<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 number)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
(212) 495-1784
(Registrant's telephone number, including area code)
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 such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
The number of shares outstanding of the issuer's Common
Stock, $7.50 par value, was 190,945,440 shares as of April 28,
1995.
<PAGE> 2
THE BANK OF NEW YORK COMPANY, INC.
FORM 10-Q
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 3
Consolidated Statements of Income
For the Three Months Ended March 31,
1995 and 1994 4
Consolidated Statement of Changes In
Shareholders' Equity
For the Three Months Ended March 31, 1995 5
Consolidated Statements of Cash Flows
For the Three Months Ended March 31,
1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART 2. OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings 17
Item 4. Submissions of Matters to Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURE 19
<PAGE> 3
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------------------------------------------------------
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Balance Sheets
(Dollars in millions, except per share amounts)
(Unaudited)
March 31, December 31,
1995 1994
---- ----
Assets
- ------
Cash and Due from Banks $ 3,723 $ 2,903
Interest-Bearing Deposits in Banks 954 992
Securities:
Held-to-Maturity (fair value of $2,650 in
1995 and $2,707 in 1994) 2,859 2,930
Available-for-Sale 1,838 1,721
------- -------
Total Securities 4,697 4,651
Trading Assets at Fair Value 1,635 940
Federal Funds Sold and Securities Purchased
Under Resale Agreements 3,412 3,019
Loans (less allowance for loan losses of $749
in 1995 and $792 in 1994) 33,488 32,291
Premises and Equipment 906 914
Due from Customers on Acceptances 1,035 810
Accrued Interest Receivable 274 290
Other Assets 2,156 2,069
------- -------
Total Assets $52,280 $48,879
======= =======
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits
Noninterest-Bearing (principally
domestic offices) $ 8,173 $ 8,579
Interest-Bearing
Domestic Offices 15,428 14,871
Foreign Offices 11,304 10,641
------- -------
Total Deposits 34,905 34,091
Federal Funds Purchased and Securities Sold
Under Repurchase Agreements 1,949 1,502
Other Borrowed Funds 6,337 4,738
Acceptances Outstanding 1,036 812
Accrued Taxes and Other Expenses 1,135 1,049
Accrued Interest Payable 247 213
Other Liabilities 392 404
Long-Term Debt 1,732 1,774
------- -------
Total Liabilities 47,733 44,583
------- -------
Shareholders' Equity
Preferred Stock-no par value, authorized
5,000,000 shares, outstanding
184,000 shares 111 111
Class A Preferred Stock - par value
$2.00 per share, authorized 5,000,000
shares, outstanding 219,604 shares
in 1995 and 322,104 shares in 1994 6 8
Common Stock-par value $7.50 per share,
authorized 350,000,000 shares, issued
193,914,725 shares in 1995 and
190,213,322 shares in 1994 1,454 1,427
Additional Capital 900 858
Retained Earnings 2,196 2,048
Securities Valuation Allowance (3) (58)
------- -------
4,664 4,394
Less: Treasury Stock-3,133,305 shares in 1995
and 2,566,071 shares in 1994, at cost 97 78
Loan to ESOP-712,695 shares, at cost 20 20
------- -------
Total Shareholders' Equity 4,547 4,296
------- -------
Total Liabilities and Shareholders' Equity $52,280 $48,879
======= =======
- -----------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements
<PAGE> 4
- -----------------------------------------------------------------------------
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Income
(Unaudited)
(In millions, except per share amounts)
For the three months ended
March 31,
1995 1994
---- ----
Interest Income
Loans $ 765 $ 512
Securities
Taxable 56 57
Exempt from Federal Income Taxes 12 15
----- -----
68 72
Deposits in Banks 30 8
Federal Funds Sold and Securities
Purchased Under Resale Agreements 66 19
Trading Assets 7 15
----- -----
Total Interest Income 936 626
----- -----
Interest Expense
Deposits 308 166
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 32 27
Other Borrowed Funds 72 23
Long-Term Debt 33 27
----- -----
Total Interest Expense 445 243
----- -----
Net Interest Income 491 383
Provision for Loan Losses 50 45
----- -----
Net Interest Income After
Provision for Loan Losses 441 338
----- -----
Noninterest Income
Processing Fees
