<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-5920
BANKERS TRUST NEW YORK CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-6180473
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
280 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)
(212) 250-2500
(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 for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of April 30, 1994: Common Stock, $1 par value,
79,671,148 shares.<PAGE>
<PAGE> 1
BANKERS TRUST NEW YORK CORPORATION
MARCH 31, 1994 FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
Three Months Ended March 31, 1994 and 1993 2
Consolidated Balance Sheet
At March 31, 1994 and December 31, 1993 3
Consolidated Statement of Changes in Stockholders'
Equity
Three Months Ended March 31, 1994 and 1993 4
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1994 and 1993 5
Consolidated Schedule of Net Interest Revenue
Three Months Ended March 31, 1994 and 1993 6
Notes to Financial Statements 7
In the opinion of management, all material adjustments
necessary for a fair presentation of the financial position
and results of operations for the interim periods presented
have been made. All such adjustments were of a normal
recurring nature, except for the cumulative effects of
accounting changes for postretirement and postemployment
benefits (recorded in the first quarter of 1993). The
results of operations for the three months ended March 31,
1994 are not necessarily indicative of the
results of operations for the full year or any other
interim period.
The financial statements included in this Form 10-Q
should be read with reference to the Corporation's 1993
Annual Report.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 30
Item 6. Exhibits and Reports on Form 8-K 31
SIGNATURE 32
<PAGE>
<PAGE> 2
PART 1. FINANCIAL INFORMATION
<TABLE>
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
<CAPTION>
Increase
THREE MONTHS ENDED MARCH 31, 1994 1993 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $1,211 $1,021 $ 190
Interest expense 841 721 120
Net interest revenue 370 300 70
Provision for credit losses - 30 (30)
Net interest revenue after provision
for credit losses 370 270 100
NONINTEREST REVENUE
Trading 14 346 (332)
Fiduciary and funds management 188 159 29
Fees and commissions 182 147 35
Securities available for sale gains 4 - 4
Investment securities gains - 4 (4)
Other 117 78 39
Total noninterest revenue 505 734 (229)
NONINTEREST EXPENSES
Salaries 177 165 12
Incentive compensation and employee benefits 162 271 (109)
Occupancy, net 37 35 2
Furniture and equipment 39 34 5
Other 226 176 50
Total noninterest expenses 641 681 (40)
Income before income taxes and
cumulative effects of accounting changes 234 323 (89)
Income taxes 70 93 (23)
INCOME BEFORE CUMULATIVE EFFECTS OF
ACCOUNTING CHANGES 164 230 (66)
Cumulative effects of accounting changes - (75) 75
NET INCOME $ 164 $ 155 $ 9
NET INCOME APPLICABLE TO COMMON STOCK $ 159 $ 148 $ 11
PRIMARY EARNINGS PER COMMON SHARE:
Income before cumulative effects of
accounting changes $1.90 $2.64 $(.74)
Cumulative effects of accounting changes - (.89) .89
Net income $1.90 $1.75 $ .15
FULLY DILUTED EARNINGS PER COMMON SHARE:
Income before cumulative effects of
accounting changes $1.90 $2.63 $(.73)
Cumulative effects of accounting changes - (.88) .88
Net income $1.90 $1.75 $ .15
Cash dividends declared per common share $.90 $.78 $.12
<FN>
The accompanying notes are an integral part of the financial statements.
/TABLE
<PAGE>
<PAGE> 3
<TABLE>
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in millions, except par value)
(unaudited)
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,775 $ 1,750
Interest-bearing deposits with banks 1,096 1,638
Federal funds sold 438 361
Securities purchased under resale agreements 14,198 9,567
Securities borrowed 3,852 2,937
Trading assets 56,173 48,276
Securities available for sale 5,791 7,073
Loans 13,659 15,200
Allowance for credit losses (1,345) (1,324)
Premises and equipment, net 737 719
Due from customers on acceptances 436 455
Accounts receivable and accrued interest 4,061 2,561
Other assets 2,850 2,869
Total $103,721 $92,082
LIABILITIES
Deposits
Noninterest-bearing
In domestic offices $ 3,495 $ 3,185
In foreign offices 562 707
Interest-bearing
In domestic offices 6,137 7,120
In foreign offices 9,855 11,764
Total deposits 20,049 22,776
Trading liabilities 23,005 9,349
Securities sold under repurchase agreements 25,842 23,834
Other short-term borrowings 17,480 18,992
Acceptances outstanding 436 455
Accounts payable and accrued expenses 3,621 3,771
Other liabilities 2,600 2,524
Long-term debt 5,693 5,597
Total liabilities 98,726 87,298
PREFERRED STOCK OF SUBSIDIARY 250 250
STOCKHOLDERS' EQUITY
Preferred stock 450 250
Common stock, $1 par value
Authorized, 300,000,000 shares
Issued, 83,678,973 shares 84 84
Capital surplus 1,319 1,321
Retained earnings 3,305 3,226
Common stock in treasury, at cost: 1994, 4,088,682 shares;
1993, 3,076,439 shares (316) (233)
Other (97) (114)
Total stockholders' equity 4,745 4,534
Total $103,721 $92,082
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<PAGE> 4
<TABLE>
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1994 1993
<S> <C> <C>
PREFERRED STOCK
Balance, January 1 $ 250 $ 500
Issuance of Adjustable Rate Cumulative Preferred Stock,
Series Q 200 -
Redemption of Money Market Cumulative Preferred Stock,
Series F, G and H - (187)
Balance, March 31 450 313
COMMON STOCK
Balance, January 1 and March 31 84 84
CAPITAL SURPLUS
Balance, January 1 1,321 1,306
Preferred stock issuance costs (4) -
Common stock distributed under employee
benefit plans 2 3
Balance, March 31 1,319 1,309
RETAINED EARNINGS
Balance, January 1 3,226 2,552
Net income 164 155
Cash dividends declared
Preferred stock (5) (6)
Common stock (72) (65)
Treasury stock distributed under employee benefit plans (8) (9)
Balance, March 31 3,305 2,627
COMMON STOCK IN TREASURY, AT COST
Balance, January 1 (233) (52)
Purchases of stock (99) (35)
Restricted stock granted, net 1 1
Treasury stock distributed under employee benefit plans 15 31
Balance, March 31 (316) (55)
COMMON STOCK ISSUABLE - STOCK AWARDS
Balance, January 1 143 53
Deferred stock awards granted, net 33 35
Deferred stock distributed - (1)
Balance, March 31 176 87
DEFERRED COMPENSATION - STOCK AWARDS
Balance, January 1 (47) (54)
Deferred stock awards granted, net (34) (34)
Restricted stock granted, net - (1)
Amortization of deferred compensation, net 16 15
Balance, March 31 (65) (74)
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, January 1 (319) (288)
Translation adjustments (23) (24)
Income taxes applicable to translation adjustments 21 11
Balance, March 31 (321) (301)
SECURITIES VALUATION ALLOWANCE
Balance, January 1 109 20
Change in unrealized net gains, after applicable
income taxes and minority interest 4 (3)
Balance, March 31 113 17
TOTAL STOCKHOLDERS' EQUITY, MARCH 31 $4,745 $4,007
<FN>
The accompanying notes are an integral part of the financial statements.
