 137 (32) 105
Commercial 17 (34) (17)
Foreign Offices (79) (87) (166)
----- ----- -----
Total Loans 75 (153) (78)
Securities
U.S. Government Obligations 8 (33) (25)
Obligations of States and
Political Subdivisions (16) (9) (25)
Other Securities, including
Trading Assets
Domestic Offices 13 (40) (27)
Foreign Offices 1 (4) (3)
----- ----- -----
Total Other Securities 14 (44) (30)
----- ----- -----
Total Securities 6 (86) (80)
----- ----- -----
Total Interest Income 84 (282) (198)
----- ----- -----
Interest Expense
- ----------------
Interest-Bearing Deposits
Domestic Offices
Money Market Rate Accounts 6 (23) (17)
Savings 36 (54) (18)
Certificate of Deposits of
$100,000 or More (17) (11) (28)
Other Time Deposits (12) (21) (33)
----- ----- -----
Total Domestic Offices 13 (109) (96)
----- ----- -----
Foreign Offices
Banks in Foreign Countries (51) (60) (111)
Government and Official
Institutions 2 (6) (4)
Other Time and Savings (36) (57) (93)
----- ----- -----
Total Foreign Offices (85) (123) (208)
----- ----- -----
Total Interest-Bearing
Deposits (72) (232) (304)
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements (17) (17) (34)
Other Borrowed Funds 12 (11) 1
Long-Term Debt 23 - 23
----- ----- -----
Total Interest Expense (54) (260) (314)
----- ----- -----
Change in Net Interest Income $ 138 $ (22) $ 116
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
1992 vs. 1991
-----------------------------------
Increase (Decrease)
due to change in:
------------------ Total
Average Average Increase
Balance Rate (Decrease)
------- ------- ---------
<S> <C> <C> <C>
Interest Income
- ---------------
Interest-Bearing Deposits in Banks $ (1) $ (10) $ (11)
Federal Funds Sold and Securities
Purchased Under Resale Agreements - (53) (53)
Loans
Domestic Offices
Consumer (85) (130) (215)
Commercial (70) (179) (249)
Foreign Offices (54) (294) (348)
------ ------ ------
Total Loans (209) (603) (812)
Securities
U.S. Government Obligations 127 (43) 84
Obligations of States and
Political Subdivisions (31) (7) (38)
Other Securities, including
Trading Assets
Domestic Offices 14 3 17
Foreign Offices (1) 1 -
----- ----- ------
Total Other Securities 13 4 17
----- ----- ------
Total Securities 109 (46) 63
----- ----- ------
Total Interest Income (101) (712) (813)
----- ----- ------
Interest Expense
- ----------------
Interest-Bearing Deposits
Domestic Offices
Money Market Rate Accounts (6) (75) (81)
Savings 34 (160) (126)
Certificate of Deposits of
$100,000 or More (55) (60) (115)
Other Time Deposits (64) (52) (116)
----- ----- ------
Total Domestic Offices (91) (347) (438)
----- ----- ------
Foreign Offices
Banks in Foreign Countries (92) (96) (188)
Government and Official
Institutions 18 (24) (6)
Other Time and Savings (30) (127) (157)
----- ----- ------
Total Foreign Offices (104) (247) (351)
----- ----- ------
Total Interest-Bearing
Deposits (195) (594) (789)
Federal Funds Purchased and
Securities Sold Under
Repurchase Agreements 45 (86) (41)
Other Borrowed Funds 43 (51) (8)
Long-Term Debt 30 (12) 18
----- ----- ------
Total Interest Expense (77) (743) (820)
----- ----- ------
Change in Net Interest Income $ (24) $ 31 $ 7
===== ===== ======
<FN>
Changes which are not solely due to balance changes or rate changes are
allocated to such categories on the basis of the respective percentage
changes in average balances and average rates.
</TABLE>
<PAGE> 12.
Interest-Rate Sensitivity
- -------------------------
The Company actively manages interest-rate sensitivity (the exposure of
net interest income to interest rate movements). The relationship of
interest-earning assets and interest-bearing liabilities between repricing
dates is monitored, and is flexible enough to capitalize on profit
opportunities, while minimizing adverse effects on earnings when changes in
short-term and long-term interest rates occur. The Company uses complex
simulation models to adjust the structure of its assets and liabilities in
response to interest rate changes.
The following table reflects the year-end position of the Company's
interest-earning assets and interest-bearing liabilities that either reprice
or mature within the designated time periods. A positive interest
sensitivity gap, for a particular time period, is one in which more interest-
earning assets reprice or mature than interest-bearing liabilities. A
negative interest sensitivity gap results from a greater amount of
liabilities repricing or maturing. Further, within the time periods shown
below, assets and liabilities reprice on different dates and at different
levels. Interest sensitivity gaps change daily. A negative gap will result
in an increase in net interest income in periods of declining rates and a
decrease in net interest income in periods of rising rates. The opposite is
true for positive gaps.
<TABLE>
<CAPTION>
December 31, 1993
----------------------------------------------------------
Within Within Within Within Greater
1 Mo. 2-3 Mos. 4-6 Mos. 7-12 Mos. Than 12 Mos. Total
----- -------- -------- --------- ------------ -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning
Assets
- ----------------
Foreign Offices $ 4,959 $ 2,829 $ 1,659 $ 654 $ 171 $10,272
Domestic Offices
Loans 14,615 385 551 732 4,380 20,663
Securities 91 78 220 419 4,472 5,280
Trading Assets 1,321 - - - - 1,321
Federal Funds Sold
and Securities
Purchased Under
Resale Agreements 36 - - - - 36
------- ------- ------- ------ ------- -------
21,022 3,292 2,430 1,805 9,023 $37,572
------- ------- ------- ------ ------- =======
Interest-Bearing
Liabilities
- -----------------
Foreign Offices 7,321 702 278 105 2 8,408
Domestic Offices
Interest-Bearing
Deposits
Money Market
Rate Accounts 3,559 - - - - 3,559
Savings 7,003 - - 12 1,434 8,449
Certificates
of Deposit
of $100,000
or More 473 332 152 72 550 1,579
Other Time
Deposits 406 281 347 244 290 1,568
------- ------- ------- ------ ------- ------
Total
Interest-
Bearing
Deposits 18,762 1,315 777 433 2,276 23,563
------- ------- ------- ------ ------- ------
Federal
Funds
Purchased
and Other
Borrowed
Funds 4,480 251 491 95 80 5,397
Long-Term
Debt 25 50 71 25 1,419 1,590
------- ------- ------- ------ ------- ------
Noninterest-
Bearing
Sources
of Funds 1,801 24 37 76 5,084 7,022
- ---------- ------- ------- ------- ------ ------- ------
Total 25,068 1,640 1,376 629 8,859 $37,572
=======
Effect of
Financial
Futures
and Swaps (105) (528) 712 11 (90)
- ---------- ------- ------ ------- ------ -------
Interest-
Sensitive Gap $(4,151) $ 1,124 $ 1,766 $1,187 $ 74
- ------------- ======= ======= ======= ====== =======
Cumulative
Interest-
Sensitivity
Gap $(4,151) $(3,027) $(1,261) $ (74) $ -
- --------- ======= ======= ======= ====== =======
</TABLE>
<PAGE> 13.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
- ---------------------------------------
Risk factors other than less developed country (LDC) loans and highly
leveraged transaction (HLT) loans are discussed below. LDC and HLT loans are
discussed under the captions "Provision and Allowance for Loan Losses" and
"Highly Leveraged Transactions" in the "Management's Discussion and Analysis"
section included in Exhibit 13, which discussion is incorporated herein by
reference.
At December 31, 1993, the domestic commercial real estate portfolio had
approximately 74% of its loans in New York and New Jersey, 6% in California,
5% in Pennsylvania, 3% in New England, and 2% in Florida; no other state
accounts for more than 2% of the portfolio. This portfolio consists of the
following types of properties:
Business loans secured by real estate 47%
Offices 24
Retail 7
Hotels 5
Mixed-Used 4
Condominiums and cooperatives 3
Land 2
Industrial/Warehouse 1
Other 7
----
100%
====
At December 31, 1993 and 1992, the Company's nonperforming real estate
loans and real estate acquired in satisfaction of loans aggregated $171
million and $411 million, respectively. Net charge-offs of real estate loans
were $69 million in 1993 and $90 million in 1992. In addition, other real
estate charges were $53 million and $106 million in 1993 and 1992. A
discussion of other real estate charges under "Noninterest Expense and Income
Taxes" in the "Management's Discussion and Analysis" section included in
Exhibit 13 is incorporated herein by reference.
The Company's consumer loan portfolio is comprised principally of credit
card, other installment, and residential loans. Residential and auto loans
are collateralized, thereby reducing the risk. Credit card net charge-offs
were $121 million in 1993 compared to $118 million in 1992. The 1993 and
1992 amounts exclude $56 million and $57 million in net charge-offs related
to the portion of the portfolio that is securitized. As a percentage of
average credit card outstandings, net charge-offs decreased to 2.88% in 1993
from 3.74% in 1992. On a managed receivables basis, net charge-offs as a
percentage of average outstandings were 3.19% in 1993 compared to 3.89% in
1992. Other consumer net charge-offs were $23 million in 1993 and $37
million in 1992.
Lending to the utility industry is concentrated in investor-owned
electric utilities. The Company also makes loans to gas and telephone
utilities. Nonperforming loans in this industry amounted to $2 million at
year-end 1993 compared to $3 million in 1992. Charge-offs of loans to the
utility industry were $14 million in 1992. There were no charge-offs in
1993.
<PAGE> 14.
The Company's loans to the communications, entertainment, and publishing
industries primarily consist of credits with cable television operators,
broadcasters, magazine and newspaper publishers and motion picture theaters.
There were no nonperforming communications loans at December 31, 1993.
Nonperforming communication loans amounted to $8 million at December 31,
1992. Charge-offs of communications loans were $1 million and $23 million in
1993 and 1992. None of these amounts represent HLTs.
The Company's portfolio of loans for purchasing or carrying securities
is comprised largely of overnight loans which are fully collateralized, with
appropriate margins, by marketable securities. Throughout its many years of
experience in this area, the Company has rarely experienced a loss.
The Company makes short-term, collateralized loans to mortgage bankers
to fund mortgages sold to investors. Nonperforming loans and charge-offs
have not been significant.
Based on an evaluation of individual credits, historical loan losses,
and global economic factors, the Company has allocated its allowance for loan
losses as follows:
<TABLE>
<CAPTION>
1993 1992 1991 1990
---- ---- ---- ----
<S> <C> <C> <C> <C>
Real Estate Loans 8% 9% 10% 11%
HLT Loans 6 7 11 17
Other Domestic Commercial and
Industrial Loans 58 57 51 38
Consumer Loans 10 9 10 8
Foreign Loans (excluding medium-term
LDC loans) 6 6 6 6
Medium-Term LDC Loans 12 12 12 20
---- ---- ---- ----
100% 100% 100% 100%
==== ==== ==== ====
</TABLE>
Such an allocation is inherently judgmental, and the entire allowance
for loan losses is available to absorb loan losses regardless of the nature
of the loan.
<PAGE> 15.
The following table details changes in the Company's allowance for loan
losses for the last five years.
<TABLE>
<CAPTION>
(dollars in millions) 1993 1992 1991
---- ---- -----
<S> <C> <C> <C>
Loans Outstanding, December 31, $30,570 $29,497 $30,335
Average Loans Outstanding 30,427 30,345 32,719
Allowance for Loan Losses
- -------------------------
Balance, January 1
Regular
Domestic $ 878 $ 889 $ 831
Foreign 70 60 62
Medium-term Less Developed Countries 124 135 218
------- ------- -------
Total, January 1 1,072 1,084 1,111
------- ------- -------
Allowance of Acquired Companies and
Other Changes 1 56 (28)
Charge-Offs
Domestic
Commercial and Industrial (142) (311) (358)
Real Estate & Construction (71) (103) (165)
Consumer Loans (173) (181) (226)
Foreign (54) (20) (32)
Medium-term Less Developed Countries (9) (13) (39)
------- ------- -------
Total (449) (628) (820)
------- ------- -------
Recoveries
Domestic
Commercial and Industrial 28 66 11
Real Estate & Construction 2 13 1
Consumer Loans 29 26 21
Foreign 2 10 4
Medium-term Less Developed Countries 1 2 6
------- ------- -------
Total 62 117 43
Net Charge-Offs (387) (511) (777)
------- ------- -------
Provision
Domestic 242 423 742
Foreign 42 20 36
Medium-term Less Developed Countries - - -
------- ------- -------
Total 284 443 778
------- ------- -------
Balance, December 31,
Regular
Domestic 794 878 889*
Foreign 60 70 60
Medium-term Less Developed Countries 116 124 135*
------- ------- -------
Total, December 31, $ 970 $ 1,072 $ 1,084
======= ======= =======
Ratios
- ------
Net Charge-Offs to Average Loans
Outstandings 1.27% 1.68% 2.37%
======= ======= =======
Net Charge-Offs to Total Allowance 39.90% 47.67% 71.68%
======= ======= =======
Total Allowance to Year-End Loans
Outstanding 3.17% 3.63% 3.57%
====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
(dollars in millions) 1990 1989
---- ----
<S> <C> <C>
Loans Outstanding, December 31, $35,776 $38,583
Average Loans Outstanding 38,139 37,898
Allowance for Loan Losses
- -------------------------
Balance, January 1
Regular
Domestic $ 593 $ 384
Foreign 24 14
Medium-term Less Developed Countries 537* 570
------- -------
Total, January 1 1,154 968
------- -------
Allowance of Acquired Companies and
Other Changes 1 -
Charge-Offs
Domestic
Commercial and Industrial (111) (46)
Real Estate & Construction (45) (37)
Consumer Loans (157) (116)
Foreign (9) (3)
Medium-term Less Developed Countries (270) (433)
------- -------
Total (592) (635)
------- -------
Recoveries
Domestic
Commercial and Industrial 35 15
Real Estate & Construction - 1
Consumer Loans 16 12
Foreign 1 4
Medium-term Less Developed Countries 1 -
------- -------
Total 53 32
Net Charge-Offs (539) (603)
------- -------
Provision
Domestic 449 380
Foreign 46 9
Medium-term Less Developed Countries - 400
------- -------
Total 495 789
------- -------
Balance, December 31,
Regular
Domestic 831* 593
Foreign 62 24
Medium-term Less Developed Countries 218* 537
------- -------
Total, December 31, $ 1,111 $ 1,154
======= =======
Ratios
- ------
Net Charge-Offs to Average Loans
Outstandings 1.41% 1.59%
======= =======
Net Charge-Offs to Total Allowance 48.51% 52.25%
======= =======
Total Allowance to Year-End Loans
Outstanding 3.11% 2.99%
======= =======
<FN>
*Each year includes a $50 million transfer from the LDC Allowance for Loan
Losses to the Regular Allowance.
</TABLE>
<PAGE> 16.
Nonperforming Assets
- --------------------
A summary of nonperforming assets is presented in the following table.
<TABLE>
<CAPTION>
(in millions) December 31,
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Nonaccrual
- ----------
Domestic $ 408 $ 581 $1,014 $1,294 $ 864
Foreign (including
Medium-term LDC) 130 198 146 86 227
------ ------ ------ ------ ------
538 779 1,160 1,380 1,091
Reduced Rate (Domestic) 2* 9* 13 15 3
- ------------ ------ ------ ------ ------ ------
540 788 1,173 1,395 1,094
Real Estate Acquired in
- -----------------------
Satisfaction of Loans 99 268 369 355 145
- --------------------- ----- ------ ------ ------- ------
$ 639 $1,056 $1,542 $1,750 $1,239
===== ====== ====== ====== ======
Past Due 90 Days or More
- ------------------------
and Still Accruing Interest
- ---------------------------
Domestic $ 156 $ 218 $ 178 $ 215 $ 188
Foreign - - 66 11 86
------ ------ ------ ------ ------
$ 156 $ 218 $ 244 $ 226 $ 274
====== ====== ====== ====== ======
<FN>
*Excludes $117 million of reduced rate Philippine obligations secured by zero
coupon U.S. Treasury bonds with comparable maturities.
</TABLE>
<PAGE> 17.
Securities
- ----------
The following table shows the maturity distribution by carrying amount and
yield (not on a taxable equivalent basis) of the Company's securities
portfolio at December 31, 1993.
<TABLE>
<CAPTION>
States
U.S. Government Political
U.S. Government Agency Subdivisions
--------------- --------------- ------------
Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ -----
(dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
Securities Held
- ---------------
for Investment
--------------
One Year or Less $ 361 5.65% $ 23 5.99% $ 376 3.50%
Over 1 through 5 Years 1,882 5.35 35 4.92 187 7.37
Over 5 through 10 Years 509 6.28 - - 147 7.28
Over 10 years 2 10.36 192 7.55 323 7.42
No Maturity - - - - - -
------ ----- ------
$2,754 5.57 $ 250 7.04 $1,033 5.96
====== ===== ======
Securities Held
- ---------------
for Sale
- ----------
One Year or Less $ - - % $ - - % $ 1 4.55%
Over 1 through 5 Years 601 6.06 120 5.04 2 4.55
Over 5 through 10 Years 488 5.70 - - 2 4.55
Over 10 years 7 7.64 - - 4 4.55
No Maturity - - - - - -
----- ----- -----
$1,096 5.91 $ 120 5.04 $ 9 4.55
====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
Other Bonds,
Notes and Stocks and
Debentures Warrants
------------- ------------
Amount Yield Amount Yield Total
------ ----- ------ ----- -----
(dollars in millions)
<S> <C> <C> <C> <C> <C>
Securities Held
- ---------------
for Investment
--------------
One Year or Less $ 55 5.63% $ - - % $ 815
Over 1 through 5 Years 33 6.02 - - 2,137
Over 5 through 10 Years 23 6.40 - - 679
Over 10 years 2 3.43 - - 519
No Maturity - - 206 2.83 206
---- ---- ------
$113 5.87 $206 2.83 $4,356
==== ==== ======
Securities Held
- ---------------
for Sale
- ----------
One Year or Less $ - - % $ - - % $ 1
Over 1 through 5 Years - - - - 723
Over 5 through 10 Years - - - - 490
Over 10 years - - - - 11
No Maturity - - 16 2.99 16
----- ---- ------
$ - - $ 16 2.99 $1,241
===== ==== ======
</TABLE>
Loans
- -----
The following table shows the maturity structure of the Company's commercial
loan portfolio at December 31, 1993.
<TABLE>
<CAPTION>
Over 1 Year
1 Year Through Over
or Less 5 Years 5 Years Total
------- ----------- ------- -----
(in millions)
<S> <C> <C> <C> <C>
Domestic
- --------
Real Estate, Excluding Loans
Collateralized by 1-4 Family
Residential Properties $ 606 $1,475 $ 705 $ 2,786
Commercial and Industrial Loans 3,352 3,887 2,542 9,781
Other, Excluding Loans to
Individuals and those
Collateralized by 1-4 Family
Residential Properties 3,364 717 152 4,233
------ ------- ------- -------
7,322 6,079 3,399 16,800
Foreign 1,852 584 1,902 4,338
- ------- ------ ------- ------- -------
Total $9,174 $6,663 $5,301 $21,138
====== ======= ======= =======
Loans with:
Predetermined Interest Rates $1,173 $ 782 $1,613 $ 3,568
Floating Interest Rates 8,001 5,881 3,688 17,570
------ ------- ------- -------
Total $9,174 $6,663 $5,301 $21,138
====== ======= ======= =======
</TABLE>
<PAGE> 18.
Deposits
- --------
The aggregate amount of deposits by foreign customers in domestic
offices was $739 million, $789 million, and $664 million at December 31,
1993, 1992, and 1991, respectively.
The following table shows the maturity breakdown of domestic time
deposits of $100,000 or more at December 31, 1993.
<TABLE>
<CAPTION>
Time
(in millions) Certificates Deposits-
of Deposits Other Total
---------------------------------------------
<S> <C> <C> <C>
3 Months or Less $ 810 $606 $1,416
Over 3 Through 6 Months 147 7 154
Over 6 Through 12 Months 72 6 78
Over 12 Months 550 16 566
------ ---- ------
Total $1,579 $635 $2,214
====== ===== ======
</TABLE>
The majority of deposits in foreign offices are time deposits in
denominations of $100,000 or more.
Other Borrowed Funds
- ---------------------
Information related to other borrowed funds in 1993, 1992, and 1991 is
presented in the table below.
<TABLE>
<CAPTION>
1993 1992
---------------- -----------------
(dollars in millions)
Average Average
Amount Rate Amount Rate
------ ------- ------ -------
<S> <C> <C> <C> <C>
Federal Funds Purchased
and Securities Sold Under
Repurchase Agreements
- ------------------------
At December 31 $2,711 2.85% $1,773 2.81%
Average During Year 3,467 2.94 4,001 3.40
Maximum Month-End Balance
During Year 4,894 2.80 5,467 3.88
Other*
- -----
At December 31 2,781 3.61% 3,029 3.82
Average During Year 2,348 3.66 2,045 4.13
Maximum Month-End Balance
During Year 3,161 3.60 3,029 3.82
</TABLE>
<TABLE>
<CAPTION>
1991
----------------
(dollars in millions)
Average
Amount Rate
------ -------
<S> <C> <C>
Federal Funds Purchased and Securities
- -------------------------------------
Sold Under Repurchase Agreements
---------------------------------
At December 31 $3,700 3.77%
Average During Year 3,196 5.55
Maximum Month-End Balance During Year 5,302 8.23
Other*
- -----
At December 31 1,128 4.73
Average During Year 1,414 6.61
Maximum Month-End Balance During Year 1,655 7.48
<FN>
*Other borrowings consist primarily of commercial paper, bank notes, extended
federal funds purchased, and amounts owed to the U.S. Treasury.
</TABLE>
Foreign Assets
- --------------
The only foreign country in which the Company's assets exceed .75% of
year end total assets was the United Kingdom ($351 million in 1993 and $393
million in 1991).
<PAGE> 19.
ITEM 2. PROPERTIES
- -------------------
In New York City, the Company owns the thirty story building housing its
executive headquarters at 48 Wall Street, a forty-nine story office building
at One Wall Street, and an operations center at 101 Barclay Street. In
addition, the Company owns and/or leases administrative and operations
facilities in New York City; various locations in New Jersey; Harrison, New
York; Newark, Delaware; London, England; and Utica, New York. Other real
properties owned or leased by the Company, when considered in the aggregate,
are not material to its operations.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
Litigation regarding Northeast Bancorp., Inc. is described in Note 14 to
the Consolidated Financial Statements included in Exhibit 13, and such
description is incorporated herein by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
There were no matters submitted to a vote of security holders of the
registrant during the fourth quarter of 1993.
PART II
- -------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
- --------------------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------
Information with respect to the market for the Company's common equity
and related stockholder matters is incorporated herein by reference from the
"Quarterly Data" section included in Exhibit 13. The Company's securities
that are listed on the New York Stock Exchange (NYSE), are indicated as such
on the front cover of this report. The NYSE symbol for the Company's Common
Stock is BK. The Warrants (to purchase the Company's Common Stock) are
traded over the counter. All of the Company's other securities are not
currently listed. The Company had 26,900 common shareholders of record at
February 28, 1994.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
Selected financial data are incorporated herein by reference from the
"Financial Highlights" section included in Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Management's discussion and analysis of financial condition and results
of operations is incorporated herein by reference from the corresponding
section of the Company's 1993 Annual Report to Shareholders the relevant
portions of which are filed as Exhibit 13 of this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
Consolidated financial statements and notes and the independent
auditors' report are incorporated herein by reference from the Company's 1993
Annual Report to Shareholders the relevant portions of which are filed as
Exhibit 13 to this report.
Supplementary financial information is incorporated herein by reference
from the "Quarterly Data" section included in Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- -----------------------------------------------------------------------------
There have been no events which require disclosure under Item 304 of
Regulation S-K.
<PAGE> 20.
PART III
- --------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The directors of the registrant are identified on pages 25 and 26 of
this report. Additional material responsive to this item is contained in the
Company's definitive Proxy Statement for its 1994 Annual Meeting of
Shareholders, which information is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT AND BUSINESS EXPERIENCE DURING THE PAST
FIVE YEARS
- -----------------------------------------------------------------------------
Company
Officer
Name Office and Experience Age Since
---- --------------------- --- -----
J. Carter Bacot 1989-1994 Chairman and Chief 61 1975
Executive Officer of the
Company and the Bank
Thomas A. Renyi 1992-1994 President of the Company and 48 1992
Vice Chairman of the Bank
1989-1993 Senior Executive Vice
President and Chief
Credit Officer of the Bank
Alan R. Griffith 1990-1994 Senior Executive Vice 52 1990
President of the Company,
and President and Chief
Operating Officer of the Bank
1989-1990 Senior Executive Vice
President of the Bank
Samuel F. Chevalier 1989-1994 Vice Chairman of the Company 60 1989
and the Bank
1989-1990 Chief Operating Officer and
President of Irving
Bank Corporation
1989 Vice Chairman and Chief
Operating Officer of
Irving Trust Company
Deno D. Papageorge 1989-1994 Senior Executive Vice 55 1980
President of the Company
1989-1994 Senior Executive Vice
President and Chief
Financial Officer
of the Bank
Richard D. Field 1989-1994 Executive Vice President 53 1987
of the Company
1989-1992 Senior Executive Vice
President of the Bank
Robert E. Keilman 1989-1994 Comptroller of the 48 1984
Company and the Bank,
Senior Vice President
of the Bank
Charles E. Rappold 1989-1994 Secretary and Chief Legal 41 1986
Officer of the Company,
Senior Vice President and
Chief Legal Officer
of the Bank
Robert J. Goebert 1989-1994 Auditor of the Company, 52 1982
Senior Vice President
of the Bank
<PAGE> 21.
Officers of BNY who perform major policy making functions:
Bank
Executive
Officer
Name Office and Experience Age Since
---- --------------------- --- ------
Richard A. Pace 1990-1994 Executive Vice President and Chief 48 1989
Technologist
1989-1990 Senior Vice President
1989 Senior Vice President of Irving
Trust Company
Robert J. Mueller 1992-1994 Senior Executive Vice President - 52 1989
Chief Credit Policy Officer
1989-1994 Executive Vice President - Mortgage &
Construction Lending
There are no family relationships between the executive officers of the
Company. The terms of office of the executive officers of the Company extend
until the annual organizational meeting of the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The material responsive to such item in the Company's definitive Proxy
Statement for its 1994 Annual Meeting of Shareholders is incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The material responsive to such item in the Company's definitive Proxy
Statement for its 1994 Annual Meeting of Shareholders is incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The material responsive to such item in the Company's definitive Proxy
Statement for its 1994 Annual Meeting of Shareholders is incorporated by
reference.
