<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, 1999
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)
One 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 761,282,494 shares as of April 30, 1999
<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, 1999 and December 31, 1998 3
Consolidated Statements of Income
For the Three Months Ended March 31, 1999 and 1998 4
Consolidated Statement of Changes In
Shareholders' Equity For the Three
Months Ended March 31, 1999 5
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market
Risk. (See "Trading Activities") 11
PART 2. OTHER INFORMATION
- --------------------------
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURE 21
<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)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
Assets
- ------
Cash and Due from Banks $ 4,546 $ 3,999
Interest-Bearing Deposits in Banks 4,785 4,504
Securities:
Held-to-Maturity (fair value of $843 in 1999
and $923 in 1998) 880 964
Available-for-Sale 5,080 5,451
------- -------
Total Securities 5,960 6,415
Trading Assets at Fair Value 1,668 1,637
Federal Funds Sold and Securities Purchased Under Resale
Agreements 1,935 3,281
Loans (less allowance for credit losses of $632 in 1999
and $636 in 1998) 39,119 37,750
Premises and Equipment 856 856
Due from Customers on Acceptances 1,213 946
Accrued Interest Receivable 331 355
Other Assets 4,504 3,760
------- -------
Total Assets $64,917 $63,503
======= =======
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits
Noninterest-Bearing (principally domestic offices) $10,432 $11,480
Interest-Bearing
Domestic 15,800 16,091
Foreign Offices 18,611 17,061
------- -------
Total Deposits 44,843 44,632
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 3,189 1,571
Other Borrowed Funds 3,632 4,536
Acceptances Outstanding 1,213 951
Accrued Taxes and Other Expenses 2,190 2,183
Accrued Interest Payable 160 188
Other Liabilities 695 608
Long-Term Debt 2,189 2,086
------- -------
Total Liabilities 58,111 56,755
------- -------
Guaranteed Preferred Beneficial Interests in the Company's
Junior Subordinated Deferrable Interest Debentures 1,500 1,300
------- -------
Shareholders' Equity
Class A Preferred Stock - par value $2.00 per share,
authorized 5,000,000 shares, outstanding 19,730
shares in 1999 and 22,820 shares in 1998 1 1
Common Stock-par value $7.50 per share, authorized
1,600,000,000 shares, issued 973,922,006 shares in
1999 and 970,767,767 shares in 1998 7,304 7,281
Additional Capital 171 142
Retained Earnings 1,528 1,318
Accumulated Other Comprehensive Income 254 312
------- -------
9,258 9,054
Less: Treasury Stock (205,233,723 shares in 1999
and 197,648,459 shares in 1998), at cost 3,939 3,593
Loan to ESOP (1,801,003 shares in 1999
and 1998), at cost 13 13
------- -------
Total Shareholders' Equity 5,306 5,448
------- -------
Total Liabilities and Shareholders' Equity $64,917 $63,503
======= =======
<FN>
- ----------------------------------------------------------------------------------------
Note: The balance sheet at December 31, 1998 has been derived from the audited financial
statements at that date.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
<PAGE> 4
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1999 1998
---- ----
<S> <C> <C>
Interest Income
- ---------------
Loans $ 661 $ 670
Securities
Taxable 64 74
Exempt from Federal Income Taxes 10 14
----- -----
74 88
Deposits in Banks 64 42
Federal Funds Sold and Securities Purchased
Under Resale Agreements 53 30
Trading Assets 5 4
----- -----
Total Interest Income 857 834
----- -----
Interest Expense
- ----------------
Deposits 317 325
Federal Funds Purchased and Securities Sold
Under Repurchase Agreements 31 34
Other Borrowed Funds 48 48
Long-Term Debt 34 32
----- -----
Total Interest Expense 430 439
----- -----
Net Interest Income 427 395
- -------------------
Provision for Credit Losses 15 5
----- -----
Net Interest Income After Provision for
Credit Losses 412 390
----- -----
Noninterest Income
- ------------------
Processing Fees
Securities 291 230
Cash 69 63
----- -----
360 293
Trust and Investment Fees 58 50
Service Charges and Fees 85 81
Securities Gains 50 28
Other 72 101
----- -----
Total Noninterest Income 625 553
----- -----
Noninterest Expense
- -------------------
Salaries and Employee Benefits 312 283
Net Occupancy 41 41
Furniture and Equipment 23 20
Other 133 123
----- -----
Total Noninterest Expense 509 467
----- -----
Income Before Income Taxes 528 476
Income Taxes 184 172
Distribution on Trust Preferred Securities 28 20
----- -----
Net Income $ 316 $ 284
- ---------- ===== =====
Net Income Available to Common Shareholders $ 316 $ 284
- ------------------------------------------- ===== =====
Per Common Share Data:
- ----------------------
Basic Earnings $0.41 $0.38
Diluted Earnings 0.41 0.36
Cash Dividends Paid 0.14 0.13
Diluted Shares Outstanding 779 781
<FN>
- ------------------------------------------------------------------------------
See accompanying Notes to Financial Statements
</FN>
</TABLE>
<PAGE> 5
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statement of Changes in Shareholders' Equity
For the three months ended March 31, 1999
(In millions)
(Unaudited)
<CAPTION>
<S> <C>
Preferred Stock
Balance, January 1 $ 1
-------
Balance, March 31 1
-------
Common Stock
Balance, January 1 7,281
Issuances in Connection with Employee Benefit Plans 23
-------
Balance, March 31 7,304
-------
Additional Capital
Balance, January 1 142
Common Stock Issuances in Connection with Employee Benefit Plans 29
-------
Balance, March 31 171
-------
Retained Earnings
Balance, January 1 1,318
Net Income 316
Cash Dividends
Common Stock (106)
-------
Balance, March 31 1,528
-------
Accumulated Other Comprehensive Income
Securities Valuation Allowance
Balance, January 1 340
Change in Fair Value of Securities Available-for-Sale,
Net of $12 Million in Taxes (11)
Reclassification Adjustment, Net of $23 Million in Taxes (42)
-------
Balance, March 31 287
-------
Foreign Currency Items
Balance, January 1 (28)
Foreign Currency Translation Adjustment,
Net of $3 Million in Tax Benefits (5)
-------
Balance, March 31 (33)
-------
Less Treasury Stock
Balance, January 1 3,593
Issued (36)
Acquired 382
-------
Balance, March 31 3,939
-------
Less Loan to ESOP
Balance, January 1 13
-------
Balance, March 31 13
-------
Total Shareholders' Equity, March 31 $ 5,306
=======
<FN>
- --------------------------------------------------------------------------------------
Comprehensive Income for the three months ended March 31, 1999 and 1998 was $258
million and $331 million.
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE> 6
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
<TABLE>
<CAPTION>
For the three months
Ended March 31,
1999 1998
---- ----
<S> <C> <C>
Operating Activities
Net Income $ 316 $ 284
Adjustments to Determine Net Cash Provided (Used) by
Operating Activities:
Provision for Losses on Loans and Other Real Estate 15 6
Depreciation and Amortization 49 44
Deferred Income Taxes 122 87
Securities Gains (50) (28)
Change in Trading Activities (6) 287
Change in Accruals and Other, Net (154) (543)
------ ------
Net Cash Provided by Operating Activities 292 137
------ ------
Investing Activities
Change in Interest-Bearing Deposits in Banks (369) 493
Purchases of Securities Held-to-Maturity (89) (84)
Maturities of Securities Held-to-Maturity 162 122
Purchases of Securities Available-for-Sale (752) (903)
Sales of Securities Available-for-Sale 403 382
Maturities of Securities Available-for-Sale 53 304
Net Principal Disbursed on Loans to Customers (1,513) (1,048)
Sales of Loans and Other Real Estate 27 85
Change in Federal Funds Sold and Securities
Purchased Under Resale Agreements 1,345 2,312
Purchases of Premises and Equipment (34) (17)
Acquisitions, Net of Cash Acquired (27) (354)
Proceeds from the Sale of Premises and Equipment 20 39
Other, Net 31 (51)
------ ------
Net Cash Provided (Used) by Investing Activities (743) 1,280
------ ------
Financing Activities
Change in Deposits 406 (748)
Change in Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 1,618 (433)
Change in Other Borrowed Funds (905) 499
Proceeds from the Issuance of Trust Preferred Securities 200 300
Proceeds from the Issuance of Long-Term Debt 100 150
Issuance of Common Stock 88 160
Treasury Stock Acquired (382) (585)
Cash Dividends Paid (106) (96)
------ ------
Net Cash Provided (Used) by Financing Activities 1,019 (753)
------ ------
Effect of Exchange Rate Changes on Cash (21) 7
------ ------
Change in Cash and Due From Banks 547 671
Cash and Due from Banks at Beginning of Period 3,999 5,769
------ ------
Cash and Due from Banks at End of Period $4,546 $6,440
====== ======
- ----------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for:
Interest $ 458 $ 451
Income Taxes 3 16
Noncash Investing Activity
(Primarily Foreclosure of Real Estate) 1 2
<FN>
- ----------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<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 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 Credit Losses
---------------------------
Transactions in the allowance for credit losses are summarized as
follows:
Three months ended
March 31,
(In millions) 1999 1998
---- ----
Balance, Beginning of Period $ 636 $ 641
Charge-Offs (22) (10)
Recoveries 3 5
----- -----
Net Charge-Offs (19) (5)
Acquisition - 4
Provision 15 5
----- -----
Balance, End of Period $ 632 $ 645
===== =====
3. Capital Transactions
--------------------
As of April 30, 1999, the Company has approximately 2 million shares
remaining to repurchase under its share buyback program.
In January 1999, the Company issued $200 million of trust preferred
securities.
4. New Accounting Pronouncements
-----------------------------
Effective January 1, 2000, a new accounting standard will require the
Company to record all derivatives on the balance sheet at fair value and apply
new accounting practices for hedging activities. The Company has not yet
determined the impact of the new accounting standard.
<PAGE> 8
5. Earnings Per Share
------------------
The following table illustrates the computations of basic and diluted
earnings per share for the three months ended March 31, 1999 and 1998:
Three Months Ended
March 31,
(In millions, except per share amounts)
1999 1998
---- ----
Net Income $316 $284
Net Income Available to Common Shareholders $316 $284
Diluted Net Income $316 $284
==== ====
Basic Weighted Average Shares Outstanding 766 739
Shares Issued on Conversion:
Warrants - 29
Employee Stock Options 13 13
---- ----
Diluted Weighted Average Shares Outstanding 779 781
==== ====
Basic Earnings Per Share: $ 0.41 $ 0.38
Diluted Earnings Per Share: 0.41 0.36
6. Commitments and Contingent Liabilities
--------------------------------------
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
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------------------------------------------------------------------------
Results of Operations
- ---------------------
The Company's actual results of future operations may differ from those
set forth in certain forward-looking statements contained herein. Refer to
further discussion under the heading "Forward Looking Statements".
The Company's reported first quarter diluted earnings per share were a
record 41 cents, up 14% from the 36 cents earned in the first quarter of 1998.
Net income for the first quarter was a record $316 million, up 12% from the
$284 million earned in the same period last year.
