<PAGE>
Rule No. 424(b)2
File No. 33-50395
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 15, 1993)
6,000,000 Depositary Shares
LOGO Bankers Trust New York Corporation
Each Representing a One-Hundredth Interest in a Share of Adjustable Rate
Cumulative Preferred Stock, Series R ($2,500 Liquidation Preference)
---------------
Each of the depositary shares offered hereby (the "Depositary Shares")
represents a one-hundredth interest in a share of the Corporation's
Adjustable Rate Cumulative Preferred Stock, Series R ($2,500
Liquidation Preference) (the "Series R Preferred Stock") deposited
with Harris Trust Company of New York, as depositary (the
"Depositary"), and, through the Depositary, will entitle the
holder thereof to all proportional rights and preferences of
the Series R Preferred Stock (including dividend, voting,
redemption and liquidation rights). The proportionate
liquidation preference of each Depositary Share will be
$25.00. See "Certain Terms of the Depositary Shares"
in this Prospectus Supplement and "Depositary
Shares" in the Prospectus accompanying this
Prospectus Supplement.
---------------
Dividends on the Series R Preferred Stock will be cumulative from the date
of original issuance and will be payable quarterly on March 1, June 1,
September 1 and December 1 of each year. All dividends payable on shares
of the Series R Preferred Stock to the Depositary, as record holder
of the Series R Preferred Stock, will be distributed to the record
holders of the Depositary Shares representing such Series R
Preferred Stock in accordance with the Deposit Agreement. See
"Depositary Shares--Dividends and Other Distributions" in
the Prospectus accompanying this Prospectus Supplement.
---------------
The dividend rate for the dividend period ending on November 30, 1994 will
be 6.42% per annum, which is equivalent to $.4458 per Depositary Share.
Thereafter, the dividend rate on the Series R Preferred Stock will be
equal to 84.5% of the Effective Rate (as defined below) in effect
from time to time, but in no event less than 4 1/2% or more
than 10 1/2% per annum. The "Effective Rate" for each
quarterly dividend period will be the highest of the
"Treasury Bill Rate," the "Ten Year Constant Maturity
Rate" and the "Thirty Year Constant Maturity Rate"
determined in advance of such dividend period.
See "Certain Terms of the Series R Preferred
Stock--Dividend Rights."
---------------
The Series R Preferred Stock will be redeemable, in whole or in
part, at the option of the Corporation on or after
September 1, 1999 at $2,500 per share (which is
equivalent to $25 per Depositary
Share) plus accrued and unpaid
dividends to the redemption date. See
"Certain Terms of the Series R
Preferred Stock--Redemption."
---------------
Application will be made to list the Depositary Shares on the New York Stock
Exchange. See "Underwriting."
---------------
THE DEPOSITARY SHARES AND SERIES R PREFERRED STOCK ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
PRICE $25 A DEPOSITARY SHARE
---------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNT AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2)(3) CORPORATION(1)(3)(4)
--------- ----------------- --------------------
<S> <C> <C> <C>
Per Depositary Share....... $25.00 $.7875 $24.2125
Total...................... $150,000,000 $4,725,000 $145,275,000
</TABLE>
- -------
(1) Plus accrued dividends, if any, from the date of original issuance.
(2) The Corporation has agreed to indemnify the Underwriters against
certain liabilities, including certain liabilities under the Securities
Act of 1933. See "Underwriting."
(3) The underwriting discount will be $.50 per Depositary Share with
respect to any Depositary Shares sold to certain institutions.
Therefore, to the extent of any such sales to such institutions, the
actual total underwriting discount will be less than, and the actual
total proceeds to the Corporation will be greater than, the amounts
shown in the table above.
(4) Before deduction of expenses payable by the Corporation estimated at
$100,000.
---------------
The Depositary Shares are offered, subject to prior sale, when, as and if
accepted by the Underwriters named herein, and subject to approval of certain
matters by Sullivan & Cromwell, counsel for the Underwriters. It is expected
that delivery of the Depositary Shares will be made on or about August 22,
1994, at the offices of Morgan Stanley & Co. Incorporated, New York, New York,
against payment therefor in New York Clearing House funds.
---------------
MORGAN STANLEY & CO.
Incorporated
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
SALOMON BROTHERS INC
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
BT SECURITIES CORPORATION
KIDDER, PEABODY & CO.
Incorporated
August 12, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
BANKERS TRUST NEW YORK CORPORATION
GENERAL
Bankers Trust New York Corporation is a bank holding company, incorporated
under the laws of the State of New York in 1965. At June 30, 1994, the
Corporation had consolidated total assets of $103.6 billion. The Corporation's
principal banking subsidiary is Bankers Trust Company ("Bankers"). Bankers,
founded in 1903, is among the largest commercial banks in New York City and the
United States, based on consolidated total assets. The Corporation concentrates
its financial and managerial resources on selected markets and services its
clients by meeting their needs for financing, advisory, processing and
sophisticated risk management solutions. The core organizational units of the
Corporation are the Global Investment Bank, Global Markets Proprietary, Global
Investment Management, Global Emerging Markets and Global Assets. Other
business activities include real estate finance and principal investing. The
Corporation also conducts its own proprietary operations. Among the
institutional market segments served are corporations, banks, other financial
institutions, governments and agencies, retirement plans, not-for-profit
organizations, wealthy individuals, foundations, private companies and
individual investors. Bankers originates loans and other forms of credit,
accepts deposits, arranges financings and provides numerous other commercial
banking and financial services. Bankers provides a broad range of financial
advisory services to its clients. It also engages in the proprietary trading of
currencies, securities, derivatives and commodities.
The Corporation is a legal entity separate and distinct from its
subsidiaries, including Bankers. There are various legal limitations governing
the extent to which the Corporation's banking subsidiaries may extend credit,
pay dividends or otherwise supply funds to, or engage in transactions with, the
Corporation or certain of its other subsidiaries. The rights of the Corporation
to participate in any distribution of assets of any subsidiary upon its
dissolution, winding-up, liquidation or reorganization or otherwise are subject
to the prior claims of creditors of that subsidiary, except to the extent that
the Corporation may itself be a creditor of that subsidiary and its claims are
recognized. Claims on the Corporation's subsidiaries by creditors other than
the Corporation include long-term debt and substantial obligations with respect
to deposit liabilities, securities sold, not yet purchased, federal funds
purchased, securities sold under repurchase agreements and commercial paper, as
well as various other liabilities.
The Corporation's principal executive offices are located at 280 Park Avenue,
New York, New York 10017, and its telephone number is (212) 250-2500.
CONSOLIDATED RATIOS OF EARNINGS TO COMBINED FIXEDCHARGES AND PREFERRED STOCK
DIVIDEND REQUIREMENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS
------------------------ ENDED
1989 1990 1991 1992 1993 JUNE 30, 1994
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Excluding Interest on Deposits........... 0.67 1.28 1.37 1.41 1.69 1.32
Including Interest on Deposits........... 0.82 1.15 1.21 1.26 1.47 1.25
</TABLE>
For purposes of computing these consolidated ratios, earnings represent
income (loss) before income taxes, cumulative effects of accounting changes and
equity in undistributed income of unconsolidated subsidiaries and affiliates,
plus fixed charges excluding capitalized interest. Fixed charges represent all
interest expense (ratios are presented both excluding and including interest on
deposits), the portion of net rental expense that is deemed representative of
the interest factor, the amortization of debt issuance expense and capitalized
interest. Fixed charges are then combined with preferred stock dividend
requirements, adjusted to a pretax basis, on the outstanding preferred stock.