PART IV
- -------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(a) 1 Financial Statements:
See Item 8.
(a) 2 Financial Statement Schedules:
Financial statement schedules are omitted since the required information
is either not applicable, not deemed material, or is shown in the respective
financial statements or in the notes thereto.
<PAGE> 22.
(a) 3 Listing of Exhibits:
Exhibit No. Per
Regulation S-K Description
- -------------- -----------
3 (a) The By-Laws of The Bank of New York Company, Inc. as amended
through October 13, 1987.
(Filed as Exhibit 3(a) to the Company's 1987 Annual Report on Form
10- K and incorporated herein by reference.)
(b) Certificate of Incorporation of The Bank of New York Company, Inc.
as amended through July 14, 1993.
(Filed as Exhibit 3 to Current Report on Form 8-K filed by the
Company on July 14, 1993.)
4 (a) None of the outstanding instruments defining the rights of holders
of long-term debt of the Company represent long-term debt in excess
of 10% of the total assets of the Company. The Company hereby
agrees to furnish to the Commission, upon request, a copy of any of
such instruments.
(b) Amended and Restated Rights Agreement dated March 8, 1994.
(Filed as Exhibit 4(a) to Current Report on Form 8-K filed by the
Company on March 23, 1994.)
10 (a) 1984 Stock Option Plan of The Bank of New York Company, Inc. as
amended through February 23, 1988.
(Filed as Exhibit 10(a) to the Company's 1988 Annual Report on Form
10-K and incorporated herein by reference.)
(b) The Bank of New York Company, Inc. Excess Contribution Plan as
amended through July 10, 1990.
(Filed as Exhibit 10(b) to the Company's 1990 Annual Report on Form
10-K and incorporated herein by reference.)
(c) Amendments to The Bank of New York Company, Inc. Excess Contribution
Plan dated February 23, 1994 and November 9, 1993.
(d) The Bank of New York Company, Inc. Excess Benefit Plan as amended
through December 8, 1992.
(Filed as Exhibit 10(d) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
(e) Amendments to The Bank of New York Company, Inc. Excess Benefit Plan
dated February 23, 1994 and November 9, 1993.
(f) Management Incentive Compensation Plan of The Bank of New York
Company, Inc.
(Filed as Exhibit 10(d) to the Company's 1986 Annual Report on Form
10-K and incorporated herein by reference.)
(g) 1994 Management Incentive Compensation Plan of The Bank of New York
Company, Inc.
(h) 1988 Long-Term Incentive Plan as amended through December 8, 1992.
(Filed as Exhibit 10(f) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
(i) The Bank of New York Company, Inc. 1993 Long Term Incentive Plan.
(Filed as Exhibit 10(m) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
<PAGE> 23.
Exhibit No. Per
Regulation S-K Description
- --------------- -----------
10 (j) The Bank of New York Company, Inc. Supplemental Executive
Retirement Plan.
(Filed as Exhibit 10(n) to the Company's 1992 Annual Report on
Form 10-K and incorporated herein by reference.)
(k) Amendment to The Bank of New York Company, Inc. Supplemental
Executive Retirement Plan dated March 9, 1993.
(l) Trust Agreement dated April 19, 1988 related to deferred
compensation plans.
(Filed as Exhibit 10(h) to the Company's 1988 Annual Report on
Form 10-K and incorporated herein by reference.)
(m) Trust Agreement dated November 16, 1993 related to deferred
compensation plans.
(n) Form of Remuneration Agreement between the Company and two of the
five most highly compensated executive officers of the Company.
(Filed as Exhibit 10 to the Company's 1982 Annual Report on Form
10-K and incorporated herein by reference.)
(o) Remuneration Agreement between the Company and an executive
officer of the Company.
(Filed as Exhibit 10(h) to the Company's 1991 Annual Report on
Form 10-K and incorporated herein by reference.)
(p) Remuneration Agreement between the Company and an executive
officer of the Company.
(Filed as Exhibit 10(i) to the Company's 1991 Annual Report on Form
10-K and incorporated herein by reference.)
(q) Remuneration Agreement between the Company and an executive
officer of the Company.
(Filed as Exhibit 10(j) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
(r) The Bank of New York Company, Inc. Retirement Plan for Non-
Employee Directors.
(s) Deferred Compensation Plan for Non-Employee Directors of The Bank
of New York Company, Inc.
11 Statement - Re: Computation of Per Common Share Earnings
12 Statement - Re: Computation of Earnings to Fixed Charges Ratios
13 Portions of the 1993 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche
23.2 Consent of Arthur Andersen & Co.
<PAGE> 24.
(b) Reports on Form 8-K:
October 18, 1993: Unaudited interim financial information and accompanying
discussion for the third quarter of 1993.
December 7, 1993: An Underwriting Agreement, a Form of Note, an Officers'
Certificate, and a Legal Opinion filed in connection with the Company's
Registration Statement on Form S-3 (File No. 33-51984 and No. 33-50333) with
the Securities and Exchange Commission covering the Company's 6.50%
Subordinated Notes due 2003.
January 13, 1994: Unaudited interim financial information and accompanying
discussion for the fourth quarter of 1993.
March 23, 1994: Amended and Restated Rights Agreement dated March 8, 1994
(c) Exhibits:
Submitted as a separate section of this report.
(d) Financial Statements Schedules:
None
<PAGE> 25.
SIGNATURES
- ----------
Pursuant to the requirements of Section 13 or 15(d) 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 in New York, New
York, on the 8th day of March, 1994.
THE BANK OF NEW YORK COMPANY, INC.
By: \s\ J. Carter Bacot
-------------------------------------
(J. Carter Bacot, Chairman)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf of
the registrant and in the capacities indicated on the 8th day of March, 1994.
Signature Title
--------- -----
\s\J. Carter Bacot Chairman and
- ----------------------------------- Chief Executive Officer
(J. Carter Bacot) (principal executive officer)
\s\ Deno D. Papageorge Senior Executive Vice President
- ----------------------------------- (principal financial officer)
(Deno D. Papageorge)
\s\ Robert E. Keilman Comptroller (principal
- ------------------------------------ accounting officer)
(Robert E. Keilman)
\s\ Richard Barth Director
- ------------------------------------
(Richard Barth)
\s\ William R. Chaney Director
- ------------------------------------
(William R. Chaney)
\s\ Samuel F. Chevalier Vice Chairman and Director
- ------------------------------------
(Samuel F. Chevalier)
\s\ Anthony S. D'Amato Director
- ------------------------------------
(Anthony S. D'Amato)
\s\ Anthony P. Gammie Director
- ------------------------------------
(Anthony P. Gammie)
<PAGE> 26.
\s\ Ralph E. Gomory Director
- ------------------------------------
(Ralph E. Gomory)
\s\ Alan R. Griffith Senior Executive Vice President
- ----------------------------------- and Director
(Alan R. Griffith)
\s\ Edward L. Hennessy, Jr. Director
- ------------------------------------
(Edward L. Hennessy, Jr.)
\s\ John C. Malone Director
- ------------------------------------
(John C. Malone)
\s\ Donald L. Miller Director
- ------------------------------------
(Donald L. Miller)
\s\ H. Barclay Morley Director
- ------------------------------------
(H. Barclay Morley)
\s\ Martha T. Muse Director
- ------------------------------------
(Martha T. Muse)
\s\ Catherine A. Rein Director
- ------------------------------------
(Catherine A. Rein)
\s\ Thomas A. Renyi President and Director
- ------------------------------------
(Thomas A. Renyi)
\s\ Harold E. Sells Director
- ------------------------------------
(Harold E. Sells)
\s\ Delbert C. Staley Director
- ------------------------------------
(Delbert C. Staley)
\s\ W. S. White, Jr. Director
- ------------------------------------
(W. S. White, Jr.)
\s\ Samuel H. Woolley Director
- ------------------------------------
(Samuel H. Woolley)
<PAGE> 27.
INDEX TO EXHIBITS
Exhibit No.
- ------------
3 (a) The By-Laws of The Bank of New York Company, Inc. as amended through
October 13, 1987.
(Filed as Exhibit 3(a) to the Company's 1987 Annual Report on Form
10-K and incorporated herein by reference.
(b) Certificate of Incorporation of The Bank of New York Company, Inc.
as amended through July 14, 1993.
(Filed as Exhibit 3 to Current Report on Form 8-K filed by the
Company on July 14, 1993.)
4 (a) None of the outstanding instruments defining the rights of holders
of long-term debt of the Company represent long-term debt in excess
of 10% of the total assets of the Company. The Company hereby
agrees to furnish to the Commission, upon request, a copy of any of
such instruments.
(b) Amended and Restated Rights Agreement dated March 8, 1994.
(Filed as Exhibit 4 (a) to Current Report on Form 8-K filed by the
Company on March 23, 1994.)
10 (a) 1984 Stock Option Plan of The Bank of New York Company, Inc. as
amended through February 23, 1988.
(Filed as Exhibit 10(a) to the Company's 1988 Annual Report on Form
10-K and incorporated herein by reference.)
(b) The Bank of New York Company, Inc. Excess Contribution Plan as
amended through July 10, 1990.
(Filed as Exhibit 10(b) to the Company's 1990 Annual Report on Form
10-K and incorporated herein by reference.)
(c) Amendments to The Bank of New York Company, Inc. Excess Contribution
Plan dated February 23, 1994 and November 9, 1993.
(d) The Bank of New York Company, Inc. Excess Benefit Plan as amended
through December 8, 1992.
(Filed as Exhibit 10(d) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
(e) Amendments to The Bank of New York Company, Inc. Excess Benefit Plan
dated February 23, 1994 and November 9, 1993.
(f) Management Incentive Compensation Plan of The Bank of New York
Company, Inc.
(Filed as Exhibit 10(d) to the Company's 1986 Annual Report on Form
10-K and incorporated herein by reference.)
(g) 1994 Management Incentive Compensation Plan of The Bank of New York
Company, Inc.
(h) 1988 Long-Term Incentive Plan as amended through December 8, 1992.
(Filed as Exhibit 10(f) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
(i) The Bank of New York Company, Inc. 1993 Long Term Incentive Plan.
(Filed as Exhibit 10(m) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
<PAGE> 28.
INDEX TO EXHIBITS
Exhibit No.
- ------------
10 (j) The Bank of New York Company, Inc. Supplemental Executive Retirement
Plan.
(Filed as Exhibit 10(n) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
(k) Amendment to The Bank of New York Company, Inc. Supplemental
Executive Retirement Plan dated March 9, 1993.
(l) Trust Agreement dated April 19, 1988 related to deferred
compensation plans.
(Filed as Exhibit 10(h) to the Company's 1988 Annual Report on Form
10-K and incorporated herein by reference.)
(m) Trust Agreement dated November 16, 1993 related to deferred
compensation plans.
(n) Form of Remuneration Agreement between the Company and two of the
five most highly compensated executive officers of the Company.
(Filed as Exhibit 10 to the Company's 1982 Annual Report on Form
10-K and incorporated herein by reference.)
(o) Remuneration Agreement between the Company and an executive officer
of the Company.
(Filed as Exhibit 10(h) to the Company's 1991 Annual Report on Form
10-K and incorporated herein by reference.)
(p) Remuneration Agreement between the Company and an executive officer
of the Company.
(Filed as Exhibit 10(i) to the Company's 1991 Annual Report on Form
10-K and incorporated herein by reference.)
(q) Remuneration Agreement between the Company and an executive officer
of the Company.
(Filed as Exhibit 10(j) to the Company's 1992 Annual Report on Form
10-K and incorporated herein by reference.)
(r) The Bank of New York Company, Inc. Retirement Plan for Non-Employee
Directors.
(s) Deferred Compensation Plan for Non-Employee Directors of The Bank of
New York Company, Inc.
11 Statement - Re: Computation of Per Common Share Earnings
12 Statement - Re: Computation of Earnings to Fixed Charges Ratios
13 Portions of the 1993 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche
23.2 Consent of Arthur Andersen & Co.
Exhibit 10(c)
<PAGE> 1.
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
EXCESS CONTRIBUTION PLAN
WHEREAS, The Bank of New York Company, Inc. Excess
Contribution Plan (the "Excess Contribution Plan") was
amended and restated, effective as of July 10, 1990; and
WHEREAS, Section 19 of the Excess Contribution Plan
provides that the Compensation Committee of the Board of
Directors of The Bank of New York Company, Inc. may amend the
Excess Contribution Plan at any time, except in certain
respects not material hereto; and
WHEREAS, the Compensation Committee desires to
amend the Excess Contribution Plan;
NOW, THEREFORE, the Excess Contribution Plan is
hereby amended in the following respects, effective as of
January 1, 1994:
1. Section 10 of the Excess Contribution Plan is
amended in its entirety to read as follows:
10. Purpose. The purpose of Part II of the Plan
is to provide employees of the Company with payment of
the amounts which would have been credited on their
behalf under the Profit-Sharing Plan and the ESOP except
for the limitations imposed by Section 401(a)(17) of the
Code.
2. Section 11 of the Excess Contribution Plan is
amended by amending the first sentence thereof to read as
follows:
Each employee of The Bank of New York who is a partici-
pant in the Profit-Sharing Plan or the ESOP shall be a
Participant in Part II of the Plan.
<PAGE> 2.
IN WITNESS WHEREOF, The Bank of New York Company,
Inc. has caused this Amendment to be executed by its duly
authorized officers this 23rd day of February , 1994.
\s\ Alan R. Griffith
______________________________
ATTEST:
\s\ Jacqueline R. McSwiggan
____________________________
Assistant Secretary
<PAGE> 3.
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
EXCESS CONTRIBUTION PLAN
WHEREAS, The Bank of New York Company, Inc. Excess
Contribution Plan (the "Excess Contribution Plan") was
amended and restated, effective as of July 10, 1990; and
WHEREAS, Section 19 of the Excess Contribution Plan
provides that the Board of Directors of The Bank of New York
Company, Inc. may amend the Excess Contribution Plan at any
time, except in certain respects not material hereto; and
WHEREAS, the Board of Directors desires to amend
the Excess Contribution Plan;
NOW, THEREFORE, the Excess Contribution Plan is
hereby amended in the following respects, effective as of
February 1, 1993:
1. Section 2 of the Excess Contribution Plan is
amended by the addition of a sentence at the end thereof to
read as follows:
Notwithstanding the foregoing, no employee shall be a
Participant in Part I of the Plan if he is eligible for
benefits under the Preservation of Benefits Plan of
National Community Bank of New Jersey.
2. Section 11 of the Excess Contribution Plan is
amended by the addition of a sentence at the end thereof to
read as follows:
Notwithstanding the foregoing, no employee shall be a
Participant in Part II of the Plan if he is eligible for
benefits under the Preservation of Benefits Plan of
National Community Bank of New Jersey.
<PAGE> 4.
IN WITNESS WHEREOF, The Bank of New York Company,
Inc. has caused this Amendment to be executed by its duly
authorized officers this 9th day of November, 1993.
\s\ Alan R. Griffith
______________________________
ATTEST:
\s\ Jacqueline R. McSwiggan
____________________________
Assistant Secretary
Exhibit 10(e)
<PAGE> 1.
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
EXCESS BENEFIT PLAN
WHEREAS, The Bank of New York Company, Inc. Excess
Benefit Plan (the "Excess Benefit Plan") was amended and
restated, effective as of July 10, 1990; and
WHEREAS, Section 17 of the Excess Benefit Plan
provides that the Compensation Committee of the Board of
Directors of The Bank of New York Company, Inc. may amend the
Excess Benefit Plan at any time, except in certain respects
not material hereto; and
WHEREAS, the Compensation Committee desires to
amend the Excess Benefit Plan;
NOW, THEREFORE, the Excess Benefit Plan is hereby
amended in the following respects, effective as of January 1,
1994:
1. Section 9 of the Excess Benefit Plan is amended
in its entirety to read as follows:
9. Purpose. The purpose of Part II of the Plan is
to provide employees of the Company with retirement
benefits which would have been provided under the
Retirement Plan except for the limitations imposed by
Section 401(a)(17) of the Code.
2. Section 10 of the Excess Benefit Plan is
amended by amending the first sentence thereof to read as
follows:
Each employee of The Bank of New York who is a
participant in the Retirement Plan shall be a
Participant in Part II of the Plan.
<PAGE> 2.
IN WITNESS WHEREOF, The Bank of New York Company,
Inc. has caused this Amendment to be executed by its duly
authorized officers this 23rd day of February, 1994.
\s\ Alan R. Griffith
______________________________
ATTEST:
\s\ Jacqueline R. McSwiggan
____________________________
Assistant Secretary
<PAGE> 3.
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
EXCESS BENEFIT PLAN
WHEREAS, The Bank of New York Company, Inc. Excess
Benefit Plan (the "Excess Benefit Plan") was amended and
restated, effective as of July 10, 1990; and
WHEREAS, Section 17 of the Excess Benefit Plan
provides that the Board of Directors of The Bank of New York
Company, Inc. may amend the Excess Benefit Plan at any time,
except in certain respects not material hereto; and
WHEREAS, the Board of Directors desires to amend
the Excess Benefit Plan;
NOW, THEREFORE, the Excess Benefit Plan is hereby
amended in the following respects, effective as of
February 1, 1993:
1. Section 2 of the Excess Benefit Plan is amended
by amending the last sentence thereof to read as follows:
Notwithstanding the foregoing, no employee shall be a
Participant in Part I of the Plan if he is eligible for
benefits under (i) the Excess Benefit Plan of Irving
Bank Corporation and Affiliated Companies, or (ii) the
Preservation of Benefits Plan of National Community Bank
of New Jersey.
<PAGE> 4.
2. Section 10 of the Excess Benefit Plan is
amended by amending the last sentence thereof to read as
follows:
Notwithstanding the foregoing, no employee shall be a
Participant in Part II of the Plan if he is eligible for
benefits under (i) the Excess Benefit Plan of Irving
Bank Corporation and Affiliated Companies, or (ii) the
Preservation of Benefits Plan of National Community Bank
of New Jersey.
IN WITNESS WHEREOF, The Bank of New York Company,
Inc. has caused this Amendment to be executed by its duly
authorized officers this 9th day of November, 1993.
\s\ Alan R. Griffith
______________________________
ATTEST:
\s\ Jacqueline R. McSwiggan
____________________________
Assistant Secretary
Exhibit 10(g)
<PAGE> 1.
1994 MANAGEMENT INCENTIVE COMPENSATION PLAN
OF THE BANK OF NEW YORK COMPANY, INC.
1. Purpose. The purpose of the 1994 Management
Incentive Compensation Plan of The Bank of New York Company,
Inc. (the "Plan") is to promote the financial interests of
The Bank of New York Company, Inc. (the "Company") and its
subsidiaries, including its growth, by (i) attracting and
retaining officers and key personnel possessing outstanding
ability; (ii) motivating officers and key personnel by means
of performance-related incentives; and (iii) providing
incentive compensation opportunities which are competitive
with those of other major banking companies.
2. Definitions. The following definitions are
applicable to the Plan:
"Average Shareholders' Equity" means the average of
the daily amounts of shareholders' equity during the
Plan Year as shown on the Company's consolidated balance
sheet.
"Board of Directors" means the Board of Directors
of the Company.
"Compensation Committee" means the Compensation
Committee of the Board of Directors.
"Covered Employee" means, for any Plan Year, the
Company's Chief Executive Officer (or an individual
acting in such capacity) and any employee of the Company
or its subsidiaries who, in the discretion of the
<PAGE> 2
Committee for purposes of determining those employees
who are "covered employees" under Section 162(m) of the
Internal Revenue Code, is likely to be among the four
other highest compensated officers of the Company for
such Plan Year.
"Incentive Fund" means the amount available for
awards under the Plan with respect to each Plan Year.
Such amount shall in no event, however, exceed 10% of
the amount by which Income exceeds 7% of the Average
Shareholders' Equity for the Plan Year.
"Income" for any year means the consolidated net
income of the Company for such year, as reported to
shareholders. This amount shall be adjusted to exclude
to the extent, if any, determined by the Compensation
Committee, unusual or non-recurring items of income and
expense.
"Participant" means an employee of the Company or
its subsidiaries who is selected to participate in the
Plan.
"Plan Year" means the calendar year.
3. Administration. The Plan shall be administered
by the Compensation Committee, which shall in no event have
as a member a person entitled to an award under the Plan. A
majority of the Compensation Committee shall constitute a
quorum, and the acts of a majority of the members present, or
acts approved in writing by a majority of the Compensation
<PAGE> 3
Committee without a meeting, shall be the acts of the
Compensation Committee.
Subject to the express provisions of the Plan, the
Compensation Committee shall have authority to:
(i) select the Participants;
(ii) determine the size of the awards to be made
under the Plan, subject to Section 5 hereof; and
(iii) establish from time to time regulations for
the administration of the Plan, interpret the Plan, and
make all determinations deemed necessary or advisable
for the administration of the Plan.
4. Participation. Participants in the Plan shall
be selected for each Plan Year from those employees of the
Company and its subsidiaries who have contributed, or have
the capacity for contributing, in a substantial measure to
the successful performance of the Company for that Plan Year.
No director who is not an employee of the Company or any of
its subsidiaries may be a Participant in the Plan. No
employee shall at any time have a right to be selected as a
Participant in the Plan for any Plan Year, to be entitled
automatically to an award, nor, having been selected as a
Participant for one Plan Year, to be a Participant in any
other Plan Year.
5. Maximum Amount Available for Awards. The
maximum amount which may be paid as awards for any Plan Year
shall be limited to the amount of the Incentive Fund for that
<PAGE> 4
year. If the accounting rules or principles to which the
Company is subject are changed, or if the Company elects to
change its method of accounting, after the effective date of
the Plan so as to materially change, in the judgment of the
Compensation Committee, the manner in which Income is
determined, the Compensation Committee may make such
adjustments as it deems advisable in order to arrive at
substantially the same amounts as would have been derived if
the accounting rules, principles or methods applicable on the
effective date of the Plan were in effect. The amount of the
Incentive Fund shall be computed by the Company in accordance
with the Plan.
6. Determination of Awards. Subject to the
provisions of Section 5 hereof, (i) the Compensation
Committee, with the approval of the Board of Directors, shall
determine the total amount of awards for each Plan Year, and
(ii) the Compensation Committee shall determine the award for
each Participant, taking into consideration, as it deems
appropriate, the individual performance for the Plan Year of
the Participant.
7. Awards to Covered Employees. Notwithstanding
anything contained herein to the contrary, the award for any
Plan Year to a Participant who is a Covered Employee may be
determined on the basis of (A) the achievement by the Company
of a specified target earnings per share, return on equity or
net income, (B) the achievement by a business unit of the
<PAGE> 5
Company of a specified target net income or market share, or
(C) any combination of the goals set forth in (A) and (B)
above. If an award is made on such basis, the Compensation
Committee shall establish such goals prior to the beginning
of the Plan Year (or such later date as may be prescribed by
the Internal Revenue Service for purposes of Section 162(m)
of the Internal Revenue Code). The Compensation Committee
may, in its discretion, reduce or eliminate an award to a
Covered Employee, notwithstanding the achievement of a
specified target. Awards to each Covered Employee for each
Plan Year will be limited to a maximum of 200% of the Covered
Employee's annual salary at the rate in effect on the first
day of such Plan Year. An award for a Plan Year to a
Participant who is a Covered Employee may, in the discretion
of the Compensation Committee, provide that in the event of
the Participant's termination of employment during the Plan
Year for any reason, such award will be payable only (A) if
the applicable target is achieved and (B) to the extent, if
any, as the Compensation Committee shall determine. Any
award paid with respect to a Plan Year under this Section
shall not be subject to the provisions of Section 5, 6 or 9
hereof, but shall reduce the amount of the Incentive Fund for
such Plan Year.
8. Payment of Awards. Awards under the Plan shall
be paid in cash within 90 days of the close of the Plan Year.
<PAGE> 6
9. Termination of Employment. A Participant shall
not be entitled to receive payment of an award, unless the
Compensation Committee determines otherwise, if at any time
prior to payment of the award (i) the Participant's
employment terminates for any reason, including retirement,
or (ii) the Participant gives or receives notice of
termination for any reason, including retirement.
10. No Assignments and Transfers. A Participant
shall not assign, encumber or transfer his rights and
interests under the Plan and any attempt to do so shall
render those rights and interests null and void.
11. No Rights to Awards or Employment. No
employee of the Company or its subsidiaries or other person
shall have any claim or right to be granted an award under
this Plan. Neither the Plan nor any action taken thereunder
shall be construed as giving any employee any right to be
retained in the employ of the Company or its subsidiaries.
12. Withholding Tax. The Company shall deduct
from all amounts paid any taxes required by law to be
withheld with respect to such payments.
13. Amendment or Termination. The Board of
Directors may amend, suspend or terminate the Plan or any
portion thereof at any time.
14. Effective Date. The Plan shall be effective
as of January 1, 1994.
<PAGE> 7
15. Term. Subject to earlier termination pursuant
to the provisions of Section 13, the Plan shall have a term
of ten years from its effective date.
Exhibit 10(k)
<PAGE> 1.
AMENDMENT TO
THE BANK OF NEW YORK COMPANY, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
WHEREAS, The Bank of New York Company, Inc.
Supplemental Executive Retirement Plan (the "Plan") was
adopted by the Board of Directors of The Bank of New York
Company, Inc., effective as of June 9, 1992; and
WHEREAS, Section 9 of the Plan provides that the
Compensation Committee of the Board of Directors may amend
the Plan at any time, except in certain respects not material
hereto; and
WHEREAS, the Compensation Committee desires to
amend the Plan;
NOW, THEREFORE, the Plan is hereby amended in the
following respects, effective as of March 9, 1993:
1. Section 4 of the Plan is amended by deleting
the second sentence thereof and substituting therefor the
following:
A Participant listed on Exhibit A whose employment
terminates prior to attaining age 60, other than by
reason of death, shall also be entitled to a Benefit
under the Plan. Any other Participant whose employment
terminates prior to attaining age 60, other than by
reason of death, shall not be entitled to a Benefit
under the Plan except as determined by the Committee in
its discretion.