Substantial revenue growth in fee based businesses, continued emphasis on
expense control, and ongoing capital management produced superior earnings
performance in the first quarter of 1999. Significant new business and active
markets worldwide drove securities servicing fees up 27%. Trust and investment
grew 16% benefiting from strong investment performance, new business wins, and
record U.S. equity markets. As a result, fee based revenue and noninterest
income contributed 59% of revenues, reflecting continued concentration on fee
based businesses.
In securities servicing, revenue growth was led by global custody, mutual
funds, securities lending, ADRs and execution services. Domestic and global
custody continued to gain market share and momentum from new business wins as
assets under custody grew by 27% from a year ago reaching $5.2 trillion at
quarter end. Trust and investment's results were due to strong investment
performance which attracted new business. Continued focus on cost control was
evident, as noninterest expense for the quarter was flat compared with the
fourth quarter of 1998 and the efficiency ratio improved to 50.3%. As part of
its capital management program, the Company repurchased 9 million shares under
its 18 million share buyback authorization.
Return on average common equity for the first quarter of 1999 was 24.48%
exceeded only by the record 24.99% in the first quarter of 1998. Return on
average assets for the first quarter of 1999 was 1.94% compared with 1.93% in
the first quarter of 1998.
Net interest income on a taxable equivalent basis for the first quarter
decreased to $436 million from $451 million in the fourth quarter of 1998, as
effective balance sheet management reduced levels of liquid deposits and
investments associated with the securities servicing business.
Fees from the Company's securities servicing businesses reached $291
million for the first quarter, up 27% compared with the corresponding period
of the prior year. All areas contributed to strong internal growth of 16% with
international activities including global custody, securities lending, and
ADRs especially strong.
In cash processing, revenues from cash management were up 14% driven by
continued cross selling to the Company's securities servicing customers.
Trade finance revenues were up 13% from a year ago as recovery in world
markets continues. Fees from funds transfer grew by 6% from the previous
year, the result of continued market share gains as CHIPS payment systems
volumes were flat for the quarter. Overall, cash processing fees grew by 10%
from a year ago reaching $69 million.
Trust and investment fees were $58 million for the quarter, an increase
of 16% over last year driven by strong results from short term money
management and portfolio transition services. Foreign exchange and other
trading revenues were $42 million compared with $51 million in the fourth
quarter of 1998 and $46 million last year. Declines were due to reduced
levels of customer trading.
<PAGE> 10
Tangible diluted earnings per share (earnings before the amortization of
goodwill and intangibles) were 43 cents per share in 1999, up 13% from $0.38
cents per share in the first quarter of 1998. On the same basis, tangible
return on average common equity was 37.28% in 1999 compared with 37.72% in
1998; and tangible return on average assets was 2.11% in 1999 compared with
2.10% in 1998.
Average diluted shares outstanding were 779 million for the first
quarter, down from the 782 million in the fourth quarter of 1998 and 781
million in the first quarter a year ago as a result of the Company's stock
buyback programs.
CAPITAL
The Company's estimated Tier 1 capital and Total capital ratios remained
strong at 7.87% and 11.91% at March 31, 1999 compared with 7.89% and 11.90% at
December 31, 1998, and 7.25% and 11.43% at March 31, 1998. Tangible common
equity as a percent of total assets was 5.88% at March 31, 1999 compared with
6.25% at December 31, 1998 and 5.68% one year ago. The leverage ratio was
7.68% at March 31, 1999 compared with 7.46% at December 31, 1998 and 7.33% one
year ago.
NET INTEREST INCOME
<TABLE>
<CAPTION>
1st 4th 1st
Quarter Quarter Quarter
------- ------- -------
(In millions) 1999 1998 1998
---- ---- ----
<S> <C> <C> <C>
Net Interest Income $436 $451 $404
Net Interest Rate
Spread 2.29% 2.22% 2.24%
Net Yield on Interest-
Earning Assets 3.18 3.20 3.33
</TABLE>
Net interest income on a taxable equivalent basis was $436 million in the
first quarter of 1999 compared with $451 million in the fourth quarter of 1998
and $404 million in the first quarter of 1998. The net interest rate spread
was 2.29% in the first quarter of 1999, compared with 2.22% in the fourth
quarter of 1998 and 2.24% one year ago. The net yield on interest-earning
assets was 3.18% compared with 3.20% in the fourth quarter of 1998 and 3.33%
in last year's first quarter.
The decrease in net interest income and the improved net interest rate
spread from the fourth quarter were due to aggressive balance sheet
management, which reduced highly liquid, lower yielding assets generated by
the Company's securities servicing businesses. The decline in the net interest
rate yield from the first and fourth quarters of 1998 was primarily due to the
Company's share repurchase program.
Interest income would have been increased by $3 million in both the first
quarters of 1999 and 1998 if loans on nonaccrual status at March 31, 1999 and
1998 had been performing for the entire quarter.
<PAGE> 11
NONINTEREST INCOME
<TABLE>
<CAPTION>
1st 4th 1st
Quarter Quarter Quarter
------- ------- -------
(In millions) 1999 1998 1998
---- ---- ----
<S> <C> <C> <C>
Processing Fees
Securities $291 $274 $230
Cash 69 63 63
---- ---- ----
360 337 293
Trust and Investment Fees 58 54 50
Service Charges and Fees 85 79 81
Foreign Exchange and
Other Trading Activities 42 51 46
Securities Gains 50 50 28
Other 30 26 55
---- ---- ----
Total Noninterest Income $625 $597 $553
==== ==== ====
</TABLE>
Total noninterest income reached $625 million, growing 5% from the fourth
quarter of 1998 and 13% from the first quarter of 1998. Securities servicing
fees increased 27% to $291 million compared with $230 million a year ago.
Strong internal growth across all areas reached 16%, with remaining growth
coming from acquisitions. First quarter service charges and fees of $85
million were up from $81 million in the first quarter of 1998. Revenues from
foreign exchange and other trading activities were $42 million in the first
quarter of 1999 compared with $46 million last year. The Company reported $50
million of securities gains in the first quarter, the same as in the fourth
quarter of 1998, and up from $28 million a year ago. Other income in the
first quarter of 1998 included $29 million from the sale of the Company's
property at 48 Wall Street.
TRADING ACTIVITIES
The fair value and notional amounts of the Company's financial
instruments held for trading purposes at March 31, 1999 are as follows:
1st Quarter 1999
March 31, 1999 Average
---------------------------- -------------------
(In millions) Fair Value Fair Value
------------------ -------------------
Notional
Trading Account Amount Assets Liabilities Assets Liabilities
- --------------- -------- ------ ----------- ------ -----------
Interest Rate Contracts:
Futures and Forward
Contracts $20,902 $ 5 $ - $ 11 $ -
Swaps 52,630 425 385 408 327
Written Options 68,433 - 440 - 378
Purchased Options 30,539 58 - 65 -
Foreign Exchange Contracts:
Written Options 44,323 - 298 - 383
Purchased Options 47,439 336 - 337 -
Commitments to Purchase
and Sell Foreign Exchange 52,944 451 431 539 524
Securities 393 38 445 38
------ ------ ------ ------
Total Trading Account $1,668 $1,592 $1,805 $1,650
====== ====== ====== ======
<PAGE> 12
The Company manages trading risk through a system of position limits, a
value at risk (VAR) methodology, stop loss advisory triggers, and other market
sensitivity measures. Risk is monitored and reported to senior management by
an independent unit on a daily basis. The VAR methodology captures, based on
certain assumptions, the potential overnight pre-tax dollar loss from adverse
changes in fair values of all trading positions. The calculation assumes a one
day holding period for most instruments, utilizes a 99% confidence level, and
incorporates the non-linear characteristics of options. This methodology does
not attempt to evaluate risk created from extraordinary financial, economic or
other occurrences, and any risk evaluation system has judgmental aspects.
The following table indicates the calculated VAR amounts for the trading
portfolio for the periods indicated. During these periods, the daily trading
loss did not exceed the calculated VAR amounts on any given day.
<TABLE>
<CAPTION>
(In millions) 1st Quarter 1999 1st Quarter 1998
----------------------------------- -----------------------------------
Market Risk Average Minimum Maximum 03/31/99 Average Minimum Maximum 03/31/98
- ----------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate $ 4.9 $ 2.1 $ 10.9 $ 4.7 $ 4.4 $ 2.0 $ 6.0 $ 5.9
Foreign Exchange 1.6 0.8 4.0 1.2 2.3 1.2 4.0 2.7
Overall Portfolio 6.5 3.7 12.1 5.9 6.7 3.6 8.6 8.6
</TABLE>
NONINTEREST EXPENSE AND INCOME TAXES
Continued adherence to expense control resulted in total noninterest
expense for the quarter of $509 million, flat with $507 million in the fourth
quarter of 1998. The increase of 9% from $467 million in the same period last
year was principally due to acquisitions. Noninterest expense for the first
quarter included $6 million related to making computer systems Year 2000
compliant compared with $8 million in last year's fourth and first quarters.
The efficiency ratio for the first quarter of 1999 was 50.3% compared
with 50.8% in the fourth quarter and 50.2% for the first quarter of 1998.
The effective tax rate for the first quarter of 1999 was 34.9% compared
with 36.1% last year.
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
Change
3/31/99 vs.
(Dollars in millions) 3/31/99 12/31/98 12/31/98
-------- -------- --------
<S> <C> <C> <C>
Loans:
Commercial Real Estate $ 4 $ 26 $ (22)
Other Commercial 103 65 38
Foreign 66 53 13
Regional Commercial 35 35 -
----- ----- -----
Total Loans 208 179 29
Other Real Estate 14 14 -
----- ----- -----
Total $ 222 $ 193 $ 29
===== ===== =====
Nonperforming Assets Ratio 0.5% 0.5%
Allowance/Nonperforming Loans 303.6 355.5
Allowance/Nonperforming Assets 284.3 328.9
</TABLE>
Nonperforming assets totaled $222 million at March 31, 1999, compared
with $193 million at December 31, 1998, an increase of $29 million. Commercial
real estate nonperforming loans declined primarily due to the sale of a
<PAGE> 13
property in New Jersey. A $44 million loan to a mortgage bank and $25 million
of Russian loans became nonperforming in the first quarter of 1999.
At March 31, 1999, impaired loans (nonaccrual loans over $1 million)
aggregated $174 million, of which $145 million exceeded their fair value by
$59 million. Impaired loans at March 31, 1998, totaled $145 million, of which
$115 million exceeded their fair value by $19 million. For the first quarters
of 1999 and 1998, the average amounts of impaired loans were $160 million and
$148 million. Interest income (cash received) of $42 thousand was received on
the impaired loans in the first quarter of 1999, while $411 thousand was
received during the first quarter of 1998.
CREDIT LOSS PROVISION AND NET CHARGE-OFFS
The provision for credit losses was $15 million in the first quarter of
1999 compared with $5 million in the first quarter of 1998. The increase in
the provision reflects the increased level of charge-offs and nonperforming
loans
<TABLE>
<CAPTION>
1st 4th 1st
Quarter Quarter Quarter
------- ------- -------
(In millions) 1999 1998 1998
---- ---- ----
<S> <C> <C> <C>
Provision $ 15 $ 5 $ 5
==== ==== ====
Net(Charge-offs)Recoveries:
Commercial Real Estate (2) - 1
Other Commercial (7) (3) (3)
Consumer (1) (1) (1)
Foreign (9) (1) (1)
Other - (2) (1)
---- ---- ----
Total $(19) $ (7) $ (5)
==== ==== ====
Other Real Estate Expenses $ - $ - $ 1
</TABLE>
The allowance for credit losses was $632 million, or 1.59% of loans at
March 31, 1999 compared with $636 million, or 1.66% of loans at December 31,
1998 and $645 million, or 1.76% of loans at March 31, 1998. The ratio of the
allowance to nonperforming assets was 284.3% at March 31, 1999 compared with
328.9% at December 31, 1998 and 321.2% at March 31, 1998.