/TABLE
<PAGE>
<PAGE> 5
<TABLE>
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 164 $ 155
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Cumulative effects of accounting changes - 75
Provision for credit losses - 30
Provision for policyholder benefits 60 44
Deferred income taxes (98) (11)
Depreciation and amortization of premises
and equipment 30 25
Other, net (28) 3
Earnings adjusted for noncash charges and credits 128 321
Net change in:
Trading assets (7,191) (4,732)
Trading liabilities 13,630 951
Receivables and payables from securities
transactions (1,656) 1,027
Other operating assets and liabilities, net 193 (140)
Securities available for sale gains (4) -
Investment securities gains - (4)
Net cash provided by (used in) operating activities 5,100 (2,577)
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in:
Interest-bearing deposits with banks 486 409
Federal funds sold (77) (1,670)
Securities purchased under resale agreements (4,639) (829)
Securities borrowed (915) (1,605)
Loans 1,472 1,435
Securities available for sale:
Purchases (1,116) -
Maturities and other redemptions 726 -
Sales 1,176 -
Investment securities:
Purchases - (2,317)
Maturities and other redemptions - 2,199
Sales - 136
Acquisitions of premises and equipment (41) (34)
Other, net 16 24
Net cash used in investing activities (2,912) (2,252)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in:
Deposits (2,920) (2,245)
Securities sold under repurchase agreements 1,979 3,902
Other short-term borrowings (1,372) 2,913
Issuances of long-term debt 512 460
Repayments of long-term debt (429) (57)
Issuance of preferred stock of subsidiary - 247
Issuance of preferred stock 196 -
Redemption of preferred stock - (187)
Purchases of treasury stock (99) (35)
Cash dividends paid (78) (71)
Other, net 10 3
Net cash provided by (used in) financing activities (2,201) 4,930
Net effect of exchange rate changes on cash 38 21
NET INCREASE IN CASH AND DUE FROM BANKS 25 122
Cash and due from banks, beginning of year 1,750 1,384
Cash and due from banks, end of period $ 1,775 $ 1,506
Interest paid $913 $754
Income taxes paid, net $70 $19
Noncash investing activities $57 $17
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<PAGE> 6
<TABLE>
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF NET INTEREST REVENUE
(in millions)
(unaudited)
<CAPTION>
Three Months Ended
March 31, Increase
1994 1993(Decrease)
<S> <C> <C> <C>
INTEREST REVENUE
Interest-bearing deposits with banks $ 34 $ 55 $(21)
Federal funds sold 2 5 (3)
Securities purchased under resale agreements 96 97 (1)
Securities borrowed 30 36 (6)
Trading assets 760 505 255
Securities available for sale
Taxable 61 - 61
Exempt from federal income taxes 21 - 21
Investment securities
Taxable - 84 (84)
Exempt from federal income taxes - 14 (14)
Loans 207 225 (18)
Total interest revenue 1,211 1,021 190
INTEREST EXPENSE
Deposits
In domestic offices 45 54 (9)
In foreign offices 153 196 (43)
Trading liabilities 196 84 112
Securities sold under repurchase agreements 214 188 26
Other short-term borrowings 174 142 32
Long-term debt 59 57 2
Total interest expense 841 721 120
NET INTEREST REVENUE $ 370 $ 300 $ 70
</TABLE>
<PAGE>
<PAGE> 7
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Note 1 - Significant Accounting Policies
The following change in the significant accounting policies of Bankers
Trust New York Corporation (the "Parent Company") and its subsidiaries
(collectively, the "Corporation" or the "Firm") was adopted effective
January 1, 1994.
Offsetting of Amounts Related to Certain Contracts
The Corporation adopted FASB Interpretation No. 39, "Offsetting of
Amounts Related to Certain Contracts," effective January 1, 1994. 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, which was in accordance with industry practice at that
time. As the result of this adoption, at March 31, 1994 the Corporation's
consolidated total assets and total liabilities each increased by $14
billion.
<PAGE>
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Corporation earned $164 million for the first quarter of 1994, or
$1.90 primary earnings per share. In the first quarter of 1993, the
Corporation earned $230 million before cumulative effects of accounting
changes, or $2.64 primary earnings per share. Net income for the first
quarter of 1993 was $155 million, or $1.75 primary earnings per share.
Effective January 1, 1993, the Corporation adopted the new 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 first quarter 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.
<TABLE>
<CAPTION>
Business Functions Profitability
(Income Before Cumulative Effects of Accounting Changes - in millions)
First Quarter
1994
<S> <C>
Client Finance $ 43
Client Advisory 30
Client Financial
Risk Management 114
Client Transaction
Processing 32
Trading and Positioning (49)
Unallocated (6)
Total $164
/TABLE
<PAGE>
<PAGE> 9
BUSINESS FUNCTIONS ANALYSIS (continued)
Client Finance - Client Finance income in the first quarter of 1994
was $43 million. This result was principally attributable to 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 was $30 million in the first
quarter of 1994. The majority of products - particularly funds management
products in Australia - contributed to this performance, as did the
Corporation's Chilean insurance subsidiary, Consorcio Nacional de Seguros
S.A. Performance-based funds management fees were somewhat down from 1993
levels.
Client Financial Risk Management - Client Financial Risk Management
was $114 million reflecting the continued demand from clients on a global
basis for sophisticated risk management products.
Client Transaction Processing - Client Transaction Processing income
was $32 million in the first quarter of 1994. Processing volumes increased
during the first quarter, continuing the 1993 trend. Profit margins in
core cash management and securities custody and clearance activities
improved as expenses were held relatively flat. The quarter also benefited
from slightly higher earnings on balances generated in the business.
Trading and Positioning - As previously stated in the Corporation's
Annual Report on Form 10-K, difficult market conditions due to, among other
things, the Federal Reserve Board's decision to raise short-term interest
rates and the breakdown of U.S.-Japan trade talks, adversely affected
certain of the Corporation's trading positions during the first quarter of
1994. The Corporation incurred a loss of $49 million, after all expenses,
in Trading and Positioning.
<PAGE>
<PAGE> 10
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>
Three Months Ended
March 31, Increase
1994 1993 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE (in millions)
Book basis $370 $300 $70
Tax equivalent adjustment 21 15 6
Fully taxable basis $391 $315 $76
AVERAGE BALANCES (in millions)
Interest-earning assets $81,037 $71,322 $ 9,715
Interest-bearing liabilities 77,935 64,802 13,133
Earning assets financed by
noninterest-bearing funds $ 3,102 $ 6,520 $(3,418)
AVERAGE RATES (fully taxable basis)
Yield on interest-earning assets 6.17% 5.89% .28%
Cost of interest-bearing liabilities 4.38 4.51 (.13)
Interest rate spread 1.79 1.38 .41
Contribution of noninterest-bearing funds .17 .41 (.24)
Net interest margin 1.96% 1.79% .17%
</TABLE>
Net interest revenue for the first quarter of 1994 totaled $370
million, up $70 million, or 23 percent, from the first quarter of 1993.