2. Section 5(b) of the Plan is amended by the
deletion of the first sentence thereof and the substitution
therefor of the following:
The Benefit payable under the Plan to a Participant
listed on Exhibit A whose employment terminates prior to
<PAGE> 2.
attaining age 60, other than by reason of death, shall
be equal to the amount of the Benefit provided in
paragraph (a) of this Section, subject to reduction (if
any) in accordance with the provisions of the Retirement
Plan for payment as of the first day of the month coin-
ciding or following the later of the date the Partici-
pant attains age 55 or the date of the Participant's
termination of employment. If the Committee determines
that any other Participant whose employment terminates
prior to attaining age 60, other than by reason of
death, is entitled to a Benefit under the Plan, the
amount thereof shall be equal to the amount of the
Benefit provided in paragraph (a) of this Section,
subject to reduction (if any) in accordance with the
provisions of the Retirement Plan for payment as of such
date as determined by the Committee.
3. Section 5(c) of the Plan is amended in its
entirety to read as follows:
(c) Unless the Committee, in its discretion,
directs payment in a different form or at a different
time, payment of a Benefit to a Participant shall be
made in the form of a lump sum within 30 days after:
(i) the Participant's termination of
employment with the Company, if his employment
terminates on or after the date he attains age 60,
other than by reason of death,
(ii) the first day of the month coinciding
with or following the later of the date the
Participant attains age 55 or the date of the
Participant's termination of employment, if the
Participant is listed on Exhibit A and his
employment terminates prior to attaining age 60,
other than by reason of death, or
(iii) as of such date as determined by the
Committee, if the Committee determines that a
Participant who is not listed on Exhibit A and
whose employment terminates prior to attaining
age 60, other than by reason of death, is entitled
to a Benefit under the Plan.
In the event of the Participant's death while an active
employee of the Company, payment of a Benefit to a
Participant's spouse shall, unless the Committee, in its
discretion, directs payment in a different form or at a
<PAGE> 3.
different time, be made in a lump sum within 30 days
after the later of:
(i) the date of the Participant's death,
(ii) the date on which benefits are payable to
the Participant's spouse under the Retirement Plan,
or
(iii) the date on which benefits would have
been payable to the Participant's spouse under the
Retirement Plan if the service with the Company of
a Participant who is or has been a member of the
Irving Plan were taken into account as provided
under the Retirement Plan.
Lump sum payments under this paragraph shall be deter-
mined based on the actuarial assumptions in effect under
the Retirement Plan immediately prior to the date of
payment.
Notwithstanding anything contained herein to the
contrary, in the event of a change of control of the
Company (as defined below), the Committee may not direct
payment of a Benefit to a Participant or to a Parti-
cipant's spouse in a different form or at a different
time. For purposes of this Section, a "change of
control" of the Company shall mean a change in control
of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K,
as in effect on March 9, 1993, pursuant to Sections 13
or 15(d) of the Securities Exchange Act of 1934;
provided that, without limitation, such change of
control shall be deemed to have occurred at such time as
(a) any "person" (within the meaning of Section 14(d) of
the Securities Exchange Act of 1934), other than the
Company or an employee benefit plan sponsored by the
Company, acquires more than 25% of combined voting power
of the outstanding securities of The Bank of New York
Company, Inc. ordinarily having the right to vote at
elections of directors, including shares of common stock
of The Bank of New York Company, Inc.; (b) there is a
sale or divestiture of all or substantially all of the
assets of the Company; or (c) during any two-year
period, individuals who constitute the Board of
Directors of The Bank of New York Company, Inc. (the
"Incumbent Board") as of the beginning of the period
cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director
during such period whose election or nomination for
election by the shareholders of The Bank of New York
<PAGE> 4.
Company, Inc. was approved by a vote of at least three-
quarters of the Incumbent Board (either by a specific
vote or by approval of the proxy statement of The Bank
of New York Company, Inc. in which such person is named
as a nominee for director without objection to such
nomination) shall be, for purposes of this clause (c),
considered as though such person were a member of the
Incumbent Board.
4. Exhibit A is added to the Plan to read as
follows:
Exhibit A
Vested Participants
The following Participants shall be entitled to a
Benefit under the Plan in the event of their termination
of employment prior to attaining age 60, other than by
reason of death:
Alan R. Griffith
Samuel F. Chevalier
Thomas A. Renyi
Richard D. Field
Richard A. Pace
Robert J. Mueller
IN WITNESS WHEREOF, The Bank of New York Company,
Inc. has caused this Amendment to be executed by its duly
authorized officers this 9th day of March, 1993.
\s\ Charles E. Rappold II
__________________________
ATTEST:
\s\ Jacqueline R. McSwiggan
____________________________
Assistant Secretary
Exhibit 10(m)
<PAGE> 1.
GRANTOR TRUST AGREEMENT
THIS AGREEMENT, made as of the 16th day of
November, 1993, by and between THE BANK OF NEW YORK COMPANY,
INC., a corporation organized and existing under the laws of
the State of New York (hereinafter referred to as the "Com-
pany"), and UNITED STATES TRUST COMPANY OF NEW YORK, a cor-
poration organized and existing under the laws of the State
of New York (hereinafter referred to as the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Company is obligated under certain
executive compensation plans and agreements, which are listed
on Exhibit I hereto (the "Plans"), to make payment of certain
amounts to current employees of the Company and its sub-
sidiaries (the "Participants") under certain circumstances;
and
WHEREAS, the Company wishes to provide a separate
source of funds to enable payment of such amounts to certain
Participants who are intended to be covered by this Agreement
(the "Covered Participants"); and
WHEREAS, the Trustee is not a party to the Plans
and makes no representations with respect thereto, and all
representations and recitals with respect to the Plans shall
be deemed to be those of the Company;
NOW, THEREFORE, the Company and the Trustee agree
as follows:
<PAGE> 2.
FIRST: Definition of Change in Control. For
purposes of this Agreement, a "Change in Control" shall be
deemed to occur if (i) a change in control of the Company
would be required to be reported in response to item 1(a) of
the Current Report of Form 8-K, as in effect on the date
hereof, pursuant to Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(ii) any "person" within the meaning of Section 14(d) of the
Exchange Act (x) becomes the "beneficial owner" as defined in
Rule 13d-3 under the Exchange Act, directly or indirectly, of
more than 25% of the then combined voting power of the out-
standing securities of the Company ordinarily having the
right to vote at the election of directors ("Voting Secu-
rities"), otherwise than through a transaction or trans-
actions arranged by, or consummated with the prior approval
of, the Board of Directors of the Company, or (y) acquires by
proxy or otherwise the right to vote for the election of
directors, for any merger or consolidation of the Company or
for any other matter or question more than 35% of the then
outstanding voting securities of the Company, otherwise than
through an arrangement or arrangements consummated with the
prior approval of the Board of Directors of the Company; or
(iii) during any two-year period, individuals who constitute
the Board of Directors of the Company (the "Incumbent Board")
as of the beginning of the period cease for any reason to
<PAGE> 3.
constitute at least a majority thereof, provided that any
person becoming a director during such period whose election
or nomination for election by the Company's stockholders was
approved by a vote of at least three-quarters of the Incum-
bent Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named
as a nominee for director without objection to such nomina-
tion) shall be, for purposes of this clause (iii), considered
as though such person were a member of the Incumbent Board.
Notwithstanding the foregoing, for purposes of this
Agreement, the Trustee shall not be deemed to have knowledge
that a Change in Control has occurred until it has received
written notice thereof from the Company or a Covered
Participant.
SECOND: Creation of Trust. (a) The Company
hereby establishes with the Trustee and the Trustee hereby
accepts a trust consisting of such cash, Letters of Credit
(as defined herein) or other property acceptable to the
Trustee as shall be paid or delivered to the Trustee from
time to time (hereafter called the "Fund"). The Company may,
in its discretion, deliver to the Trustee one or more
irrevocable letters of credit, which shall be substantially
in the form of Exhibit II hereto (referred to hereinafter as
the "Letters of Credit"). Each Letter of Credit shall name
the Trustee as beneficiary and shall provide that any notices
<PAGE> 4.
to the Trustee thereunder shall be sent to it at the address
specified in Article TENTH.
(b) The Trustee shall hold the Fund in trust and
manage and administer it in accordance with the terms and
provisions of this Agreement.
(c) The trust created herein is intended to be a
Grantor Trust under the provisions of Sections 671 through
677 of the Internal Revenue Code.
(d) The Company may, prior to a Change in Control,
revoke the trust by written notice to the Trustee. Upon such
revocation, the Trustee shall cancel all Letters of Credit,
the trust shall terminate and all assets of the Fund, after
payment of any unpaid fees and expenses of the Trustee, shall
be paid to the Company.
(e) After a Change in Control, the trust shall
become irrevocable and shall be held for the exclusive
purpose of providing benefits to Covered Participants in
accordance with the provisions of this Agreement.
THIRD: Payments from Fund. (a) The Company shall
provide the Trustee with a schedule (the "Payment Schedule")
of Participants, indicating (i) the amount payable to or in
respect of each Covered Participant upon such Covered Par-
ticipant's termination of employment or providing formulae,
or instructions, acceptable to the Trustee, utilizing readily
determinable and objective information, for determining such
<PAGE> 5.
amounts, (ii) the form in which such amount is to be paid (as
provided for or available under the Plans), and (iii) the
time for commencement of such payment. As appropriate, based
upon the terms of the Plans and the implementation of those
terms by the Company, and at least annually, the Company
shall adjust the amounts payable to or in respect of
Participants, shall add or delete Participants at any time
prior to a Change in Control and, if appropriate, shall
change the formulae or instructions for determining such
amounts (provided such formulae or instructions are
acceptable to the Trustee) by submitting a new or amending
the existing Payment Schedule. The Company shall provide
promptly to each Covered Participant the information on the
Payment Schedule pertaining to that Covered Participant,
including all changes and adjustments. In the event of any
change in the Payment Schedule after a Change in Control or
if after a Change in Control the Payment Schedule is not
adjusted or changed at a time when a Covered Participant
believes it should, the Covered Participant affected thereby
shall have the right, if he disagrees with such adjustment or
change or failure to make an adjustment or change, to furnish
information to the Trustee concerning the appropriate amount
payable to the Covered Participant. The Trustee shall be
obligated to pay from the Fund amounts based upon a Payment
Schedule as adjusted, if applicable, to reflect information
<PAGE> 6.
supplied by the Covered Participant. After a Change in
Control, no additions to or deletions from the list of
Covered Participants shall be permitted.
(b) The Trustee shall create a separate account
(the "Account") in the Fund for each Covered Participant. At
the time of each contribution to the Fund or establishment
and delivery to the Trustee of a Letter of Credit, the
Company shall designate in writing the allocation among the
Accounts of such contribution and Letter of Credit. The
Trustee shall hold all Accounts as a consolidated single
fund. The Fund shall be revalued by the Trustee as of the
last business day of each calendar quarter at current market
values, as determined by the Trustee. For valuation
purposes, a Letter of Credit shall be deemed to have a fair
market value equal to the remaining amount available for draw
under the Letter of Credit on the last business day of the
applicable calendar quarter. Net investment gains and losses
shall be allocated by the Trustee proportionately among the
Accounts as of the end of each calendar quarter based on the
value of the Accounts as of the last business day of the
preceding calendar quarter. The Trustee shall maintain a
record of the value of each Account based on the aggregate
value of the Trust Fund, the information provided by the
Company as to its contributions and its establishment and
delivery of Letters of Credit with respect to each Account
<PAGE> 7.
and any payments therefrom. To the extent an amount remains
credited to a Covered Participant's Account after the
Company's liability to him under all Plans has been paid in
full, such excess shall, as of the end of the calendar
quarter in which final payment has been made, be reallocated
to the Accounts of all other Covered Participants in
proportion to the amounts credited to the Accounts of such
Covered Participants, unless the Company directs the Trustee,
prior to a Change in Control, to cancel or reduce a Letter of
Credit allocated to the Covered Participant's Account in an
amount equal to such excess. Notwithstanding the amount
credited to a Covered Participant's Account pursuant to this
paragraph, in no event shall a Covered Participant be
entitled to payment hereunder of more than the Company's
liability to him under the Plans.
(c)(1) In the event it shall be determined prior
to a Change In Control that any Covered Participant is sub-
ject to any tax under the terms of the trust created here-
under, then the Trustee, upon receipt of written direction
from the Company, shall make payments from the Fund to such
persons, in such manner and in such amounts as the Company
shall direct, for purposes of paying the amount of federal,
state and local tax and interest and any penalties thereon
which such Covered Participant may incur arising out of such
determination. In the event such a determination is made
<PAGE> 8.
after a Change In Control occurs, then the Trustee shall make
payments from the Fund to such Covered Participant for the
purposes set forth in the preceding sentence upon notice
thereof from the Covered Participant.
(2) Any payment from the Fund pursuant to Sec-
tion (c)(1) of this Article shall be charged to the Accounts
of those Participants to whom (or on whose behalf) such a
distribution is made, under the appropriate Plan or Plans.
(d) The Company may, by notice to the Trustee
prior to a Change in Control, direct the Trustee to pay the
Company such amount as is specified in the notice, cancel one
or more Letters of Credit as specified in the notice, or
reduce one or more Letters of Credit by such amount as is
specified in the notice. In addition, such notice shall set
forth the Account or Accounts which shall be debited with
respect to such payment, cancellation or reduction. If the
amount which would remain in the Fund after any such payment
would be less than the unpaid fees and expenses of the
Trustee, then the Trustee may deduct such fees and expenses
from the payment that would otherwise be made to the Company.
(e) Any direction, designation or notice by the
Company required under this Article shall be in writing. Any
direction by the Company with respect to a payment from the
Fund shall be accompanied by a certification by the Company
that the payment directed is in conformity with Article
<PAGE> 9.
THIRTEENTH hereof. The Trustee shall not be liable in any
way for any payment made pursuant to any such direction of
the Company. In addition, the Trustee shall not be liable in
any way for any payment made based on information supplied to
it by the Company.
FOURTH: (a) Management of Assets of Fund. Sub-
ject to paragraph (b) of this Article, the Trustee, prior to
a Change In Control, shall have exclusive authority and
discretion to manage and control the assets of the Fund,
other than Letters of Credit, and pursuant to such authority
and discretion may exercise from time to time and at any time
power:
(i) To invest and reinvest the Fund, without
distinction between principal and income, in shares of
stock (whether common or preferred) or other evidences
of ownership, bonds, debentures, notes or other
evidences of indebtedness, unsecured or secured by
mortgages on real or personal property wherever situated
(including any part interest in a bond and mortgage or
note and mortgage whether insured or uninsured) and
other property, or part interest in property, real or
personal, foreign or domestic, whether or not productive
of income or consisting of wasting assets, and in order
to reduce the rate of interest rate fluctuations,
contracts, as either buyer or seller, for the future
<PAGE> 10.
delivery of United States Treasury securities and com-
parable United States Government-backed securities;
(ii) To sell, convey, redeem, exchange, grant
options for the purchase or exchange of, or otherwise
dispose of, any real or personal property, at public or
private sale, for cash or upon credit, with or without
security, without obligation on the part of any person
dealing with the Trustee to see to the application of
the proceeds of or to inquire into the validity,
expediency or propriety of any such disposition;
(iii) To manage, operate, repair and improve, and
mortgage or lease for any length of time any real prop-
erty held in the Fund; to renew or extend any mortgage,
upon any terms the Trustee may deem expedient; to agree
to reduction of the rate of interest or any other modi-
fication in the terms of any mortgage or of any guar-
antee pertaining to it; to enforce any covenant or
condition of any mortgage or guarantee or to waive any
default in the performance thereof; to exercise and
enforce any right of foreclosure; to bid in property on
foreclosure; to take a deed in lieu of foreclosure with
or without paying consideration therefor and in connec-
tion therewith to release the obligation on the bond
secured by the mortgage; and to exercise and enforce in
any action, suit or proceeding at law or in equity any
<PAGE> 11.
rights or remedies in respect of any mortgage or
guarantee;
(iv) To exercise, personally or by general or
limited proxy, the right to vote any shares of stock,
bonds or other securities held in the Fund; to delegate
discretionary voting power to trustees of a voting trust
for any period of time; and to exercise, personally or
by power of attorney, any other right appurtenant to any
securities or other property of the Fund;
(v) To join in or oppose any reorganization,
recapitalization, consolidation, merger or liquidation,
or any plan therefor, or any lease, mortgage or sale of
the property of any organization the securities of which
are held in the Fund; to pay from the Fund any assess-
ments, charges or compensation specified in any plan of
reorganization, recapitalization, consolidation, merger
or liquidation; to deposit any property with any
committee or depositary; and to retain any property
allotted to the Fund in any reorganization, recapital-
ization, consolidation, merger or liquidation;
(vi) To exercise or sell any conversion or sub-
scription or other rights appurtenant to any stock,
security or other property held in the Fund;
(vii) To borrow from any lender (other than the
Trustee in its individual capacity or the Company or any
<PAGE> 12.
of its affiliates) money, in any amount and upon any
reasonable terms and conditions, for purposes of this
Agreement, and to pledge or mortgage any property held
in the Fund to secure the repayment of any such loan;
(viii) To compromise, settle or arbitrate any claim,
debt, or obligation of or against the Fund; to enforce
or abstain from enforcing any right, claim, debt or
obligation; and to abandon any property determined by it
to be worthless; and
(ix) To make loans of securities held in the Fund
to registered brokers and dealers upon such terms and
conditions as are permitted by applicable law and regu-
lations, and in each instance to permit the securities
so lent to be registered in the name of the borrower or
a nominee of the borrower, provided that in each
instance the loan is adequately secured and neither the
borrower nor any affiliate of the borrower has discre-
tionary authority or control with respect to the assets
of the Fund involved in the transaction or renders
investment advice with respect to those assets.
(b) The Company shall deliver to the Trustee each
Letter of Credit established for the Fund as executed by the
bank issuing such credit. On the last business day of each
month, the Trustee shall draw on the Letters of Credit to the
extent the assets of the Fund are not sufficient to make
<PAGE> 13.
payments required to be made under the Payment Schedule
during the next six months. Amounts received on the draw of
any Letter of Credit shall reduce the allocation of the
Letter of Credit to those Covered Participants for whom such
Letter of Credit was previously allocated and shall be allo-
cated to the Accounts of such Covered Particiipants as if
such amounts were contributions to the Fund.
If the Trustee receives written notice prior to the
expiration or cancellation of a Letter of Credit from the
bank which issued such Letter of Credit, referencing the
Letter of Credit by number, signed by an officer of such
bank, and stating that such Letter of Credit is due to expire
and has not been extended, or is being cancelled (other than
a cancellation pursuant to paragraph (d) of Article THIRD),
the Trustee shall draw on such Letter of Credit to the full
extent thereof prior to the expiration of such Letter of
Credit (but in no event earlier than the fifth business day
prior to such expiration) unless, prior to taking such
action, the Trustee has received a replacement Letter of
Credit or cash or other property in at least the remaining
amount available to be drawn under the Letter of Credit which
is due to expire or is being cancelled.
The Trustee shall have no obligation to earn any
income with respect to any Letters of Credit which are held
by it as part of the Fund. In the event that the Trustee
<PAGE> 14.
shall resign or be removed, and a successor trustee shall be
appointed hereunder, the rights and obligations of the
Trustee under each Letter of Credit shall automatically
become the rights and obligations of the successor trustee,
and the Trustee shall have no further rights, duties, obli-
gations or liabilities with respect to any Letter of Credit.
(c) After a Change In Control occurs and subject
to paragraph (g) of Article SIXTH hereof, the Trustee shall
invest and reinvest the Fund, other than Letters of Credit,
without distinction between principal and income, in direct
obligations of the United States of America or agencies or
instrumentalities thereof, obligations unconditionally and
fully guaranteed as to principal and interest by the United
States of America, and certificates of deposit and bankers'
acceptances of a bank organized and existing under the laws
of the United States of America or any State thereof which
has a combined capital and surplus of at least $100,000,000,
all having respective maturities of not more than one year
when purchased.
FIFTH: Administrative Powers. The Trustee shall
have and in its sole and absolute discretion may exercise
from time to time and at any time the following administra-
tive powers and authority with respect to the Fund:
(a) To continue to hold any property of the Fund
whether or not productive of income; to reserve from
<PAGE> 15.
investment and keep unproductive of income, without liability
for interest, cash temporarily awaiting investment and such
cash as it deems advisable or as the Company from time to
time may specify prior to a Change In Control in order to
meet the administrative expenses of the Fund or anticipated
distributions therefrom.
(b) To hold property of the Fund in its own name
or in the name of a nominee or nominees, without disclosure
of the trust, or in bearer form so that it will pass by
delivery, but no such holding shall relieve the Trustee of
its responsibility for the safe custody and disposition of
the Fund in accordance with the provisions of this Agreement;
the Trustee's books and records shall at all times show that
such property is part of the Fund; and the Trustee shall be
absolutely liable for any loss occasioned by the acts of its
nominee or nominees with respect to securities registered in
the name of the nominee or nominees;
(c) To organize and incorporate under the laws of
any state it may deem advisable one or more corporations (and
to acquire an interest in any such corporation that it may
have organized and incorporated) for the purpose of acquiring
and holding title to any property, interests or rights that
the Trustee is authorized to acquire under Article FOURTH
hereof;
<PAGE> 16.
(d) To employ in the management of the Fund
suitable agents, without liability for any loss occasioned by
any such agents selected by the Trustee with the care, skill,
prudence and diligence under the circumstances then pre-
vailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
(e) To make, execute and deliver, as Trustee, any
deeds, conveyances, leases, mortgages, contracts, waivers or
other instruments in writing that the Trustee may deem
necessary or desirable in the exercise of its powers under
this Agreement;
(f) To hold and draw upon any Letter of Credit in
accordance with paragraph (b) of Article FOURTH; and
(g) To do all other acts that the Trustee may deem
necessary or proper to carry out any of the powers set forth
in Articles FOURTH, FIFTH and SIXTH hereof or otherwise in
the best interests of the Fund.
SIXTH: Annuity Contracts. (a) The Trustee, upon
written direction of the Company prior to a Change In Con-
trol, shall pay from the Fund such sums to such insurance
company or companies as the Company may direct for the pur-
pose of procuring individual or group annuity contracts for
any retirement allowance payable under a Plan (hereinafter in
this Article referred to as "Contracts"). The Company shall
<PAGE> 17.
prepare, or cause to be prepared in such form as it shall
prescribe, the application for any Contract to be applied
for. The Trustee shall receive and hold in the Fund, subject
to the provisions hereinafter set forth in this Article, all
Contracts so obtained.
(b) The Trustee shall be the complete and absolute
owner of Contracts held in the Fund and, upon written direc-
tion of the Company prior to a Change In Control, shall have
power, without the consent of any other person, to exercise
any and all of the rights, options or privileges that belong
to the absolute owner of any Contract held in the Fund or
that are granted by the terms of any such Contract or by the
terms of this Agreement. The Trustee shall have no discre-
tion with respect to the exercise of any of the foregoing
powers or to take any other action permitted by any Contract
held in the Fund, but shall exercise such powers or take such
action only upon the written direction of the Company prior
to a Change In Control; the Trustee shall have no duty to
exercise any of such powers or to take any such action unless
and until it shall have received such direction. The
Trustee, upon the written direction of the Company prior to a
Change In Control, shall deliver any Contract held in the
Fund to such person or persons as may be specified in the
direction.
<PAGE> 18.
(c) The Trustee shall hold in the Fund the pro-
ceeds of any sale, assignment or surrender of any Contract
held in the Fund and any and all dividends and other payments
of any kind received in respect of any Contract held in the
Fund.
(d) Upon the written direction of the Company
prior to a Change In Control, the Trustee shall pay from the
Fund premiums, assessments, dues, charges and interest, if
any, upon any Contract held in the Fund. After a Change In
Control occurs, the Trustee shall pay from the Fund premiums,
assessments, dues, charges and interest, if any, upon any
Contract held in the Fund, without direction from the
Company.
(e) No insurance company that may issue any
Contract or Contracts held in the Fund shall be deemed to be
a party to this Agreement for any purpose, or to be respon-
sible in any way for the validity of this Agreement or to
have any liability under this Agreement other than as stated
in each Contract that it may issue. Any insurance company
may deal with the Trustee as sole owner of any Contract
issued by it and held in the Fund, without inquiry as to the
authority of the Trustee to act, and may accept and rely upon
any written notice, instruction, direction, certificate or
other communication from the Trustee believed by it to be
genuine and to be signed by an officer of the Trustee and
<PAGE> 19.
shall incur no liability or responsibility for so doing. Any
sums paid out by any insurance company under any of the terms
of a Contract issued by it and held in the Fund either to the
Trustee, or, in accordance with its direction, to any other
person or persons designated as payees in such Contract shall
be a full and complete discharge of the liability to pay such
sums, and the insurance company shall have no obligation to
look to the disposition of any sums so paid. No insurance
company shall be required to look into the terms of this
Agreement, to question any action of the Trustee or to see
that any action of the Trustee is authorized by the terms of
this Agreement.
(f) Anything contained herein to the contrary
notwithstanding, neither the Company nor the Trustee shall be
liable for the refusal of any insurance company to issue or
change any Contract or Contracts or to take any other action
requested by the Trustee; nor for the form, genuineness,
validity, sufficiency or effect of any Contract or Contracts
held in the Fund; nor for the act of any person or persons
that may render any such Contract or Contracts null and void;
nor for the failure of any insurance company to pay the
proceeds and avails of any such Contract or Contracts as and
when the same shall become due and payable; nor for any delay
in payment resulting from any provision contained in any such
Contract or Contracts; nor for the fact that for any reason
<PAGE> 20.
whatsoever (other than their own negligence or willful
misconduct) any Contract or Contracts shall lapse or
otherwise become uncollectible.
(g) After a Change In Control occurs, the Trustee
may exercise any of the powers set forth in paragraphs (a)
through (f) of this Article without direction from the Com-
pany, including the power to purchase Contracts the rates of
return and maturity dates of which may reasonably be expected
to yield assets of the Fund sufficient to discharge all or a
portion of the Company's obligations for retirement allow-
ances under the Plans as set forth in the most recent infor-
mation furnished to the Trustee by the Company prior to such
Change In Control.
SEVENTH: Taxes, Expenses and Compensation of
Trustee. (a) The Company shall pay any federal, state,
local or other taxes imposed or levied with respect to the
corpus and/or income of the Fund or any part thereof under
existing or future laws and, the Company in its discretion,
or the Trustee, in its discretion, may contest the validity
or amount of any tax, assessment, claim or demand respecting
the Fund or any part thereof.