Based on an evaluation of individual credits, historical credit losses,
and global economic factors, the Company has allocated its allowance for
credit losses as follows:
3/31/99 12/31/98 3/31/98
------- -------- -------
Real Estate 2% 3% 3%
Domestic Commercial and Industrial 82 74 67
Consumer - 1 1
Foreign 13 11 7
Unallocated 3 11 22
--- --- ---
100% 100% 100%
Such an allocation is inherently judgmental, and the entire allowance for
credit losses is available to absorb credit losses regardless of the nature of
the loss. The increase in the allowance allocated to domestic commercial and
industrial loans reflects the increase in nonperforming loans and other
economic factors.
<PAGE> 14
SEGMENT PROFITABILITY
Segment Data
Effective January 1, 1999, the Company has adopted a new accounting
pronouncement requiring disclosure about the Company's segments based on a
management approach. The Company has an internal information system that
produces performance data for its four segments along product and service
lines.
The Trust, and Securities and Cash Processing segment provides a broad
array of fee based services. Trust includes personal trust and investment
management. Securities servicing includes services to both institutional
issuers and investors. Cash processing products primarily relate to funds
transfer, deposit services and trade finance.
The Corporate Banking segment provides lending services, including asset
based financing, to domestic and international commercial enterprises.
The Retail Banking segment includes consumer lending, residential
mortgage lending, and retail deposit services.
The Financial Markets segment includes trading, investing and leasing
activities, and treasury services to other segments.
The Company's segment data has been determined on an internal management
basis of accounting, other than the generally accepted accounting principles
used for consolidated financial reporting. These measurement principles are
designed to ensure that reported results of the segments track their economic
performance. Segment results are subject to restatement whenever improvements
are made in the measurement principles or organizational changes are made.
The measure of revenues and profit or loss by operating segment has been
adjusted to present segment data on a taxable equivalent basis. The provision
for credit losses allocated to each reportable segment is based on
management's judgment as to average credit losses that will be incurred in the
operations of the segment over a credit cycle of a period of years.
Management's judgment includes the following factors among others: historical
charge-off experience and the volume, composition and growth of the loan
portfolio. This method is different from that required under generally
accepted accounting principles as it anticipates future losses which are not
yet probable and therefore not recognizable under generally accepted
accounting principles. Assets and liabilities are match funded. Support and
other indirect expenses are allocated to segments based on general guidelines.
The segments contributed to the Company's profitability as follows:
<TABLE>
<CAPTION>
In Millions Trust, and
Securities
For the Quarter Ended and Cash Corporate Retail Financial Reconciling Consolidated
March 31, 1999 Processing Banking Banking Markets Items* Total
- --------------------- ---------- --------- ------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Interest Income $ 107 $ 161 $ 114 $ 36 $ 9 $ 427
Provision for
Credit Losses - 29 2 - (16) 15
Noninterest Income 447 86 21 49 22 625
Noninterest Expense 288 65 75 17 64 509
------ ------- ------ ------- ------ -------
Income Before Taxes $ 266 $ 153 $ 58 $ 68 $ (17) $ 528
====== ======= ====== ======= ====== =======
Average Assets $5,599 $33,121 $4,533 $21,188 $1,571 $66,012
====== ======= ====== ======= ====== =======
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
In Millions Trust, and
Securities
For the Quarter Ended and Cash Corporate Retail Financial Reconciling Consolidated
March 31, 1998 Processing Banking Banking Markets Items* Total
- --------------------- ---------- --------- ------- --------- ----------- ------------
<S> <C> - <C> <C> <C> <C> <C>
Net Interest Income $ 87 $ 164 $ 126 $ 20 $ (2) $ 395
Provision for
Credit Losses - 28 1 - (24) 5
Noninterest Income 374 74 19 57 29 553
Noninterest Expense 240 63 79 18 67 467
----- ------- ------ ------- ------ -------
Income Before Taxes $ 221 $ 147 $ 65 $ 59 $ (16) $ 476
===== ======= ====== ======= ====== =======
Average Assets $5,354 $31,883 $4,727 $16,152 $1,488 $59,604
====== ======= ====== ======= ====== =======
<FN>
* - Reconciling items for net interest income primarily relate to the
recording of interest income on a taxable equivalent basis, reallocation of
capital and the funding of goodwill. Reconciling items for noninterest income
primarily relate to the sale of a building in 1998. Reconciling items for
noninterest expense include $26 million and $24 million of goodwill
amortization in the first quarters of 1999 and 1998, and corporate overhead.
The adjustment to the provision for credit losses reflects the difference
between the aggregate of the credit provision over a credit cycle for the
reportable segments and the Company's recorded provision. The reconciling
items for average assets consist of goodwill and other intangible assets.
</FN>
</TABLE>
Segment Highlights
Trust, and Securities and Cash Processing
- -----------------------------------------
In the Trust, and Securities and Cash Processing segment, noninterest
income increased to $447 million from $374 million. All of the Company's
businesses have shown strong internal growth with global custody, mutual
funds, securities lending, ADRs, and execution services performing
particularly well. Strong internal growth across all areas reached 16%, with
remaining growth coming from acquisitions. Domestic and global custody
continued to gain market share and momentum from new business wins as assets
under custody grew by 27% from a year ago reaching $5.2 trillion at quarter
end. Securities servicing fees increased to $291 million as compared with $230
million in the first quarter of 1998. Fee revenues from issuer services grew
to $99 million in the first quarter of 1999, up from $87 million in the prior
year's period. Investment company services increased to $84 million in the
first quarter of 1999, as compared to $70 million in the first quarter of
1998. Broker/dealer services in the first quarter of 1999 were $108 million,
up from $73 million last year.
Fees from cash processing in the first quarter of 1999 increased to $69
million from $63 million in last year's first quarter driven by continued
cross selling to the Company's securities servicing customers. Trade finance
revenues were up 13% from a year ago as recovery in world markets continues.
Fees from funds transfer grew by 6% from the previous year, the result of
continued markets share gains as CHIPS payment systems volumes were flat for
the quarter. Fees from trust and investment management grew to $58 million in
the first quarter of 1999, as compared to $50 million in the first quarter of
1998, driven by strong results from short term money management and portfolio
transition services.
Net charge-offs in the Trust, and Securities and Cash Processing segment
were zero in the first quarters of 1999 and 1998. The rise in noninterest
expense is consistent with the increase in growth as well as the added salary
and other expenses from acquisitions.
<PAGE> 16
Corporate Banking
- -----------------
The Corporate Banking segment's net interest income was $161 million in
the first quarter of 1999, a slight decline from last year's $164 million. In
the first quarter of 1999, average loans outstanding in the Corporate Banking
segment increased 8% from the first quarter of last year.
The first quarter of 1999 provision for credit losses was $29 million
compared with $28 million last year. Net charge-offs in the Corporate Banking
segment were $18 million and $4 million in the first quarters of 1999 and
1998. The 16% increase in noninterest income to $86 million in the current
year reflects higher revenues associated with capital markets activities,
offset by lower income from the Company's offshore banking subsidiaries.
Noninterest expense increased slightly to $65 million from $63 million.
Retail Banking
- --------------
In the Retail Banking segment, net interest income in the first quarter
of 1999 was $114 million as compared with $126 million in the first quarter of
1998. Net interest income in the branch banking network has been negatively
impacted by the decline in the value of noninterest bearing sources of funds
in a declining rate environment. Noninterest income increased in this same
period to $21 million from $19 million. Noninterest expense in the first
quarter of 1999 was $75 million as compared with $79 in the previous year's
period. Net charge-offs were $1 million in both the first quarters of 1999 and
1998.
Financial Markets
- -----------------
In the Financial Markets segment, net interest income for the quarter
increased to $36 million from 1998's $20 million primarily due to increased
leasing activities. Noninterest income decreased to $49 million in the first
quarter of 1999 from $57 million in the first quarter of 1998, a 14% decrease
reflecting decreases in foreign exchange and other trading revenue. Net
charge-offs were zero in the first quarters of 1999 and 1998.
YEAR 2000 READINESS DISCLOSURE
The Company's Year 2000 compliance program consists of updating major
Company-owned application systems, business-area supported systems, and the
Company's proprietary customer software and evaluating the Year 2000
compliance efforts of vendors of major vendor-supplied systems. The Company's
compliance efforts have also focused on assessing the Year 2000 readiness of
its major service providers, business partners, and borrowers as well as
contingency planning.
The Company has divided its major proprietary applications systems into
three business line groups. The applications in each group were subjected to
a four-phase process of assessment, renovation, certification testing, and
implementation. All critical systems have completed all four phases. Compliant
versions of substantially all these applications are currently in use. Major
business-line products are being made available in isolated future-dated
environments for selected customers to test their interfaces and to assure
themselves of the Company's compliance.
The Company has identified its critical vendor-supplied systems. These
systems have been internally certified as Year 2000 compliant in accordance
with the Company's internal certification procedures.
Remediation of the Company's proprietary customer software has been
completed. Installation on client desktop computers is expected to be complete
by July 1999. Customers have been advised of their obligation to assure that
<PAGE> 17
their environments are compliant in order for the Company's software to
function correctly during and after the century date change.
The Company has completed an initial evaluation of its significant
business partners, including other financial service providers,
correspondents, counterparties, sub-custodians, vendors and settlement
agencies, for the purpose of assessing their Year 2000 compliance. The Company
is currently satisfied with the information it has received concerning the
progress and Year 2000 readiness programs of each significant third party. The
Company will continue to monitor the readiness and progress of these parties
throughout 1999. The Company is prepared to replace service providers that are
seen as not managing the Year 2000 issue adequately.
The Company considers Year 2000 readiness in its credit decisions and
factors this into borrower ratings. Based on a review of significant obligors,
the Company believes that exposure to obligor Year 2000 problems does not
present a material risk to the Company.
The Company's personal computers and physical facilities considered
critical to the Company's operations are expected to be upgraded to Year 2000
readiness by the end of July 1999.
The Company's contingency plans relating to Year 2000 issues include the
identification and assessment of the impact of various worst case scenarios on
the critical operational components for each of the Company's business units.
The Company is in the process of reviewing the applicability of its current
contingency plan, which includes creation of command centers, establishment of
special rapid response technology teams, scheduling availability of key
personnel, testing and simulation activities, offsite data center facilities,
and emergency backup power, and expects to complete modifications to the plan
by June 30, 1999.
Overall the Company's Year 2000 compliance program is on or ahead of
schedule to meet the needs of its customers and compliance deadlines defined
by its regulators. The estimated cost of the Year 2000 project is
approximately $82 million. In the first quarter of 1999 the Company spent $6
million on making computer systems Year 2000 compliant. Total expenses since
1997 have been $57 million.