For the year ended December 31, 1989, earnings, as defined, did not cover
combined fixed charges and preferred stock dividend requirements, excluding and
including interest on deposits, by $843 million as a result of the 1989 special
provision for refinancing country credit losses of $1.6 billion.
S-2
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION
The following selected consolidated financial data at and for each of the
three years in the period ended December 31, 1993 has been derived from and is
qualified in its entirety by the detailed financial information and
consolidated financial statements of the Corporation included in its Annual
Report on Form 10-K for the year ended December 31, 1993 ("Form 10-K"), which
is incorporated herein by reference.
The consolidated financial data at and for each of the six-month periods
ended June 30, 1993 and 1994 is unaudited but, in the opinion of management,
all material adjustments necessary for a fair presentation of its financial
position at such dates and its results of operations for such periods have been
made. All such adjustments were of a normal recurring nature, except for the
cumulative effects of accounting changes. The results for the six months ended
June 30, 1994 are not necessarily indicative of the results for the full year
or any other interim period.
<TABLE>
<CAPTION>
AT OR FOR THE
AT OR FOR THE SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- -----------------
1991 1992 1993 1993 1994
------- ------- ------- ------- --------
($ IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATED STATEMENT
OF INCOME:
Interest revenue................ $4,322 $4,219 $4,436 $2,088 $2,466
Interest expense................ 3,585 3,072 3,122 1,489 1,787
------- ------- ------- ------- --------
Net interest revenue............ 737 1,147 1,314 599 679
Provision for credit losses..... 238 225 93 53 --
------- ------- ------- ------- --------
Net interest revenue after pro-
vision for credit losses....... 499 922 1,221 546 679
Noninterest revenue............. 2,522 2,331 3,364 1,566 1,142
Noninterest expenses............ 2,187 2,347 3,035 1,430 1,329
------- ------- ------- ------- --------
Income before income taxes and
cumulative effects of account-
ing changes.................... 834 906 1,550 682 492
Income taxes.................... 167 267 480 201 147
------- ------- ------- ------- --------
Income before cumulative effects
of accounting changes.......... 667 639 1,070 481 345
Cumulative effects of accounting
changes (1).................... -- 446 (75) (75) --
------- ------- ------- ------- --------
Net income...................... $ 667 $1,085 $ 995 $ 406 $ 345
======= ======= ======= ======= ========
Net income applicable to common
stock.......................... $ 633 $1,055 $ 972 $ 394 $ 331
======= ======= ======= ======= ========
PER COMMON SHARE DATA:
Primary earnings per share
Income before cumulative effects
of accounting changes.......... $7.65 $7.23 $12.40 $5.54 $3.99
Net income...................... $7.65 $12.53 $11.51 $4.65 $3.99
Fully diluted earnings per share
Income before cumulative effects
of accounting changes.......... $7.65 $7.22 $12.29 $5.53 $3.99
Net income...................... $7.65 $12.51 $11.41 $4.64 $3.99
Cash dividends declared......... $2.605 $2.88 $3.24 $1.56 $1.80
--as a percentage of net income
(2)............................ 34% 40% 26% 28% 45%
Book value (3).................. $34.93 $43.23 $51.90 $45.66 $53.37
PROFITABILITY RATIOS:
Return on average common stock-
holders' equity (2)............ 23.10% 19.52% 26.33% 24.93% 15.36%
Return on average total assets
(2)............................ 1.09% .86% 1.25% 1.17% .66%
CONSOLIDATED BALANCES, END OF PE-
RIOD:
Trading assets.................. $23,580 $29,908 $48,276 $39,972 $54,669
Loans........................... $17,047 $17,318 $15,200 $16,101 $13,223
Total assets.................... $63,959 $72,886 $92,082 $83,987 $103,639
Deposits........................ $22,834 $25,071 $22,776 $24,519 $20,462
Securities sold under repurchase
agreements..................... $12,343 $17,451 $23,834 $25,017 $21,509
Other short-term borrowings..... $13,052 $11,779 $18,992 $12,008 $19,188
Long-term debt.................. $3,081 $3,992 $5,597 $4,463 $5,582
Common stockholders' equity..... $2,912 $3,621 $4,284 $3,836 $4,343
Total stockholders' equity...... $3,412 $4,121 $4,534 $4,086 $4,793
CONSOLIDATED CAPITAL RATIOS, END
OF PERIOD:
Common stockholders' equity to
total assets................... 4.55% 4.97% 4.65% 4.57% 4.19%
Total stockholders' equity to
total assets................... 5.33% 5.65% 4.92% 4.87% 4.62%
Risk-based capital ratios (1992
year-end guidelines) (4)
Tier 1 Capital.................. 6.11% 7.75% 8.50% 8.12% 8.41%
Total Capital................... 10.86% 13.64% 14.46% 14.10% 13.82%
Leverage Ratio.................. 5.15% 6.05% 6.28% 5.84% 5.97%
EMPLOYEES........................ 12,088 12,917 13,571 13,406 13,990
</TABLE>
- --------
(1) The Corporation adopted the accounting standards for postretirement
benefits other than pensions (SFAS 106) and postemployment benefits (SFAS
112) effective January 1, 1993, and for income taxes (SFAS 109) effective
January 1, 1992.
(2) These figures exclude the cumulative effects of accounting changes recorded
in 1992 and 1993.
(3) This calculation includes the effect of common shares issuable under
deferred stock awards.
(4) The 1992 ratios were not restated in connection with the retroactive
adoption of SFAS 109. At both June 30, 1994 and December 31, 1993, all three
regulatory capital ratios excluded any benefit from the adoption of SFAS 115.
S-3
<PAGE>
CONSOLIDATED RESULTS OF OPERATIONS
The Corporation earned $345 million, or $3.99 primary earnings per share, for
the first six months of 1994. For the six months ended June 30, 1993, income
before cumulative effects of accounting changes was $481 million, or $5.54
primary earnings per share.
Effects of Accounting Changes
On January 1, 1994, the Corporation adopted FASB Interpretation No. 39,
"Offsetting of Amounts Related to Certain Contracts." The Interpretation
requires that unrealized gains and losses on swaps, forwards, options and
similar contracts be recognized as assets and liabilities, except where such
gains and losses arise from contracts covered by qualifying master netting
agreements. It was the Corporation's former policy to record such unrealized
gains and losses on a net basis on the balance sheet. As the result of this
adoption, at June 30, 1994 the Corporation's consolidated total assets and
total liabilities each increased by approximately $14 billion. Effective
January 1, 1993, the Corporation adopted Statements of Financial Accounting
Standards ("SFAS") for postretirement benefits other than pensions (SFAS 106)
and postemployment benefits (SFAS 112). In adopting SFAS 106 and SFAS 112 the
Corporation recorded charges to earnings of $100 million and $7 million,
respectively (or $70 million and $5 million, respectively, net of income
taxes), in the first quarter of 1993 for the cumulative effects of these
changes in accounting principles.
Business Functions Analysis
Because the Corporation's business is complex in nature and its operations
are highly integrated, it is impractical to segregate the respective
contributions of the business functions with precision. For example, the Client
Advisory function is difficult to split from the Client Finance function, since
most complex financings include both an element of advice and the arrangement
of credit for the client. Further, transactions undertaken for purposes of
Client Financial Risk Management may contain an element of Client Finance or
Trading and Positioning. Finally, the Trading and Positioning function serves
as an element of support for client-based activities. As a result, estimates
and subjective judgments have been made to apportion revenue and expenses among
the business functions. In addition, certain revenue and expenses have been
excluded from the business functions because, in the opinion of management,
they could not be reasonably allocated or because their attribution to a
particular function would be distortive.