(b) The Company shall pay to the Trustee from time
to time such reasonable compensation for its services as
trustee as shall be agreed upon by the Company and the
Trustee. The Company shall also pay the reasonable and
<PAGE> 21.
necessary expenses incurred by the Trustee in the performance
of its duties under the Agreement, including reasonable fees
of counsel engaged by the Trustee pursuant to paragraph (b)
of Article EIGHTH of this Agreement. Such compensation and
expenses shall be charged against and paid from the Fund to
the extent not paid by the Company.
EIGHTH: General Duties of Trustee. (a) The
Trustee shall discharge its duties under this Agreement
solely in the interest of the beneficiaries of the Fund and
(i) for the exclusive purpose of providing benefits to such
beneficiaries and defraying reasonable expenses of admini-
stering the Fund; (ii) with the care, skill, prudence and
diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims; and (iii) by diversifying the
investments of the Fund so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent
not to do so.
(b) The Trustee may consult with counsel, who may
be counsel for the Company or for the Trustee in its indivi-
dual capacity, and shall not be deemed imprudent by reason of
its taking or refraining from taking any action in accordance
with the opinion of counsel. The Trustee shall not be
required to give any bond or any other security for the
<PAGE> 22.
faithful performance of its duties under this Agreement,
except as required by law.
(c) The Trustee shall be under no duties whatso-
ever, except such duties as are specifically set forth as
such in this Agreement, and no implied covenant or obligation
shall be read into this Agreement against the Trustee. The
Trustee shall not be compelled to take any action toward the
execution or performance of the trust created hereunder or to
prosecute or defend any suit or claim in respect thereof,
unless indemnified to its satisfaction against loss,
liability, and reasonable costs and expenses.
Notwithstanding anything herein to the contrary, in the event
that the bank issuing a Letter of Credit shall fail or refuse
to pay upon any draw thereunder, the Trustee will not be
obligated to pursue any remedy against such issuing bank
unless it shall have first received from the Company, the
Participants or any of them security or indemnity to its
satisfaction against the costs and expenses (including
attorney's fees) which may be incurred therein or thereby.
The Trustee shall be under no liability or obligation to
anyone with respect to any failure on the part of the Company
to perform any of its obligations under this Agreement.
(d) The Company shall pay and shall protect,
indemnify and save harmless the Trustee and its officers,
directors or trustees, employees and agents from and against
<PAGE> 23.
any and all losses, liabilities (including liabilities for
penalties), actions, suits, judgments, demands, damages,
reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) of any nature
arising from or relating to any action or failure to act by
the Trustee, its officers, directors or trustees, employees
and agents or the transactions contemplated by this Agree-
ment, except to the extent that any such loss, liability,
action, suit, demand, damage, cost or expense is the result
of the negligence or willful misconduct of the Trustee, its
officers, directors or trustees, employees or agents.
NINTH: Accounts of Trustee. (a)(i) The Trustee
shall keep accurate and detailed accounts of all its
receipts, investments and disbursements under this Agreement.
Such person or persons as the Company shall designate shall
be allowed to inspect the books of account relating to the
Fund upon request at any reasonable time during the business
hours of the Trustee.
(ii) Within 120 days after the close of each
calendar year, the Trustee shall transmit to the Company, and
certify the accuracy of, a written statement of the assets
and liabilities of the Fund at the close of that year,
showing the current value of each asset at that date, and a
written account of all the Trustee's transactions relating to
the Fund during the period from the last previous accounting
<PAGE> 24.
to the close of that year. (For the purposes of this
paragraph, the date of the Trustee's resignation or removal
as provided in Article ELEVENTH hereof shall be deemed to be
the close of a calendar year.)
(iii) Unless the Company shall have filed with the
Trustee written exceptions or objections to any such
statement and account within 60 days after receipt thereof,
the Company shall be deemed to have approved such statement
and account; and in such case or upon the written approval by
the Company of any such statement and account, the Trustee
shall be forever released and discharged with respect to all
matters and things embraced in such statement and account as
though it had been settled by decree of a court of competent
jurisdiction in an action or proceeding to which the Company
and all persons having any beneficial interest in the Fund
were parties.
(b) Nothing contained in this Agreement or in the
Plans shall deprive the Trustee of the right to have a judi-
cial settlement of its accounts. In any proceeding for a
judicial settlement the Trustee's accounts or for instruc-
tions in connection with the Fund, the only other necessary
party thereto in addition to the Trustee shall be the
Company. If the Trustee so elects, it may bring in as a
party or parties defendant any other person or persons. No
person interested in the Fund, other than the Company, shall
<PAGE> 25.
have a right to compel an accounting, judicial or otherwise,
by the Trustee, and each such person shall be bound by all
accounting by the Trustee to the Company, as herein provided,
as if the account had been settled by decree of a court of
competent jurisdiction in an action or proceeding to which
such person was a party.
TENTH: Administration of the Plans; Communica-
tions. (a) The Company shall administer the Plans as pro-
vided therein, and subject to paragraph (b) of Article THIRD
hereof or subject to any delegation by the Company and
assumption by the Trustee of the duties of administering the
Plans, the Trustee shall not be responsible in any respect
for administering the Plans nor shall the Trustee be
responsible for the adequacy of the Fund to meet and dis-
charge all payments and liabilities under the Plans. The
Trustee shall be fully protected in relying upon any written
notice, instruction, direction or other communication signed
by an officer of the Company. The Company from time to time
shall furnish the Trustee with the names and specimen
signatures of the officers of the Company authorized to act
or give directions hereunder and shall promptly notify the
Trustee of the termination of office of any such officer of
the Company and the appointment of a successor thereto.
Until notified to the contrary, the Trustee shall be fully
<PAGE> 26.
protected in relying upon the most recent list of the
officers of the Company furnished to it by the Company.
(b) Any action required by any provision of this
Agreement to be taken by the Board of Directors of the Com-
pany shall be evidenced by a resolution of the Board of
Directors certified to the Trustee by the Secretary or an
Assistant Secretary of the Company under its corporate seal,
and the Trustee shall be fully protected in relying upon any
resolution so certified to it. Unless other evidence with
respect thereto has been specifically prescribed in this
Agreement, any other action of the Company under any provi-
sion of this Agreement, including any approval of or excep-
tions to the Trustee's accounts, shall be evidenced by a
certificate signed by an officer of the Company, and the
Trustee shall be fully protected in relying upon such
certificate. The Trustee may accept a certificate signed by
an officer of the Company as proof of any fact or matter that
it deems necessary or desirable to have established in the
administration of the trust (unless other evidence of such
fact or matter is expressly prescribed herein), and the
Trustee shall be fully protected in relying upon the state-
ments in the certificate.
(c) The Trustee shall be entitled conclusively to
rely upon any written notice, instruction, direction,
certificate or other communication believed by it to be
<page. 27.
genuine and to be signed by the proper person or persons, and
the Trustee shall be under no duty to make investigation or
inquiry as to the truth or accuracy of any statement con-
tained therein.
(d) Until notice be given to the contrary, com-
munications to the Trustee shall be sent to it at its office
at 770 Broadway, New York, New York 10003-9548, Attention:
Department Manager, Employee Benefits Services; communica-
tions to the Company shall be sent to it at its office at
48 Wall Street, New York, New York 10005, Attention: General
Counsel.
ELEVENTH: Resignation or Removal of Trustee.
(a) The Trustee may resign at any time upon 60 days' written
notice to the Company, or upon shorter notice if acceptable
to the Company. The Company, by action of its Board of
Directors, may remove the Trustee at any time upon 60 days'
written notice to the Trustee, or upon shorter notice if
acceptable to the Trustee. In the event it resigns or is
removed, the Trustee shall have a right to have its accounts
settled as provided in Article NINTH hereof.
(b) Upon the resignation or removal of the
Trustee, the Company, by action of its Board of Directors,
shall appoint a successor trustee which shall be a bank as
defined under the Investment Advisers Act of 1940, having a
net worth in excess of $100,000,000 or having assets in
<PAGE> 28.
excess of $2,000,000,000, other than the Company or any
corporation that, directly or through one or more inter-
mediaries, controls, is controlled by or is under common
control with the Company, to act hereunder after the effec-
tive date of such removal or resignation. Each successor
trustee shall have the powers and duties conferred upon the
Trustee in this Agreement, and the term "Trustee" as used in
this Agreement shall be deemed to include any successor
trustee. Upon designation or appointment of a successor
trustee, the Trustee shall transfer and deliver the Fund to
the successor trustee, reserving such sums as the Trustee
shall deem necessary to defray its expenses in settling its
accounts, to pay any of its compensation due and unpaid and
to discharge any obligation of the Fund for which the Trustee
may be liable. If the sums so reserved are not sufficient
for these purposes, the Trustee shall be entitled to recover
the amount of any deficiency from either the Company or the
successor trustee, or both. When the Fund shall have been
transferred and delivered to the successor trustee and the
accounts of the Trustee have been settled as provided in
Article NINTH hereof, the Trustee shall be released and
discharged from all further accountability or liability for
the Fund and shall not be responsible in any way for the
further disposition of the Fund or any part thereof.
<PAGE> 29.
TWELFTH: Amendment of Agreement. (a) Subject to
paragraph (b) of this Article TWELFTH, the Company expressly
reserves the right at any time to amend this Agreement and
the trust created thereby to any extent that it may deem
advisable. No such amendment shall be made that affects the
duties or responsibilities of the Trustee without its consent
thereto in writing. Such amendment shall become effective
upon delivery to the Trustee of a written instrument of
amendment, duly executed and acknowledged by the Company and
accompanied by a certified copy of a resolution of the Board
of Directors of the Company authorizing such amendment.
(b) Notwithstanding any other provisions of this
Agreement, the provisions of this Agreement and the trust
created thereby may not be amended after the date a Change In
Control occurs without the written consent of two-thirds in
number of the Covered Participants. The Trustee may request
that the Company furnish evidence to establish that such a
majority in number of such Covered Participants have granted
written consent to such an amendment.
THIRTEENTH: Prohibition of Diversion. (a) Except
as provided in paragraph (b) below and in paragraphs (b)
and (d) of Article THIRD, at no time prior to the satisfac-
tion of all liabilities with respect to Covered Participants
and their beneficiaries shall any part of the corpus and/or
income of the Fund be used for, or diverted to, purposes
<PAGE> 30.
other than for the exclusive benefit of Covered Participants
and their beneficiaries and the assets of the Fund shall
never inure to the benefit of the Company and shall be held
for the exclusive purposes of providing benefits to Covered
Participants and their beneficiaries and defraying reasonable
expenses of administering the Fund. Upon satisfaction of all
liabilities with respect to Covered Participants and their
beneficiaries under the Plans, this Agreement and the trust
shall be terminated and the remaining assets of the Fund
shall be distributed to the Company.
(b) Notwithstanding any other provision of this
Agreement to the contrary, the corpus and/or income of the
Fund shall at all times be subject to the claims of creditors
of the Company. In the event that (i) a final judicial
determination is entered that the Company is unable to pay
its debts as such debts mature or (ii) there shall have been
filed by or against the Company in any court or other tri-
bunal either of the United States or of any State or of any
other authority now or hereafter exercising jurisdiction, a
petition in bankruptcy or insolvency proceedings or for
reorganization or for the appointment of a receiver or
trustee of all or substantially all of the Company's property
under the present or any future federal bankruptcy code or
any other present or future applicable federal, state or
other bankruptcy or insolvency statute or law, then the
<PAGE> 31.
Trustee shall not make payments from the Fund to any bene-
ficiary, but under either of such circumstances, the Trustee
shall deliver any property held in the Fund only as a court
or other tribunal of competent jurisdiction may direct to
satisfy the claims of the Company's creditors. The Board of
Directors and the Chief Executive Officer of the Company
shall furnish the Trustee with written notice of such final
judicial determination or filing described herein.
If the Trustee receives a written allegation from a
person claiming to be a creditor of the Company that the
Company is unable to pay its debts as they mature, the
Trustee shall, within the 30-day period from the date of
receipt of such allegation, determine whether the Company is
in fact unable to pay its debts as they mature. During such
period, the Trustee shall suspend all payments from the Fund.
If the Trustee determines the Company is able to pay its
debts as they mature, payments from the Fund will resume.
Otherwise, the Trustee will deliver the assets of the Fund as
a court or other tribunal of competent jurisdiction may
direct to satisfy the claims of the Company's creditors, and,
in the absence of such direction, the Trustee shall continue
to suspend payments from the Fund.
FOURTEENTH: Sufficiency of Fund. Notwithstanding
any provision of this Agreement, the Company shall remain
obligated to pay Participants the amounts due to them under
<PAGE> 32.
the Plans. If the assets of an Account are insufficient to
fulfill the Company's obligations to a Covered Participant
when due, then the Company shall pay to such Covered Par-
ticipant (and his beneficiaries) the amount of such
insufficiency.
FIFTEENTH: Prohibition of Assignment of Interest.
No interest, right or claim in or to any part of the Fund or
any payment therefrom shall be assignable, transferable or
subject to sale, mortgage, pledge, hypothecation, commuta-
tion, anticipation, garnishment, attachment, execution or
levy of any kind, and the Trustee shall not recognize any
attempt to assign, transfer, sell, mortgage, pledge, hypo-
thecate, commute or anticipate the same, except to the extent
required by law.
SIXTEENTH: Affiliates. Prior to a Change in
Control, any corporation that, directly or through one or
more intermediaries, controls, is controlled by or is under
common control with the Company may adopt and become a party
to this Agreement by delivering to the Trustee an instrument
in writing, duly executed and acknowledged, adopting and
assuming jointly and severally the obligations of the Company
under this Agreement and constituting and appointing the
Company to be the agent and attorney in fact of such
corporation for the purposes of giving or receiving notices,
instructions, directions and other communications to or from
<PAGE> 33.
the Trustee and approving the accounts of the Trustee, accom-
panied by duly certified copies of resolutions of the Board
of Directors of such corporation adopting the Agreement and
approving and authorizing execution, acknowledgment and
delivery of such instrument and a duly certified copy of a
resolution of the Board of Directors of the Company approving
and consenting to the same.
SEVENTEENTH: Miscellaneous. (a) This Agreement
shall be interpreted, construed and enforced, and the trust
hereby created shall be administered, in accordance with the
laws of the United States and of the State of New York.
(b) The titles to Articles of this Agreement are
placed herein for convenience of reference only, and the
Agreement is not to be construed by reference thereto.
(c) This Agreement shall bind and inure to the
benefit of the successors and assigns of the Company and the
Trustee, respectively, and the Covered Participants and their
beneficiaries under the Plans.
(d) This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an
original but all of which together shall constitute but one
instrument, which may be sufficiently evidenced by any
counterpart.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed in their respective names by
<PAGE> 34.
their duly authorized officers under their corporate seals as
of the day and year first above written.
THE BANK OF NEW YORK COMPANY, INC.
By \s\ Charles E. Rappold II
----------------------
Chief Legal Officer and Secretary
ATTEST:
\s\ Jacqueline R. McSwiggan
UNITED STATES TRUST COMPANY
OF NEW YORK
By \s\ Martha Dolan
--------------------
Vice President
ATTEST:
William H. Schroeder
Senior Vice President
<PAGE> 35.
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On this 16th day of November , 1993,
before me personally came Charles Rappold, to
me known, who, being by me duly sworn, did depose and say
that he resides at 1050 Rahway Rd, Plainfield NJ.,
and that he is CLO and Secretary of THE BANK OF NEW YORK
COMPANY, INC., one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he signed
his name thereto by like order.
\s\ Nicholas B. Simonetta
STATE OF NEW YORK )
: SS.:
COUNTY OF NEW YORK )
On this 17th day of November, 1993,
before me personally came Martha Dolan, to
me known, who, being by me duly sworn, did depose and say
that she resides at 7 Tree Farm Road, Monmouth JCT, NJ,
and that she is a Vice President of UNITED STATES TRUST COM-
PANY OF NEW YORK, one of the corporations described in and
which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
order of the Board of Trustees of said corporation; and that
he signed his name thereto by like order.
\s\ Stuart Omansky
<PAGE> 36.
EXHIBIT I
1. The Bank of New York Company, Inc. Excess Benefit Plan
2. The Bank of New York Company, Inc. Supplemental
Executive Retirement Plan
3. Agreements between The Bank of New York Company, Inc.
and the following persons:
Individual Date of Agreement
Samuel F. Chevalier July 9, 1991
Richard D. Field July 9, 1991
Alan R. Griffith July 9, 1991
Richard A. Pace July 9, 1991
Thomas A. Renyi July 9, 1991
Robert J. Mueller January 10, 1993
<PAGE> 37
EXHIBIT II
[FORM OF IRREVOCABLE LETTER OF CREDIT]
[Date]
United States Trust Company of New York,
as Trustee
770 Broadway
New York, New York 10003-9548
Attention: [ ]
Dear Sirs:
At the request and for the account of The Bank of
New York Company, Inc., we hereby establish in your favor
(and in favor of your successors, the terms "you" and "yours"
referring to you and any successor), as Trustee under the
Trust Agreement between The Bank of New York Company, Inc.
and United States Trust Company of New York, dated as of
__________, 1993 (the "Trust Agreement"), this Irrevocable
Letter of Credit No. _________ in the amount of U.S.
$_______. This Letter of Credit is effective immediately and
shall expire at the close of banking business at our office
at [address] on [ ], 1994, unless terminated earlier
or extended in either case in accordance with the provisions
hereof. The amount of this Letter of Credit will be reduced
from time to time as hereinafter provided.
Funds under this Letter of Credit are available to
you in immediately available funds upon presentation of your
sight draft in the form of Exhibit A-1 hereto appropriately
completed.
<PAGE> 38.
The amount available under this Letter of Credit
shall be automatically reduced by the amount of each draft
paid hereunder (effective on the date of payment of such
draft). In addition, upon presentation by you of a
certificate in the form of Exhibit B-1 hereto appropriately
completed, the amount available under this Letter of Credit
shall be automatically reduced by the amount stated in such
certificate.
Presentation of drafts and certificates hereunder
shall be made at our office at [address], Attention:
___________________, or at any other office in the City and
State of New York which may be designated by us by written
notice delivered to you.
Upon the earlier to occur of any one of the
following events: (i) the surrender to us by you of this
Letter of Credit for cancellation and (ii) the expiration
date stated in the initial paragraph hereof, this Letter of
Credit shall automatically expire.
Communications with respect to this Letter of
Credit shall be delivered to us by registered mail, return
receipt requested (except that drafts and certificates shall
be presented by hand delivery), addressed to us at [address],
Attention: _______________, specifically referring to the
number of this Letter of Credit.
<PAGE> 39.
We hereby agree that drafts drawn and presented in
compliance with this Letter of Credit and accompanied by the
documents required hereby will be paid in accordance with the
terms hereof.
It is a condition of this Letter of Credit that it
will be automatically extended for periods of one year from
the then relevant expiry date, unless sixty (60) days prior
to that relevant expiry date we notify you by registered
mail, return receipt requested, that we elect not to extend
this Letter of Credit for any additional period, provided,
however, that under no circumstances will this Letter of
Credit be renewed or extended beyond [ ].
We hereby agree that all notices to you under this
Letter of Credit will be sent to you by registered mail,
return receipt requested, at 770 Broadway, New York, New York
10003-9548, Attention: Department Manager, Employee Benefits
Services, or such other address as from time to time
specified by you in writing.
This Letter of Credit shall be governed by, and
construed in accordance with, the terms of the Uniform
Customs and Practices for Documentary Credits (1983
Revision), International Chamber of Commerce, Publication
No. 400 (the "UCP"). This Letter of Credit shall be deemed
to be issued under the laws of the State of New York
(including the Uniform Commercial Code as in effect in said
<PAGE> 40.
State), and, as to matters not governed by the UCP, shall be
governed by, and construed in accordance with, the laws of
the State of New York.
Very truly yours,
[Name of Bank]
By ___________________________
Vice President
<PAGE> 41
EXHIBIT A-1
SIGHT DRAFT
[Date]
For Value Received, pay on demand (by wire transfer
in same day funds) to Account No. [insert number of account
to which payment is to be made and name and address of bank]
________ United States Dollars ($__________).
Charge to Account of [name of account party]
Irrevocable Letter of Credit No. ___________.
TO: [Name of Bank]
[Address]
Attention: _________________,
Letter of Credit Operations
UNITED STATES TRUST COMPANY
OF NEW YORK
By ____________________________
Title:
<PAGE> 42.
EXHIBIT B-1
REQUEST FOR REDUCTION
[Date]
[Name of Bank]
[Address]
Attention: ____________________,
Letter of Credit Operations
Irrevocable Letter of Credit No.
Gentlemen:
In accordance with the above-captioned Letter of
Credit, each of the undersigned hereby requests that the
amount available to be drawn by the beneficiary under said
Letter of Credit be reduced by $__________ upon receipt by
you of this certificate.
THE BANK OF NEW YORK COMPANY, INC.
By ________________________________
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By _________________________________
Title:
<PAGE> 1
Exhibit 10(r)
THE BANK OF NEW YORK COMPANY, INC.
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS
1. Eligibility for Benefits.
(a) A member of the Board of Directors (the
"Board") of The Bank of New York Company, Inc. (the
"Company") shall be eligible to receive benefits under The
Bank of New York Company, Inc. Retirement Plan for Non-
Employee Directors (the "Plan") if the member (i) has served
for at least five years on the Board, (ii) has retired from
the Board (A) following attainment of age 60 or (B) by
reason of disability (as defined in paragraph (c) of this
Section) after completing 10 years of service as a member of
the Board and (iii) is not an employee of the Company or its
subsidiaries or a former employee of the Company or its
subsidiaries entitled to retirement benefits under a
retirement plan of the Company or a subsidiary with respect
to his prior service as an employee.
(b) For purposes of the Plan, service shall
include all service as a member of the Board, including
service prior to the effective date of the Plan.
(c) A person shall be considered to have incurred
a disability for purposes of the Plan if the Pension
Committee of the Board (the "Committee"), in its sole
discretion, has determined that the person is unable to
engage in any substantial gainful activity by reason of any
physical or mental impairment which can be expected to
<PAGE> 2
result in death or be of long-continued and indefinite
duration.
2. Retirement Benefits.
(a) A retired member of the Board who is eligible
for benefits under the Plan shall receive an annual
retirement benefit equal to the following percentage of the
annual cash retainer payable to non-employee Board members
at the date he ceased to be a member of the Board:
Length of Service % of Annual Retainer
5 years 50%
6 years 60%
7 years 70%
8 years 80%
9 years 90%
10 years 100%
(b) Retirement benefits for a member of the Board
who retires after age 70 shall be paid for the life of the
member of the Board. Retirement benefits for a member of
the Board who (i) retires between the ages of 60 and 70 or
(ii) retires by reason of disability shall be paid for a
number of years following retirement equal to the number of
years of service as a member of the Board.
(c) Retirement benefits under the Plan shall
commence to be paid on a quarterly basis on the first day of
the calendar quarter following the retirement of the member
of the Board.
<PAGE> 3
(d) Payment of retirement benefits under the Plan
shall cease upon the death of the retired member of the
Board.
3. Forfeitures. If, in its sole discretion, the
Board determines that a person has been removed from the
Board for cause, such person shall forfeit all existing or
future entitlement to benefits under the Plan.
4. Disability. In the event that a person who is
receiving benefits or is eligible to begin receiving
benefits under the Plan has incurred a disability, the
Committee may direct any or all of the benefits to which the
person may be entitled to be paid in any one or more of the
following ways: (a) to the person, or (b) to the person's
legal guardian or conservator, or (c) to the person's spouse
or to any other individual or entity to be expended for his
or her benefit.
5. Administration. The Committee shall
administer the Plan, resolve any ambiguities or incon-
sistencies, and decide all questions arising in its admin-
istration, interpretation or application. Any decision of
the Committee shall be conclusive and binding on members of
the Plan and all other persons having or claiming any right
to payments under the Plan.
6. Amendment and Termination. The Board may
amend or terminate the Plan in whole or in part at any time,
except that no amendment or termination may reduce or
<PAGE> 4
terminate benefits to which a current or retired member of
the Board is then entitled without the written consent of
the member.
7. Source of Payment of Benefits. The
obligations of the Company to pay the retirement benefits
provided under the Plan shall be contractual only and all
payments of retirement benefits hereunder shall be made by
the Company from its general assets at the time and in the
manner provided herein.
8. No Assignment. No right, benefit or payment
under the Plan shall be subject to assignment, sale or other
transfer, nor shall it be liable or subject in any manner to
attachment, garnishment or execution.
9. Governing Law. The Plan shall be governed
by, and construed and enforced in accordance with, the laws
of the State of New York.
10. Effective Date. The Plan shall be effective
as of May 11, 1993.
Exhibit 10(s)
<PAGE> 1
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS OF
THE BANK OF NEW YORK COMPANY, INC.
1. Definitions.
(a) "Board" means the Board of Directors of The
Bank of New York Company, Inc.
(b) "Committee" means the Pension Committee of
the Board.
(c) "Company" means The Bank of New York Company,
Inc.
(d) "Company Stock" means the common stock of the
Company.
(e) "Deferral Account" means the account
maintained on the books of the Company for each Participant
pursuant to Section 4. Separate Deferral Accounts shall be
maintained for each Participant.
(f) "Director" means any member of the Board who
is not an employee of the Company or any of its
subsidiaries.
(g) "Director Compensation" means compensation to
which the Director is entitled as a retainer or a fee for
services as a member of the Board or the Board of Directors
of The Bank of New York.
(h) "Disability" means that the Committee, in its
sole discretion, has determined that the Participant is
unable to engage in any substantial gainful activity by
reason of any physical or mental impairment which can be
<PAGE> 2
expected to result in death or to be of long-continued and
indefinite duration.
(i) "Effective Date" means December 1, 1993.
(j) "Investment Funds" means Funds A, B and C
under the Profit-Sharing Plan.
(k) "Investment Fund Accounts" means the sub-
Accounts maintained under the Plan to which deferred
compensation is credited pursuant to Section 4, to reflect
equivalent investment performance of the Investment Funds.
(l) "Participant" means a Director who elects to
participate in this Plan as provided in Section 3.
(m) "Plan" means the Deferred Compensation Plan
for Non-Employee Directors of The Bank of New York Company,
Inc. as set forth herein and as amended from time to time.
(n) "Profit-Sharing Plan" means the Employees'
Profit-Sharing Plan of The Bank of New York Company, Inc.
(o) "Stock Account" means the sub-Account
maintained under the Plan to which deferred compensation is
credited pursuant to Section 4, to reflect equivalent
investment performance of Fund D under the Profit-Sharing
Plan.