A material Year 2000 problem could result in an interruption in, or a
failure of, certain normal business activities or operations. Such problems
could materially and adversely affect the Company's results of operations,
liquidity and financial condition. Due to the general uncertainty inherent in
the Year 2000 problem, resulting in part from the uncertainty of the Year 2000
readiness of suppliers, customers and other business partners, as well as
companies with which the Company does not have direct business relations, the
Company is unable to determine at this time whether the consequences of the
Year 2000 failures will have a material impact on the Company's results of
operations, liquidity or financial condition. The Year 2000 compliance program
is intended to significantly reduce the Company's level of uncertainty about
the Year 2000 problem and, in particular, about the Year 2000 compliance and
readiness of its material business partners. The Company believes that, with
completion of its Year 2000 compliance program as scheduled, the possibility
of significant interruptions of normal operations should be reduced. However,
because of the unprecedented nature of this issue, there can be no certainty
as to its impact.
INTRODUCTION OF THE EURO
In January 1999, eleven European countries adopted the euro as their
common legal currency. In the transition period from adoption through December
31, 2001, commerce may be conducted in either the euro or the former national
currencies.
<PAGE> 18
The Company has adapted its information technology systems and business
practices to accommodate euro-denominated transactions. The introduction of
the euro currency may result in increased price transparency in the euro-area
countries as well as a loss of cross-currency trading in the former national
currencies, and may ultimately have profound political and financial
implications. Based on its knowledge at this time, the Company does not,
anticipate that the introduction of the euro will have a material effect on
the Company's financial condition or results of operations.
FORWARD LOOKING STATEMENTS
The Company or its executive officers and directors on behalf of the
Company, may from time to time make forward looking statements. Any such
forward looking statements could be affected by a number of factors that the
Company is necessarily unable to predict with accuracy, including future
changes in interests rates, economic activity, consumer behavior, government
monetary policy, legislation and regulation, competition, and loan demand. In
addition, the Company's future results of operations and other forward looking
statements contained in Management's Discussion and Analysis and elsewhere in
this Form 10-Q involve a number of risks and uncertainties, including risks
relating to Year 2000 and the introduction of the Euro (in particular, the
Year 2000 readiness of third parties with which the Company does business). As
a result of variations in such factors, actual results may differ materially
from any forward looking statements. Some of these factors are described
below. The Company disclaims any obligation to update forward looking
statements.
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 and thus on the
earnings of the Company.
Legislation and Regulation
Proposals to change the laws and regulations governing the banking
industry are frequently introduced in Congress, in the state legislatures and
before the various bank regulatory agencies. Such changes could, among other
things, increase the Company's overhead and capital costs or reduce fees
charged by the Company or increase competition for banks. The likelihood and
timing of any such changes and the impact such changes might have on the
Company and its subsidiaries, however, cannot be determined at this time.
Competition
The businesses in which the Company operates are very 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. A wide variety of domestic and
foreign companies compete for processing services.
<PAGE> 19
THE BANK OF NEW YORK COMPANY, INC.
Average Balances and Rates on a Taxable Equivalent Basis
(Dollars in millions)
<TABLE>
<CAPTION>
For the three months For the three months
ended March 31, 1999 ended March 31, 1998
------------------------------ ------------------------------
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) $ 5,294 $ 64 4.90% $ 2,852 $ 42 6.05%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 4,513 53 4.76 2,318 30 5.25
Loans
Domestic Offices 19,817 362 7.40 19,022 371 7.91
Foreign Offices 19,504 299 6.22 17,623 300 6.89
------- ----- ------- -----
Total Loans 39,321 661 6.82 36,645 671 7.42
------- ----- ------- -----
Securities
U.S. Government Obligations 2,592 37 5.72 3,424 48 5.76
U.S. Government Agency Obligations 857 13 6.33 611 10 6.43
Obligations of States and
Political Subdivisions 626 12 7.70 663 14 8.23
Other Securities, including
Trading Securities 2,335 26 4.45 2,727 28 4.15
------- ----- ------- -----
Tota1l Securities 6,410 88 5.53 7,425 100 5.44
------- ----- ------- -----
Total Interest-Earning Assets 55,538 866 6.32% 49,240 843 6.94%
----- -----
Allowance for Credit Losses (635) (644)
Cash and Due from Banks 3,075 3,541
Other Assets 8,034 7,467
------- -------
TOTAL ASSETS $66,012 $59,604
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Interest-Bearing Deposits
Money Market Rate Accounts $ 5,176 52 4.10% $ 4,721 54 4.68%
Savings 7,793 42 2.20 7,672 49 2.57
Certificates of Deposit
$100,000 & Over 657 8 4.92 668 9 5.51
Other Time Deposits 2,255 25 4.41 2,309 28 4.86
Foreign Offices 18,596 190 4.13 14,352 185 5.23
------- ----- ------- -----
Total Interest-Bearing Deposits 34,477 317 3.72 29,722 325 4.43
Federal Funds Purchased and
Securities Sold Under Repurchase
Agreements 2,989 31 4.23 2,954 34 4.63
Other Borrowed Funds 3,627 48 5.32 3,376 48 5.81
Long-Term Debt 2,126 34 6.45 1,840 32 6.93
------- ----- ------- -----
Total Interest-Bearing Liabilities 43,219 430 4.03% 37,892 439 4.70%
----- -----
Noninterest-Bearing Deposits 10,424 10,020
Other Liabilities 5,682 6,062
Minority Interest-Preferred Securities 1,447 1,027
Preferred Stock 1 1
Common Shareholders' Equity 5,239 4,602
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $66,012 $59,604
======= =======
Net Interest Earnings
and Interest Rate Spread $ 436 2.29% $ 404 2.24%
===== ==== ===== ====
Net Yield on Interest-Earning Assets 3.18% 3.33%
==== ====
</TABLE>
<PAGE> 20
PART 2. OTHER INFORMATION
Item 5. Other Information
- --------------------------
On March 23, 1999, Company announced its agreement to purchase RBS Trust
Bank Ltd. from the Royal Bank of Scotland plc. In addition, the Company will
acquire an equity ownership in RBSI Security Services (Holdings) Ltd.,
headquartered on the island of Jersey. The proposed transactions are subject
to negotiation of a definitive contract, final due diligence and regulatory
approvals. The transaction is expected to be completed during the third
quarter of 1999. RBS Trust Bank Ltd. has over $640 billion of assets under
administration and over $11 billion in total assets as of March 31, 1999.
This transaction continues the Company's expansion in the European market
and further enhances its position as a leading provider of investor services.
In the UK, RBS Trust Bank Ltd. is the largest provider of pension fund
services and holds a leading position in the fund manager market, offering
retail funds services, trustee and depositary services, as well as pension,
banking and treasury products. In addition, RBS Trust Bank Ltd. is one of the
few worldwide providers to successfully assume and integrate fund managers'
mid and back office operations, permitting the managers to focus on their core
businesses. Upon completion of this transaction, the Company will become the
largest global custodian with assets under administration, worldwide, of $5.9
trillion.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) The exhibits filed as part of this report are as follows:
Exhibit 3(a) - Amended By-Laws of The Bank of New York Company, Inc. as
amended through June 9, 1998.
Exhibit 12 - Statement Re: Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and Distributions on Trust
Preferred Securities for the Three Months Ended March 31, 1999 and 1998.
Exhibit 27 - Statement Re: Financial Data Schedule containing selected
financial data at March 31, 1999.
(b) The Company filed the following reports on Form 8-K since
December 31, 1998:
On January 19, 1999, 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 1998 contained in the
Company's press release dated January 19, 1999.
On January 29, 1999, the Company filed a Form 8-K Current Report (Items 5
and 7), related to the issuance by BNY Capital IV, a statutory business trust
(the "Trust") of 8,000,000 of its 6 7/8% Trust Preferred Securities, Series E
(Liquidation amount $25 per Trust Preferred Security) (the "Trust Preferred
Securities"), which represent beneficial interests in the Trust, in a public
offering (Registration Statement Nos. 333-40837 and 333-40837-01 through 03).
The following exhibits, all relating to the issuance of the Trust Preferred
Securities were included in the filing: a Pricing Agreement, Junior
Subordinated Indenture, Specimen of the 6 7/8% Junior Subordinated Deferrable
Interest Debentures, Series E, of the Company, Amended and Restated Trust
Agreement, Specimens of the 6 7/8% Trust Preferred Securities, Series E, of
the Trust, Guarantee Agreement, and Agreement as to Expenses and Liabilities
On April 19, 1999, 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 1999 contained in the
Company's press release dated April 19, 1999.
<PAGE> 21
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 14,1999 By: \s\ Thomas J. Mastro
---------------------------------
Name: Thomas J. Mastro
Title: Comptroller
<PAGE> 22
EXHIBIT INDEX
--------------
Exhibit Description
- ------- -----------
3 (a) Amended By-Laws of The Bank of New York Company, Inc. as
amended through June 9, 1998.
12 Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Distributions
on Trust Preferred Securities for the Three Months Ended
March 31, 1999 and 1998.
27 Financial Data Schedule containing selected
financial data at March 31, 1999.
<PAGE>
EXHIBIT 3 (a)
BY-LAWS
of
The Bank of New York Company, Inc.
As amended through June 9, 1998
Table of Contents
Page No.
ARTICLE I Offices
SECTION 1.1 Principal Office 1
SECTION 1.2. Other Offices 1
ARTICLE II Meetings of Shareholders
SECTION 2.1. Place of Meeting 1
SECTION 2.2. Annual Meetings 1
SECTION 2.3. Special Meetings 1
SECTION 2.4. Notice of Meetings 1
SECTION 2.5. Waiver of Notice 2
SECTION 2.6. Quorum 2
SECTION 2.7. Organization 2
SECTION 2.8. Voting and Proxies 2
SECTION 2.9. Inspectors 4
SECTION 2.10. Stockholder Proposals and Nominations 4
ARTICLE III Board of Directors
SECTION 3.1. General Powers 6
SECTION 3.2. Number 6
SECTION 3.3. Qualifications 6
SECTION 3.4. Election and Term 6
SECTION 3.5. Resignations 6
SECTION 3.6. Removal 7
SECTION 3.7. Newly Created Directorships and Vacancies 7
SECTION 3.8. Time and Place of Meetings;
Content of Notice, if any 7
SECTION 3.9. Annual Meeting 7
SECTION 3.10. Regular Meetings 7
SECTION 3.11. Special Meetings 7
SECTION 3.12. Quorum and Manner of Acting 8
SECTION 3.13. Organization 8
SECTION 3.14. Compensation 8
SECTION 3.15. Interest of Directors and Officers in Transactions 9
ARTICLE IV Executive Committee
SECTION 4.1. How Constituted 10
SECTION 4.2. Term of Office 10
SECTION 4.3. Vacancies 10
SECTION 4.4. Powers 10
<PAGE>
SECTION 4.5. Resignations 11
SECTION 4.6. Removal 11
SECTION 4.7. Quorum and Manner of Acting 11
SECTION 4.8. Alternate Members 11
ARTICLE V Other Committees
SECTION 5.1. Other Committees of Directors 11
SECTION 5.2. Other Committees of Directors,
Officers and/or Other Persons 12
ARTICLE VI Officers
SECTION 6.1. Number and Qualifications 12
SECTION 6.2. Annually Elected Officers 12
SECTION 6.3. Additional Officers 12
SECTION 6.4. Removal 12
SECTION 6.5. Resignations 13
SECTION 6.6. Vacancies 13
SECTION 6.7. Salaries 13
SECTION 6.8. Powers and Duties 13
ARTICLE VII Indemnification of Directors and Officers
SECTION 7.1. Indemnification 13
ARTICLE VIII Contracts, Checks, Drafts, etc.