This increase was due primarily to higher trading-related net interest,
reflecting a 14 percent increase in average interest-earning assets, most
of which related to trading strategies.
<PAGE>
<PAGE> 11
REVENUE (continued)
The Corporation views trading revenue and trading-related net interest
revenue in combination, as quantified below (in millions):
<TABLE>
<CAPTION>
Trading-
Related
Net
Trading Interest
Revenue Revenue Total
<S> <C> <C> <C>
First Quarter 1994 $ 14 $177 $191
First Quarter 1993 $346 $117 $463
</TABLE>
The $272 million decrease in this combined total from the first
quarter of 1993 was primarily attributable to sharply lower revenue from
proprietary trading and positioning activities. The main areas of reduced
revenue were sovereign bond trading, foreign exchange trading and the
trading of emerging markets debt and equity issues. Partially offsetting
this decline was higher revenue from the Firm's client risk management
activities.
<PAGE>
<PAGE> 12
REVENUE (continued)
Shown below is a comparison of the components of noninterest revenue
(in millions).
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase
1994 1993(Decrease)
<S> <C> <C> <C>
Trading $ 14 $346 $(332)
Fiduciary and funds management 188 159 29
Fees and commissions
Corporate finance fees 108 78 30
Service charges on deposit accounts 22 23 (1)
Acceptances and letters of credit commissions11 12 (1)
Other 41 34 7
Total fees and commissions 182 147 35
Securities available for sale gains 4 - 4
Investment securities gains - 4 (4)
Other noninterest revenue
Insurance premiums 55 38 17
Net revenue from equity investment transactions,
including write-offs 29 30 (1)
Other 33 10 23
Total other noninterest revenue 117 78 39
Total noninterest revenue $505 $734 $(229)
</TABLE>
Fiduciary and funds management revenue totaled a record $188 million
for the first quarter, up $29 million, or 18 percent, from the same period
last year. 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.
Fees and commissions of $182 million increased by $35 million, or 24
percent, from the equivalent period in 1993. Of this increase, $30 million
related to corporate finance fees, which rose 38 percent, to $108 million,
led by increased loan syndication and debt underwriting activities.
Other noninterest revenue totaled $117 million, up $39 million from
the prior year's quarter. This increase was due to higher insurance
premium revenue as well as increases in both equity in income of
unconsolidated subsidiaries and gains on sales of other assets.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The Corporation recorded $21 million of net recoveries and no
provision for credit losses in the first quarter of 1994. In the prior
year's quarter, net charge-offs of $121 million and a provision for credit
losses of $30 million were recognized. Refinancing country recoveries of
$19 million were recorded in the first quarter of 1994, compared with $1
million of net recoveries in last year's first quarter. Nonrefinancing
country net recoveries for the current quarter were $2 million, compared
<PAGE>
<PAGE> 13
PROVISION AND ALLOWANCE FOR CREDIT LOSSES (continued)
with net charge-offs of $122 million for the first quarter of 1993, which
included a charge-off of $66 million which resulted from the sale of
Mexican government Par Bonds, as well as $17 million of loans to highly
leveraged borrowers and $7 million of real estate loans.
The provision for credit losses and the other changes in the allowance
for credit losses are shown below (in millions).
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
<S> <C> <C>
Allowance for credit losses, January 1 $1,324 $1,620
Net charge-offs
Charge-offs 21 130
Recoveries 42 9
Total net charge-offs (recoveries) (1) (21) 121
Provision for credit losses - 30
Allowance for credit losses, March 31 $1,345 $1,529
<FN>
(1) Components:
Secured by real estate $ (2) $ 6
Real estate related - 1
Highly leveraged (9) 17
Other 9 98
Refinancing country (19) (1)
Total $(21) $121
</TABLE>
The allowance for credit losses, at $1.345 billion at March 31, 1994,
was up $21 million from its level at December 31, 1993, due to net
recoveries. The allowance was equal to 156 percent and 136 percent of
total cash basis loans at March 31, 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.
EXPENSES
Total noninterest expenses of $641 million decreased by $40 million
from the first quarter of 1993. Incentive compensation and employee
benefits expense decreased $109 million, or 40 percent, mostly due to lower
bonus expense reflecting the reduced earnings. Salaries expense increased
$12 million, or 7 percent, from the first quarter of 1993. The average
number of employees increased by 5 percent versus the same period, to
13,649.
<PAGE>
<PAGE> 14
EXPENSES (continued)
All other expenses totaled $302 million for the quarter, up $57
million, or 23 percent, from last year's first quarter. Increases in the
provision for policyholder benefits, minority interest, agency personnel
fees and other real estate expense accounted for most of this increase.
INCOME TAXES
Income tax expense for the first quarter of 1994 amounted to $70
million, compared with $93 million for the first quarter of 1993. The
effective tax rate was 30 percent for the current quarter, compared with 29
percent in the first quarter of last year. The first quarter figure for
1993 excludes the income taxes included in the reported cumulative effects
of accounting changes for SFAS 106 and SFAS 112.
EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per common share amounts were
computed by subtracting from the applicable earnings the dividend
requirements on preferred stock to arrive at earnings applicable to common
stock and dividing those amounts by the average number of common and common
equivalent shares outstanding during the period.
For both primary and fully diluted earnings per share, the average
number of common and common equivalent shares outstanding was the sum of
the average number of shares of common stock outstanding and the
incremental number of shares issuable under outstanding stock options and
deferred stock awards that had a dilutive effect as computed under the
treasury stock method. Under this method, the number of incremental shares
is determined by assuming the issuance of the outstanding stock options and
deferred stock awards reduced by the number of shares assumed to be
repurchased from the issuance proceeds, using the market price of the
Parent Company's common stock. For primary earnings per share, this market
price is the average market price for the period, while for fully diluted
earnings per share, it is the period-end market price if it is higher than
the average market price. At no time during the three month period ended
March 31, 1994 and 1993 did the Corporation have outstanding any securities
which were convertible to the Parent Company's common stock.
<PAGE>
<PAGE> 15
EARNINGS PER COMMON SHARE (continued)
The earnings applicable to common stock and the number of shares used
for primary and fully diluted earnings per share were as follows (in
millions):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1994 1993
<S> <C> <C>
Earnings applicable to common stock:
Income before cumulative effects of accounting changes $159 $223
Cumulative effects of accounting changes - (75)
Net income $159 $148
Average number of common shares outstanding 80.313 82.940
Primary earnings per share
Average number of common and common equivalent shares
outstanding 83.665 84.581
Fully diluted earnings per share
Average number of common and common equivalent shares
outstanding - assuming full dilution 83.665 84.789
</TABLE>
<PAGE>
<PAGE> 16
BALANCE SHEET ANALYSIS
The following table highlights the changes in the balance sheet.