(p) "Stock Unit" means the equivalent of one
share of Company Stock.
2. Administration
(a) The Plan shall be administered by the
Committee. The Committee shall also have the authority to
<PAGE> 3
make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of the Plan and
decide any and all questions as may arise in connection with
the interpretation or application of the Plan.
(b) The decision or action of the Committee in
respect to any question arising out of or in connection with
the administration, interpretation and application of the
Plan and the rules and regulations promulgated hereunder
shall be final, conclusive and binding upon Participants and
all other persons having or claiming any interest in the
Plan.
3. Participation.
(a) A Director may elect to participate in the
Plan by filing a written election with the Company, on such
form as may be prescribed by the Committee, to defer 50%,
75% or 100% of his or her Director Compensation.
(b) A deferral election shall become effective on
the first day of the calendar year following the date the
election is made. A deferral election for a Participant
shall remain effective for each subsequent calendar year
unless the Participant files another election in which the
Participant elects to cease deferring Director Compensation
or to change the percentage of Director Compensation which
is deferred. The new deferral election shall become
effective on the first day of the calendar year following
the date the election is made.
<PAGE> 4
(c) Notwithstanding anything contained herein to
the contrary, in the case of each individual who is a
Director as of December 1, 1993, a deferral election will be
effective for Director Compensation for 1994 if it is made
by February 15, 1994; provided, however, such election shall
not be effective for any Director Compensation earned before
the election is made. An individual who becomes a Director
after the Effective Date may make a deferral election within
30 days after becoming a Director; such election, however,
shall be effective only with respect to Director
Compensation earned after the date such election is made.
4. Deferral Account.
(a) The portion of Director Compensation that
would otherwise be paid in cash except that it is deferred
pursuant to a deferral election, shall be credited to the
Participant's Deferral Account and shall be allocated in
multiples of 25% in accordance with the Participant's
deferral election, among (i) the Investment Fund Accounts
maintained for the Participant, as if invested in the
applicable Investment Fund as of the first business day of
the month in which such Director Compensation would have
been paid and (ii) the Stock Account maintained for the
Participant, in Stock Units, the number of which shall be
determined by dividing (A) the portion of such Director
Compensation to be allocated to the Stock Account of the
Participant by (B) an amount equal to 95% of the closing
<PAGE> 5
price of the Company Stock, as reported on the New York
Stock Exchange on the date such Director Compensation would
have been paid.
The portion of Director Compensation that would
otherwise be paid in Company Stock except that it is
deferred pursuant to a deferral election, shall be credited
to the Participant's Deferral Account and shall be allocated
to the Stock Account maintained for the Participant in Stock
Units. The number of Stock Units shall be determined by
(A) multiplying (x) the number of shares of Company Stock
which the Participant elected to defer by (y) the closing
price of the Company Stock as reported on the New York Stock
Exchange on the date such Director Compensation would have
been paid, and (B) dividing (z) the amount determined in
clause (A) above by (xx) an amount equal to 95% of the
closing price of the Company Stock as reported on the New
York Stock Exchange on the date such Director Compensation
would have been paid.
(b) The balance credited to a Participant's
Investment Fund Accounts and Stock Account shall be adjusted
from time to time to reflect the equivalent investment
performance of the applicable Investment Fund or of Fund D
of the Profit-Sharing Plan. No transfers may be made among
the Investment Fund Accounts or between the Investment Fund
Accounts and the Stock Account.
<PAGE> 6
(c) The Company shall submit to each Participant,
within 120 days after the close of each calendar year, a
statement, setting forth the balance to the credit of such
Participant in his Deferral Account, as well as the
allocation thereof among the Investment Fund Accounts and
the Stock Account as of the last business day of such year.
5. Payment of Deferred Compensation.
(a) Payment of a Participant's Deferral Account
shall be made or commenced within 60 days after the
Participant's retirement, death, or other termination of
service as a Director (other than by reason of Disability).
Payment shall be made in a lump sum or in substantially
equal installments over a period not to exceed ten years, in
accordance with the Participant's election made at the time
of his deferral election.
(b) In the event of a Participant's death prior
to payment of the balance credited to his Deferral Account,
the amount remaining in his Deferral Account shall be paid
to his Beneficiary in accordance with the Participant's
payment election.
(c) In the event of the Disability of a
Participant, the Participant's Deferral Account shall be
paid in a lump sum within 60 days of such Disability.
(d) A Participant may request that payment be
made of all or a portion of his Deferral Account due to
financial hardship occurring prior to his retirement, death,
<PAGE> 7
or other termination as a Director by submitting a written
request to the Committee. Payment of the amount determined
by the Committee necessary to relieve such financial
hardship shall be made in a lump sum.
(e) Notwithstanding anything contained herein to
the contrary, in the event of the Participant's retirement,
death, or other termination as a Director after a Change of
Control (as defined in paragraph (g) of this Section), his
Deferral Account shall be paid in a lump sum within 60 days
of such retirement, death, or other termination.
(f) Payments from the Plan with respect to the
Participant's Investment Fund Accounts shall be made in cash
equal to the value of the Participant's Investment Fund
Accounts as of the last business day of the month following
the date of the Participant's retirement, death, Disability
or other termination of service as a Director (and each
anniversary of such date if payments are made in
installments). Payments from the Plan with respect to a
Participant's Stock Account shall be made in shares of
Company Stock equal to the number of Stock Units in the
Participant's Stock Account as of the date on which payment
is made; provided, however, that cash payments shall be made
in lieu of fractional shares.
(g) A "Change of Control" shall be deemed to have
occurred if (i) any "person" (within the meaning of Section
14(d) of the Securities Exchange Act of 1934 (the "Exchange
<PAGE> 8
Act")), other than the Company, a subsidiary of the Company
or an employee benefit plan of the Company, acquires more
than 25% of the shares of the Company's common stock; (ii)
there is a sale or divestiture of all or substantially all
of the assets of the Company; (iii) during any two-year
period, individuals who constituted the Board of Directors
of the Company (the "Incumbent Board") as of the beginning
of the period cease for any reason to constitute at least a
majority thereof, provided that any person becoming a
director during such period whose election or nomination for
election by the Company's shareholders was approved by a
vote of at least three-quarters of the Incumbent Board
(either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a
nominee for director without objection to such nomination)
shall be, for purposes of this clause (iii), considered as
though such person were a member of the Incumbent Board; or
(iv) a change in control of the Company would be required to
be reported in response to item 1(a) of the Current Report
on Form 8-K, as in effect on the Effective Date pursuant to
Sections 13 or 15(d) of the Exchange Act.
6. Beneficiary Designation
Each Participant shall have the right, at any
time, to designate any person or persons as his beneficiary
or beneficiaries to whom payment under this Plan shall be
paid in the event of his death prior to complete
<PAGE> 9
distribution to Participant of his Deferral Account. Any
beneficiary designation may be made or changed by a
Participant by a written instrument in such form prescribed
by the Committee which is filed with the Company prior to
the Participant's death. If a Participant fails to
designate a beneficiary, or if all designated beneficiaries
predecease the Participant, then any amounts otherwise
payable to the Participant's beneficiary shall be paid to
the Participant's estate.
7. Amendment and Termination of Plan
(a) The Board may at any time amend the Plan in
whole or in part.
(b) The Board may, in its sole discretion,
terminate the Plan at any time, and upon any such
termination, the Company shall immediately pay to each
Participant in a lump sum the then remaining balance in the
Participant's Deferral Account.
8. Miscellaneous
(a) The Company's obligation to make payments
under the Plan shall be contractual only and all payments
hereunder shall be made by the Company from its general
assets at the time and in the manner provided for in the
Plan.
(b) Neither a Participant nor any other person
shall have any right to sell, assign, transfer, pledge,
anticipate, or otherwise encumber, the amounts, if any,
<PAGE> 10
payable hereunder, to the Participant or such other person.
No part of the amounts payable under the Plan shall be
subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency.
(c) This Plan shall be governed by, and construed
and enforced in accordance with, the laws of the State of
New York.
EXHIBIT 11
<PAGE> 1.
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Computation of Earnings Per Common Share
For the Years Ended December 31,
<CAPTION>
1993 1992 1991
---- ---- ----
(in millions, except per share amounts)
<S> <C> <C> <C>
Weighted Average Number of Shares of
Common Stock for Primary Computation 93 86 80
Shares Assumed to be Issued on Conversion:
Debentures 6 6 2
Cumulative Preferred Stock 1 2 2
----- ----- -----
Weighted Average Number of Shares of
Common Stock Assuming Full Dilution 100 94 84
===== ===== =====
Net Income $ 559 $ 393 $ 134
Dividend Requirements on Preferred Stock 25 33 32
----- ----- -----
Net Income Available to Common
Shareholders 534 360 102
Interest On Convertible Debentures,
Net of Tax 10 11 4
Dividends on Convertible Preferred Stock 3 6 6
----- ----- -----
Net Income Available to Common Shareholders,
Assuming Full Dilution $ 547 $ 377 $ 112
===== ===== =====
Earnings Per Share:
Primary $5.74 $4.19 $1.27
Fully Diluted 5.44 4.00 1.34*
<FN>
*Antidilutive
</TABLE>
EXHIBIT 12
<PAGE> 1.
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Ratios of Earnings to Fixed Charges and Ratios
of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
For The Years Ended December 31
<CAPTION>
EARNINGS 1993 1992 1991 1990 1989
- -------- ---- ---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Income Before Income Taxes $ 886 $ 588 $ 208 $ 430 $ 137
Fixed Charges, Excluding
Interest on Deposits 340 346 378 816 973
------ ------- ------ ------ ------
Income Before Income Taxes
and Fixed Charges Excluding
Interest on Deposits 1,226 934 586 1,246 1,110
Interest on Deposits 701 1,005 1,794 2,489 2,575
------ ------- ------ ------ ------
Income Before Income Taxes
and Fixed Charges, Including
Interest on Deposits $1,927 $ 1,939 $2,380 $3,735 $3,685
====== ======= ====== ====== ======
FIXED CHARGES
- -------------
Interest Expense, Excluding
Interest on Deposits $ 305 $ 315 $ 346 $ 782 $ 936
One-Third Net Rental Expense* 35 31 32 34 37
------ ------ ------ ------ -----
Total Fixed Charges, Excluding
Interest on Deposits 340 346 378 816 973
Interest on Deposits 701 1,005 1,794 2,489 2,575
------ ------ ------ ------ -----
Total Fixed Charges, Including
Interest on Deposits $1,041 $1,351 $2,172 $3,305 $3,548
====== ====== ====== ====== ======
PREFERRED STOCK DIVIDENDS,
PRE-TAX BASIS $ 40 $ 50 $ 51 $ 47 $ 51
- ------------------------------ ====== ====== ====== ====== ======
EARNINGS TO FIXED CHARGES RATIOS
- --------------------------------
Excluding Interest on Deposits 3.61x 2.70x 1.55x 1.53x 1.14x
Including Interest on Deposits 1.85 1.44 1.10 1.13 1.04
EARNINGS TO COMBINED FIXED CHARGES
& PREFERRED STOCK DIVIDENDS RATIOS
- ----------------------------------
Excluding Interest on Deposits 3.23 2.36 1.37 1.44 1.08
Including Interest on Deposits 1.78 1.38 1.07 1.11 1.02
<FN>
*The proportion deemed representative of the interest factor.
</TABLE>
<PAGE> 1
EXHIBIT 13
1993 Annual Report to Shareholders
<TABLE>
FINANCIAL HIGHLIGHTS
The Bank of New York Company, Inc.
<CAPTION>
Dollars in millions,
except per share
amounts 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net Interest Income $ 1,497 $ 1,367 $ 1,350 $ 1,476 $ 1,413
Noninterest Income 1,319 1,183 1,094 976 956
Provision for Loan
Losses 284 443 778 495 789
Noninterest Expense 1,646 1,519 1,458 1,527 1,443
Net Income 559 393 134 311 96
Net Income Available to
Common Shareholders 534 360 102 278 61
Return on Average Assets 1.20% 0.85% 0.29% 0.59% 0.18%
Return on Average Common
Shareholders' Equity 14.98 12.00 3.85 10.64 2.28
Common Dividend Payout
Ratio 27.99 33.89 125.49 57.91 234.43
Per Common Share
Primary Earnings $ 5.74 $ 4.19 $ 1.27 $ 3.51 $ .79
Fully Diluted Earnings 5.44 4.00 - 3.51 .81
Cash Dividends 1.71 1.52 1.67 2.12 1.97
Market Value at Year End 57.00 53.88 30.88 17.75 40.25
Average Securities $ 6,352 $ 6,202 $ 4,676 $ 4,623 $ 5,210
Average Loans 30,427 30,345 32,719 38,139 37,898
Average Total Assets 46,644 46,227 46,617 53,214 53,135
Average Deposits 32,837 33,237 35,669 37,905 37,400
Average Long-Term Debt 1,729 1,386 991 872 1,041
Average Preferred
Shareholders' Equity 334 409 395 395 413
Average Common
Shareholders' Equity 3,563 2,996 2,652 2,611 2,661
At Year End
Allowance for Loan Losses
as a Percent of Loans 3.17% 3.63% 3.57% 3.11% 2.99%
Tier I Capital Ratio 8.87 7.59 5.79 5.03 4.61
Total Capital Ratio 13.65 12.30 9.40 7.96 7.53
Leverage Ratio 7.99 7.11 5.77 5.02 4.58
Common Equity to
Assets Ratio 8.29 7.30 6.14 5.36 4.81
Total Equity to
Assets Ratio 8.94 8.24 7.04 6.16 5.55
Common Shares
Outstanding 93,613,882 91,065,452 80,372,760 79,668,862 78,282,848
Employees 15,621 16,167 15,139 15,847 17,083
<FN>
The above amounts have been restated for the acquisition of National Community
Banks, Inc., and the adoption of the liability method of accounting for income
taxes.
</TABLE>
<PAGE> 2
<TABLE>
Consolidated Balance Sheets
The Bank of New York Company, Inc.
<CAPTION>
December 31,
- --------------------------------------------------------------------------------
Dollars in millions, except per share amounts 1993 1992
---- ----
<S> <C> <C>
Assets
Cash and Due from Banks $ 4,511 $ 5,506
Interest-Bearing Deposits in Banks 269 233
Securities:
Held for Investment (market value of
$4,449 in 1993 and $3,412 in 1992) 4,356 3,322
Held for Sale (market value of
$1,243 in 1993 and $2,597 in 1992) 1,241 2,578
------- -------
Total Securities 5,597 5,900
Trading Assets at market value 1,325 736
Federal Funds Sold and Securities Purchased
Under Resale Agreements 36 265
Loans (less allowance for loan losses of $970 in
1993 and $1,072 in 1992) 29,600 28,425
Premises and Equipment 945 974
Due from Customers on Acceptances 888 615
Accrued Interest Receivable 222 231
Other Assets 2,153 2,325
------- -------
Total Assets $45,546 $45,210
======= =======
Liabilities and Shareholders' Equity
Deposits:
Noninterest-Bearing (principally domestic offices) $ 8,690 $ 8,761
Interest-Bearing
Domestic Offices 15,156 16,049
Foreign Offices 8,313 8,445
------- -------
Total Deposits 32,159 33,255
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 2,711 1,773
Other Borrowed Funds 2,781 3,029
Acceptances Outstanding 901 615
Accrued Taxes and Other Expenses 763 560
Accrued Interest Payable 111 153
Other Liabilities 458 400
Long-Term Debt 1,590 1,695
------- -------
Total Liabilities 41,474 41,480
------- -------
Shareholders' Equity
Preferred Stock-no par value, authorized 5,000,000
shares, outstanding 3,648,100 shares in 1993 and
4,400,792 shares in 1992 267 400
Class A Preferred Stock-par value $2.00 per share,
authorized 5,000,000 shares, outstanding 1,085,415
shares in 1993 and 1,150,000 shares in 1992 27 28
Common Stock-par value $7.50 per share, authorized
350,000,000 shares, outstanding 93,700,481 shares
in 1993 and 91,079,286 shares in 1992 703 683
Additional Capital 1,544 1,467
Retained Earnings 1,536 1,153
------- -------
4,077 3,731
Less: Treasury Stock (86,599 shares in 1993
and 13,834 shares in 1992), at cost 5 1
------- -------
Total Shareholders' Equity 4,072 3,730
------- -------
Total Liabilities and Shareholders' Equity $45,546 $45,210
======= =======
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 3
<TABLE>
Consolidated Statements of Income
The Bank of New York Company, Inc.
<CAPTION>
In millions, except per share amounts For the years ended December 31,
- --------------------------------------------------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest Income
Loans $2,025 $2,102 $2,915
Securities
Taxable 235 262 182
Exempt from Federal Income Taxes 69 86 110
------ ------ ------
304 348 292
Deposits in Banks 24 76 87
Federal Funds Sold and Securities
Purchased Under Resale Agreements 97 85 138
Trading Assets 53 76 58
------ ------ ------
Total Interest Income 2,503 2,687 3,490
------ ------ ------
Interest Expense
Deposits 701 1,005 1,794
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 102 136 177
Other Borrowed Funds 86 85 93
Long-Term Debt 117 94 76
------ ------ ------
Total Interest Expense 1,006 1,320 2,140
------ ------ ------
Net Interest Income 1,497 1,367 1,350
Provision for Loan Losses 284 443 778
------ ------ ------
Net Interest Income After Provision
for Loan Losses 1,213 924 572
------ ------ ------
Noninterest Income
Processing Fees
Securities 307 273 244
Other 161 148 124
------ ------ ------
468 421 368
Trust and Investment Fees 131 118 110
Service Charges and Fees 460 442 385
Securities Gains 64 42 95
Other 196 160 136
------ ------ ------
Total Noninterest Income 1,319 1,183 1,094
------ ------ ------
Noninterest Expense
Salaries and Employee Benefits 813 714 650
Net Occupancy 178 168 176
Furniture and Equipment 95 97 107
Other 560 540 525
------ ------ ------
Total Noninterest Expense 1,646 1,519 1,458
------ ------ ------
Income Before Income Taxes 886 588 208
Income Taxes 327 195 74
------ ------ ------
Net Income $ 559 $ 393 $ 134
====== ====== ======
Net Income Available to Common
Shareholders $ 534 $ 360 $ 102
====== ====== ======
Per Common Share Data:
Primary Earnings $ 5.74 $ 4.19 $ 1.27
Fully Diluted Earnings 5.44 4.00 -
Cash Dividends 1.71 1.52 1.67
Average Common Shares Outstanding 93.042 85.724 80.184
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 4
<TABLE>
Consolidated Statements of Changes in Shareholders' Equity
The Bank of New York Company, Inc.
<CAPTION>
Dollars in millions
For the years ended December 31, 1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Preferred Stock
Balance, January 1 $ 428 $ 395 $ 395
Issuance in Public Offering (shares:
1,334,000) - 139 -
Redemption and Repurchase (shares: 752,120 in
1993 and 100,000 in 1992) (76) (99) -
Conversion of Preferred Stock (shares: 65,157
in 1993 and 75 in 1992) (58) (7) -
------ ------ ------
Balance, December 31 294 428 395
------ ------ ------
Common Stock
Balance, January 1 683 604 603
Issuance in Public Offering (shares: 9,200,000) - 69 -
Conversion of Preferred Stock (shares: 1,468,546
in 1993 and 184,790 in 1992) 11 1 -
Other Issuances (shares: 1,152,649 in 1993,
1,113,551 in 1992, and 164,285 in 1991) 9 9 1
------ ------ ------
Balance, December 31 703 683 604
------ ------ ------
Additional Capital
Balance, January 1 1,467 1,165 1,169
Issuance in Public Offering - 270 -
Conversion of Preferred Stock 35 4 -
Redemption and Repurchases of Preferred Stock (1) (1) -
Other 43 29 (4)
------ ------ ------
Balance, December 31 1,544 1,467 1,165
------ ------ ------
Retained Earnings
Balance, January 1 1,153 913 907
Net Income 559 393 134
Cash Dividends
Common Stock (150) (122) (127)
Preferred Stock (27) (33) (32)
Change in Accumulated Foreign
Currency Translation Adjustment 1 2 (2)
Unrealized Gain on Marketable
Equity Securities - - 33
------ ------ -----
Balance, December 31 1,536 1,153 913
------ ------ -----
Less: Treasury Stock
Balance, January 1 1 6 21
Issued (shares: 5,400 in 1993, 212,173 in
1992, and 625,896 in 1991) - (6) (17)
Acquired (shares: 78,165 in 1993, 17,822 in
1992, and 86,283 in 1991) 4 1 2
------ ------ ------
Balance, December 31 5 1 6
------ ------ ------
Total Shareholders' Equity, December 31 $4,072 $3,730 $3,071
====== ====== ======
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 5
<TABLE>
Consolidated Statements of Cash Flows
The Bank of New York Company, Inc.
<CAPTION>
In millions For the years ended December 31,
- -------------------------------------------------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Operating Activities
Net Income $ 559 $ 393 $ 134
Adjustments to Determine Net Cash Provided (Used)
by Operating Activities:
Provision for Losses on Loans and Other
Real Estate 338 520 861
Depreciation and Amortization 187 176 163
Deferred Income Taxes 195 165 18
Securities Gains (64) (42) (95)
Change in Trading Assets (591) (251) (266)
Change in Securities Held for Sale 1,325 (1,016) (956)
Change in Accruals and Other, Net 155 727 (527)
------ ------ ------
Net Cash Provided (Used) by Operating
Activities 2,104 672 (668)
------ ------ ------
Investing Activities
Change in Interest-Bearing Deposits in Banks 16 155 (100)
Purchases of Securities Held for Investment (2,344) (1,937) (1,528)
Sales of Securities Held for Investment 22 361 846
Maturities of Securities Held for Investment 1,174 1,159 1,278
Net Principal Collected (Disbursed) on Loans to
Customers (2,030) 1,049 629
Sales of Loans 494 634 2,406
Sales of Other Real Estate 80 81 98
Change in Federal Funds Sold and Securities
Purchased Under Resale Agreements 229 1,462 (67)
Purchases of Premises and Equipment (47) (40) (42)
Acquisitions, Net of Cash Acquired 58 688 78
Proceeds from the Sale of Premises and Equipment 3 3 5
Other, Net (35) 37 (17)
------ ------ ------
Net Cash Provided (Used) by Investing
Activities (2,380) 3,652 3,586
------ ------ ------
Financing Activities
Change In Deposits (1,048) (1,781) (3,484)
Change in Federal Funds Purchased and Securities
Sold Under Repurchase agreements 938 (1,927) 94
Change in Other Borrowed Funds (248) 1,897 (704)
Proceeds from the Issuance of Long-Term Debt 546 595 397
Repayments of Long-Term Debt (655) (131) (33)
Redemption and Repurchases of Preferred Stock (77) (100) -
Conversion of Preferred Stock (13) (2) -
Issuance of Common Stock 53 380 17
Issuance of Preferred Stock - 139 -
Treasury Stock Acquired (4) (1) (2)
Cash Dividends Paid (179) (153) (161)
Other - - (2)
------ ------ ------
Net Cash Used by Financing Activities (687) (1,084) (3,878)
------ ------ ------
Effect of Exchange Rate Changes on Cash (32) (33) (12)
------ ------ ------
Change in Cash and Due From Banks (995) 3,207 (972)
Cash and Due from Banks at Beginning of Year 5,506 2,299 3,271
------ ------ ------
Cash and Due from Banks at End of Year $4,511 $5,506 $2,299
====== ====== ======
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest $1,047 $1,408 $2,199
Income Taxes 181 74 49
Noncash Investing Activity (Primarily
Foreclosure of Real Estate) 54 179 235
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 6
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting and Reporting Policies
The following is a summary of the Company's more significant accounting and
reporting policies.
Securities - Debt securities, which the Company has the ability and intent to
hold until maturity or on a long-term basis, are classified as held for
investment and stated at cost, adjusted for discount accrued and premium
amortized. Remaining debt securities are classified as securities held for sale
and are stated at the lower of aggregate cost or market value. Debt securities
held for sale include those management uses as part of its asset/liability
management. Marketable equity securities are stated at the lower of aggregate
cost or market value. Other equity securities are stated at cost. Gains and
losses on the sale of securities are determined by the specific identification
method. Investments of less than a majority but at least 20% ownership are
accounted for by the equity method and classified as other assets.
In 1994, the Company will change its accounting for securities held for sale
from the lower of aggregate cost or market to fair value. The after-tax amount
of net unrealized gains or losses will be reported as a separate component of
shareholders' equity. Shareholders' equity at December 31, 1993, would have
been increased by $1 million if securities held for sale at that date had been
recorded at fair value.
Allowance for Loan Losses - The allowance for loan losses is maintained at a
level that, in management's judgment, is adequate to absorb future losses.
Management's judgment is based on an evaluation of existing risks of individual
credits; past loan loss experience; the volume, composition, and growth of the
loan portfolio; current and projected economic conditions; and other relevant
factors.
In 1995, a new accounting standard will require the Company to introduce the
time value of money into the determination of the portion of the allowance for
loan losses which relates to impaired, non-consumer loans. The loss component
of impaired, non-consumer loans will be measured by the difference between their
recorded value and fair value. Fair value would be either the present value of
the expected future cash flows from borrowers, market value of the loan, or the
fair value of the collateral. At the present time, the impact of the new method
on the Company's results of operations and financial condition is not expected
to be material.
Nonperforming Assets - Commercial loans are placed on nonaccrual status when
collateral is insufficient and principal or interest is past due 90 days or
more, or when there is reasonable doubt that interest or principal will be
collected. Accrued interest is usually reversed when a loan is placed on
nonaccrual status. Interest payments received on nonaccrual loans may be
recognized as income or applied to principal depending upon management's
judgment. Loans are not restored to accruing status until principal and
interest are current or they become fully collateralized. Consumer loans are
not classified as nonperforming assets, but are charged off when they are
between 120 and 185 days past due, depending on the product. Interest accrual
on consumer loans is suspended when the loans are 120 days past due. Real
estate acquired in satisfaction of loans is carried in other assets at the
lower of the recorded investment in the property or fair value.
Interest Rate Contracts - Interest rate swaps and forward and futures contracts
are used as part of the Company's asset/liability management. Gains and losses
on hedge transactions are deferred and amortized as adjustments to net interest
income over the lives of the hedged assets or liabilities. Other gains and
losses are recognized currently in noninterest income.
Other - Certain 1992 and 1991 information has been reclassified to conform its
presentation with the 1993 financial statements.