SECTION 8.1. Contracts, etc. 16
SECTION 8.2. Checks, Drafts, etc. 16
SECTION 8.3. Securities of Other Corporations 16
ARTICLE IX Shares of Stock
SECTION 9 1. Certificates for Shares of Stock 16
SECTION 9.2. Transfer of Shares of Stock 17
SECTION 9.3. Registered Holders 17
SECTION 9.4. Lost, Stolen or Destroyed Share Certificates 17
SECTION 9.5. Record Date 18
SECTION 9.6. Regulations, Transfer Agents and Registrars 18
ARTICLE X Seal
SECTION 10.1. Seal 18
ARTICLE XI Fiscal Year
SECTION 11.1. Fiscal Year 18
ARTICLE XII Books
SECTION 12.1. Books 18
ARTICLE XIII Amendments
SECTION 13.1. Amendments 19
<PAGE> 1
BY-LAWS
of
The Bank of New York Company, Inc.
As Amended through June 9, 1998
ARTICLE I
OFFICES
SECTION 1.2. Principal Office. The principal office of The Bank of New
York Company, Inc. (hereinafter called the Company) shall be in the City and
County of New York.
SECTION 1.2. Other Offices. The Company may have other offices at such
other places as the Board of Directors of the Company (hereinafter called the
Board) may from time to time determine and as shall be legally authorized.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.1. Place of Meeting. Each meeting of the shareholders of the
Company (hereinafter called the shareholders) shall be held at the principal
office of the Company or at such other place, within or without the State of
New York, as shall be specified in the notice of such meeting.
SECTION 2.2. Annual Meetings. The annual meeting of the shareholders for
the election of directors and the transaction of such other business as
properly may be brought before such meeting shall be held on such date as may
be designated by the Board from time to time, at such hour as may be specified
in the notice of such meeting.
SECTION 2.3. Special Meetings. A special meeting of the shareholders for
any purpose or purposes may be called at any time by order of the Board or by
the Chairman of the Board (hereinafter called the Chairman) or, in his
absence, the President.
SECTION 2.4. Notice of Meetings. Notice of each meeting of the
shareholders shall be in writing and signed by the Chairman, the President or
the Secretary. Such notice shall state the purpose or purposes for which such
meeting is called and the place, date and hour of the meeting, and, unless it
is the annual meeting, shall indicate that it is being issued by or at the
direction of the person or persons calling the meeting. If, at any meeting,
action is proposed to be taken which would, if taken, entitle shareholders who
comply with applicable requirements of law to receive payment for their
shares, the notice of such meeting shall include a statement of that purpose
and to that effect. Except as otherwise provided by law, a copy of the notice
of any meeting shall be given, personally or by mail, not less than ten nor
more than fifty days before such meeting, to each shareholder entitled to vote
at such meeting. If mailed, such notice shall be deemed to have been given
when deposited in the United States mail, with postage thereon prepaid,
directed to the shareholder at his address as it appears on the record of
shareholders of the Company, or, if he shall have filed with the Secretary a
written request that notices to him be
<PAGE> 2
mailed to some other address, then directed to him at such other address.
Unless the Board fixes a new record date for an adjourned meeting of the
shareholders, notice thereof need not be given if the time and place to which
the meeting is adjourned are announced at the meeting at which the adjournment
is taken. Any previously scheduled meeting of the shareholders may be
postponed, and (unless the Certificate of Incorporation otherwise provides)
any special meeting of the shareholders may be canceled, by resolution of the
Board of Directors upon public notice given prior to the time previously
scheduled for such meeting of shareholders.
SECTION 2.5. Waiver of Notice. Notice of any meeting of the shareholders
need not be given to any shareholder who submits a signed waiver of notice, in
person or by proxy, whether before or after the meeting, and the attendance of
any shareholder at a meeting, in person or by proxy, without protesting prior
to the conclusion thereof the lack of notice of such meeting, shall constitute
a waiver of notice thereof by him.
SECTION 2.6. Quorum. Except as otherwise provided by law, at all
meetings of the shareholders the presence, in person or by proxy, of the
holders of a majority of the shares of the Company entitled to vote thereat
shall be necessary to constitute, and shall constitute, a quorum for the
transaction of business. When a quorum is once present to organize a meeting,
it is not broken by the subsequent withdrawal of any shareholder. In the
absence of a quorum at any such meeting or any adjournment or adjournments
thereof, a majority in voting interest of the shareholders present in person
or by proxy and entitled to vote at such meeting may adjourn such meeting from
time to time and from place to place until a quorum shall be present thereat.
At any such adjourned meeting at which a quorum shall be present, any business
may be transacted which might have been transacted at the meeting as
originally called if a quorum then had been present.
SECTION 2.7. Organization. At each meeting of the shareholders, the
Chairman or, in his absence, the President or, in his absence, such person as
may be designated by the Board or, in the absence of any of the foregoing, a
person chosen for the purpose by a majority in voting interest of the
shareholders present in person or by proxy and entitled to vote at such
meeting, shall act as chairman thereof and preside thereat; and the Secretary
or, in his absence, the person whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
The person presiding at the meeting shall establish the rules for the conduct
of the meeting, including, without limitation, the order of consideration of
matters to be voted upon by the shareholders. Except as otherwise provided
by law, the Certificate of Incorporation or these By-laws, the person
presiding at the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made
or proposed, as the case may be, in accordance with the procedures set forth
in these By-laws and, if any proposed nomination or business is not in
compliance with these By-laws, to declare that such proposal or nomination
shall be disregarded.
SECTION 2.8. Voting and Proxies. Subject to the provisions of Section
9.5 of these By-laws and except as otherwise provided in this Section or by
law, every shareholder of record of the Company shall be entitled at every
meeting of the shareholders to one vote in person or by proxy for every share
of stock of the Company standing in his name on the record of shareholders.
The person presiding at the meeting shall fix and announce at the meeting the
date
<PAGE> 3
and time of the opening and the closing of the polls for each matter upon
which shareholders will vote at the meeting.
Treasury shares as of the record date and shares held as of the record
date by another domestic or foreign corporation of any type or kind, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held as of the record date by the Company, shall not be
shares entitled to vote or to be counted in determining the total number of
outstanding shares.
Shares held by an administrator, executor, guardian, conservator,
committee or other fiduciary, except a trustee, may be voted by him or it,
either in person or by proxy, without transfer of such shares into his or its
name. Shares held by a trustee may be voted by him or it, either in person or
by proxy, only after the shares have been transferred into his or its name as
trustee or into the name of his or its nominee.
Shares standing in the name of another domestic or foreign corporation of
any type or kind may be voted by such officer, agent or proxy as the by-laws
of such corporation may provide, or, in the absence of such provision, as the
board of directors of such corporation may determine.
A shareholder shall not sell his vote or issue a proxy to vote to any
person for any sum of money or anything of value except as permitted by law.
Every proxy must be signed by the shareholder or by his duly authorized
attorney-in-fact. No proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the shareholder executing it,
except as otherwise provided by law. The authority of the holder of a proxy
to act shall not be revoked by the incompetence or death of the shareholder
who executed the proxy unless, before the authority is exercised, written
notice of an adjudication of such incompetence or of such death is received by
the Secretary or any Assistant Secretary.
At all meetings of the shareholders, a quorum being present, all matters,
except as otherwise provided by law, the Certificate of Incorporation of the
Company or Section 3.4 of these By-laws, shall be authorized by a majority of
the votes cast at the meeting by the shareholders present in person or by
proxy and entitled to vote thereon.
Unless demanded by a shareholder or shareholders present in person or by
proxy at any meeting of the shareholders and owning not less than ten percent
in voting interest of the outstanding stock of the Company entitled to be
voted thereat, or unless so directed by the chairman of the meeting, the vote
thereat on any question need not be by ballot, except in the case of the
election of directors.
A list of shareholders as of the record date for the meeting, certified
by the Secretary or an Assistant Secretary responsible for its preparation or
by a transfer agent for the stock of
<PAGE> 4
the Company, shall be produced at any meeting of the shareholders upon the
request thereat or prior thereto of any shareholder. If the right to vote at
any meeting is challenged, the inspectors appointed pursuant to Section 2.9 of
these By-laws, or the person presiding thereat, shall require such list of
shareholders to be produced as evidence of the right of the persons challenged
to vote at such meeting, and all persons who appear from such list to be
shareholders entitled to vote thereat may vote at such meeting.
SECTION 2.9. Inspectors. The Board, in advance of any meeting of the
shareholders, may appoint one or more persons to act as inspectors (with
respect to any election to be held, or otherwise) at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person presiding
at the meeting of the shareholders may, and if so requested by a shareholder
entitled to vote thereat shall, appoint one or more persons to act as
inspectors. In case any person appointed as an inspector fails to appear or
act, the vacancy may be filled by appointment made by the Board in advance of
the meeting or at the meeting by the person presiding thereat. Each
inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability.
At such meeting the inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum and the validity and effect of proxies, and
shall receive votes, ballots or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and tabulate
all votes, ballots or consents, determine the result, and do such other acts
as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting or any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and execute a
certificate of any fact found by them. Any report or certificate made by them
shall be prima facie evidence of the facts stated and of the vote as certified
by them.
SECTION 2.10. Stockholder Proposals and Nominations.