Securities 98 88
Other 44 42
----- -----
142 130
Trust and Investment Fees 32 33
Service Charges and Fees 113 119
Securities Gains 7 12
Other 25 56
----- -----
Total Noninterest Income 319 350
----- -----
Noninterest Expense
Salaries and Employee Benefits 222 211
Net Occupancy 44 47
Furniture and Equipment 22 22
Other 128 123
----- -----
Total Noninterest Expense 416 403
----- -----
Income Before Income Taxes 344 285
Income Taxes 131 107
----- -----
Net Income $ 213 $ 178
===== =====
Net Income Available to
Common Shareholders $ 210 $ 174
===== =====
Per Common Share Data:
Primary Earnings $1.12 $0.93
Fully Diluted Earnings 1.06 0.87
Cash Dividends 0.32 0.225
Average Common Shares Outstanding 188 188
- -------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements
<PAGE> 5
- -------------------------------------------------------------------------------
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statement of Changes in Shareholders' Equity
(Unaudited)
For the three months ended March 31, 1995
(In millions)
Class A
Pre- Pre- Addi- Securities Treas- Loan
ferred ferred Common tional Retained Valuation ury to
Stock Stock Stock Capital Earnings Allowance Stock ESOP
------ ------- ------ ------- -------- ---------- ------ ----
Balance,
January 1, 1995 $111 $ 8 $1,427 $858 $2,048 $(58) $ 78 $20
Changes:
Net Income 213
Cash Dividends
Common Stock (60)
Preferred Stock (3)
Conversion of
Debentures 23 38
Conversion of
Preferred Stock (2) 1 1
Acquisition of
Common Stock
Warrants and
Issuance of
Common Stock 3 3 (36)
Treasury Stock
Acquired 55
Net Unrealized
Gain on Secur-
ities Avail-
able for Sale 55
Change in
Cumulative
Foreign
Currency
Translation
Adjustment (2)
---- --- ------ ---- ------ ---- ---- ---
Balance,
March 31, 1995 $111 $ 6 $1,454 $900 $2,196 $ (3) $ 97 $20
==== === ====== ==== ====== ==== ==== ===
- -------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements
<PAGE> 6
- -------------------------------------------------------------------------------
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
For the three months ended
March 31,
1995 1994
---- ----
Operating Activities
Net Income $ 213 $ 178
Adjustments to Determine Net Cash Provided (Used)
by Operating Activities
Provision for Losses on Loans and Other Real Estate 51 45
Depreciation and Amortization 48 48
Deferred Income Taxes 64 53
Securities Gains (7) (12)
Change in Trading Assets (695) (230)
Change in Accruals and Other, Net 55 (237)
------- -------
Net Cash Used by Operating Activities (271) (155)
------- -------
Investing Activities
Change in Interest-Bearing Deposits in Banks 69 (21)
Purchases of Securities Held-to-Maturity (78) (107)
Maturities of Securities Held-to-Maturity 159 141
Purchases of Securities Available-for-Sale (38) (486)
Sales of Securities Available-for-Sale 15 693
Maturities of Securities Available-for-Sale 7 5
Net Principal Disbursed on Loans to Customers (1,377) (2,085)
Sales of Loans 86 122
Sales of Other Real Estate 3 6
Change in Federal Funds Sold and Securities
Purchased Under Resale Agreements (392) (264)
Purchases of Premises and Equipment (9) (6)
Acquisitions, Net of Cash Acquired 67 (160)
Proceeds from the Sale of Premises and Equipment - 4
Partial Sale of Unconsolidated Subsidiary - 37
Other, Net (44) (108)
------- -------
Net Cash Used by Investing Activities (1,532) (2,229)
------- -------
Financing Activities
Change in Deposits 594 560
Change in Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 447 15
Change in Other Borrowed Funds 1,620 717
Repayments of Long-Term Debt (2) (50)
Redemption, Conversion and Repurchases of
Preferred Stock & Warrants - (173)
Issuance of Common Stock 42 2
Treasury Stock Acquired (55) -
Cash Dividends Paid (63) (46)
------- -------
Net Cash Provided by Financing Activities 2,583 1,025
------- -------
Effect of Exchange Rate Changes on Cash 40 13
------- -------
Change in Cash and Due From Banks 820 (1,346)
Cash and Due from Banks at Beginning of Period 2,903 4,511
------- -------
Cash and Due from Banks at End of Period $ 3,723 $ 3,165
======= =======
- -----------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest $ 412 $ 224
Income Taxes 5 11
Noncash Investing Activity (Primarily Foreclosure
of Real Estate) 5 29
- -----------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements
<PAGE> 7
THE BANK OF NEW YORK COMPANY, INC.