Since quarter-end balances can be distorted by one-day fluctuations, an
analysis of changes in the quarterly averages is provided to give a better
indication of balance sheet trends.
<TABLE>
<CAPTION>
CONDENSED AVERAGE BALANCE SHEETS
(in millions)
1st Qtr 4th Qtr Increase
1994 1993 (Decrease)
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits with banks $ 1,512 $ 2,042 $ (530)
Federal funds sold 279 488 (209)
Securities purchased under resale
agreements 12,866 8,791 4,075
Securities borrowed 3,788 2,343 1,445
Trading assets 43,007 41,942 1,065
Securities available for sale
Taxable 5,294 - 5,294
Exempt from federal income taxes 1,288 - 1,288
Total securities available for sale 6,582 - 6,582
Investment securities
Taxable - 5,541 (5,541)
Exempt from federal income taxes - 1,030 (1,030)
Total investment securities - 6,571 (6,571)
Loans 13,003 14,211 (1,208)
Total interest-earning assets 81,037 76,388 4,649
Cash and due from banks 2,020 1,971 49
Noninterest-earning trading assets 19,359 3,772 15,587
All other assets 8,046 6,528 1,518
Allowance for credit losses (1,349) (1,494) 145
Total $109,113 $87,165 $21,948
LIABILITIES
Interest-bearing deposits
In domestic offices $ 7,065 $ 8,511 $(1,446)
In foreign offices 11,472 12,410 (938)
Total interest-bearing deposits 18,537 20,921 (2,384)
Trading liabilities 12,223 7,430 4,793
Securities sold under repurchase agreements 24,120 21,671 2,449
Other short-term borrowings 17,361 14,504 2,857
Long-term debt 5,694 5,450 244
Total interest-bearing liabilities 77,935 69,976 7,959
Noninterest-bearing deposits 4,154 3,932 222
Noninterest-bearing trading liabilities 15,358 1,694 13,664
All other liabilities 6,814 6,883 (69)
Total liabilities 104,261 82,485 21,776
PREFERRED STOCK OF SUBSIDIARY 250 250 -
STOCKHOLDERS' EQUITY
Preferred stock 259 250 9
Common stockholders' equity 4,343 4,180 163
Total stockholders' equity 4,602 4,430 172
Total $109,113 $87,165 $21,948
<FN>
The condensed average balance sheets are presented on a different basis than the spot
balance sheets, in that the various categories of interest-earning assets and interest-
bearing liabilities exclude certain noninterest-earning/bearing components included in
the spot balance sheet captions. These components are included in "all other assets" and
"all other liabilities" in the condensed average balance sheets.
</TABLE>
<PAGE>
<PAGE> 17
BALANCE SHEET ANALYSIS (continued)
The Corporation's average total assets amounted to $109.1 billion for
the first quarter of 1994, representing an increase of $21.9 billion, or 25
percent, from the fourth quarter of 1993. Noninterest-earning trading
assets increased $15.6 billion due primarily to the adoption of FASB
Interpretation No. 39, effective January 1, 1994. Average interest-earning
assets increased $4.6 billion, however, due to the adoption of FASB
Interpretation No. 39, the proportion of interest-earning assets to total
assets decreased, from 88 percent to 74 percent. The increase in interest-
earning assets was primarily due to increases in securities purchased under
resale agreements (up $4.1 billion, or 46 percent) and securities borrowed
(up $1.4 billion, or 62 percent). As a percentage of average total assets,
interest-earning trading assets decreased from 48 percent to 39 percent in
the first quarter of 1994, while loans decreased from 16 percent to 12
percent.
Average total liabilities increased $21.8 billion, or 26 percent, from
the fourth quarter of 1993. Noninterest-bearing trading liabilities
increased $13.7 billion due primarily to the adoption of FASB
Interpretation No. 39. Interest-bearing liabilities increased $8.0
billion, or 11 percent, from last year's fourth quarter. This increase was
primarily attributable to higher levels of trading liabilities (up $4.8
billion, or 65 percent), other short-term borrowings (up $2.9 billion, or
20 percent) and securities sold under repurchase agreements (up $2.4
billion, or 11 percent) offset in part by a decrease in total interest-
bearing deposits (down $2.4 billion, or 11 percent). Total short-term
borrowings (securities sold under repurchase agreements and other short-
term borrowings) as a percentage of total interest-bearing liabilities
increased slightly to 53 percent, from 52 percent in the fourth quarter of
1993.
Trading Assets and Trading Liabilities
The components of these accounts, which are carried at market value,
were as follows (in millions):
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
TRADING ASSETS
U.S. government and agency securities $17,423 $19,648
Obligations of U.S. states and political subdivisions553 494
Foreign government securities 8,600 13,229
Corporate debt securities 5,365 5,565
Equity securities 3,843 3,804
Bankers acceptances and certificates of deposit 1,294 2,178
Swaps, options and other derivative contracts (1)15,575 732
Other 3,520 2,626
Total trading assets $56,173 $48,276
TRADING LIABILITIES
Securities sold, not yet purchased
U.S. government and agency securities $ 6,020 $4,023
Foreign government securities 1,570 3,099
Corporate debt securities 1,026 -
Equity securities 1,892 1,644
Other 157 583
Swaps, options and other derivative contracts (1)12,340 -
Total trading liabilities $23,005 $9,349
<FN>
(1) Comprised of fair values of interest rate instruments, foreign exchange rate
instruments, and equity and commodity instruments, reduced by the effects of master
netting agreements, in accordance with FASB Interpretation No. 39, at March 31, 1994.
At December 31, 1993, prior to the adoption of FASB Interpretation No. 39, the
Corporation's policy was to record the unrealized gains and losses on these contracts
on a net basis.
</TABLE> <PAGE>
<PAGE> 18
BALANCE SHEET ANALYSIS (continued)
Securities Available for Sale
The fair value, amortized cost and gross unrealized holding gains and
losses for the Corporation's securities available for sale follow (in
millions):
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
Fair value $5,791 $7,073
Amortized cost 5,585 6,898
Excess of fair value over amortized cost (1) $ 206 $ 175
<FN>
(1) Components:
Unrealized gains $279 $ 308
Unrealized losses (73) (133)
$206 $ 175
</TABLE>
<PAGE>
<PAGE> 19
BALANCE SHEET ANALYSIS (continued)
Long-term Debt
During the first quarter of 1994, the Corporation obtained $512
million of cash proceeds from the issuances of long-term debt and repaid
$429 million of long-term debt. The larger of these debt issuances and
redemptions were as follows (in millions):
<TABLE>
<CAPTION>
Face Amount
Issuances Redemptions
<S> <C> <C>
Parent Company
10.20% Subordinated Debentures due March 1999 $145
Bankers Trust Company
5-3/8% Notes due February 1994 $200
BT Securities Corporation
Senior Subordinated Floating Rate Notes due 1997$200
</TABLE>
Preferred Stock Issuance
On March 28, 1994, the Parent Company issued $200 million, or 8
million depositary shares at $25 per share, each representing a one-
hundredth interest in a share of Adjustable Rate Cumulative Preferred
Stock, Series Q (Liquidation Preference - $2,500 per share) ("Series Q").