The following table breaks down earnings on the basis of the Corporation's
five business functions, which represent its core business activities and are
an important tool for analyzing the results of operations. Detailed definitions
of these categories, as well as a discussion of the methodology used to
calculate their results, appear in the 1993 Annual Report on Form 10-K.
Business Functions Profitability
(Income Before Cumulative Effects of Accounting Changes--in millions)
<TABLE>
<CAPTION>
SIX
MONTHS
----------
SECOND FIRST
QTR. QTR. INCREASE INCREASE
1994 1994 (DECREASE) 1994 1993 (DECREASE)
------ ----- ---------- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Client Finance.................. $ 36 $ 43 $ (7) $ 79 $ 30 $ 49
Client Advisory................. 23 30 (7) 53 37 16
Client Financial Risk Manage-
ment........................... 50 114 (64) 164 161 3
Client Transaction Processing... 26 32 (6) 58 37 21
Trading and Positioning......... 52 (49) 101 3 226 (223)
Unallocated..................... (6) (6) -- (12) (10) (2)
---- ---- ---- ---- ---- -----
Total......................... $181 $164 $ 17 $345 $481 $(136)
==== ==== ==== ==== ==== =====
</TABLE>
S-4
<PAGE>
Client Finance--Client Finance income in the second quarter of 1994 was $36
million, a $7 million decrease from the strong first quarter results of $43
million. Income for the first half of 1994 rose to $79 million, more than
double the result from the comparable half-year period in 1993. The first half
growth was principally attributable to strong performance in loan syndications
and high yield bond underwritings, accompanied by a decrease in the credit cost
related to the loan portfolio.
Client Advisory--Client Advisory income declined $7 million in the second
quarter of 1994, to $23 million. Income rose over 40 percent in the first half
of 1994, to $53 million, versus the comparable half-year period in 1993 as the
majority of products earned higher revenue, led by funds management products in
Australia. Additionally, both the private banking and core investment
management areas also experienced improved revenue performance, offset by
increased staffing costs. Performance-based funds management fees were down
during the second quarter relative to both the first quarter and comparable
1993 periods. This function also produced improved results at the Corporation's
Chilean insurance subsidiary, Consorcio Nacional de Seguros S.A., compared to
the prior year's results.
Client Financial Risk Management--Client Financial Risk Management income
during the second quarter of 1994 slowed by 56 percent to $50 million, compared
to the record results achieved in the first quarter, reflecting the generally
adverse conditions and uncertain outlook prevailing in the United States and
European markets, which tended to curtail client demand in those markets.
Income during the first half of 1994 was $164 million, just above the results
achieved in the comparable half-year period in 1993. Results by product were
all generally comparable with 1993 levels. The demand for risk management
products during this period increased substantially over 1993 levels in the
emerging markets of Southeast Asia and Latin America.
Client Transaction Processing--Client Transaction Processing income declined
to $26 million during the second quarter of 1994, from $32 million in the first
quarter. Transaction processing volumes generally remained at levels consistent
with the first quarter of 1994 and above the comparable 1993 periods. Although
revenues declined slightly in the second quarter of 1994, profit margins in
core cash management and securities custody and clearance activities remained
generally improved relative to the comparable 1993 periods, as expenses were
held relatively flat. The period also benefited from slightly higher earnings
on balances generated in the business. As a result, Client Transaction
Processing income increased 57 percent over the reported 1993 half-year levels,
to $58 million.
Trading and Positioning--Although the extremely difficult market conditions
which prevailed early in the year have abated, the trading environment has
continued to remain generally unfavorable in the second quarter of 1994. In
this difficult environment, the Corporation posted Trading and Positioning
income of $52 million in the second quarter of 1994 including the significant
positive impact of the Brazilian Brady bonds and Past-Due Interest bonds sales,
versus the first quarter loss of $49 million. As a result, the Corporation
posted year-to-date Trading and Positioning income of $3 million.
S-5
<PAGE>
Revenue
The table below shows net interest revenue, average balances and average
rates. The tax equivalent adjustment is made to present the revenue and yields
on certain assets, primarily tax-exempt securities and loans, as if such
revenue were taxable.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------
1994 1993
-------- --------
<S> <C> <C>
Net Interest Revenue (in millions)
Book basis............................................... $ 679 $ 599
Tax equivalent adjustment................................ 42 35
-------- --------
Fully taxable basis...................................... $ 721 $ 634
======== ========
Average Balances (in millions)
Interest-earning assets.................................. $ 77,553 $ 75,317
Interest-bearing liabilities............................. 74,547 68,024
-------- --------
Earning assets financed by noninterest-bearing funds..... $ 3,006 $ 7,293
======== ========
Average Rates (fully taxable basis)
Yield on interest-earning assets......................... 6.52% 5.68%
Cost of interest-bearing liabilities..................... 4.83 4.41
-------- --------
Interest rate spread .................................... 1.69 1.27
Contribution of noninterest-bearing funds................ .18 .43
-------- --------
Net interest margin...................................... 1.87% 1.70%
======== ========
</TABLE>
Net interest revenue was $679 million for the first six months of 1994, up
$80 million, or 13 percent, from the first half of 1993. This increase was
primarily attributable to an improved interest rate spread, partially offset by
an increase in average interest-bearing liabilities.
The Corporation views trading revenue and trading-related net interest
revenue in combination, as quantified below (in millions):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------
1994 1993
-------- --------
<S> <C> <C>
Trading Revenue......................................... $138 $751
Trading-Related Net Interest Revenue.................... 298 239
-------- --------
Total................................................. $436 $990
======== ========
</TABLE>
For the six months ended June 30, 1994, the combined trading revenue and
trading-related net interest revenue decreased $554 million. This decline was
primarily attributable to lower revenue from proprietary trading and
positioning activities, as generally rising interest rates and related
volatility in the United States and European markets made positioning
activities difficult during the first half of 1994. The main areas of reduced
revenue were sovereign bond trading, foreign exchange trading, and the trading
of emerging markets debt and equity issues. Also impacting trading revenue and
net interest revenue for the six months ended June 30, 1994, as mentioned
above, was the sale of Brazilian Brady bonds and Past-Due Interest bonds.
S-6
<PAGE>
Shown below is a comparison of the components of noninterest revenue (in
millions).
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------- INCREASE
1994 1993 (DECREASE)
-------- -------- ----------
<S> <C> <C> <C>
Trading........................................ $ 138 $ 751 $(613)
Fiduciary and funds management................. 375 335 40
Fees and commissions
Corporate finance fees....................... 223 180 43
Service charges on deposit accounts.......... 44 47 (3)
Acceptance and letters of credit commissions. 21 25 (4)
Other........................................ 89 68 21
-------- -------- -----
Total fees and commissions................. 377 320 57
-------- -------- -----
Securities available for sale gains............ 23 -- 23
Investment securities gains ................... -- 12 (12)
Other noninterest revenue
Insurance premiums........................... 96 65 31
Net revenue from equity investment transac-
tions, including write-offs................. 55 58 (3)
Other........................................ 78 25 53
-------- -------- -----
Total other noninterest revenue............ 229 148 81
-------- -------- -----
Total noninterest revenue.................. $1,142 $1,566 $(424)
======== ======== =====
</TABLE>
Fiduciary and funds management revenue of $375 million increased $40 million,
or 12 percent, from the first six months of 1993. Continued growth in private
banking assets under management contributed significantly to this increase.
Increases were also recorded by most other business activities within this
revenue category, except for performance-based fees from foreign exchange funds
managed, which declined during this period.
Fees and commissions increased $57 million, or 18 percent, from the first
half of 1993. The $43 million, or 24 percent, increase in corporate finance
fees was due mostly to higher fees from loan syndication, private placement and
financial advisory activities, offset in part by lower leasing syndication
fees.