<PAGE> 7
2. Mergers and Acquisitions
On August 11, 1993, the 10,730,668 outstanding shares of National Community
Banks'(NCB) common stock were exchanged for 10,301,441 shares of the Company's
common stock and the 1,149,750 outstanding shares of NCB's preferred stock were
exchanged for an equal number of shares of the Company's Class A preferred
stock. The merger was accounted for as a pooling of interests and prior period
financial statements were restated. Previously reported revenue (total
interest and noninterest income) and net income for the years ended
December 31, 1992 and 1991, for the Company and NCB are as follows:
- ---------------------------------------------------------
In millions 1992 1991
- ---------------------------------------------------------
Revenue
Company $3,566 $4,230
NCB 304 354
Net Income
Company 369 122
NCB 24 12
In December 1992, the Company acquired substantially all of the banking
activities of Barclays Bank of New York, N.A. (Barclays). This transaction added
deposits of $1.9 billion and assets of $1.8 billion. The pro forma effect of
this acquisition had it occurred January 1, 1991 would not have been material.
In early 1994, the Company acquired the factoring business of the
Bank of Boston.
3. Cash Balance Requirements
The subsidiary banks of the Company are required to maintain balances with
Federal Reserve Banks under the Federal Reserve Act and Regulation D. Required
balances averaged $769 million and $679 million for the years 1993 and 1992.
4. Securities
A comparison of the carrying amount and market value of securities for the years
1993, 1992, and 1991; 1993 and 1992 gross unrealized gains and losses; and a
maturity schedule of investments in debt securities is incorporated by reference
from "Securities" in the Management's Discussion and Analysis Section of this
Report. Assets, including securities sold under repurchase agreements, carried
at $3 billion, $2 billion, and $3 billion at December 31, 1993, 1992, and 1991
were pledged for various purposes as required or permitted by law.
5. Loans
The Company's loan distribution and industry concentrations of credit risk at
December 31, 1993 and 1992 are incorporated by reference from "Loans" and
"Highly Leveraged Transactions" in the Management's Discussion and Analysis
Section of this Report. The Company's retail, community, and middle market
banking operations in the New York metropolitan area create a significant
geographic concentration.
<PAGE> 8
Transactions in the allowance for loan losses are summarized as follows:
- -------------------------------------------------------------
In millions 1993 1992 1991
- -------------------------------------------------------------
Balance, January 1 $1,072 $1,084 $1,111
Charge-Offs (449) (628) (820)
Recoveries 62 117 43
------ ------ ------
Net Charge-Offs (387) (511) (777)
Provision 284 443 778
Acquisitions/(Dispositions) 1 56 (28)
------ ------ ------
Balance, December 31 $ 970 $1,072 $1,084
====== ====== ======
Nonaccrual and reduced rate loans outstanding at December 31, 1993, 1992,
and 1991 were $540 million, $788 million, and $1,173 million. Nonperforming
loans at December 31, 1993 and 1992 exclude $117 million of reduced rate
Philippine obligations secured by zero coupon U. S. Treasury bonds. At December
31, 1993, commitments to borrowers whose loans were classified as nonaccrual or
reduced rate were not material.
Interest income received on nonaccrual and reduced rate loans exceeded
reversals by $4 million in 1993, $7 million in 1992, and $5 million in 1991.
Interest income would have been increased by $27 million, $89 million, and $167
million if loans on nonaccrual status at December 31, 1993, 1992, and 1991 had
been performing for the entire year. At year end, foreign (including LDC) loans
on nonperforming status were $130 million in 1993, $198 million in 1992, and
$146 million in 1991. Interest income received on foreign nonperforming loans
equaled reversals in 1993, and exceed reversals by $1 million in 1992, and $3
million in 1991. Interest income would have been increased by $6 million, $10
million, and $15 million if foreign loans on nonaccrual status at
December 31, 1993, 1992, and 1991 had been performing for the entire year.
Other real estate was $99 million, $268 million, and $369 million, at
December 31, 1993, 1992, and 1991. Writedowns of and expenses related to other
real estate included in noninterest expense were $53 million, $106 million, and
$103 million, in 1993, 1992, and 1991.
<PAGE> 9
6. Long-Term Debt
The following is a summary of the contractual maturity and sinking fund
requirements of long-term debt at December 31, 1993 and 1992:
1993 1992
- --------------------------------------------------------------------- -----
Due
1 Year Due
Under Through 5 After 5 Years
In millions 1 Year Years Through 15 Total Total
------ --------- ------------- ----- -----
Fixed $ 78 $ 12 $1,409 $1,499 $ 958
Variable 31 24 36 91 737
---- ---- ------ ------ ------
Total $109 $ 36 $1,445 $1,590 $1,695
==== ==== ====== ====== ======
Fixed-rate debt at December 31, 1993 had interest rates ranging from 6.50%
to 8.50%. The weighted average interest rates on fixed-rate debt at December 31,
1993 and 1992 were 7.29% and 7.70%. To reduce exposure to interest rate
movements, the Company enters into interest rate swap agreements for some of its
debt issues. As a result of these agreements, the effective interest rates
differ from those stated. The weighted average interest rates on variable-rate
debt at December 31, 1993 and 1992 were 5.58% and 5.14%.
The Company's $250 million of 7.50% subordinated debentures due 2001 are
convertible at the option of the holder into common stock of the Company at a
price of $39.10 per share, subject to adjustment in certain circumstances. The
debentures may be redeemed, at the option of the Company, on or after August 15,
1996 at an initial redemption price of 103.75% of the principal amount,
declining by 0.75% per annum.
<PAGE> 10
7. Shareholders' Equity
The following is a summary of the Company's preferred stock outstanding:
Dollars in millions, except per share amounts December 31, 1993 1992
- --------------------------------------------------------------------------------
8.60% Cumulative, stated value $625 per share, issued
184,000 shares (4,600,000 depositary shares) $111 $111
7.75% Cumulative Convertible, par value $2 per share,
issued 1,085,415 shares in 1993 and 1,150,000 shares in 1992 27 28
Other 156 289
---- ----
Total $294 $428
==== ====
The other preferred stocks at December 31, 1993 were redeemed in the first
quarter of 1994. All holders of cumulative preferred stock have cumulative
dividend rights in preference to holders of common stock.
The 8.60% cumulative preferred stock has a liquidation preference of $625
per share and is redeemable at the option of the Company on and after December
1, 1997 at $625 per share, plus cumulative and unpaid dividends.
The Class A 7.75% cumulative convertible preferred stock has a liquidation
preference of $25 per share. It is redeemable at the option of the Company on
or after July 1, 1996 at $26.16 per share and at decreasing prices thereafter to
$25 per share on or after July 1, 2002, plus cumulative and unpaid dividends.
Each share is convertible at the option of the holder into 0.9232 shares of
common stock of the Company subject to adjustment in certain circumstances.
Warrants expiring in 1998 (exercise price $62 per share) to purchase
approximately 14,120,539 shares of the Company's common stock were outstanding
at December 31, 1993.
At December 31, 1993, the Company had reserved for issuance 27 million
common shares pursuant to the terms of securities and employee benefit plans.
The Company has a preferred stock purchase rights plan. The plan provides
that if any person or group becomes the beneficial owner of 20% or more of the
Company's common stock (an "acquiring person"), then on and after the tenth day
thereafter, each right would entitle the holder to purchase $400 in market value
of the Company's common stock for $200. In addition, if there is a business
combination between the Company and an acquiring person, or in certain other
circumstances, each right (if not previously exercised) would entitle the holder
to purchase $200 in market value of the common stock of the acquiring person for
$100. The rights are redeemable by the Company at $0.05 per right until they
are exercisable, and will expire in 2004.
The effect of common stock equivalents (stock options and warrants) on
earnings per share is not dilutive. Fully diluted earnings per share give effect
to the assumed conversion of the convertible debentures and convertible
preferred stock. The effect of the assumed conversion of the convertible
preferred stock and the 7.50% convertible debentures was antidilutive in 1991.
<PAGE> 11
8. Stock Option Plans
The Company has stock option plans (the Plans) which provide for the issuance of
stock options at fair market value at the date of grant to officers and key
employees of the Company and its subsidiaries. All options related to plans
adopted prior to 1993 have been granted. Under the Company's 1993 Plan, options
to acquire common stock may be granted in amounts that do not exceed, on a
cumulative basis, 1% of the outstanding shares of common stock per year, and,
subject to adjustment, options covering no more than approximately 4.2 million
shares in the aggregate may be granted during the first five years. Generally,
each option granted under the Plans is exercisable between one and 10 years from
the date of grant. The following is a summary of activity under the Plans for
the years 1993, 1992, and 1991:
<TABLE>
<CAPTION>
1993 1992 1991
- --------------------------------------------------------------------------------
Option Option Option
Price Price Price
Shares per Share Shares per Share Shares per Share
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
January 1 3,044,594 $11.13 to 2,970,138 $11.13 to 2,286,568 $11.13 to
44 44 44
Granted 1,027,150 54.75 902,330 16.67 to 880,000 26.75
37.75
Exercised (708,804) 11.13 to (748,634) 18.75 to (13,456) 18.75 to
44 44 31.25
Canceled (117,918) 18.75 to (79,240) 25.58 to (182,974) 18.75 to
54.75 44 44
--------- --------- -------- -------- -------- --------
Outstanding, $18.75 to $11.13 to $11.13 to
December 31 3,245,022 54.75 3,044,594 44 2,970,138 44
========= ========= ========= ========= ========= ========
Exercisable, $18.75 to $11.13 to $11.13 to
December 31 1,871,775 44 1,826,496 44 1,868,094 44
========= ======== ========= ========= ========== ========
Available for
Grant,
December 31 2,803,925 None 997,839
========= ==========
</TABLE>
9. Income Taxes
In the first quarter of 1993, the Company changed retroactively from the
deferred method to the liability method of accounting for income taxes
and restated its financial statements. Shareholders' equity was reduced by a
$46 million charge to retained earnings in prior period financial statements.
Income taxes included in the consolidated statements of income consist of
the following:
<TABLE>
<CAPTION>
1993 1992* 1991*
---------------------- ---------------------- ----------------------
In million Current Deferred Total Current Deferred Total Current Deferred Total
------- -------- ----- ------- -------- ----- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal $ 98 $ 145 $243 $ 13 $112 $125 $ 38 $ 11 $ 49
Foreign 11 - 11 10 - 10 10 - 10
State and
Local 23 50 73 7 53 60 8 7 15
---- ----- ---- ---- ---- ---- ---- ---- ----
$132 $ 195 $327 $ 30 $165 $195 $ 56 $ 18 $ 74
==== ===== ==== ==== ==== ==== ==== ==== ====
</TABLE>
* Reclassified to reflect current and deferred taxes upon filing of the tax
returns.
<PAGE> 12
The components of income before taxes for the computation of taxes are as
follows:
- -------------------------------------
In millions 1993 1992 1991
- -------------------------------------
Domestic $821 $540 $158
Foreign 65 48 50
---- ---- ----
$886 $588 $208
==== ==== ====
The Company's net deferred tax liability (included in accrued taxes) at
December 31 consisted of the following:
- ------------------------------------------------------------
In millions 1993 1992* 1991*
- ------------------------------------------------------------
Lease Financings $ 792 $ 722 $ 657
Depreciation and Amortization 287 280 257
Credit Losses on
Nonperforming Loans (515) (532) (608)
Other 106 70 68
----- ------ ------
Net Deferred Tax Liability $ 670 $ 540 $ 374
===== ====== ======
* Reclassified to reflect current and deferred taxes upon filing of the tax
returns.
The Company has not recorded a valuation allowance because it expects to
realize all of its deferred tax assets.
A reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate is shown in the following table:
1993 1992 1991
---- ---- ----
% of Pre- % of Pre- % of Pre-
Tax Income Tax Income Tax Income
---------- ---------- ----------
Computed Provision 35.0% 34.0% 34.0%
Tax-Exempt Interest (2.7) (4.9) (17.6)
Foreign Operations (0.2) (3.2) 0.8
State and Local Income
Taxes, Net of Federal
Income Tax Benefit 4.6 6.7 12.6
Nondeductible Expenses 2.3 3.1 8.7
Leveraged Lease Portfolio 0.3 (0.7) (2.3)
Other (2.4) (1.8) (0.6)
----- ----- -----
36.9% 33.2% 35.6%
===== ===== =====
<PAGE> 13
10. Employee Benefit Plans
Pension Plans
- -------------
The Company has defined benefit retirement plans covering substantially all full
time employees. The Company has an Employee Stock Ownership Plan (ESOP), which
may provide additional benefits. The Company's funding policy is to annually
contribute an amount necessary to satisfy the Internal Revenue Service's funding
standards.
The following table presents the income (expense) components included in net
pension income:
In millions
1993 1992 1991
---- ---- ----
Service Cost - Benefits Earned $ (14) $(14) $(13)
Interest Cost on Projected Benefit Obligation (20) (23) (19)
Actual Return on Plan Assets 52 74 80
Net Amortization and Deferral 9 (20) (29)
---- ---- ----
Net Pension Income $ 27 $ 17 $ 19
===== ==== ====
The expected long-term rate of return on plan assets used in computing
pension income was 10.5% in 1993, 1992, and 1991. The ESOP provision was $1
million in 1993, compared with $3 million in 1992 and 1991.
<PAGE> 14
The following table sets forth the retirement plans' funded status at
December 31, 1993 and 1992:
In millions 1993 1992
---- ----
Present Value of Accumulated Benefit Obligation, Including
Vested Benefits of $265 in 1993 and $191 in 1992 $281 $199
==== ====
Present Value of Projected Benefit Obligation $311 $232
Plan Assets at Fair Value, Primarily Short-Term
Investments, Fixed-Income and Equity Securities 588 550
---- ----
Excess of Plan Assets over the
Projected Benefit Obligation 277 318
Unrecognized Prior Service Cost (27) (28)
Unrecognized Net Loss (Gain) from Past Differences and
Effects of Changes in Assumptions 41 (20)
Unrecognized Net Asset Being Amortized over 16.2 Years (27) (31)
---- ----
Prepaid Pension Cost Included in Other Assets $264 $239
==== ====
Assumptions used in computing the benefit obligation
were:
1993 1992
---- ----
Weighted Average Discount Rate 7.88% 8.75%
Rate of Increase in Future Compensation Level 4.38 4.38
Other Postretirement Benefits
- -----------------------------
The Company provides health care and life insurance benefits for certain
retired employees. In the first quarter of 1993, the Company changed to the
accrual from the cash method of accounting for these benefits.
The cost of these benefits for the year ended December 31, 1993 consisted
of the following components:
(in millions)
Service Cost - Benefits Earned $ 3
Accumulated Benefit Obligation:
Interest 11
Amortization 7
---
Total $21
===
The assumed health care cost trend rates to be used in determining cost of
these benefits for 1994 is 9%, decreasing proportionately in each successive
year to 6% in 2010 and thereafter. A change of one percentage point in this
rate for each year would change the benefit obligation by 13% and the cost of
the benefits by 9%.
<PAGE> 15
The following table sets forth the funded status of the Company's other
postretirement benefit obligation as of December 31:
(in millions) 1993 1992
----- ----
Accumulated Postretirement Benefit Obligation:
Retirees $ 88 $ 80
Fully Eligible Active Plan Participants 23 21
Other Active Plan Participants 37 29
----- -----
Total Obligation 148 130
Unrecognized Net Gain (Loss) from Past Differences
and Effects of Changes in Assumptions (16) -
Unrecognized Net Liability Being Amortized
Over 20 Years (123) (130)
----- -----
Accrued Postretirement Benefit
Obligation Included in Other Liabilities $ 9 $ -
===== =====
The assumed discount rates used in determining the accumulated benefit
obligation were 7.75% and 8.75% in 1993 and 1992.
11. Foreign Operations
Certain information with respect to foreign operations for the years ended
December 31, 1993, 1992, and 1991 is incorporated by reference from "Foreign
Operations" in the Management's Discussion and Analysis section of this Report.
Foreign exchange activities arise from servicing customers' needs for
foreign exchange, and from managing the Company's foreign currency positions.
Net gains resulting from foreign exchange transactions were $54 million, $66
million, and $47 million in 1993, 1992, and 1991, and are included in other
noninterest income.
<PAGE> 16
12. Company Financial Information
The condensed financial statements of the Company are as follows:
Balance Sheets
In millions December 31, 1993 1992
- --------------------------------------------------------------------
Assets
Cash and Due from Banks $ 2 $ 6
Securities 96 188
Loans 3 16
Investment in and Advances to Subsidiaries
Banks 5,713 5,561
Other 435 348
------ ------
6,148 5,909
------ ------
Other Assets 129 118
------ ------
Total Assets $6,378 $6,237
====== ======
Liabilities and Shareholders' Equity
Other Borrowed Funds $ 407 $ 375
Due to Subsidiaries
Banks 42 155
Other 12 218
------ ------
54 373
------ ------
Other Liabilities 256 132
Long-Term Debt 1,589 1,627
------ ------
Total Liabilities 2,306 2,507
------ ------
Shareholders' Equity*
Preferred 294 428
Common 3,778 3,302
------ ------
Total Liabilities and Shareholders' Equity $6,378 $6,237
====== ======
*See Consolidated Statements of Changes in Shareholders' Equity.
<PAGE> 17
Statements of Income
In millions For the years ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------------
Operating Income
Dividends from Subsidiaries
Banks $171 $156 $302
Other 7 32 -
Interest from Subsidiaries
Banks 99 70 53
Other 1 1 1
Other 21 8 23
---- ---- ----
Total 299 267 379
---- ---- ----
Operating Expenses
Interest (including $8 in 1993, $10 in 1992,
and $10 in 1991 to nonbank subsidiaries) 128 108 114
Other 18 10 9
---- ---- ----
Total 146 118 123
---- ---- ----
Income Before Income Taxes and Equity in
Undistributed Earnings of Subsidiaries 153 149 256
Income Tax Benefit (11) (19) (6)
---- ---- ----
Income Before Equity in Undistributed
Earnings of Subsidiaries 164 168 262
---- ---- ----
Equity in Undistributed Earnings of Subsidiaries
Banks 386 236 (147)
Other 9 (11) 19
---- ---- ----
395 225 (128)
---- ---- ----
Net Income $559 $393 $134
==== ==== ====
<PAGE> 18
Statements of Cash Flows
In millions For the years ended December 31, 1993 1992 1991
- -------------------------------------------------------------------------------
Operating Activities
Net Income $ 559 $ 393 $ 134
Adjustments to Determine Net Cash Provided by
Operating Activities
Amortization 4 2 1
Equity in Undistributed Earnings
of Subsidiaries (393) (226) 130
Securities (Gains) Losses (14) 15 (10)
Change in Interest Receivable (4) (4) (7)
Change in Interest Payable (1) 13 5
Change in Taxes Payable 31 (1) 105
Other, Net 3 (18) (3)
----- ------ -----
Net Cash Provided by Operating Activities 185 174 355
----- ------ -----
Investing Activities
Purchase of Securities (57) (39) (10)
Sales of Securities 117 94 37
Maturities of Securities 37 4 5
Change in Loans 8 8 15
Acquisition of, Investment in, and Advances to
Subsidiaries 154 (1,265) (77)
----- ------ -----
Net Cash Provided (Used) by Investing Activities 259 (1,198) (30)
----- ------ -----
Financing Activities
Change in Other Borrowed Funds 32 257 (476)
Proceeds from the Issuance of Long-Term Debt 546 595 397
Repayments of Long-Term Debt (589) (129) (29)
Change in Advances from Subsidiaries (217) 40 (72)
Redemption and Repurchases of Preferred Stock
and Warrants (77) (100) -
Issuance of Common Stock 53 380 17
Issuance of Preferred Stock - 139 -
Conversion of Preferred Stock (13) (2) -
Treasury Stock Acquired (4) (1) (2)
Cash Dividends Paid (179) (153) (161)
Other, Net - - (3)
----- ------ -----
Net Cash Provided (Used) by Financing
Activities (448) 1,026 (329)
----- ------ -----
Change in Cash and Due from Banks (4) 2 (4)
Cash and Due from Banks at Beginning of Year 6 4 8
----- ------ -----
Cash and Due from Banks at End of Year $ 2 $ 6 $ 4
===== ====== =====
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest $ 129 $ 95 $ 109
Income Taxes 152 78 33
<PAGE> 19
The Bank of New York (Bank), a significant subsidiary, is subject to
dividend limitations under the Federal Reserve Act and the New York Banking Law.
The Bank of New York National Association (BNYNA) is subject to dividend
limitations under the National Bank Act. Under these statutes, prior regulatory
approval is required for dividends in any year that would exceed either bank's
net profits for such year combined with retained net profits for the prior two
years. Also, both banks are prohibited from paying a dividend in an amount
greater than "undivided profits then on hand" less "bad debts" (generally loans
six months or more past due).
Under the first of these two standards, in 1994 the Bank could declare
dividends of $365 million plus net profits earned in 1994 and BNYNA could
declare dividends of $56 million plus net profits earned in 1994. Neither bank
is restrained from paying dividends under the second of these two standards.
In addition to these statutory tests, each bank's primary federal regulator
(the Federal Reserve Board, in the case of the Bank, and the Comptroller of the
Currency, in the case of BNYNA) could prohibit a dividend if they determined
that the payment would constitute an unsafe or unsound banking practice. Bank
regulators have indicated that, generally, dividends should be paid by banks
only to the extent of earnings from continuing operations.
Each of the Company, the Bank, and BNYNA must comply with risk based capital
and leverage ratio guidelines established by bank regulators for bank holding
companies and banks. In addition, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") restricts dividend payments that would cause
certain capital ratios to fall below "adequate" capital ratio standards. Each
of the Company, the Bank, and BNYNA is in compliance with the capital and
leverage ratio standards applicable to it.
The dividend policy of The Bank of New York (Delaware) is to declare
dividends that, at a minimum, allow it to meet capital guidelines established by
the Federal Deposit Insurance Corporation ("FDIC"). The Bank of New York
(Delaware) is also in compliance with the capitalization requirements set by
FDICIA.
Consistent with its policy regarding bank holding companies serving as a
source of financial strength for their subsidiary banks, the Federal Reserve
Board has stated that, as a matter of prudent banking, a bank holding company
generally should not maintain a rate of cash dividends unless its net income
available to common stockholders has been sufficient to fully fund the
dividends, and the prospective rate of earnings retention appears consistent
with the bank holding company's capital needs, asset quality, and overall
financial condition.
The Federal Reserve Act limits amounts of, and requires collateral on,
extensions of credit by the Company's insured bank subsidiaries to the Company
and, with certain exceptions, its nonbank affiliates; also, there are
restrictions on the amounts of investments by such banks in stock and other
securities of the Company and such affiliates, and restrictions on the
acceptance of their securities as collateral for loans by such banks.
Extensions of credit by insured bank subsidiaries to each of the Company and
such affiliates are limited to 10% of such bank subsidiary's capital and
surplus, and in the aggregate for the Company and all such affiliates to 20%.
13. Fair Value of Financial Instruments
The carrying amount of the Company's financial instruments (i.e., monetary
assets and liabilities) is determined under different accounting methods-see
Note 1. The following disclosure discusses these instruments on a uniform basis
- - fair value. However, active markets do not exist for the greatest portion of
these instruments. As a result, fair value determinations require significant
subjective judgments regarding future cash flows. Other judgments would result
<PAGE> 20
in different fair values. Among the assumptions used by the Company are discount
rates ranging principally from 3% to 11% at December 31, 1993 and 1992. The fair
value information supplements the basic financial statements and other
traditional financial data presented throughout this Report.
A summary of the practices used for determining fair value is as follows:
Securities and Trading Activities
- ---------------------------------
The fair value of securities and trading assets is based on quoted market
prices, dealer quotes, or pricing models. The fair value of financial
instruments such as options, future and forward rate contracts, commitments to
purchase and sell foreign exchange, and foreign currency swaps, are similarly
determined. The fair value of interest rate swaps is the amount that would
be received or paid to terminate the agreement.
Loans and Commitments
- ---------------------
For certain categories of consumer loans, fair value includes consideration of
the quoted market prices for securities backed by similar loans. The fair value
of other types of loans is determined by discounting the future cash flows
(including those related to off-balance-sheet activities that serve as hedges)
and using secondary market values. The fair value of commitments to extend
credit, standby letters of credit, and commercial letters of credit is based
upon the cost to settle the commitment.
Other Financial Assets
- ----------------------
The fair value of these assets are assumed to equal their carrying value due to
their short maturity.
Deposits, Borrowings, and Long-Term Debt
- ----------------------------------------
The fair value of noninterest-bearing deposits is assumed to be their carrying
amount. The fair value of interest-bearing deposits, borrowings, and long-term
debt is estimated based upon the current rates for instruments of the same
remaining maturity or quoted market prices for the same or similar issues and
the effect of hedges.
<PAGE> 21
The carrying amount and estimated fair value of the Company's financial
instruments are as follows:
In millions December 31, 1993 1992
-------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- ------
Assets:
Securities and Trading Assets $ 7,040 $ 7,196 $ 6,744 $ 6,940
Loans and Commitments 28,259 28,804 27,219 27,475
Other Financial Assets 5,091 5,091 6,291 6,291
------- ------- ------- -------
Total Financial Assets 40,390 $41,091 40,254 $40,706
======= =======
Non-Financial Assets 5,156 4,956
------- -------
Total Assets $45,546 $45,210
======= =======
Liabilities:
Noninterest-Bearing Deposits $ 8,690 $ 8,690 $ 8,761 $ 8,761
Interest-Bearing Deposits 23,469 23,497 24,494 24,545
Borrowings 5,603 5,607 4,955 4,955
Long-Term Debt 1,590 1,805 1,695 1,836
------- ------- ------- -------
Total Financial Liabilities 39,352 $39,599 39,905 $40,097
======= =======
Non-Financial Liabilities 2,122 1,575
------- -------
Total Liabilities $41,474 $41,480
======= =======
In determining fair value, the effects of off-balance-sheet hedge items are as
follows:
In millions December 31, 1993 1992
---- ----
Increase (Decrease)
Securities and Trading Assets $ (7) $ 2
Loans and Commitments (35) (35)
Interest-Bearing Deposits (27) (7)
Borrowings - (2)
Long-Term Debt (3) -
Commitments and contingent items reduced the fair value of loans and commitments
by $62 million in 1993 and $85 million in 1992.
14. Commitments and Contingent Liabilities
In the normal course of business, various commitments and contingent liabilities
are outstanding which are not reflected in the accompanying consolidated balance
sheets. Management does not expect any material losses to result from these
matters.