Notes to Consolidated Financial Statements
1. General
-------
The accounting and reporting policies of The Bank of New York Company,
Inc. (the Company), a bank holding company, and its subsidiaries, conform
with generally accepted accounting principles and general practice within the
banking industry. Such policies, except as noted below, are consistent with
those applied in the preparation of the Company's annual financial
statements.
The accompanying financial statements are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of financial
position, results of operations and cash flows for the interim periods have
been made. Such adjustments are of a normal recurring nature.
2. Allowance for Loan Losses
-------------------------
Transactions in the allowance for loan losses are summarized as
follows:
Three months ended
March 31,
(In millions) 1995 1994
---- -----
Balance, Beginning of Period $ 792 $ 970
Charge-offs (107) (100)
Recoveries 11 17
----- -----
Net Charge-Offs (96) (83)
Acquisition 1 -
Credit Card Securitization 2 2
Provision 50 45
----- -----
Balance, End of Period $ 749 $ 934
===== =====
Effective January 1, 1995, the Company adopted a new accounting standard
which introduces the time value of money into the determination of the
allowance for loan losses. The portion of the allowance allocated to
nonaccrual commercial loans over $1 million is now measured by the difference
between their recorded value and fair value. Fair value is 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 March 31, 1995, such
loans aggregated $209 million, of which $170 million exceeded their fair
value by $41 million. For the first quarter of 1995, the average amount of
impaired loans was $213 million and interest income (cash received)
<PAGE> 8
recognized on them was $1 million.
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. Real estate acquired in satisfaction of loans is carried in
other assets at the lower of recorded investment in the property or fair
value minus estimated costs to sell.
3. Capital Resources
-----------------
During the quarter, the Company purchased 1.7 million of its common
shares for $55 million, completing a 5 million share buyback program begun in
the second quarter of last year, at an aggregate cost of approximately $168
million. All of the repurchased shares were used or are being held in
treasury for use in connection with employee benefit plans.
4. Commitments and Contingent Liabilities
--------------------------------------
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. In the opinion of management, the
claims made 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> 9
5. Acquisitions and Dispositions
-----------------------------
On March 25, 1995 the Company agreed to acquire The Putnam Trust Company
of Greenwich, headquartered in Greenwich, Connecticut. Putnam Trust Company
has 8 branches in Fairfield County, with $655 million in assets at March 31,
1995. The Company has agreed to purchase the securities processing
businesses of BankAmerica Corporation. The acquisition includes U.S. and
global custody, as well as securities lending, securities clearance, and
master trust. BankAmerica Corporation has approximately $462 billion in
custody assets, while those of the Company total $1.65 trillion. These
transactions are expected to close in the second half of 1995 and are subject
to regulatory approval.
On May 3, 1995, the Company sold its $7.6 billion residential mortgage
servicing portfolio. The Company has also completed the closing of its
mortgage origination offices on the west coast and in other parts of the U.S.
However, the Company will continue to originate residential mortgages through
11 offices in New York, New Jersey and Connecticut.