Other noninterest revenue totaled $229 million, up $81 million from the first
half of 1993. This increase was due to several factors including higher
insurance premium revenue from operations in Chile, the impact of an insurance
settlement related to the January 1993 fire at the Corporation's headquarters
at 280 Park Avenue, a lower level of losses from the revaluation of non-trading
foreign currency investments and an increase in equity in income of
unconsolidated subsidiaries.
Expenses
Total noninterest expenses of $1.329 billion for the first six months of 1994
decreased by $101 million from the first half of 1993. Incentive compensation
and employee benefits expense decreased $220 million, or 38 percent, almost
entirely due to lower bonus expense reflecting the reduced earnings. Salaries
expense increased $34 million, or 10 percent, from the first half of 1993. The
average number of employees increased by 5 percent versus the same period, to
13,740.
All other expenses for the first six months of 1994 totaled $599 million, up
$85 million, or 17 percent, from the first half of 1993. Increases in the
provision for policyholder benefits, service bureaus, agency personnel fees and
minority interest accounted for most of this increase.
S-7
<PAGE>
Income Taxes
Income tax expense for the first six months of 1994 was $147 million,
compared with $201 million for the first six months of 1993. The effective tax
rate was 30 percent for the six months ended June 30, 1994, compared with 29
percent for the six months ended June 30, 1993. The six month figure for 1993
excludes the income taxes included in the reported cumulative effects of
accounting changes for SFAS 106 and SFAS 112.
Provision and Allowance for Credit Losses
For the six months ended June 30, 1994, the Corporation recorded $16 million
of net recoveries and no provision for credit losses, compared with $172
million of net charge-offs and a $53 million provision for credit losses for
the same period last year. Nonrefinancing country net charge-offs were $14
million in the first half of 1994, compared with $168 million for the first six
months of 1993. The 1993 amount included a charge-off of $66 million which
resulted from the sale of Mexican government Par Bonds, as well as $51 million
of real estate loans and $17 million of loans to highly leveraged borrowers.
The allowance for credit losses, at $1.340 billion at June 30, 1994, was up
$16 million from December 31, 1993. The allowance was equal to 180 percent and
136 percent of total cash basis loans at June 30, 1994 and December 31, 1993,
respectively. The Corporation believes that its allowance must be viewed in its
entirety and therefore is available for potential credit losses in its entire
portfolio, including loans, credit-related commitments, derivatives and other
financial instruments.
In the opinion of management, the allowance, when taken as a whole, is
adequate to absorb reasonably estimated credit losses inherent in the
Corporation's portfolio.
DESCRIPTION OF THE CORPORATION'S CAPITAL STOCK
The following information supplements the information set forth under
"Description of the Corporation's Capital Stock--Preferred Stock--Series
Preferred Stock" in the accompanying Prospectus. The Corporation has notified
the holders of the Fixed/Adjustable Rate Cumulative Preferred Stock, Series D
(the "Series D Preferred Stock") that all of the 4,105,550 outstanding shares
of Series D Preferred Stock will be called for redemption on September 1, 1994,
at a price of $50 per share plus accrued and unpaid dividends. Also, on March
28, 1994, the Corporation issued 80,000 shares of its Adjustable Rate
Cumulative Preferred Stock, Series Q ($2,500 liquidation preference) (the
"Series Q Preferred Stock"). The dividend rate on the Series Q Preferred Stock
is equal to 85% of the Effective Rate (as defined below) in effect from time to
time, but in no event less than 4 1/2% or more than 10 1/2% per annum. The
"Effective Rate" for the Series Q Preferred Stock for each quarterly dividend
period is the highest of the "Treasury Bill Rate," the "Ten Year Constant
Maturity Rate" and the "Thirty Year Constant Maturity Rate" determined in
advance of such dividend period. If dividends payable on the Series Q Preferred
Stock are in arrears in an amount equivalent to dividends for six full dividend
periods, the number of directors of the Corporation will be increased by two
and the holders of the outstanding Series Q Preferred Stock, voting together as
a single class with holders of shares of any other series of series preferred
stock then outstanding upon which like voting rights have been conferred and
are then exercisable, will be entitled to elect two additional directors until
all dividends in arrears on the Series Q Preferred Stock have been declared and
paid or set apart for payment in full. In the event of any liquidation,
dissolution or winding up of the Corporation, the holders of the Series Q
Preferred Stock will be entitled to receive a distribution of $2,500 per share
plus, in each case, an amount equal to accrued and unpaid dividends to the date
of final distribution.
The Series Q Preferred Stock is redeemable at the option of the Corporation,
in whole or in part, at any time or from time to time on or after March 1, 1999
on not more than 60 and not fewer than 30 days' notice. The redemption price
payable by the Corporation in respect of any such redemption will be $2,500 per
share plus accrued and unpaid dividends to the redemption date.
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USE OF PROCEEDS
The net proceeds from the sale of the Depositary Shares will be used in the
redemption of the outstanding shares of the Corporation's Fixed/Adjustable Rate
Cumulative Preferred Stock, Series D. The balance of the funds to be used for
the redemption, approximately $60 million, will come from funds from operations
of the Corporation.
CERTAIN TERMS OF THE DEPOSITARY SHARES
The Corporation has provided for the issuance by the Depositary of the
Depositary Receipts evidencing Depositary Shares, each of which represents a
one-hundredth interest in a share of the Series R Preferred Stock as described
below.
The shares of Series R Preferred Stock represented by the Depositary Shares
will be deposited under the Deposit Agreement, dated as of August 15, 1994 (the
"Deposit Agreement"), between the Corporation, Harris Trust Company of New
York, as Depositary (the "Depositary"), and the holders from time to time of
Depositary Receipts issued by the Depositary thereunder. Depositary Receipts
will be issuable only in definitive registered form. Each Depositary Share will
represent a one-hundredth interest in a share of the Series R Preferred Stock.
Subject to the terms of the Deposit Agreement, each owner of a Depositary Share
will be entitled, through the Depositary and in proportion to the one-hundredth
interest in a share of the Series R Preferred Stock represented by such
Depositary Share, to all rights and preferences of a share of the Series R
Preferred Stock (including dividend, voting, redemption and liquidation
rights). See "Certain Terms of the Series R Preferred Stock" below and
"Description of Series Preferred Stock" and "Depositary Shares" in the
Prospectus accompanying this Prospectus Supplement.
Harris Trust Company of New York will act as Depositary and as transfer
agent, dividend disbursing agent and registrar for the Series R Preferred Stock
and acts as transfer agent, dividend disbursing agent and registrar for the
Corporation's Common Stock and certain series of the Corporation's series
preferred stock. In addition, the Corporation and Bankers have other
relationships arising in the ordinary course of business with Harris Trust
Company of New York and its affiliates.
The information contained herein concerning the Depositary Shares does not
purport to be complete and is subject to and qualified in its entirety by
reference to the provisions of the Deposit Agreement, including the definitions
therein of certain terms, and should be read in conjunction with the statements
under "Depositary Shares" in the Prospectus accompanying this Prospectus
Supplement.