At the option of the Parent Company, the Series Q may be redeemed, in whole
or in part, on or after March 1, 1999, at $2,500 per share (or $25 per
depositary share), plus, in each case, accrued and unpaid dividends to the
redemption date. Any optional redemption shall be with the approval of the
Federal Reserve Board unless at that time that body should determine that
its approval is not required.
Dividends on the Series Q are cumulative and payable quarterly on
March 1, June 1, September 1 and December 1 of each year. The dividend
rate is determined by a formula that considers the interest rates of
selected short- and long-term U.S. Treasury securities at the time the rate
is set. In no event will the dividend rate be less than 4 1/2 percent per
annum.
A more detailed description of the terms of the Series Q is contained
in the Prospectus, as supplemented, which was filed with the Securities and
Exchange Commission.
<PAGE>
<PAGE> 20
END-USER DERIVATIVES
The Corporation, as an end user, utilizes various types of derivative
products (principally interest rate swaps) to manage the interest rate,
currency and other market risks associated with liabilities and assets such
as interest-bearing deposits, short-term borrowings and long-term debt as
well as investments in non-marketable equity instruments and net
investments in foreign entities. End-user derivative products are
accounted for on an accrual basis, that is, revenue or expense pertaining
to management of interest rate exposure is recognized over the life of the
contract as an adjustment to interest revenue or expense.
At December 31, 1993, the Corporation had reported net unrealized
gains applicable to end-user derivatives of $215 million. At March 31,
1994, due to significant increases in interest rates, the fair value of
end-user derivatives had decreased by approximately $466 million. This
decline in fair value was more than offset by a reduction in the fair value
of the Corporation's related liabilities (interest-bearing deposits, other
short-term borrowings and long-term debt). The change in the fair value of
the applicable assets and liabilities favorably offset the decline in the
value of the related end-user derivatives by approximately $33 million.
The following table provides the gross gains and gross losses not yet
recognized in the financial statements for end-user derivatives applicable
to certain hedged assets and liabilities (in millions):
<TABLE>
<CAPTION>
Other
short-
Interest- term Long-
Other bearing borrow- term
Quarter Ended March 31, 1994 assets deposits ings debt Total
<S> <C> <C> <C> <C> <C>
Interest Rate Swap
Pay Variable Unrealized Gain $- $ 97 $ 16 $ 119 $ 232
Pay Variable Unrealized (Loss) - (49) (185) (129) (363)
Pay Variable Net - 48 (169) (10) (131)
Pay Fixed Unrealized Gain - 28 - 16 44
Pay Fixed Unrealized (Loss) - (95) (1) (61) (157)
Pay Fixed Net - (67) (1) (45) (113)
Total Unrealized Gain - 125 16 135 276
Total Unrealized (Loss) - (144) (186) (190) (520)
Total Net $- $ (19) $(170)$ (55) $(244)
Currency Swap
Unrealized Gain $2 $ 3 $ 3 $34 $42
Unrealized (Loss) - (1) (1) (2) (4)
Net $2 $ 2 $ 2 $32 $38
Equity Swap/Collar
Unrealized Gain $ 12 $- $- $- $ 12
Unrealized (Loss) (57) - - - (57)
Net $(45) $- $- $- $(45)
Total Unrealized Gain $ 14 $ 128 $ 19 $ 169 $ 330
Total Unrealized (Loss) (57) (145) (187) (192) (581)
Total Net $(43) $ (17) $(168)$ (23) $(251)
/TABLE
<PAGE>
<PAGE> 21
END-USER DERIVATIVES (continued)
Derivatives which are used to manage the risks associated with
securities available for sale are carried at fair value. The unrealized
gains and unrealized losses on derivatives included in securities available
for sale amounted to $9 million and $52 million, respectively, at March 31,
1994, with the corresponding offset to securities valuation allowance in
stockholders' equity.
For pay variable and pay fixed interest rate swaps entered into as end
user, the weighted average receive rate and weighted average pay rate by
maturity and corresponding notional amounts at March 31, 1994 were as
follows ($ in millions):
<TABLE>
<CAPTION>
Notional
Amount Paying Variable(1) Paying Fixed
Maturing Notional Receive Pay Notional Receive Pay Total
In: Amount Rate Rate Amount Rate Rate Notional
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $ 8,319 3.45% 3.66% $2,200 3.56%5.17% $10,519
1995-1996 9,530 4.63 3.59 2,893 3.61 5.98 12,423
1997-1998 3,123 5.08 3.38 890 3.02 5.93 4,013
1999 and thereafter 4,295 6.08 3.59 1,360 3.76 8.09 5,655
Total $25,267 $7,343 $32,610
<FN>
(1) Variable rates were those in effect at March 31, 1994.
</TABLE>
<PAGE>
<PAGE> 22
REGULATORY CAPITAL
The Federal Reserve Board's capital adequacy guidelines mandate that
minimum ratios ("FRB Minimum Regulatory Guidelines") be maintained by bank
holding companies and banks. The Corporation's 1993 Annual Report on Form
10-K, on page 39, provides a detailed discussion of both these regulatory
capital guidelines and the federal bank regulations regarding capital tiers
under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") for the Corporation's bank subsidiaries.
Based on their respective regulatory capital ratios at March 31, 1994,
both Bankers Trust Company ("BTCo.") and Bankers Trust (Delaware) are well
capitalized, based on the definitions in the regulations issued by the
Federal Reserve Board and the other federal bank regulatory agencies
setting forth the general capital requirements mandated by FDICIA.
The table below indicates the regulatory capital ratios of the
Corporation and BTCo. and the minimum regulatory guidelines.
<TABLE>
<CAPTION>
FRB
Minimum
March 31, December 31, Regulatory
1994 1993 Guidelines
<S> <C> <C> <C>
CORPORATION
Risk-Based Ratios
Tier 1 Capital 8.89% 8.50% 4.0%
Total Capital 14.66% 14.46% 8.0%
Leverage Ratio 5.39% 6.28% 3.0%
BTCo.
Risk-Based Ratios
Tier 1 Capital 9.98% 9.38% 4.0%
Total Capital 13.48% 12.96% 8.0%
Leverage Ratio 5.68% 6.01% 3.0%
</TABLE>
The following were the essential components of the Corporation's risk-
based capital ratios (in millions):
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
Tier 1 Capital $4,441 $4,072
Tier 2 Capital 2,884 2,859
Total Capital $7,325 $6,931
Total risk-weighted assets $49,963 $47,916
</TABLE>
<PAGE>
<PAGE> 23
REGULATORY CAPITAL (continued)
During the first quarter of 1994, the Corporation's Tier 1 Capital
ratio increased by 39 basis points and the Total Capital ratio improved by
20 basis points. The Leverage Ratio decreased by 89 basis points as a
result of a 27 percent increase in quarterly average total assets,
primarily due to the adoption of FASB Interpretation No. 39. The $369
million increase in Tier 1 Capital was primarily attributable to the
issuance of Series Q Preferred Stock, the inclusion of net deferred tax
assets which are permissible for regulatory capital, as well as the
retention of earnings. The Corporation's total risk-weighted assets at
March 31, 1994 were $2.047 billion higher than at year-end 1993.