<PAGE> 10
Management's Discussion and Analysis of Financial Condition
- -----------------------------------------------------------
and Results of Operations
- -------------------------
The Bank of New York Company, Inc. reported first quarter fully diluted
earnings per share of $1.06, a 22% increase over the 87 cents earned in the
first quarter of 1994. Net income rose by 20% to $213 million from $178
million earned in the same period last year.
Net interest income, on a taxable equivalent basis, totaled $502 million
in the first quarter, a $106 million or 27% increase over the first quarter
of last year. Tax equivalent net interest income was up from the fourth
quarter of 1994, as it increased by $16 million, or 3%. The net yield on
interest earning assets of 4.49%, a quarterly record, was 10 basis points
higher than in the fourth quarter of 1994 and 60 basis points higher than the
first quarter of 1994. The Company continued to shift its asset mix toward
higher yielding assets, including credit cards. Revenues from the Company's
securities processing business grew 11% and were led by strong performances
from ADRs, corporate trust, mutual funds custody and master trust. Continued
strict control of operating costs also contributed to higher earnings.
Return on average common equity was a record 19.98% in the first quarter
of 1995, compared with 19.03% in the fourth quarter of 1994 and 18.55% in the
first quarter of last year. Return on average assets for the first quarter
was a record 1.65% versus 1.55% in the fourth quarter and 1.50% in the first
quarter of 1994.
CAPITAL AND LIQUIDITY
- ---------------------
The Company's estimated Tier 1 capital and Total capital ratios were
8.59% and 13.34% at March 31, 1995 compared with 8.45% and 13.43% at December
31, 1994, and 8.28% and 12.89% at March 31, 1994. Tangible common equity as
a percent of total assets was 7.40% at March 31, 1995 compared with 7.39% at
December 31, 1994 and 6.84% one year ago.
NET INTEREST INCOME
- -------------------
1995 1994
------- ------------------
1st 4th 1st
(In millions) Quarter Quarter Quarter
------- ------- -------
Net Interest Income $502 $486 $396
Net Interest Rate
Spread 3.41% 3.44% 3.18%
Net Yield on Interest
Earning Assets 4.49 4.39 3.89
<PAGE> 11
On a taxable equivalent basis, net interest income amounted to a record
$502 million in the first quarter of 1995, compared with $396 million in the
same period of 1994, an increase of 27%. The net interest rate spread was
3.41% in the first quarter of 1995 compared with 3.44% in the fourth quarter
of 1994 and 3.18% one year ago. The net yield on interest earning assets was
a record 4.49% in the first quarter of 1995 compared with 4.39% in the fourth
quarter of 1994 and 3.89% in the same period last year. The return of a
portion of the Company's credit card securitization to its balance sheet was
of modest benefit to the yield.
The Company's credit card business continued its strong growth. Managed
outstandings were up by 21% to $7.6 billion from $6.3 billion and the number
of card accounts increased by 16% to 5.7 million from 4.9 million one year
ago.
Interest lost on loans on nonaccrual status at March 31, 1995 and 1994,
reduced net interest income by $5 million and $6 million for the three months
ended March 31, 1995 and 1994.
NONINTEREST INCOME
- ------------------
1st Quarter
-----------
(In millions) 1995 1994
---- ----
Processing Fees
Securities $ 98 $ 88
Other 44 42
---- ----
142 130
Trust and Investment Fees 32 33
Income from Credit Card
Securitization 3 12
Other Service Charges and Fees 110 107
Securities Gains 7 12
Foreign Exchange and
Other Trading Activities 12 16
Other 13 40
---- ----
Total Noninterest Income $319 $350
==== ====
Securities processing fees increased 11% to $98 million compared to $88
million in the first quarter of 1994. All of the Company's securities
processing businesses showed increases compared with the fourth quarter of
1994, with the strongest performances coming from ADRs, corporate trust,
mutual funds custody and master trust. Trade finance revenue increased by
22% over the first quarter of last year. Total revenues in funds transfer
were up 20% from last year. However, service fees in the funds transfer and
deposit services areas were lower this quarter due to customers' continued
use of compensating balances in lieu of fees in the current high interest
<PAGE> 12
rate environment. Credit card interchange income, which increased 50% to $17
million in the first quarter, and syndication fees were also areas of
strength. Other noninterest income was $13 million versus $40 million in the
first quarter of 1994. The difference relates principally to the inclusion
of a $22 million non-recurring pre-tax gain on the sale of a portion of the
Company's interest in Wing Hang Bank, Ltd. in the first quarter of 1994.