CERTAIN TERMS OF THE SERIES R PREFERRED STOCK
The following description of certain terms of the Series R Preferred Stock
supplements, and to the extent inconsistent therewith supersedes, the
description of the general terms and provisions of the series preferred stock
set forth under the heading "Description of Series Preferred Stock" in the
Prospectus accompanying this Prospectus Supplement, to which reference is
hereby made. The Series R Preferred Stock is a series of the series preferred
stock of the Corporation, which series preferred stock may be issued from time
to time in one or more series with such rights, preferences and limitations as
are determined by the Corporation's Board of Directors or a duly authorized
committee thereof. The description of certain provisions of the Series R
Preferred Stock set forth below does not purport to be complete and is subject
to and qualified in its entirety by reference to the Restated Certificate of
Incorporation, as amended, of the Corporation, which has been filed with the
Commission as an exhibit to the Registration Statement of which the Prospectus
accompanying this Prospectus Supplement is a part, and the Certificate of
Amendment of the Restated Certificate of Incorporation, as amended, relating to
the Series R Preferred Stock adopted by the Board of Directors of the
Corporation, to be filed by the Secretary of State of the State of New York on
or prior to the date of original
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issuance of the Series R Preferred Stock. The Certificate of Amendment will be
filed with the Commission on or about the date of original issuance of the
Depositary Shares.
DIVIDEND RIGHTS
Holders of shares of Series R Preferred Stock will be entitled to receive
cumulative cash dividends when, as and if declared by the Board of Directors of
the Corporation, out of funds legally available therefor, from the date of
original issuance of such shares to and including November 30, 1994 (the
"Initial Dividend Period"), and for each dividend period commencing on each
March 1, June 1, September 1 and December 1 thereafter, and ending on and
including the day next preceding the first day of the next dividend period
(such Initial Dividend Period and each of such other periods being hereinafter
referred to as a "Dividend Period") at a rate per annum equal to the Applicable
Rate (as defined below) in respect of such Dividend Period. The amount of
dividends per share payable for the Initial Dividend Period and for any portion
of any other Dividend Period less than a full Dividend Period shall be computed
on the basis of a 360-day year and the actual number of days elapsed in the
Dividend Period for which the dividends are payable, and by multiplying the
Applicable Rate by $2,500.
Dividends will accrue from the date of original issuance and will be payable
when, as and if declared by the Board of Directors of the Corporation, out of
funds legally available therefor, quarterly on each March 1, June 1, September
1 and December 1 in each year, commencing December 1, 1994 (each, a "Dividend
Payment Date"), to the holders of record on such respective dates, not
exceeding 30 days preceding the related Dividend Payment Date, as may be
determined by the Board of Directors of the Corporation, or a duly authorized
committee of the Board of Directors, in advance of such Dividend Payment Date.
To the extent not declared and paid for any past Dividend Periods, dividends
may be declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, not exceeding 30 days
preceding the payment date therefor, as may be fixed by the Board of Directors
of the Corporation, or a duly authorized committee of the Board of Directors.
No interest, or sum of money in lieu of interest, shall be payable in respect
of any dividend that is not paid when it accrues.
No dividend will be declared and paid or set apart for payment on any share
of Series R Preferred Stock or any share of any other series of series
preferred stock or any share of any class of stock, or series thereof, ranking
on a parity with the Series R Preferred Stock as to dividends, for any Dividend
Period unless at the same time a like proportionate dividend for the same
Dividend Period, ratably in proportion to the respective dividends applicable
thereto (adjusted in the case of the Initial Dividend Period to reflect the
length of such period), shall be declared and paid or set apart for payment on
all shares of Series R Preferred Stock and all shares of all other series of
series preferred stock and all shares of any class, or series thereof, ranking
on a parity with Series R Preferred Stock as to dividends, then issued and
outstanding and entitled to receive dividends. Except as herein provided,
holders of shares of Series R Preferred Stock will not be entitled to any
dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends, as herein provided, on the Series R Preferred Stock.
So long as any shares of Series R Preferred Stock are outstanding, unless the
full cumulative dividends on all outstanding shares of Series R Preferred Stock
have been declared and paid or set apart for payment for all past Dividend
Periods and except as provided in the immediately preceding paragraph, (i) no
dividend (other than a dividend in Common Stock or in any other stock of the
Corporation ranking junior to the Series R Preferred Stock as to dividends and
distribution of assets upon liquidation, dissolution or winding up) may be
declared and paid or set aside for payment, or other distribution declared or
made, on the Common Stock or on any other stock ranking junior to or on a
parity with the Series R Preferred Stock as to dividends or distribution of
assets upon liquidation, dissolution or winding up, and (ii) no shares of
Common Stock or shares of any other stock of the Corporation ranking junior to
or on a parity with the Series R Preferred Stock as to dividends or
distribution of assets upon liquidation, dissolution or winding up will be
redeemed, purchased or otherwise acquired for any consideration by the
Corporation or any subsidiary of the Corporation (nor may any moneys be paid to
or made available for a sinking or other fund for the redemption,
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purchase or other acquisition of any shares of any such stock), other than by
conversion into or exchange for Common Stock or any other stock of the
Corporation ranking junior to the Series R Preferred Stock as to dividends and
distribution of assets upon liquidation, dissolution or winding up. The
cutting-off of dividends on the Common Stock and other stock junior to the
Series R Preferred Stock and the limitations on redemptions and other
acquisitions of such stock until the arrearages have been paid or provided for,
as outlined above, and the right to vote for the election of directors
described below under "Voting Rights" shall be the only consequences of the
failure to declare or pay dividends on the Series R Preferred Stock. After
payment in full of all dividend arrearages on the Series R Preferred Stock,
dividends on the Common Stock and such other junior stock may be declared and
paid out of funds legally available for that purpose as the Board of Directors
may determine.
APPLICABLE RATE
The dividend rate per annum referred to above for any Dividend Period (the
"Applicable Rate") will be equal to (i) in the case of the Initial Dividend
Period, 6.42% per annum (which is equivalent to $.4458 per Depositary Share)
and (ii) in the case of any subsequent Dividend Period, 84.5% of the Effective
Rate (as defined below), but not less than 4 1/2% per annum, or more than 10
1/2% per annum. The "Effective Rate" for any Dividend Period will be equal to
the highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Thirty Year Constant Maturity Rate (each as defined below under "Three-way
Pricing Index") for the Dividend Period. In the event that the Corporation
determines in good faith that for any reason:
(i) any one of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate and the Thirty Year Constant Maturity Rate cannot be determined for
any Dividend Period, then the Effective Rate for such Dividend Period will
be equal to the higher of whichever two such rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate and the Thirty Year Constant Maturity Rate can be determined for any
Dividend Period, then the Effective Rate for such Dividend Period will be
equal to whichever such rate can be so determined; or
(iii) none of the Treasury Bill Rate, the Ten Year Constant Maturity Rate
and the Thirty Year Constant Maturity Rate can be determined for any
Dividend Period, then the Effective Rate for the preceding Dividend Period
will be continued for such Dividend Period.
THREE-WAY PRICING INDEX. Except as described below in this paragraph, the
"Treasury Bill Rate" for each Dividend Period will be the arithmetic average of
the two most recent weekly per annum market discount rates (or the one weekly
per annum market discount rate, if only one such rate is published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board (as defined below)
during the Calendar Period immediately preceding the last ten calendar days
preceding the Dividend Period for which the dividend rate on the Series R
Preferred Stock is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum market discount rate during any
such Calendar Period, then the Treasury Bill Rate for such Dividend Period will
be the arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate, if only one
such rate is published during the relevant Calendar Period) for three-month
U.S. Treasury bills, as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency selected by
the Corporation. In the event that a per annum market discount rate for three-
month U.S. Treasury bills is not published by the Federal Reserve Board or by
any Federal Reserve Bank or by any U.S. Government department or agency during
such Calendar Period, then the Treasury Bill Rate for such Dividend Period will
be the arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate, if only one
such rate is published during the relevant Calendar Period) for all of the U.S.
Treasury bills then having remaining maturities of not less than 80 nor more
than 100 days, as published during such Calendar Period by the Federal Reserve
Board or, if the Federal Reserve Board does not publish such rates, by any
Federal Reserve Bank or by any U.S. Government department or agency selected by
the Corporation.