(a) Annual or Special Meetings of Shareholders. At any annual or special
meeting of shareholders, proposals by shareholders and persons nominated for
election as directors by shareholders shall be considered only if advance
notice thereof has been timely given as provided herein and such proposals or
nominations are otherwise proper for consideration under applicable law and
the Certificate of Incorporation and By-laws of the Company. Notice of any
proposal to be presented by any shareholder or of the name of any person to be
nominated by any shareholder for election as a director of the Company at any
meeting of shareholders shall be delivered to the Secretary of the Company at
its principal executive office (i) in the case of an annual meeting, not fewer
than 90 nor more than 120 days prior to the date of the meeting (provided that
with respect to the 1999 annual meeting a proposal submitted prior to November
30, 1998 for inclusion in the Company's proxy statement shall be deemed
timely); provided, however, that if the date of the meeting is first publicly
announced fewer than 100 days prior to the date of the meeting, such advance
notice shall be given not more than ten days following the earlier of the day
on which notice of the date of the meeting was mailed and public announcement
was made; and (ii) in the
<PAGE> 5
case of a special meeting at which directors are to be elected, not later than
the close of business on the tenth day following the earlier of the day on
which notice of the date of the meeting was mailed and public announcement was
made. Any shareholder who gives notice of any such proposal shall deliver
therewith the text of the proposal to be presented and a brief written
statement of the reasons why such shareholder favors the proposal and setting
forth such shareholder's name and address, the number and class of all shares
of each class of stock of the Company beneficially owned by such shareholder
and any material interest of such shareholder in the proposal (other than as a
shareholder generally) and whether such person has received any financial
assistance, funding or other consideration from any other person in respect of
the proposal (and the details thereof). Any shareholder desiring to nominate
any person for election as a director of the Company shall deliver with such
notice (i) a statement in writing setting forth the name of the person to be
nominated, the number and class of all shares of each class of stock of the
Company beneficially owned by such person, the information regarding such
person required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K
adopted by the Securities and Exchange Commission (or the corresponding
provisions of any regulation subsequently adopted by the Securities and
Exchange Commission applicable to the Company), (ii) such person's signed
consent to serve as a director of the Company if elected, (iii) such
shareholder's name and address, (iv) a confirmation of the number and class of
all shares of each class of stock of the Company beneficially owned by such
shareholder, (v) a confirmation that any governmental approvals required in
connection with such person's nomination, election or taking office as a
director of the Company have been obtained by such stockholder and/or nominee,
as applicable, and are in full force and effect as of the date of submission
of such notice of nomination and (vi) a statement as to whether such person or
shareholder received any financial assistance, funding or consideration from
any other person in respect of the nomination (and the details thereof). As
used herein, shares "beneficially owned" shall include all shares that such
person, together with such person's affiliates and associates (as defined in
Rule 12b-2 under the Securities Exchange Act of 1934), may be deemed to
beneficially own pursuant to Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as well as all shares of which such person, together
with such person's affiliates and associates, has the right to become the
beneficial owner pursuant to any agreement or understanding, or upon the
exercise of warrants, options or rights to convert or exchange (whether such
rights are exercisable immediately or only after the passage of time or the
occurrence of conditions). The person presiding at the meeting, in addition
to making any other determinations that may be appropriate to the conduct of
the meeting, shall determine whether such notice has been duly given and shall
direct that proposals and nominees not be considered if such notice has not
been given. In no event shall the public announcement of an adjournment of an
annual or special meeting commence a new time period for the giving of
shareholders notice as described above.
(b) Eligibility of Directors. Only such persons who are nominated in
accordance with the procedures set forth in this By-law shall be eligible to
serve as directors and only such business shall be conducted at a meeting of
shareholders as shall have been brought before a meeting in accordance with
the procedures set forth in this By-law.
(c) Public Announcement Defined. For purposes of this By-law, "public
announcement" shall mean disclosure in a press release reported by the Dow
Jones News Service, Associated
<PAGE> 6
Press or comparable national news service or in a document publicly filed by
the Company with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(d) Exchange Act Matters. Notwithstanding the foregoing provisions of
this By-law, a shareholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this By-law. Nothing in this By-law shall be deemed
to affect any rights (i) of shareholders to request inclusion of proposals in
the Company's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of preferred stock of the Company, if any,
to elect directors under specified circumstances.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. General Powers. The business and affairs of the Company
shall be managed by the Board.
SECTION 3.2. Number. The Board shall consist of such number of
directors, not less than nine, as shall be fixed from time to time by
resolution adopted by a majority of the total number of directors which the
Company would have, prior to any increase or decrease, if there were no
vacancies on the Board. The tenure of office of a director shall not be
affected by any decrease in the number of directors so made by the Board.
SECTION 3.3. Qualifications. No person shall be eligible to serve as a
director unless, when his term commences, he is not less than eighteen years
of age nor (except in the case of those persons who were named as directors in
the Statement of Organization of the Company or who were members of the Board
of Trustees of The Bank of New York prior to April 30, 1957) more than seventy
years of age. Directors need not be shareholders.
SECTION 3.4. Election and Term. At each annual meeting of the
shareholders, directors shall be elected to hold office until the next annual
meeting. Subject to the provisions of these By-laws, each director shall hold
office until the expiration of the term for which he is elected and until his
successor has been elected and qualified.
Directors shall be elected by the shareholders, except as otherwise
provided by law or the Certificate of Incorporation of the Company or these
By-laws. In order to be elected as a director by the shareholders, a person
must, except as otherwise provided by law, receive a plurality of the votes
cast by the holders of shares entitled to vote thereon at a meeting of the
shareholders for the election of directors at which a quorum shall be present.
SECTION 3.5. Resignations. Any director of the Company may resign at any
time by giving written notice to the Chairman, the President or the Secretary.
Such resignation shall take effect at the date of receipt of such notice, or
at any later time specified therein, and, unless
<PAGE> 7
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 3.6. Removal. Any or all of the directors maybe removed for
cause by vote of the shareholders or by action of the Board.
SECTION 3.7. Newly Created Directorships and Vacancies. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board for any reason, except the removal of
directors by the shareholders without cause, shall be filled by election by
the affirmative vote of a majority of the directors then in office, even
though less than a quorum exists. Vacancies occurring as a result of the
removal of directors by the shareholders without cause shall be filled by the
shareholders.
A director elected to fill a vacancy, or to fill a newly created
directorship, shall be elected to hold office until the next annual meeting of
the shareholders and until his successor has been elected and qualified.
SECTION 3.8. Time and Place of Meetings; Content of Notice, if any.
Except as otherwise provided in these By-laws, the Board may hold any meeting
within or without the State of New York at such place, and at such time, as
from time to time may be designated by resolution of the Board or as shall be
specified in the notice of such meeting or in the waivers of notice thereof
signed by the directors at the time in office (other than any director who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice thereof to him). Except as otherwise specifically provided
by law or in these By-laws, any notice or waiver of notice of any meeting of
the Board need not contain any statement of the purpose or purposes of the
meeting or any specification of the business to be transacted thereat, but
shall specify the time and place thereof.
SECTION 3.9. Annual Meeting. Following each annual meeting of the
shareholders for the election of directors, the Board shall meet for the
purposes, without limitation, of organization and the annual election and
appointment of officers. The meeting of the Board to be held for such
purposes shall be the regular meeting of the Board next following each such
annual meeting of the shareholders, unless a special meeting of the Board
shall in the meantime have been duly called and held for such purposes.
SECTION 3.10. Regular Meetings. Regular meetings of the Board may be
held at such time and place as shall from time to time be specified in a
resolution of the Board, and no notice thereof need be given.
SECTION 3.11. Special Meetings. A special meeting of the Board may be
called at any time by the Chairman or, in his absence, by the President and
shall be called by the Chairman, the President or the Secretary upon the
written request of any two directors.
Except as otherwise provided by law, notice of each such meeting shall be
given to each director by mail, addressed to him at his residence or usual
place of business, not later than noon,
<PAGE> 8
New York time, on the third day prior to the day on which the meeting is to be
held, or shall be given to him, so addressed, by telegram or cable or
radiogram, or given to him personally by messenger or telephone, not later
than noon, New York time, on the day before the day on which such meeting is
to be held. Notices are deemed to have been given by mail, when deposited in
the United States mail, by telegram or cable or radiogram at the time of
filing, by messenger at the time of delivery, and by telephone at the time of
the telephone call.
Notice of such meeting need not be given to any director who submits a
signed waiver of notice whether before or after the meeting, or who attends
the meeting without protesting, prior thereto or at its commencement, the lack
of notice to him.
SECTION 3.12. Quorum and Manner of Acting. At all meetings of the Board
the presence of one-third of the entire Board shall be necessary to constitute
a quorum for the transaction of business thereat, and an act taken by vote of
a majority of the directors present at the time of the vote, if a quorum is
present at such time, shall be the act of the Board, except as otherwise
provided by law or these By-laws.
Members of the Board may participate in a meeting of the Board by means
of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Any action required or permitted to be taken by the Board may be taken
without a meeting if all members of the Board consent in writing to the
adoption of a resolution authorizing the action. The resolution and the
written consents by the members of the Board shall be filed with the minutes
of the proceedings of the Board.
A majority of the directors present, whether or not a quorum shall be
present, may adjourn any meeting from time to time and from place to place.
Notice of any adjournment of a meeting to another time or place shall be given
in the manner described in Section 3.11 of these By-laws to the directors who
were not present at the time of the adjournment and, unless such time and
place are announced at the meeting, to the other directors. At any such
adjourned meeting at which a quorum shall be present any business may be
transacted which might have been transacted at the meeting as originally
called if a quorum then had been present. The directors shall act only as a
Board and the individual directors shall have no power as such.
SECTION 3.13. Organization. At each meeting of the Board, the Chairman
or, in his absence, the President or, in his absence, such person as may be
designated by the Board or, in the absence of any of the foregoing, a director
chosen by a majority of the directors present, shall act as chairman thereof
and preside thereat; and the Secretary or, in his absence, the person whom the
chairman of such meeting shall appoint, shall act as secretary of such meeting
and keep the minutes thereof.
SECTION 3.14. Compensation. Each director, other than officers of the
Company or any of its subsidiaries, shall be paid such compensation as the
Board from time to time may determine
<PAGE> 9
for his services as director or as a member of any committee appointed by or
pursuant to the authorization of the Board, and shall, in addition, be
reimbursed for such transportation and other expenses as shall be incurred by
him in the performance of his duties. Nothing in this Section shall preclude
any director from serving the Company in any other capacity and receiving
compensation therefor.
SECTION 3.15. Interest of Directors and Officers in Transactions. In the
absence of fraud, no contract or other transaction between the Company and one
or more of its directors, or between the Company and any other corporation,
firm, association or other entity in which one or more of its directors or
officers are directors, or have a substantial financial interest, shall be
either void or voidable, irrespective of whether such interested director or
directors are present at the meeting of the Board, or of a committee thereof,
which approves such contract or transaction and irrespective of whether his or
their votes are counted for such purpose:
(a) if the material facts as to such director's interest in such
contract or transaction and as to any such common directorship, officership or
financial interest are disclosed in good faith or known to the Board, or a
committee thereof, and the Board or committee approves such contract or
transaction by a vote sufficient for such purpose without counting the vote of
such interested director or, if the votes of the disinterested directors are
insufficient to constitute an act of the Board under Section 3.12 of these By-
laws, by unanimous vote of the disinterested directors; or
(b) if the material facts as to such director's interest in such
contract or transaction and as to any such common directorship, officership or
financial interest are disclosed in good faith or known to the shareholders
entitled to vote thereon, and such contract or transaction is approved by vote
of such shareholders.
If there was no such disclosure or knowledge, or if the vote of such
interested director was necessary for the approval of such contract or
transaction at a meeting of the Board or committee at which it was approved,
the Company may avoid the contract or transaction unless the party or parties
thereto shall establish affirmatively that the contract or transaction was
fair and reasonable as to the Company at the time it was approved by the
Board, a committee or the shareholders.
Notwithstanding the foregoing, no loan, except advances in connection
with indemnification, shall be made by the Company to any director unless it
is authorized by vote of the shareholders without counting any shares of the
director who would be the borrower.
<PAGE> 10
ARTICLE IV
EXECUTIVE COMMITTEE
SECTION 4.1. How Constituted. The Board, by resolution adopted by a
majority of the entire Board, may appoint an Executive Committee, which shall
consist of the Chairman, the President, and not less than one other director.
The Executive Committee shall serve at the pleasure of the Board.
SECTION 4.2. Term of Office. Each member of the Executive Committee,
provided he continues to be a director, shall, subject to the provisions of
this Article, continue in office as such member until the next annual meeting
of the Board and until his successor, if any, shall have been appointed, or
until he shall resign or shall have been removed in the manner hereinafter
provided.
SECTION 4.3. Vacancies. In case any vacancy shall exist in the Executive
Committee resulting from any cause whatsoever, the Board may fill such vacancy
by resolution adopted by a majority of the entire Board.