The return of the securitized credit card receivables to the balance
sheet reduced noninterest income by $10 million compared to last year's first
quarter.
NONINTEREST EXPENSE AND INCOME TAXES
- ------------------------------------
The Company continued its strict control of expenses in the first
quarter of 1995. Total noninterest expense was up only 3% to $416 million
from $403 million in the same period last year. Salaries and employee
benefits increased 5% in the first quarter to $222 million from $211 million
in the same period last year due in part to acquisitions in the Company's
securities processing and factoring businesses and growth in its credit card
business. Occupancy and furniture and equipment expense were down 4% from
last year's first quarter. The effective tax rate for the first quarter of
1995 was 38.1% compared with 37.5% for the first quarter of 1994.
NONPERFORMING ASSETS
- --------------------
Change
1Q 1995 vs
(Dollars in millions) 3/31/95 12/31/94 4Q 1994
-----------------------------
Loans:
HLT $ 23 $ 24 (4)%
Commercial Real Estate 67 63 6
Other Commercial 47 50 (6)
Foreign 31 32 (3)
LDC 34 45 (24)
Community Banking 79 83 (5)
---- ----
Total Loans 281 297 (5)
Other Real Estate 57 56 2
---- ----
Total $338 $353 (4)
==== ====
Nonperforming Assets
Ratio 1.0% 1.1%
Allowance/Nonperforming
Loans 266.5 266.7
Allowance/Nonperforming
Assets 221.5 224.4
<PAGE> 13
This was the fifteenth consecutive quarter of nonperforming assets
decreases. NPAs totaled $338 million at March 31, 1995, compared with $353
million at December 31, 1994, a decrease of $15 million or 4%.
LOAN LOSS PROVISION AND NET CHARGE-OFFS
- ---------------------------------------
1st 4th 1st
Quarter Quarter Quarter
------- ------- -------
(In millions) 1995 1994 1994
-------------------------
Provision $ 50 $ 39 $ 45
---- ---- ----
Net Charge-offs:
HLT - (1) -
Commercial Real Estate (4) - (5)
Other Commercial (4) (16) (20)
Consumer (63) (48) (39)
Foreign (11) (17) -
Other (3) (1) (19)
---- ---- ----
Total (85) (83) (83)
Acquisition 1 - -
Credit Card Securitization 2 3 2
---- ---- ----
Decrease in Regular Allowance $(32) $(41) $(36)
==== ==== ====
Other Real Estate Expenses $ 1 $ 4 $ 2
The increase in the provision was principally related to growth in the
credit card portfolio, particularly in the Consumers Edge (registered
servicemark) product line. The allowance for loan losses was $749 million,
or 2.19% of loans at March 31, 1995, compared with $792 million, or 2.40% of
loans at December 31, 1994. In addition, the Company charged off $11
million of loans to Yugoslavia.
CREDIT CARD OPERATIONS
- ----------------------
Credit card receivables sold in the form of a security is a technique
for financing the Company's credit card operations. It replaces at
competitive rates other sources of deposits and borrowed money, and improves
liquidity and capital. For accounting purposes, the technique removes the
underlying assets and liabilities from the balance sheet, and amounts
otherwise reported in the income statement are classified as noninterest
income.