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In the event that the Corporation determines in good faith that for any reason
no such U.S. Treasury bill rates are published as provided above during such
Calendar Period, then the Treasury Bill Rate for such Dividend Period will be
the arithmetic average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues of marketable
noninterest-bearing U.S. Treasury securities with a remaining maturity of not
less than 80 nor more than 100 days from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the Corporation
by at least three recognized dealers in U.S. Government securities selected by
the Corporation. In the event that the Corporation determines in good faith
that for any reason the Corporation cannot determine the Treasury Bill Rate for
any Dividend Period as provided above in this paragraph, the Treasury Bill Rate
for such Dividend Period will be the arithmetic average of the per annum market
discount rates based upon the closing bids during such Calendar Period for each
of the issues of marketable interest-bearing U.S. Treasury securities with a
remaining maturity of not less than 80 nor more than 100 days, as chosen and
quoted daily for each business day in New York City (or less frequently if
daily quotations are not generally available) to the Corporation by at least
three recognized dealers in U.S. Government securities selected by the
Corporation.
Except as described below in this paragraph, the "Ten Year Constant Maturity
Rate" for each Dividend Period will be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields (as defined below) (or the one
weekly per annum Ten Year Average Yield, if only one such yield is published
during the relevant Calendar Period), as published weekly by the Federal
Reserve Board during the Calendar Period immediately preceding the last ten
calendar days preceding the Dividend Period for which the dividend rate on the
Series R Preferred Stock is being determined. In the event that the Federal
Reserve Board does not publish such a weekly per annum Ten Year Average Yield
during such Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend Period will be the arithmetic average of the two most recent weekly
per annum Ten Year Average Yields (or the one weekly per annum Ten Year Average
Yield, if only one such yield is published during the relevant Calendar
Period), as published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Ten Year Average Yield is not
published by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then the Ten
Year Constant Maturity Rate for such Dividend Period will be the arithmetic
average of the two most recent weekly per annum average yields to maturity (or
the one weekly per annum average yield to maturity, if only one such yield is
published during the relevant Calendar Period) for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities (as defined below)) then having remaining maturities of not less
than eight nor more than twelve years, as published during such Calendar Period
by the Federal Reserve Board or, if the Federal Reserve Board does not publish
such yields, by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason the Corporation cannot determine
the Ten Year Constant Maturity Rate for any Dividend Period as provided above
in this paragraph, then the Ten Year Constant Maturity Rate for such Dividend
Period will be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of
the issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than eight nor more than twelve years from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the Corporation
by at least three recognized dealers in U.S. Government securities selected by
the Corporation.
Except as described below in this paragraph, the "Thirty Year Constant
Maturity Rate" for each Dividend Period will be the arithmetic average of the
two most recent weekly per annum Thirty Year Average Yields (as defined below)
(or the one weekly per annum Thirty Year Average Yield, if only one such yield
is published during the relevant Calendar Period), as published weekly by the
Federal Reserve Board during the Calendar Period immediately preceding the last
ten calendar days preceding the Dividend Period for which the dividend rate on
the Series R Preferred Stock is being determined. In the event that the Federal
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Reserve Board does not publish such a weekly per annum Thirty Year Average
Yield during such Calendar Period, then the Thirty Year Constant Maturity Rate
for such Dividend Period will be the arithmetic average of the two most recent
weekly per annum Thirty Year Average Yields (or the one weekly per annum Thirty
Year Average Yield, if only one such yield is published during the relevant
Calendar Period), as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency selected by
the Corporation. In the event that a per annum Thirty Year Average Yield is not
published by the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then the
Thirty Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum average yields to
maturity (or the one weekly per annum average yield to maturity, if only one
such yield is published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities (other
than Special Securities) then having remaining maturities of not less than
twenty-eight nor more than thirty years, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board does not
publish such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation cannot
determine the Thirty Year Constant Maturity Rate for any Dividend Period as
provided above in this paragraph, then the Thirty Year Constant Maturity Rate
for such Dividend Period will be the arithmetic average of the per annum
average yields to maturity based upon the closing bids during such Calendar
Period for each of the issues of actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) with a final maturity
date not less than twenty-eight nor more than thirty years from the date of
each such quotation, as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations are not generally available)
to the Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty
Year Constant Maturity Rate will each be rounded to the nearest five hundredths
of a percent.
The Effective Rate with respect to each Dividend Period (other than the
Initial Dividend Period) will be calculated as promptly as practicable by the
Corporation according to the appropriate method described above. The
Corporation will cause each Applicable Rate to be published in a newspaper of
general circulation in New York City before the commencement of the Dividend
Period to which it applies and will cause notice of such Applicable Rate to be
enclosed with the dividend payment checks next mailed to the holders of Series
R Preferred Stock.
As used above, the term "Calendar Period" means a period of fourteen calendar
days; the term "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System; the term "Special Securities" means securities which
can, at the option of the holder, be surrendered at face value in payment of
any Federal estate tax or which provide tax benefits to the holder and are
priced to reflect such tax benefits or which were originally issued at a deep
or substantial discount; the term "Ten Year Average Yield" means the average
yield to maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of ten years); and the term
"Thirty Year Average Yield" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities (adjusted to
constant maturities of thirty years).
VOTING RIGHTS
Whenever, at any time or times, dividends payable on shares of Series R
Preferred Stock are in arrears in an amount equivalent to dividends for six
full Dividend Periods, then, immediately upon the happening of such event, the
number of directors of the Corporation will be increased by two and the holders
of outstanding shares of Series R Preferred Stock will have the right, voting
together as a single class with holders of shares of any other series of series
preferred stock then outstanding and upon which like voting rights have been
conferred and are then exercisable, to the exclusion of (a) the holders of the
Common Stock, (b) the holders of any other series of series preferred stock
upon which such voting rights have not been conferred or are not
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then exercisable, and (c) the holders of any other stock of the Corporation
having general voting rights, to vote for the election of two members of the
Board of Directors of the Corporation to fill such newly created directorships,
until all dividends in arrears on the Series R Preferred Stock have been
declared and paid or set apart for payment in full. The right of the holders of
Series R Preferred Stock to elect members of the Board of Directors of the
Corporation as aforesaid will continue until such time as all dividends in
arrears on the Series R Preferred Stock have been declared and paid or set
apart for payment in full, at which time such right will terminate, except as
set forth in the Certificate of Amendment of the Corporation's Restated
Certificate of Incorporation, as amended, or by law expressly provided, subject
to revesting in the event of each and every subsequent arrearage in the amount
above mentioned. Upon any termination of the right of such holders to elect
directors as herein described, the term of office of all directors then in
office elected thereby, and the vacancies created pursuant to the Certificate
of Amendment of the Restated Certificate of Incorporation, as amended, and
described above, will terminate immediately. Any director who has been so
elected may be removed at any time, with or without cause, and any vacancy
thereby created may be filled, only by the affirmative vote of the holders of
Series R Preferred Stock voting together as a single class with the holders of
shares of any other series of series preferred stock entitled to vote for such
director. If the office of any director elected as described above becomes
vacant for any reason other than removal from office, the remaining director
may choose a successor who will hold office for the remainder of such unexpired
term.