SECTION 4.4. Powers. While the Board is not in session, the Executive
Committee shall have and may exercise (unless the Board shall otherwise
determine) all the authority and powers of the Board in the management of the
business and affairs of the Company, including generally and without
limitation all powers conferred upon or vested in the Board by law, by the
Certificate of Incorporation of the Company, by these By-laws or otherwise,
excepting the powers conferred upon the Board by this Article, and except that
the Executive Committee shall not have authority as to the following matters:
(a) the submission to shareholders of any action for which shareholders'
authorization is required;
(b) the filling of vacancies in the Board or in the Executive Committee
or any other committee having any of the authority of the Board;
(c) the fixing of compensation of the directors for serving on the Board
or on the Executive Committee or any other committee;
(d) the amendment or repeal of these By-laws, or the adoption of new By-
laws;
(e) the amendment or repeal of any resolution of the Board which by its
terms is not amendable or repealable;
(f) the removal or indemnification of directors; or
(g) the taking of action which is expressly required by law to be taken
at a meeting of the Board or by a specified proportion of the directors.
<PAGE> 11
SECTION 4.5. Resignations. Any member of the Executive Committee may
resign at any time by giving written notice to the Board, the Chairman, the
President or the Secretary. Such resignation shall take effect at the time of
receipt of such notice or at any later time specified therein, and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 4.6. Removal. Any member of the Executive Committee, other than
a member who shall at the time be the Chairman or the President, may be
removed by the Board with or without cause at any time.
SECTION 4.7. Quorum and Manner of Acting. A majority of the members of
the Executive Committee shall be necessary to constitute a quorum, and an act
taken by vote of a majority of the members of the Committee present at the
time of the vote, if a quorum is present at such time, shall be the act of the
Committee. Members of the Executive Committee may participate in a meeting of
the Committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting. Any action required or permitted to be taken by the
Executive Committee may be taken without a meeting if all members of the
Committee consent in writing to the adoption of a resolution authorizing the
action. The resolution and the written consents by the members of the
Committee shall be filed with the minutes of the proceedings of the Committee.
Subject to the foregoing, and unless the Board shall otherwise decide, the
Executive Committee shall fix its rules of procedure, determine its action and
fix the time and place of its meetings. The Executive Committee shall keep a
record of its proceedings, which shall be at all times available to the
directors. All action taken by the Executive Committee shall be reported to
the Board at its next meeting.
SECTION 4.8. Alternate Members. The Board, by resolution adopted by a
majority of the entire Board, may appoint one or more directors as alternate
members of the Executive Committee, to serve, in accordance with the terms of
such resolution, as replacements for, and with the authority and powers of,
any members of that Committee absent from any meeting thereof.
ARTICLE V
OTHER COMMITTEES
SECTION 5.1. Other Committees of Directors. The Board, by resolution
adopted by a majority of the entire Board, may from time to time designate
from among its members such other committees consisting of three or more
directors as it may deem advisable and grant to any such committee, to the
extent provided in the resolution creating it, authority of the Board;
provided, however, that no such committee shall be granted any power or
authority withheld from the Executive Committee by Section 4.4 of these By-
laws. Each such committee shall serve at the pleasure of the Board. All
provisions of Sections 4.2, 4.3, 4.5, 4.6, 4.7 and 4.8 of these By-laws shall
apply to each such committee and the members thereof with the same force and
effect as if such committee were referred to in the text of such provisions in
each instance in which the Executive Committee is so referred to.
<PAGE> 12
SECTION 5.2. Other Committees of Directors, Officers and/or Other
Persons. The Board may appoint, or authorize the Chairman or, in his absence,
the President to appoint, from time to time, such other committees consisting
of directors, officers and/or other persons and having such powers, duties and
functions in or relating to the business and affairs of the Company as the
Board may determine. Each such committee and each member thereof shall serve
at the pleasure of the Board and, in the case of any committee appointed by
the Chairman or the President, at the pleasure of the Chairman or, in his
absence, of the President. A majority of all the members of any such
committee, or, in the case of any committee appointed by the Chairman or the
President, the Chairman or, in his absence, the President, may determine the
rules of order and procedure of such committee and the time and place of its
meetings, unless the Board shall otherwise provide.
ARTICLE VI
OFFICERS
SECTION 6.1. Number and Qualifications. The officers of the Company
shall be a Chairman, a President, one or more Vice Chairmen of the Board
(herein called Vice Chairman or Vice Chairmen), a Secretary, a Treasurer, and
such other officers, including but not by way of limitation Vice Presidents
(who may include one or more Executive Vice Presidents and Senior Vice
Presidents), a Comptroller and an Auditor, as may be elected or appointed in
accordance with the provisions of these By-laws. The Chairman, the President
and any Vice Chairmen shall be elected, and the other officers may, but need
not be, elected or appointed, from among the directors. One person may hold
any two or more offices and perform the duties thereof except those of
President and Secretary.
SECTION 6.2. Annually Elected Officers. The Chairman, the President, any
Vice Chairmen, any Vice Presidents, the Secretary, the Treasurer and such
other officers, if any, as the Board may determine, shall be elected by the
Board at each annual meeting. Each such officer shall hold office until the
next annual meeting of the Board and until his successor, if any, shall have
been elected and shall have qualified, or until his death, or until he shall
resign or shall be removed in the manner hereinafter provided.
SECTION 6.3. Additional Officers. The Board may from time to time elect
such additional officers (including Vice Chairmen and Vice Presidents) as it
shall deem advisable. The Board may also delegate to the Chairman or, in his
absence, the President the power to appoint such further officers as the Board
shall deem advisable. Each such officer shall serve at the pleasure of the
Board and, in the case of an officer appointed by the Chairman or the
President, also at the pleasure of the Chairman or, in his absence, of the
President.
SECTION 6.4. Removal. Any officer may be removed by the Board, and an
officer appointed by the Chairman or the President may be removed by the
Chairman or, in his absence, the President, at any time, or his authority may
be suspended by the Board or the Chairman or, in his absence, the President,
with or without cause (in the latter case without prejudice to his
<PAGE> 13
contract rights, if any). The election or appointment of an officer shall not
be deemed of itself to create contract rights.
SECTION 6.5. Resignations. Any officer may resign at any time by giving
written notice to the Board, the Chairman, the President or the Secretary.
Such resignation shall take effect at the date of the receipt of such notice
or any later date specified therein, and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 6.6. Vacancies. A vacancy from any cause in any office referred
to above may be filled at any time for the unexpired portion of the term, if
any, in the manner prescribed in these By-laws for regular election or
appointment to such office.
SECTION 6.7. Salaries. The salaries of the officers elected by the Board
shall be fixed from time to time by the Board. The salaries of the officers
appointed by the Chairman or the President shall be fixed from time to time by
the Board or the Chairman or, in his absence, the President. No officer shall
be prevented from receiving such salary by reason of the fact that he is also
a director of the Company.
SECTION 6.8. Powers and Duties. The officers of the Company shall have
such authority and perform such duties in the management of the Company as may
be prescribed by these By-laws or by the Board and, to the extent not so
prescribed, they shall have such authority and perform such duties in the
management of the Company, subject to the control of the Board, as generally
pertain to their respective offices.
The Chairman shall be the chief executive officer of the Company.
The Board may require any officer, agent or employee to give security for
the faithful performance of his duties.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 7.1. Indemnification. Except to the extent expressly prohibited
by the New York Business Corporation Law, the Company shall indemnify any
person made or threatened to be made a party to any action or proceeding,
whether civil or criminal, by reason of the fact that such person or such
person's testator or intestate is or was a director or officer of the Company,
or serves or served at the request of the Company any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
in any capacity, against judgments, fines, penalties, amounts paid in
settlement and reasonable expenses, including attorneys' fees, incurred in
connection with such action or proceeding, or any appeal therein; provided
that no such indemnification shall be made if a judgment or other final
adjudication adverse to such person established that his or her acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that he or she
personally gained in fact a financial profit or other advantage to which he or
she was not legally entitled; and provided further that no such
indemnification shall be required with respect to any
<PAGE> 14
settlement or other nonadjudicated disposition of any threatened or pending
action or proceeding unless the Company has given its prior consent to such
settlement or other disposition.
The Company may advance or promptly reimburse upon request any person
entitled to indemnification hereunder for all expenses, including attorneys'
fees, reasonably incurred in defending any action or proceeding in advance of
the final disposition thereof upon receipt of an undertaking by or on behalf
of such person to repay such amount if such person is ultimately found not to
be entitled to indemnification or, where indemnification is granted, to the
extent the expenses so advanced or reimbursed exceed the amount to which such
person is entitled; provided, however, that such person shall cooperate in
good faith with any request by the Company that common counsel be utilized by
the parties to an action or proceeding who are similarly situated unless to do
so would be inappropriate due to actual or potential differing interests
between or among such parties.
Nothing herein shall limit or affect any right of any person otherwise
than hereunder to indemnification or expenses, including attorneys' fees,
under any statute, rule, regulation, certificate of incorporation, by-law,
insurance policy, contract or otherwise.
Anything in these By-laws to the contrary notwithstanding, no elimination
of this By-law, and no amendment to this By-law adversely affecting the right
of any person to indemnification or advancement of expenses hereunder, shall
be effective until the 60th day following notice to such person of such
action, and no elimination of or amendment to this By-law shall deprive any
person of his or her rights hereunder arising out of alleged or actual
occurrences, acts or failures to act prior to such 60th day.
The Company shall not, except by elimination of or amendment to this By-
law in a manner consistent with the preceding paragraph, take any corporate
action or enter into any agreement which prohibits, or otherwise limits the
rights of any person to, indemnification in accordance with the provisions of
this By-law. The indemnification of any person provided by this By-law shall
continue after such person has ceased to be a director or officer of the
Company and shall inure to the benefit of such person's heirs, executors,
administrators and legal representatives.
The Company is authorized to enter into agreements with any of its
directors or officers extending rights to indemnification and advancement of
expenses to such person to the fullest extent permitted by applicable law, but
the failure to enter into any such agreement shall not affect or limit the
rights of such person pursuant to this By-law, it being expressly recognized
hereby that all directors or officers of the Company by serving as such after
the adoption hereof, are acting in reliance hereon and that the Company is
estopped to contend otherwise.
In case any provision in this By-law shall be determined at any time to
be unenforceable in any respect, the other provisions shall not in any way be
affected or impaired thereby, and the affected provision shall be given the
fullest possible enforcement in the circumstances, it being the intention of
the Company to afford indemnification and advancement of expenses to its
directors and officers, acting in such capacities or in the other capacities
mentioned herein, to the fullest extent permitted by law.
<PAGE> 15
For purposes of this By-law, the Company shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person of his or her duties to the Company also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan, and excise taxes assessed on a person with respect
to any employee benefit plan pursuant to applicable law shall be considered
indemnifiable expenses. For purposes of this By-law, the terms "Company"
shall include any legal successor to the Company, including any corporation
which acquires all or substantially all of the assets of the Company in one or
more transactions.