The Company securitized $1,350 million of credit card receivables in
1991; $50 million were outstanding at March 31, 1995, and are scheduled to
mature during the second quarter of 1995. The impact of the securitization,
assuming the funds received from the securitization were used to replace
<PAGE> 14
short-term borrowings, is summarized below:
Three months ended
March 31,
(In millions) 1995 1994
---- ----
Lower Net Interest Income $4 $34
Lower Provision for Loan Losses 1 13
Higher Noninterest Income 3 12
HIGHLY LEVERAGED TRANSACTIONS
- -----------------------------
At March 31, 1995, HLT loans outstanding were $1,397 million and
commitments were $476 million compared with $1,250 million and $480 million
at December 31, 1994. At March 31, 1995, borrowers in the communication
industry represented 45% of the HLT portfolio.
SECTOR PROFITABILITY
- --------------------
The Company has an internal information system used for management
purposes that produces sector performance data for Trust, and Securities and
Other Processing, Retail Banking, Corporate Banking, and Other Sectors. A
set of measurement principles has been developed to help ensure that reported
results of the sectors track their economic performance.
The sectors contributed to the Company's profitability for the first
quarter as follows:
Trust, and
Securities
and Other Retail Corporate
Processing Banking Banking
---------- ---------- ----------
(In millions) 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
Net Interest Income on a
Taxable Equivalent Basis $ 36 $ 27 $305 $221 $133 $102
Provision for Loan Losses - - 66 60 30 24
Noninterest Income 201 189 39 52 69 88
Noninterest Expense 151 140 173 175 58 48
---- ---- ---- ---- ---- ----
Income before Taxes $ 86 $ 76 $105 $ 38 $114 $118
==== ==== ==== ==== ==== ====
Other Total
---------- ----------
(In millions) 1995 1994 1995 1994
---- ---- ---- ----
Net Interest Income on a
Taxable Equivalent Basis $ 28 $ 46 $502 $396
Provision for Loan Losses (46) (39) 50 45
Noninterest Income 10 21 319 350
Noninterest Expense 34 40 416 403
---- ---- ---- ----
Income before Taxes $ 50 $ 66 $355 $298
==== ==== ==== ====
In the Trust, and Securities and Other Processing Sector, American
Depositary Receipts and corporate trust showed exceptional growth. Other
areas of strength included mutual funds custody and master trust. Securities
processing fees increased 11% to $98 million compared to $88 million in the
first quarter of 1994. All of the Company's securities processing businesses
showed increases compared with the fourth quarter of 1994, with the strongest
performances coming from ADRs, corporate trust, mutual funds custody and
<PAGE> 15
master trust. Trade finance revenue increased by 22% over the first quarter
of last year. Total revenues in funds transfer were up 20% from last year.
However, service fees in the funds transfer and deposit services areas were
lower this quarter due to customers' continued use of compensating balances
in lieu of fees in the current high interest rate environment.
The increase in the Retail Sector principally reflects strong growth in
the Company's credit card business and the higher value of noninterest-bearing
balances. Maturities in the sector's credit card securitization program
shifted revenue from noninterest income to net interest income.
The increase in net interest income in the Corporate Banking Sector is
attributable to higher yields as well as a decline in nonperforming assets.
In addition, increased earnings in the Company's factoring business
contributed to the sector's results. The decline in noninterest income is
primarily attributable to the inclusion of a $22 million non-recurring pre-tax
gain on the sale of a portion of the Company's interest in Wing Hang Bank,
Ltd. in the first quarter of 1994.
The other sector reflects a credit for the difference between the
recorded provision for loan losses and that allocated to the sectors. The
other sector also had a decline in revenue from trading and investing
activities.
<PAGE> 16
THE BANK OF NEW YORK COMPANY, INC.