So long as any shares of Series R Preferred Stock shall be outstanding,
unless the vote or consent of the holders of a greater number of shares shall
then be required by law, the affirmative vote or consent of the holders of (a)
at least 66 2/3% of the shares of the Series R Preferred Stock and (b) the
holders of at least a majority of the shares of the Series R Preferred Stock
and of any other series of series preferred stock then outstanding upon which
like voting rights have been conferred and are then exercisable, voting
together as a single class, in each case given in person or by proxy either in
writing or by resolution at any special or annual meeting called for the
purpose, shall be necessary to authorize, permit, effect or validate any one or
more of the following: (i) the authorization or any increase in the authorized
amount of any class of stock, or the establishment or designation of any series
of stock (unless the class of which such series is a part has been authorized
previously pursuant to this paragraph), or the issuance or sale of any
obligation, security or instrument convertible into, exchangeable for, or
evidencing the right to purchase, acquire or subscribe for shares of a class or
series of stock, if such class or series of stock ranks prior to the Series R
Preferred Stock as to dividends or distribution of assets upon liquidation,
dissolution or winding up (unless the class or series has been authorized
previously pursuant to this paragraph), and (ii) the amendment, alteration or
repeal, whether by merger, consolidation or otherwise, of any of the provisions
of the Restated Certificate of Incorporation, as amended, as amended by the
Certificate of Amendment relating to the Series R Preferred Stock, which would
materially and adversely affect any right, preference, privilege or voting
rights of the series preferred stock then outstanding; provided, however, that
in the event that any such amendment, alteration or repeal would materially and
adversely affect the rights of only the Series R Preferred Stock, then such
amendment, alteration or repeal may be effected only with the affirmative vote
or consent of the holders of 66 2/3% of the shares of Series R Preferred Stock
then outstanding; provided, further, that the authorization, establishment,
designation, issuance or sale of other series preferred stock shall not have,
or be deemed to have, such material adverse effect; and, provided, further,
however, that an increase in the authorized amount of series preferred stock,
or the authorization, establishment, designation, issuance or sale of any
shares of stock that do not rank prior to the series preferred stock as to
dividends or distribution of assets upon liquidation, dissolution or winding
up, shall not have, or be deemed to have, such material adverse effect.
In addition, unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the affirmative vote or consent of the
holders of at least a majority of the shares of Series R Preferred Stock and
any other series of series preferred stock then outstanding upon which like
voting rights have been conferred and are then exercisable, voting together as
a single class, given in person or by proxy either in writing or by resolution
at any special or annual meeting called for the purpose, shall be necessary to
authorize an increase in the authorized amount of the series or serial
preferred stock or the creation of a class of stock that would rank pari passu
with the series or serial preferred stock as to dividends or distribution of
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assets upon liquidation, dissolution or winding up, or to authorize, permit,
effect or validate the voluntary liquidation, dissolution or winding up of the
Corporation; provided, however, that a consolidation or merger of the
Corporation with or into another corporation or corporations, or a sale, lease
or conveyance, whether for cash, shares of stock, securities or properties, of
all or substantially all or any part of the assets of the Corporation, shall
not be deemed or construed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this paragraph.
The foregoing voting provisions will not apply if, in connection with the
matters specified, provision is made for the redemption or retirement of all
outstanding Series R Preferred Stock.
Holders of Series R Preferred Stock, and the holders of shares of any other
series of series preferred stock of the Corporation upon which like voting
rights have been conferred and are then exercisable (other than the
Corporation's Series C Junior Participating Preferred Stock), shall be entitled
to one vote for each share of such stock held on matters as to which holders
shall be entitled to vote.
Under regulations adopted by the Federal Reserve Board, if the holders of
shares of Series R Preferred Stock become entitled to vote for the election of
directors because dividends on such shares are in arrears, the Series R
Preferred Stock may then be deemed a "class of voting securities" and a holder
of 25% or more of the shares of such series (or a holder of 5% or more if it
otherwise exercises a "controlling influence" over the Corporation) may then be
subject to regulation as a bank holding company in accordance with the Bank
Holding Company Act of 1956, as amended. In addition, at such time (i) any bank
holding company may be required to obtain the approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") under the
Bank Holding Company Act of 1956, as amended, to acquire or retain 5% or more
of the Series R Preferred Stock and (ii) any person other than a bank holding
company may be required to obtain the approval of the Federal Reserve Board
under the Change in Bank Control Act to acquire 10% or more of the Series R
Preferred Stock.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of shares of Series R Preferred
Stock will be entitled to receive out of assets of the Corporation available
for distribution to shareholders, before any payment or distribution is made on
the Common Stock or on any other class or series of stock of the Corporation
ranking junior to the Series R Preferred Stock, upon liquidation, dissolution
or winding up, liquidating distributions in the amount of $2,500 per share
(which is equivalent to $25 per Depositary Share) plus, in each case, an amount
equal to accrued and unpaid dividends (whether or not declared) to the date of
final distribution. After such payment, the holders of Series R Preferred Stock
will be entitled to no other payments. If, in such case, the assets of the
Corporation or proceeds thereof shall be insufficient to make the full
liquidating payment on the Series R Preferred Stock and liquidating payments on
any other outstanding series preferred stock (including accrued and unpaid
dividends, if any), then such assets and proceeds shall be distributed among
the holders of Series R Preferred Stock and any other outstanding series of
series preferred stock, ratably in accordance with the respective amounts which
would be payable on all series preferred stock (including accrued and unpaid
dividends, if any) if all such liquidating amounts payable were paid in full. A
consolidation or merger of the Corporation with or into another corporation or
corporations or a sale, lease or conveyance, whether for cash, shares of stock,
securities or properties, of all or substantially all or any part of the assets
of the Corporation shall not be deemed or construed to be a liquidation,
dissolution or winding up of the Corporation.
REDEMPTION
Shares of Series R Preferred Stock will not be redeemable prior to September
1, 1999. On or after such date, the shares of Series R Preferred Stock will be
redeemable at the option of the Corporation, as a whole or in part, at any time
or from time to time on not less than 30 nor more than 60 days' notice, at the
redemption price of $2,500 per share (which is equivalent to $25 per Depositary
Share) plus, in each case, an amount equal to accrued and unpaid dividends
(whether or not declared) to the date fixed for redemption.
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<PAGE>
Upon mailing of notice, dividends on the shares of Series R Preferred Stock
called for redemption will cease to accrue from and after the date fixed for
redemption (unless default shall be made by the Corporation in providing funds
for the payment of the redemption price), and such shares will no longer be
deemed to be outstanding. All rights of the holders of such shares as holders
of Series R Preferred Stock (except the right to receive the redemption price,
but without interest) shall cease. The Corporation's obligation to provide
funds in accordance with the preceding sentence will be deemed fulfilled if, on
or before 12:00 noon, New York City time on the date fixed for redemption, the
Corporation deposits with a paying agent (which may be an affiliate of the
Corporation) (a "Paying Agent"), which shall be a bank or trust company
organized and in good standing under the laws of the United States or the State
of New York, having an office or agency in the Borough of Manhattan, The City
of New York, and having, together with its corporate parent, capital, surplus
and undivided profits aggregating at least $50,000,000, funds necessary for
such redemption, in trust, with irrevocable instructions and authorization that
such funds be applied to the redemption of the shares of Series R Preferred
Stock called for redemption upon surrender of certificates for such shares
(properly endorsed or assigned for transfer). If fewer than all the outstanding
shares of the Series R Preferred Stock are to be redeemed, the selection of the
shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors of the Corporation.
Any interest accrued on funds deposited with a Paying Agent in connection
with any redemption of shares of Series R Preferred Stock will be paid to the
Corporation from time to time and the holders of any such shares to be redeemed
with such money will have no claim to any such interest. Any funds deposited
and unclaimed at the end of two years from any redemption date will be repaid
or released to the Corporation, after which the holder or holders of shares of
Series R Preferred Stock so called for redemption shall look only to the
Corporation for payment of the redemption price, without any interest thereon.