<PAGE> 22
A summary of the notional amount of the Company's off-balance-sheet
transactions, net of participations, at December 31, 1993 and 1992 follows:
In millions
Off-Balance-Sheet Risks 1993 1992
- ----------------------- ---- ----
Commercial Lending Commitments $19,463 $17,718
Standby Letters of Credit 3,146 3,669
Commercial Letters of Credit 1,497 1,647
Securities Lending
Indemnifications 15,005 13,676
Interest Rate Contracts:
Futures and Forward Contracts 14,383 6,848
Interest Rate Swaps 10,806 12,924
Options Written 6,189 5,036
Options Purchased 5,145 4,774
Foreign Exchange Contracts:
Commitments to Purchase and
Sell Foreign Exchange 37,276 51,236
Foreign Currency Swaps 677 697
Options Written 898 470
Options Purchased 1,027 584
The total potential loss on undrawn commitments, standby and commercial
letters of credit, and securities lending indemnifications is equal to the total
notional amount, which does not consider the value of any collateral. The
Company's exposure to credit loss for interest rate contracts and foreign
exchange contracts amounted to $264 million and $468 million in 1993 and $288
million and $1,103 million in 1992. These amounts represent net unrealized
gains with counterparties.
A discussion of the credit, interest rate, and foreign exchange risks
inherent in off-balance-sheet financial transactions is presented under "Off-
Balance-Sheet Risks" in the Management's Discussion and Analysis Section of this
Report.
Standby letters of credit principally support corporate obligations and
include $1.0 billion that were collateralized with cash and securities at
December 31, 1993 and 1992. At December 31, 1993 and 1992, securities lending
indemnifications were secured by collateral of $15.0 billion and $13.7 billion.
At December 31, 1993, approximately $2.5 billion of the standbys will expire
within one year, $0.6 billion between one to five years, and the balance after
five years. At December 31, 1993, approximately $1.9 billion of interest rate
swaps will mature within one year, $6.7 billion between one to five years, and
the balance after five years. Substantially all futures, forward, and option
contracts mature within two years.
The table below summarizes the carrying amount of
items hedged and the related notional amount of interest rate swaps and
futures and foreign exchange contracts that were designated as hedges at
December 31, 1993:
Notional Amount
In millions ---------------
Foreign
Interest Futures Exchange
Amount Rate Swaps Contracts Contracts
Financial --------- ---------- --------- ---------
Instruments
- -----------
Loans $1,001 $649 $2,033 $ -
Securities 601 100 4,452 -
Deposits 579 579 - -
Other Borrowed Funds 717 717 - -
Long-Term Debt 275 275 - -
Credit Card
Securitization 450 450 - -
Foreign Investments 212 - - 212
<PAGE> 23
In 1994, a new accounting standard will require the Company to recognize
unrealized gains and losses related to certain interest rate and foreign
currency contracts as assets and liabilities on its balance sheet. The new
standard allows the netting of unrealized gains and losses with the same
counterparty when a master netting agreement is in effect. The Company's
current policy is to present all unrealized gains and losses on a net basis.
If the standard had been in effect on December 31, 1993, reported assets and
liabilities would have increased by approximately $732 million.
Net rent expense for premises and equipment was $99 million in 1993, $91
million in 1992, and $96 million in 1991.
At December 31, 1993, the Company and its subsidiaries were obligated under
various noncancelable lease agreements, certain of which provide for additional
rents based upon real estate taxes, insurance, and maintenance and for various
renewal options. The minimum rental commitments under noncancelable operating
leases for premises and equipment having a term of more than one year from
December 31, 1993 are as follows:
- ---------------------------------------------------------------------------
Year ending December 31, In millions
- ---------------------------------------------------------------------------
1994 $ 66
1995 58
1996 50
1997 41
1998 31
Subsequent to 1998 125
----
Total Minimum Lease Payments $371
====
In April 1990, the Company notified Northeast Bancorp., Inc. (NEB) that NEB
had materially breached its obligation under a merger agreement. Following
denial by the Federal Reserve Board of the Company's application for approval to
acquire NEB and failure by state regulators to approve the proposed merger prior
to the August 15, 1990 termination date, the Company's Board of Directors
notified NEB in September 1990 that it had terminated the merger agreement.
In May 1990, NEB brought suit against the Company in the United States Court
for the District of Connecticut seeking money damages of $350 million relating
to NEB's allegations that the Company breached its obligations. In November
1990, the Company filed a motion for summary judgment to have the lawsuit
dismissed; in June 1991, this motion was granted as to NEB's Connecticut Unfair
Trade Practices Act and libel claims and denied as to NEB's other claims. In
March 1993, the Company's motion for summary judgment on NEB's contract claims
was denied. In May 1993, as part of the acquisition of NEB's Class A voting
common stock by First Fidelity Bancorporation, NEB's interest in the suit was
transferred to a trust funded with $2 million for the benefit of former NEB
shareholders. The action will continue. In the opinion of management, NEB's
claims are without merit.
In the ordinary course of business, there are various claims pending against
the Company and its subsidiaries. In the opinion of management, liabilities
arising from such claims, if any, would not have a material effect upon the
Company's consolidated financial statements.
<PAGE> 24
Independent Auditors' Report Deloitte & Touche
To the Board of Directors and Shareholders of
The Bank of New York Company, Inc.
New York, New York
We have audited the accompanying consolidated balance sheets of The Bank of New
York Company, Inc. and subsidiaries (the "Company") as of December 31, 1993 and
1992,and the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the three years ended December 31, 1993.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. The consolidated financial statements give retroactive effect to
the merger of the Company and National Community Banks, Inc., which has been
accounted for as a pooling of interests as described in Note 2 to the
consolidated financial statements. We did not audit the consolidated balance
sheets of National Community Banks, Inc. as of December 31, 1992, or the related
consolidated statements of income, changes in shareholders' equity, and cash
flows of National Community Banks,Inc. for the years ended December 31, 1992 and
1991, which statements reflect total assets of $4,181,508,000 as of December 31,
1992 and net income of $23,785,000, and $12,384,000 for the years ended December
31, 1992, and 1991, respectively. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for National Community Banks, Inc. for 1992 and
1991, is based solely on the report of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of The Bank of New York Company, Inc.
and subsidiaries as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.
As discussed in Note 9 to the consolidated financial statements, in the first
quarter of 1993 the Company changed its method of accounting for income taxes to
conform with Statement of Financial Accounting Standards No. 109 and
retroactively, restated the 1992 and prior financial statements for the change.
\s\ Deloitte & Touche
New York, New York
February 25, 1994
<PAGE> 25
Management's Discussion and Analysis of the Company's Financial Condition and
Results of Operations
- -------------------------------------------------------------------------------
SUMMARY OF RESULTS
For the year 1993, The Bank of New York Company, Inc. (the Company) reported
record net income of $559 million or a record $5.44 per fully diluted share,
compared with $393 million or $4.00 per fully diluted share in 1992 and $134
million or $1.27 per share in 1991.
In 1993, spreads widened reflecting a continuing shift in asset mix toward
higher yielding assets and a lower level of nonperforming assets. Fee income was
strong, especially from credit cards and securities and other processing. A
lower provision for loan losses, continued control of operating expenses, and
the acquisition of 62 branches of Barclays Bank of New York, N.A. (Barclays) on
December 11, 1992, also helped to increase earnings.
Earnings at the 105-branch National Community Banks (BNYNA) increased
significantly in 1993. In 1993, BNYNA added $36 million to net income compared
with $24 million in 1992 and $12 million in 1991. The Company's results for
1993, 1992, and 1991 have been restated to reflect the acquisition, which was
accounted for as a pooling-of-interests.
In 1993, nonperforming assets declined by $417 million, or 39%, to $639
million. December 31, 1993 marked the tenth consecutive quarter that
nonperforming assets declined.
During 1993, the Company continued to strengthen its capital position. The
Company retained $383 million of earnings and issued $550 million of
subordinated debt while $655 million of long-term debt matured or was redeemed
and $75 million of preferred stock was redeemed. In addition, $58 million of
preferred stock was converted into $46 million of common stock. The Tier I and
total capital ratios for the Company at December 31, 1993 were 8.87% and 13.65%
compared with 7.59% and 12.30% last year and 5.79% and 9.40% in 1991. Tangible
common equity as a percent of total assets was 7.00% at December 31, 1993
compared with 5.83% one year ago and 4.49% in 1991.
In 1992, noninterest income from personal trust, funds transfer, trade
finance, securities lending, mutual fund custody, stock transfer, government
securities clearance, and corporate trust grew significantly. Net interest
income increased, reflecting increases in the net interest rate spread and the
net yield on interest-earning assets. Strict control of operating expenses
resulted in a modest increase in compensation expense and declines in furniture
and fixture and occupancy expense. The provision for loan losses was
significantly lower in 1992.
In 1992, the Company sold 9.2 million shares of common stock for $339
million, $600 million of subordinated debt, and $143 million of preferred stock.
It redeemed $100 million of subordinated debt and $100 million of preferred
stock.
The Company's 1991 results were affected by an adverse change in asset
quality. As a result, the Company recorded a significant provision for loan
losses. Net interest income declined, reflecting a lower volume of earning
assets, including the impact of those that were nonperforming; the decline was
reduced by an improvement in spreads and yields from the low interest rate
environment. Noninterest income from credit cards, American depositary receipts,
mutual fund custody, personal trust, securities lending, and master trust showed
special strength. Operating expenses remained under tight control. The
Company's capital position was improved with the issuance of $250 million of
convertible subordinated debentures.
Return on average assets for 1993 was 1.20% - a record for the Company -
compared with .85% in 1992 and .29% in 1991, while return on average common
equity was 14.98% in 1993 compared with 12.00% in 1992 and 3.85% in 1991.
<PAGE> 26
Net Interest Income
- --------------------------------------------------------------------------------
Dollars in millions 1993 1992 1991
---- ---- ----
Net Interest Income on a Taxable
Equivalent Basis $ 1,550 $1,434 $1,427
Net Interest Rate Spread 3.12% 2.91% 2.56%
Net Yield on Interest-Earning Assets 3.84% 3.61% 3.52%
Net interest income increased 8%, the spread by 7%, and the yield by 6% in 1993.
Contributing to these increses were a $0.7 billion rise in the level of average
interest-earning assets, the Company being liability sensitive in a declining
rate environment, and the large decline in nonperforming loans. The increase in
yield also reflects a higher volume of interest-free sources of funds, partially
offset by lower returns on these funds in a low interest rate environment.
Average earning assets increased to $40.4 billion in 1993 from $39.7 billion
in 1992, primarily resulting from a $0.8 billion increase in federal funds sold
and securities purchased under resale agreements. Although average loans did not
grow ($30.4 billion in 1993) the mix improved, contributing to the growth in
spread and yield. Special strength was noted in wholesale mortgage lending,
securities industries banking, factoring, and credit card lending, which
increased $1.1 billion. Credit card outstandings are expected to increase
further in 1994 due to account growth and the maturities of asset
securitizations ($0.6 billion).
Net interest income increased slightly in 1992. A $0.9 billion decline in
the level of average interest-earning assets was more than offset by the
increase in the spread and yield, the result of the Company being liability
sensitive in a declining rate environment. The smaller increase in yield
reflects the lower returns on interest-free sources of funds in a low interest
rate environment. Also the effect of the large decline in nonperforming loans
had a positive impact on interest rate spreads. Loans declined to $30.3 billion
in 1992 from $32.7 billion in 1991, primarily due to weak commercial loan
demand and the full year effect of credit card securitizations entered into
in 1991. This decline was partially offset by a $1.5 billion increase in
securities. New credit card lending, which increased average outstandings by
$0.5 billion, was offset by the full year effect of credit card securitizations
entered into in 1991.
The credit card securitizations reduced net interest income by $162 million
in 1993, $164 million in 1992, and $79 million in 1991.
Interest income would have been increased by $27 million, $89 million, and
$167 million if loans on nonaccrual status at December 31, 1993, 1992, and 1991
had been performing for the entire year.
<PAGE> 27
NONINTEREST INCOME
Noninterest income is provided by a wide range of fiduciary and processing
services, other fee-based services, and trading activities. These revenues
increased 11% to $1,319 million in 1993, compared with $1,183 million in 1992
and $1,094 million in 1991.
Securities processing fees were $307 million, $273 million, and $244
million in 1993, 1992, and 1991. Contributing to the increase in 1993 were
American depositary receipts, government securities clearance, master trust,
mutual fund custody, stock transfer, and corporate trust. Other processing
fee principally funds transfer, deposit services, and trade finance, were $161
million in 1993, $148 million in 1992, and $124 million in 1991. All three
performed strongly in 1993.
Trust and investment fees were $131 million in 1993, $118 million in 1992,
and $110 million in 1991. During 1993, increases occurred in institutional
investment management, while personal trust was strong in 1992.
Service charges and fees were $460 million in 1993, compared with $442
million in 1992 and $385 million in 1991. The increase in 1993 resulted
primarily from growth in the Company's credit card business and the Barclays
acquisition. The number of credit card accounts increased by 22% to 4.8 million
and managed outstandings were up 19% from 1992 to $6.2 billion. The 1991 credit
card securitizations increased noninterest income by $64 million in 1993, $70
million in 1992, and $48 million in 1991. Part of the decrease in the
noninterest income from securitizations in 1993 compared with 1992 was due to
maturities. The 1992 increase in service charges and fees resulted primarily
from increases in syndication fees and the full year effect of credit card
securitization. The Barclays acquisition made a modest contribution to the
increase in service charges and fees.
Securities gains in 1992 totaled $64 million, $42 million, and $95 million
in 1993, 1992, and 1991, including $28 million, $1 million, and $26 million of
gains on equity securities. The 1992 results include a $31 million writedown of
the Company's investment in Northeast Bancorp, Inc.
Other noninterest income was $196 million in 1993, $160 million in 1992,
and $136 million in 1991. Foreign exchange profits were $54 million, $66
million, and $47 million in 1993, 1992, and 1991. Profits from trading interest
rate contracts amounted to $18 million, $7 million, and $4 million in 1993,
1992, and 1991. Trading in debt and equity securities resulted in gains of $7
million, $21 million, and $20 million in 1993, 1992, and 1991. Other
noninterest income for 1993 included a pre-tax gain of $24 million related to
the sale of a portion of the Company's interest in Wing Hang Bank, Ltd. during
the second quarter.
NONINTEREST EXPENSE AND INCOME TAXES
Noninterest expense was $1,646 million, $1,519 million, and $1,458 million
in 1993, 1992, and 1991.
Total noninterest expense increased 8% in 1993 compared with 1992.
Furniture and equipment expense declined by 2% to $95 million for the year.
Other real estate expense declined substantially by 50% to $53 million from $106
million in 1992. Salaries increased 10% in 1993 to $601 million from $546
million in 1992, and profit sharing increased to $58 million from $38 million.
Other employee benefits - primarily incentive compensation and health care
expenses - were up 19% to $154 million from $129 million in 1992. Occupancy
expense increased by 6% to $178 million. The Barclays acquisition was a
significant factor in the increase in noninterest expense.
In 1992, significant cost savings were realized in occupancy and furniture
and equipment expense. Salaries and employee benefits were up 9%. Other real
estate expenses increased 3%. The Barclays acquisition was a modest factor in
the increase in noninterest expense.
Deposit insurance premiums were $57 million in 1993 compared with $50
million and $48 million in 1992 and 1991.
Other real estate charges were $53 million, $106 million, and $103 million
in 1993, 1992, and 1991. Operating expenses related to other real estate owned
<PAGE> 28
were approximately $8 million in 1993, compared with $25 million in 1992 and $19
million in 1991. Writedowns and losses on sales of other real estate at NCB were
$15 million, $25 million, and $20 million in 1993, 1992, and 1991. In 1993,
other real estate charges include declines in the estimates of value of hospital
properties in Texas ($9 million) and an office building in New Jersey ($3
million), and losses on the sale of a shopping mall in Ohio ($7 million), and
two properties in New Jersey ($5 million). The 1992 other real estate charges
include declines in the estimates of value of a shopping center ($7 million) and
a mixed-use property ($7 million), and losses on the sale of a mixed-use
property ($12 million), a hotel ($7 million), and an office building ($4
million). The 1991 other real estate charges include declines in the estimates
of the values of shopping centers ($20 million), a mixed-use project ($10
million), and office buildings ($9 million), and losses on the sale of shopping
centers ($12 million), and an office building ($4 million).
The Company remains committed to strong cost controls. For 1994, the
Company has adopted an incentive program to encourage employees to reduce
controllable costs. Additional cost savings are expected in 1994 from the
consolidation of 12 retail branches and the closing of the Company's Sioux
Falls, South Dakota credit card operations center in November 1993.
The Company's consolidated effective tax rates for 1993, 1992, and 1991 were
36.9%, 33.2%, and 35.6%. The increase in the effective tax rate for 1993 is
attributable to the increase in the federal tax rate from 34% to 35%, a decline
in the proportion of tax-exempt income to total income, and lower foreign tax
credits. These increases were partially offset by a lower proportion of state
and local income taxes and nondeductible expenses to total income. The decrease
in 1992 compared with 1991 reflects a lower proportion of state and local income
taxes and nondeductible expenses to total income, as well as higher foreign tax
credits, partially offset by a decline in the ratio of tax-exempt income to
total income.
LIQUIDITY
The Company maintains its liquidity through the management of its assets and
liabilities, utilizing worldwide financial markets. The diversification of
liabilities reflects the flexibility of the Company's funding sources under
changing market conditions. Stable core deposits, including demand and retail
time, are generated through the Company's diversified network and managed with
the use of trend studies and deposit pricing. The use of derivative products
such as interest rate swaps and financial futures enhances liquidity through the
issue of long-term liabilities without exposure to interest rate risk. Liquidity
also results from the maintenance of a portfolio of assets which can be easily
reduced and the monitoring of unfunded loan commitments, thereby reducing
unanticipated funding requirements.
Reflecting plans to improve liquidity, average savings and noninterest-
bearing deposits increased by $1.2 billion and $1.1 billion during 1993. Also,
medium-term bank notes grew by $0.7 billion. More volatile sources of interest-
bearing deposits and borrowings decreased by $2.9 billion.
In 1993, the Company's average commercial paper borrowings were $93 million
compared with $107 million in 1992. The Company has backup lines of credit at
financial institutions supporting these borrowings.
The following comments relate to the information disclosed in the
Consolidated Statements of Cash Flows.
Cash flows from earnings and other operating activities were $2.1 billion
in 1993 and $0.7 billion in 1992, compared with an outflow of $0.7 billion in
1991. The 1993 and 1992 increases in cash flows reflect a reduction in assets
held for sale.
The 1993 cash flows used by investing activities were $2.4 billion,
reflecting additions to loans and securities. In 1992, investing activities were
the source of $3.7 billion of cash flow, reflecting a decrease in federal funds
sold and securities purchased under resale agreements and a reduction of loans.
In 1991, a net reduction of loans and securities held for investment contributed
<PAGE> 29
to the generation of $3.6 billion of cash from investing activities. Cash used
by financing activities was $0.7 billion, $1.1 billion, and $3.9 billion in
1993, 1992, and 1991 as the Company reduced its deposit borrowings.
Restrictions on the ability of the Company to obtain funds from its
subsidiaries are discussed in Note 12 to the Consolidated Financial Statements.
CAPITAL RESOURCES
December 31,
Capital Ratios 1993 1992
- -------------- ---- ----
Common Equity 8.29% 7.30%
Tangible Common Equity 7.00 5.83
Tier I Capital 8.87 7.59
Total Capital 13.65 12.30
Leverage 7.99 7.11
The significant improvement in these ratios in 1993 is the result of growth
in shareholders' equity, the issuance of $550 million of subordinated debt, and
modest growth in assets. The Company's common equity ratio is one of the highest
among money center banks. The Company's banks' capital ratios exceed "well
capitalized", the highest of five regulatory capital categories.
Shareholders' equity was $4,072 million at December 31, 1993, compared with
$3,730 million at December 31, 1992 and $3,071 million at December 31, 1991.
The change in shareholders' equity in 1993 is primarily attributable to growth
in retained earnings of $383 million offset in part by the redemption of $75
million of adjustable rate, noncumulative preferred stock. In addition, the
Company issued $300 million of 6 5/8% long-term debt and $250 million of 6 1/2%
long-term debt to replace $655 million of debt that was redeemed or matured in
1993. In February 1993, $58 million of preferred stock was converted into $46
million of common stock. Two issues of preferred stock were redeemed in the
first quarter of 1994 reducing preferred stock by $156 million and additional
capital by $17 million.
The change in shareholders' equity in 1992 is primarily attributable to the
issuance of 9.2 million shares of common stock in June 1992, resulting in
proceeds of $339 million, and growth in retained earnings of $240 million. In
addition, the Company issued $115 million of 8.6% preferred stock and $29
million of 7.75% convertible preferred stock, while redeeming $100 million of
9.45% preferred stock. During 1992, the Company also issued $600 million of
subordinated notes at a weighted average rate of 7.72%, and redeemed $100
million of 12.38% subordinated debentures.
The Company can issue up to $750 million of debt and preferred stock
(including convertible preferred stock) pursuant to a shelf registration
statement.
CREDIT CARD OPERATIONS
Credit card receivables sold in the form of a security is a technique for
financing the Company's credit card operations. For accounting purposes, the
underlying assets and liabilities are removed from the balance sheet, and
amounts otherwise reported in the income statement as net interest income, fees,
and provision for loan losses are reflected in noninterest income.
The Company securitized $1,350 million of credit card receivables in 1991;
$1,225 million were outstanding at December 31, 1993, and $1,025 million are
scheduled to mature in 1994. The Company expects to return these assets to its
balance sheet and to replace these financings with lower cost funds. The impact
<PAGE> 30
of the securitizations on the Company's financial statements assuming the funds
received from the securitizations were used to replace short-term borrowings, is
summarized below:
In millions 1993 1992 1991
---- ---- ----
Lower Net Interest Income $162 $164 $ 79
Lower Provision for Loan Losses 56 57 15
Higher Noninterest Income 64 70 48
PROVISION AND ALLOWANCE FOR LOAN LOSSES
In 1993, the Company continued to experience significant improvement in
asset quality. Both charge-offs and nonperforming loans dropped sharply. The
provision for loan losses was $284 million in 1993, compared with $443 million
in 1992 and $778 million in 1991. Net charge-offs were $387 million in 1993,
$511 million in 1992, and $777 million in 1991. In these years net charge-offs
were primarily attributable to HLT, other commercial, real estate, and consumer
loans. The total allowance for loan losses was $970 million and $1,072 million
at year-end 1993 and 1992. This decrease of $102 million resulted from net
charge-offs exceeding the provision for loan losses and reflects the sharp
decline in the level of nonaccrual loans. The decrease in 1992 ($12 million)
resulted from net charge-offs exceeding the provision for loan losses ($68
million), partially offset by an increase in the allowance ($56 million)
resulting from the Barclays acquisition. The ratio of the total allowance for
loan losses to year-end loans was 3.17% and 3.63% at December 31, 1993 and 1992.
The allowance for loan losses was 152% of total nonperforming assets at December
31, 1993, compared with 102% at December 31, 1992.
At December 31, 1993, the Company's LDC exposures consisted of $151 million
in medium-term loans (and no material commitments), $193 million in short-term
loans, $11 million in accrued interest, and $49 million in equity investments.
At December 31, 1993, the allowance for loan losses associated with medium-term
LDC loans was $116 million (approximately 77% of such loans). The LDC exposure
excludes $266 million (face value) of bonds whose principal payments are
collateralized by U.S. Treasury zero coupon obligations and interest payments
are partially collateralized. These include $117 million of reduced rate
Philippine bonds which were received in exchange for the same amount of
Philippine loans in 1992. The Company restructured $59 million of Argentine
debt and sold $27 million of medium-term LDC loans in 1991.
<PAGE> 31
LOANS
The following table shows the Company's loan distribution at the end of each of
the last five years:
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
In millions
Domestic
Commercial and Industrial Loans* $ 9,781 $10,495 $12,398 $12,896 $13,297
Consumer Loans 6,028 5,229 4,315 6,080 5,592
Real Estate Loans
Construction and Land
Development 160 188 322 665 1,310
Other, Principally Commercial
Mortgages 2,626 2,822 2,340 2,456 1,691
Collateralized by Residential
Properties 3,203 3,423 2,820 3,633 3,835
Banks and Other Financial
Institutions** 1,893 1,521 35 35 26
Loans for Purchasing or Carrying
Securities 2,275 1,098 1,417 1,079 2,499
Lease Financings 1,038 1,033 1,063 1,026 1,260
Other** 65 126 1,222 1,784 2,139
------- ------- ------- ------- -------
Total Domestic 27,069 25,935 25,932 29,654 31,649
------- ------- ------- ------- -------
Foreign
Commercial and Industrial Loans 1,775 1,928 2,773 3,130 4,316
Banks and Other Financial
Institutions 810 997 1,122 1,428 1,622
Government and Official
Institutions 565 535 546 584 913
Other 1,188 947 795 1,817 984
------- ------- ------- ------- -------
Total Foreign 4,338 4,407 5,236 6,959 7,835
------- ------- ------- ------- -------
Total Loans 31,407 30,342 31,168 36,613 39,484
Less: Unearned Income 837 845 833 837 901
Allowance for Loan Losses 970 1,072 1,084 1,111 1,154
------- ------- ------- ------- -------
Net Loans $29,600 $28,425 $29,251 $34,665 $37,429
======= ======= ======= ======= =======
*The commercial and industrial loan portfolio does not contain any industry
concentration which exceeds 10% of loans.
**Prior to 1992, certain loans to the securities and mortgage banking
industries were classified as other loans.
<PAGE> 32
HIGHLY LEVERAGED TRANSACTIONS
At year-end 1993, HLT loans outstanding were $1,314 million and commitments were
$349 million, compared with $1,658 million and $414 million at year-end 1992.
At December 31, 1993, borrowers in the communication industry represented 57% of
the HLT portfolio. Nonperforming HLT loans at December 31, 1993 were $52 million
(nine customers), compared with $92 million (thirteen customers) at December 31,
1992. In 1993, net charge-offs of HLTs decreased to $22 million, versus $94
million in 1992 and $174 million in 1991.
The carrying value of equity investments associated with HLTs was $22
million at December 31, 1993, compared with $44 million at December 31, 1992.
There were no debt investments associated with HLT's at December 31, 1993,
compared with $33 million at the end of 1992. Commitments to fund additional
equity investments were $7 million at December 31, 1993.