Average Balances and Rates on a Taxable Equivalent Basis
(Dollars in millions)
For the three months For the three months
ended March 31, 1995 ended March 31, 1994
------------------------ -------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- ------
ASSETS
- ------
Interest-Bearing
Deposits in Banks
(primarily foreign) $ 1,907 $ 30 6.31% $ 563 $ 8 5.39%
Federal Funds Sold and
Securities Purchased
Under Resale Agreements 4,598 66 5.86 2,444 19 3.23
Loans
Domestic Offices 23,101 575 10.10 21,309 398 7.58
Foreign Offices 10,554 192 7.36 10,005 116 4.69
------- ------ ------- ------
Total Loans 33,655 767 9.24 31,314 514 6.66
------- ------ ------- ------
Securities
U.S. Government
Obligations 2,871 41 5.82 3,688 48 5.30
U.S. Government Agency
Obligations 318 5 6.33 366 6 6.41
Obligations of States and
Political Subdivisions 713 19 10.71 1,024 24 9.55
Other Securities,
including Trading
Securities 1,232 19 6.24 1,822 20 4.35
------- ------ ------- ------
Total Securities 5,134 84 6.63 6,900 98 5.74
------- ------ ------- ------
Total Interest-Earning
Assets 45,294 947 8.48% 41,221 639 6.29%
------ ------
Allowance for Loan Losses (787) (971)
Cash and Due from Banks 2,658 3,000
Other Assets 5,118 5,116
------- -------
TOTAL ASSETS $52,283 $48,366
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Interest-Bearing Deposits
Money Market Rate
Accounts $ 3,414 36 4.26% $ 3,626 22 2.47%
Savings 7,692 57 2.99 8,383 45 2.19
Certificates of Deposit
$100,000 & Over 1,863 26 5.76 885 7 3.06
Other Time Deposits 2,489 31 5.07 2,268 24 4.37
Foreign Offices 11,412 158 5.61 8,739 68 3.17
------ ------ ------- ------
Total Interest-Bearing
Deposits 26,870 308 4.65 23,901 166 2.83
Federal Funds Purchased
and Securities Sold
Under Repurchase
Agreements 2,277 32 5.76 3,713 27 2.90
Other Borrowed Funds 4,691 72 6.25 2,610 23 3.63
Long-Term Debt 1,781 33 7.36 1,557 27 6.86
------ ------ ------ ------
Total Interest-Bearing
Liabilities 35,619 445 5.07% 31,781 243 3.11%
------ ------
Noninterest-Bearing
Deposits 8,757 9,440
Other Liabilities 3,527 3,106
Preferred Stock 117 243
Common Shareholders'
Equity 4,263 3,796
------ ------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $52,283 $48,366
======= =======
Net Interest Earnings
and Interest Rate Spread $ 502 3.41% $ 396 3.18%
====== ======
Net Yield on Interest-
Earning Assets 4.49% 3.89%
==== ====
<PAGE> 17
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Discussion of litigation regarding Northeast Bancorp, Inc. is included
in Note 4 to the Consolidated Financial Statements included in Part 1, Item
1 of this Report.
Item 4. Submissions of Matters to Vote of Security Holders
- -----------------------------------------------------------
The Company held its annual meeting on May 9, 1995 at The Bank of New
York (Delaware) in Newark, Delaware. The following matters were submitted to
a vote of the shareholders:
-- Election of sixteen director nominees to new one-year terms was
approved with no nominee receiving less than 168.6 million votes.
-- Appointment of Deloitte & Touche LLP as the Company's independent
public accountants for 1995 was ratified by a vote of 168.8 million
affirmative to 2.0 million negative.
-- A proposal that cumulative voting rights be accorded to shareholders
was defeated by a vote of 31.8 million affirmative to 115.6 million negative.
-- A proposal to limit the amount of time that an outside director can
serve on the Company's board of directors was defeated by a vote of 10.6
million affirmative to 143.7 million negative.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) The exhibits filed as part of this report are as follows:
Exhibit 11 - Statement Re: Computation of Earnings Per Common Share for
the Three Months Ended March 31, 1995 and 1994.
Exhibit 12 - Statement Re: Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and Preferred Stock Dividends for
the Three months Ended March 31, 1995 and 1994.
Exhibit 27 - Statement Re: Financial Data Schedule containing selected
financial data at March 31, 1995 and for the three months ended March
31, 1995.
<PAGE> 18
(b) The Company filed the following reports on Form 8-K since December 31,
1994:
On January 17, 1995, the Company filed a Form 8-K Current Report (Items
5 and 7), which report included unaudited interim financial information
and accompanying discussion for the fourth quarter of 1994 contained in
the Company's press release dated January 17, 1995.