In no event will the Corporation redeem, purchase or otherwise acquire for
consideration fewer than all the outstanding shares of Series R Preferred Stock
unless full cumulative dividends have been declared and paid or set apart for
payment on all outstanding shares of Series R Preferred Stock for all prior
Dividend Periods; provided, however, that the foregoing will not prevent, if
otherwise permitted, the purchase or acquisition of shares of Series R
Preferred Stock pursuant to a tender or exchange offer made on the same terms
to holders of all the outstanding shares of Series R Preferred Stock and mailed
to the holders of record of all such outstanding shares at such holders'
addresses as the same appear on the books of the Corporation; and provided
further that if some, but fewer than all, of the shares of Series R Preferred
Stock are to be purchased or otherwise acquired pursuant to such tender or
exchange offer and the number of shares so tendered exceeds the number of
shares so to be purchased or otherwise acquired by the Corporation, the shares
of Series R Preferred Stock tendered will be purchased or otherwise acquired by
the Corporation on a pro rata basis (with adjustments to eliminate fractions)
according to the number of such shares tendered by each holder tendering shares
of Series R Preferred Stock for such purchase or exchange.
At the option of the Corporation, shares of Series R Preferred Stock redeemed
or otherwise acquired may be restored to the status of authorized but unissued
shares of series preferred stock.
Any optional redemption by the Corporation will be with the approval of the
Federal Reserve Board unless at the time the Federal Reserve Board determines
that its approval is not required.
MISCELLANEOUS
Harris Trust Company of New York will serve as transfer agent, dividend
disbursing agent and registrar for the Series R Preferred Stock. The holders of
Series R Preferred Stock will not have any preemptive rights to purchase or
subscribe for any shares of any class or other securities of any type of the
Corporation. When issued, the Series R Preferred Stock will be fully paid and
nonassessable. The Certificate of Amendment of the Restated Certificate of
Incorporation, as amended, of the Corporation setting forth the provisions of
the Series R Preferred Stock will become effective after the date of this
Prospectus Supplement but on or before issuance of the Series R Preferred
Stock.
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<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following brief description of certain Federal income tax considerations
of the ownership of Depositary Shares representing the Series R Preferred Stock
reflects the opinion of Sullivan & Cromwell, special tax counsel to the
Corporation. Hereinafter, references in this section to Series R Preferred
Stock will mean either the Series R Preferred Stock or Depositary Shares
representing the Series R Preferred Stock, as the case may be. This description
is a summary only, and each purchaser of Series R Preferred Stock offered by
this Prospectus Supplement and the accompanying Prospectus should consult his
own tax adviser as to the tax consequences to him of acquiring, holding and
disposing of shares of Series R Preferred Stock in his particular
circumstances, including the effect of the alternative minimum tax and the
application of state, local and other tax laws.
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the Series R Preferred Stock represented by
such Depositary Shares and, accordingly, must take into account for Federal
income tax purposes the income and deductions to which they would be entitled
if they were holders of such Series R Preferred Stock.
Dividends declared and paid by the Corporation with respect to the Series R
Preferred Stock will be dividends for Federal income tax purposes to the extent
of the current or accumulated earnings and profits of the Corporation as
determined for Federal income tax purposes and will be eligible for the 70%
dividends-received deduction allowed to corporate shareholders. Corporate
holders of shares of Series R Preferred Stock should consider the effects of
(i) Section 246(c) of the Internal Revenue Code of 1986, as amended (the
"Code"), which, among other things, disallows the dividends-received deduction
in respect of any dividend on a share of stock held for 45 days or less; (ii)
Section 246A of the Code, which reduces the dividends-received deduction
allowed to a corporate shareholder that has indebtedness "directly
attributable" to an investment in portfolio stock; and (iii) Section 1059 of
the Code, which, under certain circumstances, reduces the tax basis of stock,
for the purposes of calculating gain or loss in a subsequent disposition, by
the portion of any "extraordinary dividend" eligible for the dividends-received
deduction. The alternative minimum tax treatment of the dividends-received
deduction should also be considered.
Dividends on the Series R Preferred Stock will not be increased if there is a
reduction in or elimination of the 70% dividends-received deduction.
EXPERTS
The consolidated financial statements of the Corporation appearing in the
Annual Report on Form 10-K for the year ended December 31, 1993, incorporated
by reference in this Prospectus Supplement, the accompanying Prospectus and the
Registration Statement, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in auditing and accounting.
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<PAGE>
UNDERWRITING
Under the terms of and subject to the conditions set forth in an underwriting
agreement (the "Underwriting Agreement") dated the date hereof between the
Corporation and the Underwriters named below (the "Underwriters"), the
Underwriters have severally agreed to purchase, and the Corporation has agreed
to sell to them severally, the respective number of Depositary Shares set forth
below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER DEPOSITARY SHARES
----------- -----------------
<S> <C>
Morgan Stanley & Co. Incorporated.......................... 2,140,000
Bear, Stearns & Co. Inc. .................................. 600,000
Lehman Brothers Inc. ...................................... 600,000
Salomon Brothers Inc ...................................... 600,000
Smith Barney Inc. ......................................... 600,000
Goldman, Sachs & Co. ...................................... 400,000
BT Securities Corporation.................................. 200,000
Kidder, Peabody & Co. Incorporated......................... 200,000
Robert W. Baird & Co. Incorporated......................... 60,000
Commerzbank Capital Markets Corporation.................... 60,000
Dain Bosworth Incorporated................................. 60,000
Dillon, Read & Co. Inc. ................................... 60,000
A.G. Edwards & Sons, Inc. ................................. 60,000
First Albany Corporation................................... 60,000
Interstate/Johnson Lane Corporation........................ 60,000
Oppenheimer & Co., Inc. ................................... 60,000
Piper Jaffray Inc. ........................................ 60,000
Rauscher Pierce Refsnes, Inc. ............................. 60,000
Raymond James & Associates, Inc. .......................... 60,000
---------
Total Number of Depositary Shares...................... 6,000,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are obligated to take and pay for all of the Depositary Shares
offered hereby, if any are taken.
The Underwriters have advised the Corporation that the Underwriters propose
to offer the Depositary Shares to the public initially at the offering price
set forth on the cover of this Prospectus Supplement and to certain dealers at
such price less a selling concession of $.50 per Depositary Share. The
Underwriters may allow, and each such dealer may reallow, to other dealers a
concession not exceeding $.25 per Depositary Share. After the initial public
offering, the public offering price and such concessions may be changed.
The Depositary Shares are a new issue of securities with no established
trading market. Application will be made to list the Depositary Shares on the
New York Stock Exchange. There can be no assurance that the Depositary Shares
will be so listed or will continue to be listed. Although the Corporation has
been advised by the Underwriters that they may from time to time purchase
Depositary Shares in the secondary market, they are not obligated to do so and
may discontinue market-making at any time without notice. Consequently, there
can be no assurance as to the liquidity of the trading market for the
Depositary Shares.
The Corporation has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
This Prospectus Supplement and the accompanying Prospectus may also be
delivered in connection with sales of the Depositary Shares by affiliates of
the Corporation that have acquired such Depositary Shares.
Underwriters and certain of their associates and affiliates may be customers
of (including borrowers from), engage in transactions with, and/or perform
services for the Corporation and its subsidiaries (including Bankers) in the
ordinary course of business.
BT Securities Corporation is a wholly owned subsidiary of the Corporation.
The underwriting arrangements for this offering comply with the requirements of
Schedule E of the By-laws of the National Association of Securities Dealers,
Inc. ("NASD") regarding an NASD member firm's underwriting securities of an
affiliate.
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