LIQUIDITY
Liquidity management at the Corporation focuses on both asset
liquidity and liability management. Enhancing asset liquidity remains a
particularly important element of its liquidity management philosophy. At
the same time, management is continually seeking opportunities to further
diversify the Corporation's funding sources.
Liquid assets consist of cash and due from banks, interest-bearing
deposits with banks, federal funds sold, securities purchased under resale
agreements, securities borrowed, trading assets and securities available
for sale. At March 31, 1994, the Corporation's liquid assets amounted to
$83.3 billion, or 79 percent of gross total assets, compared with 77
percent at December 31, 1993.
Cash Flows
The following comments apply to the consolidated statement of cash
flows, which appears on page 5.
Cash and due from banks increased $25 million during the first quarter
of 1994, as the sum of net cash used in investing and financing activities
exceeded the net cash provided by operating activities. Within the
investing activities category, cash outflows from a net increase in
securities purchased under resale agreements ($4.6 billion) and purchases
of securities available for sale ($1.1 billion) were offset in part by cash
inflows from sales, maturities and other redemptions of securities
available for sale ($1.9 billion) and a net decrease in loans ($1.5
billion). The $2.2 billion of net cash used in financing activities
resulted from net decreases of $2.9 billion in deposits and $1.4 billion in
other short-term borrowings, partially offset by a $2.0 billion net
increase in securities sold under repurchase agreements. The $5.1 billion
of net cash provided by operating activities primarily resulted from a
$13.6 billion net increase in trading liabilities offset in part by cash
outflows from a $7.1 billion net increase in trading assets and a $1.7
billion net change in receivables and payables from securities
transactions.
For the quarter ended March 31, 1993, cash and due from banks
increased $122 million, as net cash provided by financing activities
exceeded the sum of net cash used in operating and investing activities.
The $4.9 billion of net cash provided by financing activities primarily
<PAGE>
<PAGE> 24
LIQUIDITY (continued)
resulted from net increases in securities sold under repurchase agreements
($3.9 billion) and other short-term borrowings ($2.9 billion), offset in
part by a net decrease in deposits ($2.2 billion). The $2.6 billion of net
cash used in operating activities primarily resulted from $2.9 billion of
net cash outflows from changes in operating assets and liabilities and by
$321 million of earnings adjusted for noncash charges and credits. Within
the investing activities category, cash outflows from purchases of
investment securities ($2.3 billion), net changes in federal funds sold
($1.7 billion), securities borrowed ($1.6 billion) and securities purchased
under resale agreements ($829 million) were offset in part by cash inflows
from sales, maturities and other redemptions of investment securities ($2.3
billion) and the net change in loans ($1.4 billion).
Interest Rate Sensitivity
Condensed interest rate sensitivity data for the Corporation at
March 31, 1994 is presented in the table below. For purposes of this
presentation, the interest-earning/bearing components of trading account
assets and securities sold, not yet purchased are assumed to reprice within
three months.
Since the interest rate gaps are actively managed and change daily as
adjustments are made in interest rate views and market outlook, positions
at the end of any period may not be reflective of the Corporation's
interest rate view in subsequent periods. Active management dictates that
longer term economic views are balanced against prospects of short-term
interest rate changes in all repricing intervals.
<TABLE>
<CAPTION>
By Repricing Interval Non-
interest-
Within 1 - 5 After bearing
(in billions) March 31, 1994 1 year years 5 years funds Total
<S> <C> <C> <C> <C> <C>
Assets $ 70.8 $ 2.0 $ 2.4 $ 28.5 $103.7
Liabilities, preferred stock
of subsidiary and preferred
stock (69.2) (3.2) (1.9) (25.1) (99.4)
Common stockholders' equity - - - (4.3) (4.3)
Effect of off-balance sheet
hedging instruments (1.3) .8 .5 - -
Interest rate sensitivity gap $ .3 $ (.4) $ 1.0 $ (.9) $ -
</TABLE>
<PAGE>
<PAGE> 25
NONPERFORMING ASSETS
The components of cash basis loans, renegotiated loans, other real
estate and other nonperforming assets are shown below ($ in millions).
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
CASH BASIS LOANS (NONREFINANCING COUNTRY)
Domestic
Commercial and industrial $219 $285
Secured by real estate 321 306
Financial institutions 24 30
Total domestic 564 621
International
Commercial and industrial 93 84
Secured by real estate 141 149
Other 2 2
Total international 236 235
Total cash basis loans (nonrefinancing country) 800 856
CASH BASIS LOANS (REFINANCING COUNTRY)
International 62 118
Total cash basis loans $862 $974
Ratio of cash basis loans to total loans 6.3% 6.4%
Ratio of allowance for credit losses to cash
basis loans 156% 136%
RENEGOTIATED LOANS
Highly leveraged $ 5 $ 6
Secured by real estate 14 14
Other nonrefinancing country 1 1
Total renegotiated loans $20 $21
Other real estate $283 $287
OTHER NONPERFORMING ASSETS
Assets acquired in credit workouts $ 85 $ 85
Nonperforming derivative contracts 16 16
Total other nonperforming assets $101 $101
Loans 90 days or more past due and still
accruing interest $23 $40
</TABLE>
<PAGE>
<PAGE> 26
NONPERFORMING ASSETS (continued)
An analysis of the changes in the Corporation's total cash basis loans
during the first quarter of 1994 follows (in millions).
<TABLE>
<CAPTION>
<S> <C>
Balance, December 31, 1993 $974
Net transfers from accrual status 53
Net paydowns (43)
Charge-offs (19)
Transfers to other real estate (9)
Loan sales (39)
Other (55)
Balance, March 31, 1994 $862
</TABLE>
The Corporation's total cash basis loans amounted to $862 million
at March 31, 1994, down $112 million, or 11 percent, from December 31,
1993. Nonrefinancing and refinancing country cash basis loans each
decreased by $56 million during the first quarter of 1994.
Within total nonrefinancing country cash basis loans were loans
secured by real estate of $462 million and $455 million at March 31, 1994
and December 31, 1993, respectively. Also within nonrefinancing country
cash basis loans, loans to highly leveraged borrowers (mainly included
within the domestic commercial and industrial category in the table on page
25) decreased by $31 million, to $162 million, during the first quarter of
1994. Other real estate decreased by $4 million during the same period.
Although total nonperforming assets have decreased for nine
consecutive quarters, in view of current economic conditions, no assurance
can be given that the level of cash basis real estate loans and other real
estate will not increase during the remainder of 1994.
<PAGE>
<PAGE> 27
NONPERFORMING ASSETS (continued)
The following table sets forth the approximate effect on interest
revenue of cash basis loans and renegotiated loans. This disclosure
reflects the interest on loans which were carried on the balance sheet and
classified as either cash basis or renegotiated at March 31 of each year.