On March 27, 1995, the Company filed a Form 8-K Current Report (Items
5 and 7), which report included an Agreement and Plan of Merger (Merger
Agreement), dated March 25, 1995 by and between The Bank of New York
Company, Inc. (BNY) and The Putnam Trust Company of Greenwich (PTC), and
a press release dated March 27, 1995 issued by BNY and PTC announcing
the Merger Agreement.
On April 17, 1995, the Company filed a Form 8-K Current Report (Items
5 and 7), which report included unaudited interim financial information
and accompanying discussion for the first quarter of 1995 contained in
the Company's press release dated April 17, 1995.
<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BANK OF NEW YORK COMPANY, INC.
----------------------------------
(Registrant)
Date: May 11, 1995 \s\ Robert E. Keilman
------------------------------
Robert E. Keilman
Comptroller
(principal accounting officer)
<PAGE> 20
EXHIBIT INDEX
--------------
Exhibit Description
- ------- -----------
11 Computation of Earnings Per Common Share
for the Three Months Ended March 31, 1995
and 1994.
12 Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
for the Three Months Ended March 31, 1995
and 1994.
27 Financial Data Schedule containing selected
financial data at March 31, 1995 and for
the Three months ended March 31, 1995.
EXHIBIT 11
THE BANK OF NEW YORK COMPANY, INC.
Computation of Earnings Per Common Share
(In millions, except per share amounts)
For the Three Months Ended
March 31,
1995 1994
---- ----
Weighted Average Number of Shares
of Common Stock for Primary Computation 188 188
Shares Assumed to be Issued on Conversion:
Debentures 12 12
Cumulative Preferred Stock 1 2
----- -----
Weighted Average Number of Shares of
Common Stock Assuming Full Dilution 201 202
===== =====
Net Income $ 213 $ 178
Dividend Requirements on Preferred Stock 3 4
----- -----
Net Income Available
to Common Shareholders 210 174
Interest on Convertible
Debentures, Net of Tax 2 2
Dividends on Convertible Preferred Stock - 1
----- -----
Net Income Available to Common
Shareholders, Assuming Full Dilution $ 212 $ 177
===== =====
Earnings Per Share:
Primary $1.12 $0.93
Fully Diluted 1.06 0.87
EXHIBIT 12
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
(Dollars in millions)
For the three months ended
March 31,
1995 1994
EARNINGS ---- ----
- --------
Income Before Income Taxes $344 $285
Fixed Charges, Excluding Interest on Deposits 145 85
---- ----
Income Before Income Taxes and Fixed
Charges, Excluding Interest on Deposits 489 370
Interest on Deposits 308 166
---- ----
Income Before Income Taxes and Fixed
Charges, Including Interest on Deposits $797 $536
==== ====
FIXED CHARGES
- -------------
Interest Expense, Excluding Interest
on Deposits $137 $ 77
One-Third Net Rental Expense* 8 8
---- ----
Total Fixed Charges, Excluding Interest
on Deposits 145 85
Interest on Deposits 308 166
---- ----
Total Fixed Charges, Including Interest
on Deposits $453 $251
==== ====
PREFERRED STOCK DIVIDENDS, PRE-TAX BASIS $ 4 $ 8
- ---------------------------------------- ==== ====
EARNINGS TO FIXED CHARGES RATIOS
- --------------------------------
Excluding Interest on Deposits 3.37x 4.35x
Including Interest on Deposits 1.76 2.14
EARNINGS TO COMBINED FIXED CHARGES
& PREFERRED STOCK DIVIDENDS RATIOS
- ----------------------------------
Excluding Interest on Deposits 3.28 3.98
Including Interest on Deposits 1.74 2.07
* The proportion deemed representative of the interest factor.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from The Bank of
New York Company, Inc.'s Form 10-Q for the period ended March 31, 1995 and is
qualified entirely by reference to such Form 10-Q.
</LEGEND>
<CIK> 0000009626
<NAME> THE BANK OF NEW YORK COMPANY, INC.
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