NONPERFORMING ASSETS
The following table shows the distribution of nonperforming assets at
December 31, 1993 and 1992:
Dollars in millions 1993 1992 Change
=======================================
Category of Loans:
HLT $ 52 $ 92 (43)%
Commercial Real Estate 72 143 (50)
Other Commercial 130 139 (6)
Foreign 34 89 (62)
LDC(*) 96 109 (12)
Community Banking 156 216 (28)
------- ------
Total Nonperforming Loans 540 788 (31)
Other Real Estate 99 268 (63)
------- ------
Total Nonperforming Assets $ 639 $1,056 (39)
======= ======
Nonperforming Asset Ratio 2.1% 3.6%
Allowance/Nonperforming Loans 179.6 136.0
Allowance/Nonperforming Assets 151.8 101.5
(*) Excludes $117 million of reduced rate Philippine obligations secured by U.S.
Treasury bonds.
Nonperforming assets declined for the tenth consecutive quarter to $639
million at December 31, 1993.
The decrease in nonperforming assets during 1993 is attributable to charge-
offs and writedowns of $264 million and paydowns, sales, and returns to accrual
status of $456 million. The decrease was partially offset by $303 million of
loans placed on nonperforming status.
<PAGE> 33
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments are disclosed in Note 13
to the Consolidated Financial Statements. The fair values, if realized, would
improve the Company's capital resources and results of operations because the
excess of fair value over the carrying amount for its assets is greater than the
corresponding excess for liabilities. The fair values would not affect
liquidity.
In both 1993 and 1992, the interest rate environment produced unrecognized
fair value gains in the securities and loan portfolios. Higher values
attributable to consumer loans more than offset the declines in value associated
with credit-impaired commercial loans. The increase in fair value of long-term
debt primarily reflects the influence of the Company's stock price on the fair
value of its convertible subordinated debentures.
OFF-BALANCE SHEET RISKS
The Company's significant off-balance-sheet risks are commercial lending
commitments, letters of credit, securities lending indemnifications, and foreign
currency and interest rate risk management products. The Company assumes these
risks to reduce its own interest rate and foreign currency risks and to enable
its customers to meet their credit and liquidity needs and hedge their foreign
currency and interest rate risks. These items involve, to varying degrees,
credit, foreign exchange, and interest rate risk not recognized in the balance
sheet. There are no significant industry concentrations of such risks.
The Company's off-balance-sheet risks are managed and monitored in manners
similar to those used for on-balance-sheet risks.
The Company's exposure to credit loss for lending commitments, letters of
credit, and securities lending indemnification is represented by the contractual
amount of those transactions. Since many of the commitments are expected to
expire without being drawn upon, the total amount does not necessarily represent
future cash requirements. In securities lending transactions, the Company
requires the borrower to provide collateral, thus reducing the credit risk.
The notional amounts for other off-balance-sheet risks express the dollar
volume of the transactions; however, the credit risk is much smaller.
The Company performs credit reviews and enters into netting agreements to
minimize the credit risk of foreign currency and interest rate risk management
products. Exposure to foreign exchange and interest rate risk is reduced by
entering into offsetting positions.
The amounts associated with off-balance-sheet risks are disclosed in Note
14 to the Consolidated Financial Statements.
<PAGE> 34
SECURITIES
The following table sets forth the carrying amounts and the market values of
securities at the end of the last three years:
1993 1992 1991
---------------- ---------------- ----------------
Carrying Market Carrying Market Carrying Market
In millions Amount Value Amount Value Amount Value
-------- ------ -------- ------ -------- ------
Securities Held for
Investment
U. S. Government
Obligations $2,754 $2,813 $1,372 $1,403 $1,261 $1,295
U.S. Government Agency
Obligations 250 258 417 423 501 515
Obligations of States and
Political Subdivisions 1,033 1,043 1,139 1,195 1,303 1,325
Equity Securities 206 220 205 205 328 338
Other Debt Securities 113 115 189 186 208 206
------ ------ ------ ------ ------ ------
Total Securities
Held for Investment 4,356 4,449 3,322 3,412 3,601 3,679
------ ----- ------ ------ ------ ------
Securities Held for Sale
U. S. Government
Obligations 1,096 1,097 1,939 1,945 767 801
U.S. Government Agency
Obligations 120 120 639 652 302 315
Obligations of States and
Political Subdivisions 9 9 - - - -
Equity Securities 16 17 - - - -
------ ------ ------ ------ ------ ------
Total Securities
Held for Sale 1,241 1,243 2,578 2,597 1,069 1,116
------ ------ ------ ------ ------ ------
Total Securities $5,597 $5,692 $5,900 $6,009 $4,670 $4,795
====== ====== ====== ====== ====== ======
<PAGE> 35
Total proceeds from sales of securities were $6,626 million, $3,086 million,
and $2,847 million in 1993, 1992, and 1991, of which proceeds from debt
securities were $6,606 million, $2,960 million, and $2,793 million. Gains on the
sale of debt securities were $38 million, $37 million, and $57 million in 1993,
1992, and 1991.
The gross unrealized gains and losses in investments in securities at
December 31, 1993 and 1992, are as follows:
1993 1992
---------------------- ---------------------
Gross Gross Gross Gross
Unrealized Unrealized Unrealized Unrealized
In millions Gains Losses Gains Losses
----------- --------- ---------- ----------
Securities Held for Investment
U.S. Government
Obligations $61 $ 2 $ 31 $ -
U.S. Government Agency
Obligations 8 - 7 1
Obligations of States and
Political Subdivisions 10 - 56 -
Equity Securities 16 2 1 1
Other Debt Securities 3 1 - 3
--- --- ---- ---
Total Securities Held
for Investment 98 5 95 5
--- --- ---- ---
Securities Held for Sale
U.S. Government
Obligations 1 - 8 2
U.S. Government Agency
Obligations - - 13 -
Obligations of States and
Political Subdivisions - - - -
Equity Securities 1 - - -
--- --- ---- ---
Total Securities
Held for Sale 2 - 21 2
--- --- ---- ---
Total Securities $100 $ 5 $116 $ 7
=== === ==== ===
<PAGE> 36
The amortized cost and estimated market values of securities at December 31,
1993, by contractual maturity, are as follows:
1993
---------------------
Estimated
Amortized Market
In millions Cost Value
--------- ---------
Securities Held for Investment
Due In One Year or Less $ 815 $ 822
Due After One Year Through
Five Years 2,137 2,174
Due After Five Years Through
Ten Years 679 703
Due After Ten Years 327 330
Mortgage-Backed Securities 192 200
Equity Securities 206 220
------ ------
Total Securities Held
for Investment 4,356 4,449
------ ------
Securities Held for Sale
Due In One Year or Less 1 1
Due After One Year Through
Five Years 723 723
Due After Five Years Through
Ten Years 490 491
Due After Ten Years 11 11
Equity Securities 16 17
------ ------
Total Securities Held for Sale 1,241 1,243
------ ------
Total Securities $5,597 $5,692
====== ======
<PAGE> 37
FOREIGN OPERATIONS
The Company's foreign activities consist of banking, trust, and processing
services provided to customers domiciled outside of the United States,
principally in Europe and Asia. The following financial information concerning
such activities reflects direct attributions and charges for funds employed,
based upon average costs of interest-bearing funds:
In millions Europe Asia Other Foreign Domestic Total
------ ---- ------------- -------- -----
1993
Total Revenue $ 138 $ 201 $ 190 $ 3,293 $ 3,822
Income Before Income
Taxes 18 78 9 781 886
Net Income 10 44 5 500 559
Total Assets 1,375 2,079 2,355 39,737 45,546
1992
Total Revenue $ 208 $ 187 $ 212 $ 3,263 $ 3,870
Income Before Income
Taxes 48 52 42 446 588
Net Income 28 30 24 311 393
Total Assets 1,329 2,071 2,382 39,428 45,210
1991
Total Revenue $ 163 $ 222 $ 294 $ 3,905 $ 4,584
Income Before Income
Taxes 19 43 14 132 208
Net Income 12 28 10 84 134
Total Assets 1,896 1,732 2,429 37,514 43,571
<PAGE> 38
<TABLE>
QUARTERLY DATA UNAUDITED
<CAPTION>
1993 1992
------------------------------- ----------------------------
Dollars in millions,
except per share
amounts
First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest
Income $ 627 $ 628 $ 625 $ 625 $ 652 $ 660 $ 674 $ 702
Interest
Expense 246 252 250 259 290 318 345 367
----- ----- ----- ----- ----- ----- ----- -----
Net
Interest
Income 381 376 375 366 362 342 329 335
----- ----- ----- ----- ----- ----- ----- -----
Provision
for Loan
Losses 50 55 86 93 97 95 112 139
Noninterest
Income 307 335 347 330 290 311 284 297
Noninterest
Expense 409 405 441 391 390 401 362 366
----- ----- ----- ----- ----- ---- ---- ----
Income Before
Income
Taxes 229 251 195 212 165 157 139 127
Income
Taxes 72 100 77 78 53 53 47 43
----- ----- ----- ----- ----- ----- ----- -----
Net Income $ 157 $ 151 $ 118 $ 134 $ 112 $ 104 $ 92 $ 84
===== ===== ===== ===== ===== ===== ===== =====
Net Income
Available to
Common
Shareholders $ 151 $ 145 $ 111 $ 127 $ 103 $ 96 $ 84 $ 76
===== ===== ===== ===== ===== ===== ===== =====
Per Common
Share Data:
Primary
Earnings $1.62 $1.56 $1.19 $1.37 $1.13 $1.06 $1.04 $ .95
Fully
Diluted
Earnings 1.53 1.47 1.14 1.30 1.08 1.01 1.00 .91
Cash
Dividends 0.50 0.45 0.38 0.38 .38 .38 .38 .38
Stock Price
High 58.25 60.12 61.75 60.25 54.62 44.00 43.37 41.63
Low 52.75 52.25 51.75 52.00 43.37 39.75 37.62 31.25
Ratios:
Return on Average
Common
Shareholders'
Equity 16.16% 15.95% 12.65% 15.06% 12.52% 11.95% 12.14% 11.28%
Return on
Average
Assets 1.32 1.28 1.03 1.17 .94 .89 .82 .74
</TABLE>
<PAGE> 39
Business Review
Securities and Other Processing
Highlights:
* Revenues in Government Securities Clearance were up 36% from 1992 as a
result of higher volume from existing customers and many important new
relationships. We also experienced significant growth in tri-party
repurchase agreements where we act as custodian.
* For the fourth consecutive year The Bank of New York captured over 60% of the
new public sponsored American Depositary Receipt business by establishing 75
new programs from 26 countries.
* The Bank established the first two depositary receipt programs in the Peoples
Republic of China and the first program in Turkey. The Bank also acted as
custodian for the first Argentine company to use depositary receipts
to raise capital in the U.S. private market.
* Funds Transfer fees grew by 15% in 1993. An important part of this
improvement resulted from increased dollar clearing activities in Russia,
Korea, Indonesia, Taiwan, and Eastern Europe. Also, we developed new and
expanded relationships with companies in the mortgage banking and securities
industries.
<PAGE> 40
* Growth in our Trade Finance area was due to an increase in market share and a
significant increase in letters of credit and collections from Hong Kong,
China, Thailand, the Philippines, India, and Brazil.
* Corporate Trust fees increased 20% in 1993, due to an increase in market
share and a large volume of bond refinancings because of lower interest
rates.
* The Bank of New York solidified its position as the leading provider of trust
services for the debt derivative market with over $34 billion in securities
outstanding by year end, a fourfold increase over the previous year. Debt
derivatives are secondary market products created for the purpose of
increasing investor yields.
* The Mutual Fund Division's revenues increased by 28% in 1993 largely due to
new business from companies in the insurance and securities industries.
* In Stock Transfer, revenue increased 29%. The Bank of New York received over
50 new transfer agency appointments in 1993.
<PAGE> 41
* Fees in Master Trust/Master Custody increased by 18% due in large part to
new relationships in both the public and corporate sectors.
Overview:
The Bank of New York is the leader in securities processing, and among the top
providers of other processing products, such as trade finance and funds
transfer. In nearly all our businesses, the Bank is either the market leader
or among the top five providers of processing services.
Market Leader
- -------------
American and Global Depositary Receipts
Securities Lending
Government Securities Clearance
Number Two
- ----------
Mutual Fund Custody
Unit Investment Trust
<PAGE> 42
Among Top Five
- --------------
Corporate Trust
Stock Transfer
Master Trust/Master Custody
Institutional Custody
Funds Transfer
Trade Finance
Depositary Receipts -- Commonly referred to as ADRs, they allow foreign
companies to offer their dollar denominated securities to investors in the
United States. In 1993 we continued to expand our leadership position and
increased our market share to over 53% of all public sponsored Depositary
Receipt programs.
Securities Lending -- Our global programs are designed for customers whose
assets are held in custody at the Bank to increase the yield on their portfolio
by lending their U.S. and non-U.S. dollar denominated securities. Average daily
loan outstandings in the domestic market total approximately $25 billion.
Overseas, we experienced significant growth in London and expanded our
securities lending operations to Hong Kong.
<PAGE> 43
Government Securities Clearance -- The Bank of New York is the market leader in
government securities clearance and administration of tri-party repurchase
agreements. Through our highly automated systems and direct links to the
Federal Reserve network, we clear a daily average of $400 billion in U.S.
Government and Agencies securities. This represents a 14% increase over the
1992 level of $350 billion.
Mutual Fund Custody -- The Bank of New York is the second largest provider of
mutual fund custody with $305 billion in assets under administration. Services
include securities safekeeping, payment of dividends to customers and portfolio
valuation.
Unit Investment Trust -- The Bank provides trustee and custody services for
over 3,800 trusts with an aggregate value of $25 billion. Lower interest
rates in 1993 triggered record redemptions of municipal bonds and slowed
the number of new trusts established.
<PAGE> 44
Corporate Trust -- The Bank is the trustee for debt instruments issued
by corporations and municipal, state, and federal government agencies.
We offer a complete product line that can be customized to meet issuers'
requirements for all types of fixed-income securities. We have
expanded our services to include the fast-growing market for such products
as mortgage-backed, asset-backed and debt derivative securities.
Stock Transfer -- We provide complete record keeping and dividend disbursement
services for 350 public companies with 7 million shareholders. This represents
an increase over 1992 of 27% in the number of companies as well as a 20%
increase in the number of shareholders.
Master Trust/Master Custody -- We provide custody and accounting services to
public and corporate pension funds, foundations, endowments, and organizations
having special compliance or tax reporting requirements. The Bank is a leader
in the public funds market. We have been increasing our share of business with
corporate retirement funds, and in 1993 added a substantial number of new
relationships.
<PAGE> 45
Cash Management -- CA$H-Register (registered trademark) , one of the Bank's
proprietary electronic banking systems, provides corporate customers with a
computerized connection to the Bank to make payments and obtain information
on their banking activities. In 1993, the Bank introduced an enhancement to
CA$H-Register (registered trademark) that allows customers to access
information on their multicurrency accounts at banks worldwide.
Funds Transfer -- The Bank clears an average of over $185 billion each day
for domestic and foreign financial institutions. Volume increased by 25% in
1993 to a record 10 million transactions.
Trade Finance -- We provide a range of trade finance services, such as letters
of credit, to many of America's leading corporations. In addition, we
are emphasizing the sale of these products to middle market companies located
primarily in the New York metropolitan area. Our extensive international
network of correspondent banks enables us to expedite customers' imports and
exports around the globe, particularly in Asia, Latin America and
the Middle East.
<PAGE> 46
Retail Banking
Highlights:
* The Bank of New York introduced the sale of annuities* into its branch network
with specially trained Investment Product Specialists. They also sell three
proprietary mutual funds: the BNY Hamilton Equity Income Fund**, the BNY
Hamilton Intermediate Government Fund** and the BNY Hamilton Intermediate New
York Tax-Exempt Fund**. Investment Product Specialists may be reached by
calling 1-800-BNY-4IPS (1-800-269-4477).
*The Bank's 24-hour bank by phone service, 1-800-CALL-BNY, was enhanced with new
features such as the ability to obtain information on IRA accounts as well as
to obtain information or to place stop payments on Instant Credit checks.
* ARCS Mortgage, Inc., our residential mortgage banking subsidiary, closed $3.7
billion in single- and multi-family home mortgages in 1993, up 20% over 1992.
ARCS' loan servicing portfolio was $10.3 billion at year end.
<PAGE> 47
Overview:
The acquisition of National Community Banks, Inc. added 105 branches to the
retail network and expanded our presence to a two- state network of
383 offices serving 24 counties.
We offer the same full range of sophisticated products and services that are
available to large corporations to individuals, professionals, small
businesses, and municipalities.
The Custom Banking and International Private Banking areas, based in New York,
provide high-net-worth individuals with a customized range of private
banking products and services -- from deposit products to personal trust and
asset management, as well as tailored loan products. The Bank's
asset management services have been of particular value to our
clients in the current low-rate environment, as they seek to
maximize returns on their investments.
*Annuities are offered through The Annuity Agency of New York, Inc.
which is not affiliated with The Bank of New York. Annuities are not
obligations nor guarantees of The Bank of New York and are not FDIC
or federally insured.
**The BNY Hamilton Funds are not a deposit or obligation of The Bank of
New York, are not insured by the FDIC and are not guaranteed
by The Bank of New York. Investments in mutual funds involve risk, including
the possible loss of principal. BNY Hamilton Distributors Inc.
is the sponsor and distributor for the BNY Hamilton
Funds and is unaffiliated with The Bank of New York. For a prospectus,
which contains more complete information, including charges and expenses,
on the BNY Hamilton Funds, call 1-800-426-9363. Read
carefully before investing or sending money.
<PAGE> 48
Credit Cards
The Bank of New York (Delaware)
Highlights:
* Credit card accounts increased in 1993 by 22% to a total of 4.8
million, while managed credit card outstandings rose by 19% to a
year-end total of $6.2 billion.
* Over the last few years, we have experienced rapid growth in our
credit card business. Since 1991, compound growth rates of both
accounts and outstandings have been more than twice those of the
industry.
* The Bank of New York (Delaware) has been a consistent leader in
credit quality. The charge-off rate of the entire card portfolio
decreased to 3.2% in 1993 from 3.9% in 1992, and was approximately
100 basis points below the industry average.
<PAGE> 49
* Two new products were introduced in the highly popular Consumers
Edge family of cards: Consumers Edge 25 (registered trademark)
and Consumers Edge Gold (registered trademark). Like the
original Consumers Edge card, both have no annual fee and
offer one of the lowest rates nationally available. Both new
cards also have a 25-day grace period.
* Three new major unions were added to the successful Union Privilege
program: the American Teachers Federation, the Carpenters Union,
and the Teamsters Union. Aggressive marketing campaigns to solicit
these unions' members showed excellent results in 1993 and
additional campaigns are underway in 1994.
Overview:
The Bank of New York (Delaware) is the seventh-largest commercial bank issuer of
credit cards in the United States. Its strategy is to be the nation's leading
provider of low rate, no annual fee credit cards.
<PAGE> 50
The Bank's portfolio includes two key programs:
* Consumers Edge is a no annual fee card with no grace period that
appeals to customers who maintain outstanding balances. It offers
one of the lowest annual percentage rates in the country.
Excellent growth in this portfolio during 1993 was driven by
aggressive advertising and direct mail campaigns. The response
rate was more than twice that of the industry average.
* The Union Privilege MasterCard (registered trademark), also
low rate with no annual fee, is offered on an exclusive basis
to 13 million members of the AFL-CIO. With more than 75
affiliated unions participating, the Union Privilege program
is the largest single affinity card program the country.
Charge-offs in the Union Privilege program are lowest of all
of our card portfolios.
In 1993 we closed our credit card processing facility in South Dakota and
consolidated its operations into our Delaware facilities. This action will
reduce operating costs going forward.
<PAGE> 51
Corporate Banking
Highlights:
* The Mortgage Banking Division, part of the Bank's Special
Industries Sector, is a market leader in financing mortgage banking
companies. In 1993, we were lead agent on credit transactions
totaling $1.4 billion. Loan fee and service product income
increased 50% over 1992 levels.
* The Bank of New York continued to expand its role as a leader in
the broadly syndicated loan market. Syndicated loan volume for
1993 increased by over 50% from the previous year for transactions
in which the Bank acted as arranger, agent or co-agent. The number
of administrative agencies we handle more than doubled and our fee
income was up 36%.
<PAGE> 52
* The Bank is a leading lender to the Communications, Entertainment
and Publishing industries. The Bank's strong relationships with
these industries and a history of successful lending resulted in
the division more than doubling the number of new transactions at
the agent or co-agent level during 1993.
* BNY Financial Corporation, our factoring subsidiary, completed its
tenth consecutive year of record earnings. Factored sales volume
grew by 7% to an annual level of $7.6 billion. Over one-half of
new business was due to the introduction of a new proprietary
product -- Accounts Receivable Management System -- which assists
clients with back-office operations and financing their
receivables.
* The Bank continued as a major user of The Export-Import Bank of the
United States ("Eximbank") providing the only two bank-to-bank
credit facilities approved for Russian banks.
<PAGE> 53
* As a result of intensive efforts to cross-sell processing and
operating services, Middle Market Banking produced more than a 20%
increase in cash management and trade fees.
Overview:
Corporate Banking is divided into four basic areas:
Special Industries Banking
The Bank of New York has long been a leading provider of credit and operating
services to the media, public utilities, securities, surface transportation,
real estate, mortgage banking, insurance, and energy industries. Each
specialized area provides a focused expertise to meet the unique requirements
of these industries.
U.S. Commercial Banking
The Bank serves domestic corporations by focusing its calling efforts on the
major metropolitan areas around the country that offer the greatest
concentrations of existing and prospective customers. We seek to establish
relationships with top tier companies, to obtain lead positions in corporate
credits and to cross-sell processing and operating services.
<PAGE> 54
Middle Market Banking
We offer lending expertise to middle market businesses throughout the greater
New York metropolitan area along with sophisticated banking services usually
provided to much larger companies. These services include: asset-based finance,
cash management, securities processing, leasing, and investment banking. Our
acquisition of National Community Banks in New Jersey provides an excellent base
for expanding these services to New Jersey middle market businesses.
International Banking
Our network of 23 foreign branches and representative offices is a major source
of business for securities and other processing products such as Depositary
Receipts, Funds Transfer and Trade Finance. We serve overseas commercial and
central banks, government agencies and corporations. Our extensive international
capabilities are utilized to enhance the Bank's position with corporate
customers in the United States.
<PAGE> 55
Trust and Investment Management
Highlights:
* Total revenues in Trust and Investment Management grew by 11% in
1993 to a record $131 million.
* The Institutional Investment Sector posted 15% revenue growth led
by a better than 50% increase in Short-Term Money Management. This
portfolio management service for corporations and not-for-profit
institutions helps to enhance investment returns while meeting
customer liquidity requirements.
Overview:
We offer individuals a complete range of trust services through offices in New
York City and in full-service regional offices in Westchester, Dutchess, and
Orange counties, Long Island, and New Jersey, as well as in Florida as The Bank
of New York Trust Company of Florida, N.A.
Services include investment management, custody, estate and financial planning,
trust and estate settlement, income tax preparation and real estate management.
<PAGE> 56
The Tax-Exempt Bond Management Division is a unique service that assists high-
net-worth individuals and corporations in maximizing returns on their municipal
bond portfolios. The division actively manages bond holdings by providing
investment counseling, ongoing credit review, custody and comprehensive
portfolio analysis and reporting. Our large size gives us a distinct
competitive advantage in buying and selling municipal bonds for customers.
Institutional Investment provides portfolio management of balanced, equity and
fixed-income portfolios for domestic and offshore investors. Customers include
corporations, Taft-Hartley clients, endowment funds, and other tax-exempt
institutions.
Financial Market Services
Highlights:
* Foreign exchange profits and other trading activities totaled $79
million in 1993, the second highest level in the Company's history.
* Securities gains of $64 million were taken as a result of favorable
price movements in the bond and equity markets; securities gains were
$42 million in 1992.
<PAGE> 57
Overview:
The Bank of New York is a market maker in the major trading currencies of the
world and provides full-service trading capabilities around the clock through
offices in New York, London, Tokyo, Frankfurt, Hong Kong, Seoul, and Taipei. The
Bank is a full-service broker/dealer and underwriter of investment-grade,
general obligation tax-exempt securities, which are provided to mutual funds,
financial institutions, corporations, and individual investors. For more
information, call 1-800-BNY-MUNI. Financial market professionals manage our
worldwide assets and liabilities as well as the Company's investment portfolio.
EXHIBIT 21
<PAGE> 1.
Subsidiaries Of The Registrant
Significant subsidiaries of The Bank of New York Company, Inc. are
as follows:
The Bank of New York, a New York State Chartered Bank
BNY Holdings (Delaware) Corporation, a Delaware Corporation
The Bank of New York (Delaware)*, a Delaware State Chartered Bank
BNY Holdings (New Jersey) Corporation, a New Jersey Corporation
The Bank of New York National Association**, a National Bank
- -------------------------------
* Subsidiary of BNY Holdings (Delaware) Corporation
** Subsidiary of BNY Holdings (New Jersey) Corporation
EXHIBIT 23.1
<PAGE> 1.
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements
of The Bank of New York Company, Inc. listed below of our report dated
February 25, 1994, appearing in the 1993 Annual Report to Shareholders which
is incorporated by reference in this Annual Report on Form 10-K of The Bank
of New York Company, Inc. for the year ended December 31, 1993.
On Form S-3:
No. 33-50333
On Form S-4:
No. 33-25805
On Form S-8:
No. 33-57670
Post Effective Amendment No. 2 to Registration Statement
No. 2-95764
Post Effective Amendment No. 5 to Registration Statement
No. 2-95765
Pre Effective Amendment No. 1 to Registration Statement
No. 33-20999
Pre Effective Amendment No. 1 to Registration Statement
No. 33-33460
/s/ Deloitte & Touche
New York, New York
March 28, 1994
EXHIBIT 23.2
<PAGE> 1.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference into The Bank of New York Company, Inc.'s Form 10-K of our report
dated January 12, 1993 (except with respect to the matter discussed in
Note 18, as to which the date is January 29, 1993) with respect to the
consolidated financial statements of National Community Banks, Inc. (NCB)
referred to in such report. It should be noted that we have not audited any
financial statements of NCB subsequent to December 31, 1992 or performed any
audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN & CO.
/S/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Roseland, New Jersey
March 24, 1994