The rates used in determining the gross amount of interest that would have
been recorded at the original rate were not necessarily representative of
current market rates.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(in millions) 1994 1993
<S> <C> <C>
Domestic Loans
Gross amount of interest that would have
been recorded at original rate $11 $18
Less, interest, net of reversals, recognized
in interest revenue 1 2
Reduction of interest revenue 10 16
International Loans
Gross amount of interest that would have
been recorded at original rate 5 15
Less, interest, net of reversals, recognized
in interest revenue 3 20
Reduction of (Increase in) interest revenue 2 (5)
Total reduction of interest revenue $12 $11
</TABLE>
<PAGE>
<PAGE> 28
HIGHLY LEVERAGED TRANSACTIONS
Amounts included in the table and discussion which follow are
generally based on the definition that the Corporation uses in order to
monitor the extent of its exposure to highly leveraged transactions
("HLTs"). The Corporation's 1993 Annual Report on Form 10-K, on page 45,
provides a detailed discussion of the definition.
<TABLE>
<CAPTION>
Highly Leveraged Transactions
March 31,December 31,
(in millions) 1994 1993
<S> <C> <C>
Loans
Senior debt $825 $1,314
Subordinated debt 134 126
Total loans $959 $1,440
Unfunded commitments
Commitments to lend $348 $603
Letters of credit 194 201
Total unfunded commitments $542 $804
Equity investments $508 $477
Commitments to invest $140 $127
</TABLE>
The Corporation's outstanding loans were to 85 separate borrowers in
34 separate industry groups at March 31, 1994, compared to 105 separate
borrowers in 35 separate industry groups at December 31, 1993.
Broadcasting, at 10.85 percent, was the only industry concentration which
exceeded 10 percent of total HLT loans outstanding at March 31, 1994.
In addition to the amounts shown in the table above, at March 31,
1994, the Corporation had issued commitment letters which had been
accepted, subject to documentation and certain other conditions, of $1.1
billion (which were in various stages of syndication) and had additional
HLTs in various stages of discussion and negotiation.
During the first quarter of 1994, the Corporation originated $329
million of HLT commitments, of which $197 million were sold, syndicated or
participated, on a non-recourse basis.
All loans and commitments to finance HLTs are reviewed and approved by
senior credit officers of the Corporation. In addition to a strict
transactional and credit approval process, the portfolio of leveraged loans
and commitments is actively monitored and managed to minimize risk through
diversification among borrowers and industries. As part of this strategy,
sell and hold targets are regularly updated in connection with market
<PAGE>
<PAGE> 29
HIGHLY LEVERAGED TRANSACTIONS (continued)
opportunities and the addition of new HLTs. Retention by the Corporation
after syndication and sales of loan participations has typically been less
than $50 million, and the average outstanding for the portfolio at
March 31, 1994 was less than $12 million. However, at March 31, 1994, the
Corporation had total exposure (loans outstanding plus unfunded
commitments) in excess of $50 million to 7 separate highly leveraged
borrowers.
At March 31, 1994, $162 million of the HLT loan portfolio was on a
cash basis and $5 million was classified as renegotiated. In addition, $38
million of the equity investments in HLT companies represented assets
acquired in settlement of indebtedness, which are reported as other
nonperforming assets. Net recoveries of $9 million of HLT loans were
recorded in the first quarter of 1994. In addition, the Corporation
recorded a net gain of $9 million in connection with its equity investments
in highly leveraged companies during the first quarter of 1994.
Generally, fees (typically 2 to 4 percent of the principal amount
committed) and interest charged (typically LIBOR plus 1.5 to 3 percent) on
HLT loans are higher than on other credits. The Corporation does not
account for revenue or expenses from HLTs separately from its other
corporate lending activities. However, it is estimated that transaction
fees recognized for lending activities relating to HLTs were approximately
$39 million during the first quarter of 1994 and that as of March 31, 1994,
approximately $16 million of fees were deferred and will be recognized as
future revenue.
During the first quarter of 1994, the Corporation transferred
approximately $238 million of outstanding loans to highly leveraged
borrowers from its loan portfolio to trading. The transferred loans were
carried at market value upon transfer to trading. None of the loans was
classified as a nonperforming asset at the time of transfer. Accordingly,
subsequent to transfer these loans have been excluded from the
Corporation's HLT outstandings at March 31, 1994 as reported above. No
significant impact on earnings was recorded as a result of this transfer.
<PAGE>
<PAGE> 30
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on April 19, 1994.
(b) Each of the persons named in the Proxy Statement as a nominee for
Director was elected.
(c) The following are the voting results on each of the matters which
were submitted to the stockholders:
Against
or Broker
For Withheld Abstain Non-Votes
Election of Directors
George B. Beitzel 72,405,762 762,639
William R. Howell 72,407,289 761,112
Jon M. Huntsman 72,410,245 758,156
Vernon E. Jordan, Jr. 72,358,906 809,495
Hamish Maxwell 72,402,608 765,793
Donald F. McCullough 72,367,362 801,039
N. J. Nicholas Jr. 72,404,740 763,661
Russell E. Palmer 72,408,015 760,386
Didier Pineau-Valencienne 72,366,465 801,936
Charles S. Sanford, Jr. 72,405,392 763,009
Eugene B. Shanks, Jr. 72,409,356 759,045
Patricia C. Stewart 72,402,033 766,368
George J. Vojta 72,407,809 760,592
Resolutions
. To ratify the appointment of
Ernst & Young as independent
auditor for 1994. 72,782,642 176,956 208,803
. To approve the 1994 Stock
Option and Stock Award Plan.51,040,92316,857,729 444,496 4,825,253
. To approve the Incentive Bonus
Plan for Corporate Officers.67,633,9813,039,133 493,087 2,002,200
. To provide for cumulative
voting in the election of
directors. 14,843,303 53,259,653 307,856 4,757,589
. To not make any new loans
or renew any old loans to
corporations which have
changed their Annual Meeting
dates to conflict with those
of other major corporations.1,092,34866,179,702 1,133,962 4,762,389
The text of the matters referred to under this Item 4 is set forth
in the Proxy Statement dated March 15, 1994 previously filed with
the Commission and incorporated herein by reference.
<PAGE>
<PAGE> 31
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(4) Instruments Defining the Rights of Security Holders,
Including Indentures
(v) - The Corporation hereby agrees to furnish to the
Commission, upon request, a copy of any instru-
ments defining the rights of holders of long-term
debt issued by Bankers Trust New York Corporation
or its subsidiaries.
(12) Statement re Computation of Ratios
(99) Additional Exhibits
Proxy Statement dated March 15, 1994 - Notice of Annual
Meeting of Bankers Trust New York Corporation on
April 19, 1994 - Previously filed with the Commission.
(b) Reports on Form 8-K - Bankers Trust New York Corporation filed
two reports on Form 8-K during the quarter ended March 31, 1994.
- The report dated January 20, 1994 filed the Corporation's
Press Release dated January 20, 1994, which announced earnings
for the quarter and year ended December 31, 1993.