A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in the first paragraph of this By-law shall be indemnified as authorized in
such paragraph. Except as provided in the preceding sentence and unless
ordered by a court, indemnification under this By-law shall be made by the
Company if, and only if, authorized in the specific case:
(1) By the Board of Directors acting by a quorum consisting of directors
who are not parties to such action or proceeding upon a finding that the
director or officer has met the standard of conduct set forth in the first
paragraph of this By-law, or,
(2) If such a quorum is not obtainable or, even if obtainable, a quorum
of disinterested directors so directs;
(a) by the Board of Directors upon the opinion in writing of independent
legal counsel that indemnification is proper in the circumstances because the
standard of conduct set forth in the first paragraph of this By-law has been
met by such director or officer; or
(b) by the shareholders upon a finding that the director or officer has
met the applicable standard of conduct set forth in such paragraph.
If any action with respect to indemnification of directors and officers
is taken by way of amendment of these By-laws, resolution of directors, or by
agreement, the Company shall, not later than the next annual meeting of
shareholders, unless such meeting is held within three months from the date of
such action and, in any event, within fifteen months from the date of such
action, mail to its shareholders of record at the time entitled to vote for
the election of directors a statement specifying the action taken.
<PAGE> 16
ARTICLE VIII
CONTRACTS, CHECKS, DRAFTS, ETC.
SECTION 8.1. Contracts, etc. Except as otherwise provided in these By-
laws or by law, all deeds, bonds, mortgages, contracts and other instruments
to be executed in the name and on behalf of the Company, either for its own
account or in a fiduciary or other capacity, shall be signed by the Chairman,
the President, a Vice Chairman, an Executive Vice President, a Senior Vice
President, a Vice President, the Treasurer, or the Comptroller, or any other
officer or officers or agent or agents of the Company designated for that
purpose by the Board or by the Chairman, the President, a Vice Chairman, an
Executive Vice President, a Senior Vice President or a Vice President, and the
seal of the Company shall if appropriate be affixed hereto by any of such
officers or the Secretary or any Assistant Secretary.
SECTION 8.2. Checks, Drafts, etc. Except as otherwise provided in these
By-laws or by law, all checks, drafts, bills of exchange and other orders for
the payment of money, and all letters of credit, promissory notes and other
instruments obligating the Company for the payment of money, shall be signed
on behalf of the Company in such manner and by such person or persons as from
time to time shall be determined by the Board. Except as the Board may
otherwise prescribe, the Chairman, the President, a Vice Chairman, an
Executive Vice President, a Senior Vice President, a Vice President, the
Treasurer, the Secretary, the Comptroller, an Assistant Vice President if any,
any Assistant Treasurer or any Assistant Secretary, or any other officer or
officers or agent or agents to whom such power may be delegated by the Board
or by the Chairman, the President, a Vice Chairman, an Executive Vice
President, a Senior Vice President or a Vice President, may sign on behalf of
the Company all checks, drafts, bills of exchange, letters of credit,
promissory notes and other instruments obligating the Company for the payment
of money, and endorse and deliver for deposit, collection or credit for
account of the Company any bill of exchange, draft, check or other order for
the payment of money, or any note or other instrument for the payment of
money, or any bill of lading, warehouse receipt, insurance policy or other
commercial document requiring endorsement for collection or endorsement on
behalf of the Company.
SECTION 8.3. Securities of 0ther Corporations. Securities of other
corporations held by the Company may be voted by any officer designated by the
Board and, in the absence of any such designation, by the Chairman, the
President, a Vice Chairman, a Vice President, the Secretary, the Treasurer or
the Comptroller.
ARTICLE IX
SHARES OF STOCK
SECTION 9.1. Certificates for Shares of Stock. Each certificate for a
share or shares of stock of the Company shall be in such form as shall be
approved by the Board, shall be signed by the Chairman, the President, a Vice
Chairman, or a Vice President, and by the Secretary, the Treasurer, an
Assistant Secretary or an Assistant Treasurer, and shall be sealed with the
seal of the Company or a facsimile thereof. The signatures of the officers
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar
<PAGE> 17
other than the Company itself or its employee. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer before such certificate is issued, it may
nevertheless be issued by the Company with the same effect as if he were such
officer at the date of its issue.
If the Company is authorized to issue shares of more than one class, each
certificate representing shares issued by the Company shall set forth upon the
face or back of the certificate, or shall state that the Company will furnish
to any shareholder upon request and without charge, a full statement of the
designation, relative rights, preferences and limitations of the shares of
each class of shares authorized to be issued and the designation, relative
rights, preferences and limitations of each series of any class of preferred
shares authorized to be issued so far as the same have been fixed and the
authority of the Board to designate and fix the relative rights, preferences
and limitations of other series.
Each certificate representing shares shall state upon the face thereof:
(a) that the Company is formed under the laws of the State of New York;
(b) the name of the person or persons to whom issued; and
(c) the number and class of shares, and the designation of the series,
if any,
which such certificate represents.
SECTION 9.2. Transfer of Shares of Stock. A transfer of shares of stock
of the Company shall be made on the record of shareholders of the Company
after satisfaction of all legal prerequisites to the Company's duty to
register such transfer, including the surrender of the certificate therefor
which shall be canceled when the new certificate is issued.
SECTION 9.3. Registered Holders. The Company shall be entitled to treat
and shall be protected in treating the persons in whose names shares or any
warrants, rights or options stand on the record of shareholders, warrant
holders, rights holders or option holders, as the case may be, as the owners
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to, or interest in, any such share, warrant, right or option on
the part of any other person, whether or not the Company shall have notice
thereof, except as expressly provided otherwise by the statutes of the State
of New York.
SECTION 9.4. Lost, Stolen or Destroyed Share Certificates. No
certificate for shares of the Company shall be issued in place of any
certificate alleged to have been lost, destroyed or wrongfully taken, except,
if and to the extent required by the Board, upon:
(a) production of evidence of loss, destruction or wrongful taking;
(b) delivery of a bond indemnifying the Company and its agents against
any claim that may be made against it or them on account of the alleged loss,
destruction or wrongful taking of the replaced certificate or the issuance of
the new certificate;
<PAGE> 18
(c) payment of the expenses of the Company and its agents incurred in
connection with the issuance of the new certificate; and
(d) compliance with such other reasonable requirements as may be imposed.
SECTION 9.5. Record Date. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of the
shareholders or any adjournment thereof, or to express consent to or dissent
from any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividend or the allotment of
any rights, or for the purpose of any other action, the Board may fix, in
advance, a date not more than fifty days and not less than ten days before the
date of such meeting, and not more than fifty days prior to any other action,
as the record date for any such determination of shareholders. Upon
adjournment of any meeting, the Board may but shall not be required to fix a
new record date.
If a record date for any such determination of shareholders is not fixed
by the Board, then, the record date for such determination shall be as
provided by law.
SECTION 9.6. Regulations, Transfer Agents and Registrars. The Board may
make such further rules and regulations as it may deem expedient, not
inconsistent with these By-laws or with the Certificate of Incorporation of
the Company, concerning the issue, transfer and registration of certificates
for shares of stock of the Company. It may appoint one or more transfer
agents and one or more registrars of transfers, and may require all
certificates of stock to bear the signature of either or both.
ARTICLE X
SEAL
SECTION 10.1. Seal. The Board may adopt a corporate seal, alter such
seal at pleasure, and authorize it to be used by causing it or a facsimile to
be affixed or impressed or reproduced in any other manner.
ARTICLE XI
FISCAL YEAR
SECTION 11.1. Fiscal Year. The fiscal year of the Company shall be the
calendar year.
ARTICLE XII
BOOKS
SECTION 12.1. Books. The Company shall keep correct and complete books
and records of account and shall keep minutes of the proceedings of its
shareholders, the Board and the Executive Committee if any. There shall be
kept at the principal office of the Company or at the office of its transfer
agent or registrar, if any, in the State of New York, a record containing the
names and addresses of all shareholders of the Company, the number of shares
held by each
<PAGE> 19
and the dates when they respectively became the owners of record thereof. Any
of the foregoing books, records or minutes may be in legible form or in any
other form capable of being converted into legible form within a reasonable
time.
The Board shall have power to determine from time to time, subject to
the laws of the State of New York, whether and to what extent and at what
times and places and under what conditions and regulations the accounts,
books, records or other documents of the Company, or any of them, shall be
open to inspection, and no creditor, security holder or other person shall
have any right to inspect any account, book, record or other document of the
Company, except as conferred by the laws of the State of New York or these By-
laws, unless and until authorized to do so by resolution of the Board or of
the shareholders.
ARTICLE XIII
AMENDMENTS
SECTION 13.1. Amendments. By-laws of the Company may be adopted, amended
or repealed by vote of the holders of the shares at the time entitled to vote
in the election of any directors. By-laws may also be adopted, amended or
repealed by the Board, by resolution adopted by a majority of the entire
Board, but any By-law adopted by the Board may be amended or repealed by the
shareholders entitled to vote thereon as hereinabove provided.
If any By-law regulating an impending election of directors is adopted,
amended or repealed by the Board, there shall be set forth in the notice of
the next meeting of shareholders for the election of directors the By-law so
adopted, amended or repealed, together with a concise statement of the changes
made.
EXHIBIT 12
<TABLE>
THE BANK OF NEW YORK COMPANY, INC.
Ratios of Earnings to Fixed Charges and
Ratios of Earnings to Combined Fixed Charges,
and Distributions on Trust Preferred Securities
(Dollars in millions)
<CAPTION>
Three Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
EARNINGS
- --------
Income Before Income Taxes $ 528 $ 476
Fixed Charges, Excluding Interest on Deposits 122 123
------ ------
Income Before Income Taxes and Fixed Charges
Excluding Interest on Deposits 650 599
Interest on Deposits 317 325
------ ------
Income Before Income Taxes and Fixed Charges,
Including Interest on Deposits $ 967 $ 924
====== ======
FIXED CHARGES
- -------------
Interest Expense, Excluding Interest
on Deposits $ 113 $ 114
One-Third Net Rental Expense* 9 9
------- -------
Total Fixed Charges, Excluding Interest on
Deposits 122 123
Interest on Deposits 317 325
------ ------
Total Fixed Charges, Including Interest on
Deposits $ 439 $ 448
====== ======
DISTRIBUTION ON TRUST PREFERRED
SECURITIES, PRE-TAX BASIS $ 28 $ 20
- -------------------------------
====== ======
EARNINGS TO FIXED CHARGES RATIOS
- --------------------------------
Excluding Interest on Deposits 5.33x 4.87x
Including Interest on Deposits 2.20 2.06
EARNINGS TO COMBINED FIXED CHARGES,
DISTRIBUTION ON TRUST PREFERRED SECURITIES,
& PREFERRED STOCK DIVIDENDS RATIOS
- -------------------------------------------
Excluding Interest on Deposits 4.33 4.19
Including Interest on Deposits 2.07 1.97
<FN>
*The proportion deemed representative of the interest factor.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9<LEGEND>This schedule contains summary financial information
extracted from the Bank of New York Company, Inc.'s Form 10-Qfor the period
ended March 31, 1999. d is qualified entirely by reference to such Form 10-Q.
</LEGEND>
<CIK> 0000009626
<NAME> THE BANK OF NEW YORK COMPANY, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
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<INT-BEARING-DEPOSITS> 4,785
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<TOTAL-ASSETS> 64,917
<DEPOSITS> 44,843
<SHORT-TERM> 6,821
<LIABILITIES-OTHER> 3,045
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0
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