- The report dated March 21, 1994 filed an underwriting agreement
covering the issuance and sale by Bankers Trust New York
Corporation of 8,000,000 Depositary Shares, each representing
a one-hundredth interest in a share of Adjustable Rate
Cumulative Preferred Stock, Series Q and various other exhibits
related to the issuance.
<PAGE>
<PAGE> 32
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, on May 16, 1994.
BANKERS TRUST NEW YORK CORPORATION
By: GEOFFREY M. FLETCHER
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
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<PAGE> 33
BANKERS TRUST NEW YORK CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1994
EXHIBIT INDEX
(4) Instruments Defining the Rights of Security
Holders, Including Indentures
(v) - Long-Term Debt Indentures (a)
(12) Statement re Computation of Ratios
(a) - Computation of Consolidated Ratios of
Earnings to Fixed Charges
(b) - Computation of Consolidated Ratios of
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements
[FN]
(a) The Corporation hereby agrees to furnish to the Commission, upon
request, a copy of any instruments defining the rights of holders
of long-term debt issued by Bankers Trust New York Corporation or
its subsidiaries.
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<TABLE>
EXHIBIT 12(a)
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<CAPTION>
Three
Months
Ended
Year Ended December 31, March 31,
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income (loss) before
income taxes and
cumulative effects
of accounting
changes $ (815) $ 815 $ 834 $ 906 $1,550 $ 234
2. Add: Fixed charges
excluding
capitalized
interest
(Line 10) 4,803 4,826 3,614 3,099 3,148 848
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 14 47 31 40 30 14
4. Earnings including
interest on deposits 3,974 5,594 4,417 3,965 4,668 1,068
5. Less: Interest on
deposits 2,253 2,226 1,589 1,119 1,013 198
6. Earnings excluding
interest on deposits $1,721 $3,368 $2,828 $2,846 $3,655 $ 870
Fixed Charges:
7. Interest Expense $4,775 $4,799 $3,585 $3,072 $3,122 $ 841
8. Estimated interest
component of net
rental expense 26 27 29 27 26 7
9. Amortization of debt issuance
expense 2 - - - - -
10. Total fixed charges
including interest on
deposits and excluding
capitalized interest 4,803 4,826 3,614 3,099 3,148 848
11. Add: Capitalized
interest 5 - - - - -
12. Total fixed charges 4,808 4,826 3,614 3,099 3,148 848
13. Less: Interest on
deposits
(Line 5) 2,253 2,226 1,589 1,119 1,013 198
14. Fixed charges excluding
interest on deposits $2,555 $2,600 $2,025 $1,980 $2,135 $ 650
Consolidated Ratios of Earnings
to Fixed Charges:
Including interest on
deposits
(Line 4/Line 12) 0.83 1.16 1.22 1.28 1.48 1.26
Excluding interest on
deposits
(Line 6/Line 14) 0.67 1.30 1.40 1.44 1.71 1.34
<FN>
For the year ended December 31, 1989, earnings, as defined above, did not cover fixed
charges, including and excluding interest on deposits, by $834 million as a result of the 1989
special provision for refinancing country credit losses of $1.6 billion.
</TABLE>
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<TABLE>
EXHIBIT 12(b)
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(dollars in millions)
<CAPTION>
Three
Months
Ended
Year Ended December 31, March 31,
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income (loss) before
income taxes and
cumulative effects
of accounting
changes $ (815) $ 815 $ 834 $ 906 $1,550 $ 234
2. Add: Fixed charges
excluding
capitalized
interest
(Line 13) 4,803 4,826 3,614 3,099 3,148 848
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 14 47 31 40 30 14
4. Earnings including
interest on
deposits 3,974 5,594 4,417 3,965 4,668 1,068
5. Less: Interest on
deposits 2,253 2,226 1,589 1,119 1,013 198
6. Earnings excluding
interest on
deposits $1,721 $3,368 $2,828 $2,846 $3,655 $ 870
Preferred Stock Dividend Requirements:
7. Preferred stock dividend
requirements $ 7 $ 31 $ 34 $ 30 $ 23 $ 5
8. Ratio of income from
continuing operations
before income taxes to
income from continuing
operations after income
taxes * 127% 123% 125% 142% 145% 143%
9. Preferred stock dividend
requirements on a pretax
basis $ 9 $ 38 $ 43 $ 43 $ 33 $ 7
Fixed Charges:
10. Interest Expense $4,775 $4,799 $3,585 $3,072 $3,122 841
11. Estimated interest
component of net
rental expense 26 27 29 27 26 7
12. Amortization of debt
issuance expense 2 - - - - -
13. Total fixed charges
including interest
on deposits and
excluding capitalized
interest 4,803 4,826 3,614 3,099 3,148 848
14. Add: Capitalized
interest 5 - - - - -
15. Total fixed charges 4,808 4,826 3,614 3,099 3,148 848
16. Add: Preferred stock
dividend require-
ments - pretax
(Line 9) 9 38 43 43 33 7
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17. Total combined fixed
charges and preferred
stock dividend require-
ments on a pretax
basis 4,817 4,864 3,657 3,142 3,181 855
18. Less: Interest on
deposits
(Line 5) 2,253 2,226 1,589 1,119 1,013 198
19. Combined fixed charges
and preferred stock
dividend requirements
on a pretax basis
excluding interest on
deposits $2,564 $2,638 $2,068 $2,023 $2,168 $ 657
Consolidated Ratios of Earnings
to Combined Fixed Charges
and Preferred Stock
Dividend Requirements:
Including interest on
deposits
(Line 4/Line 17) 0.82 1.15 1.21 1.26 1.47 1.25
Excluding interest on
deposits
(Line 6/Line 19) 0.67 1.28 1.37 1.41 1.69 1.32
<FN>
* Represents income from continuing operations before income taxes, excluding the 1989 special
provision for refinancing country credit losses of $1.6 billion, divided by income from
continuing operations after income taxes, excluding the 1989 special provision for refinancing
country credit losses of $1.6 billion, which adjusts preferred stock dividend requirements to a
pretax basis.
For the year ended December 31, 1989, earnings, as defined above, did not cover combined fixed
charges and preferred stock dividend requirements, including and excluding interest on deposits,
by $843 million as a result of the 1989 special provision for refinancing country credit losses
of $1.6 billion.
</TABLE>
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BANKERS TRUST NEW YORK CORPORATION
280 PARK AVENUE
NEW YORK, NEW YORK 10017
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
May 16, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
Accompanying this letter is Bankers Trust New York
Corporation's quarterly report on Form 10-Q for the quarter ended
March 31, 1994 (the "Form 10-Q"). The Form 10-Q is being filed
electronically through the EDGAR System. One hard copy of the Form
10-Q will be sent to the Securities and Exchange Commission's Filer
Support Unit, Alexandria, Virginia.
If there are any questions or comments in connection with the
enclosed filing, please contact the undersigned at 212-250-7098.
Very truly yours,
BANKERS TRUST NEW YORK CORPORATION
By: GEOFFREY M. FLETCHER
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
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