<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 June 30, 1995
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 July 31, 1995: Common Stock, $1 par value,
78,383,895 shares.
<PAGE> 1
BANKERS TRUST NEW YORK CORPORATION
June 30, 1995 FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
Three Months Ended June 30, 1995 and 1994 2
Six Months Ended June 30, 1995 and 1994 3
Consolidated Balance Sheet
At June 30, 1995 and December 31, 1994 4
Consolidated Statement of Changes in Stockholders'
Equity
Six Months Ended June 30, 1995 and 1994 5
Consolidated Statement of Cash Flows
Six Months Ended June 30, 1995 and 1994 6
Consolidated Schedule of Net Interest Revenue
Three Months and Six Months Ended
June 30, 1995 and 1994 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. The results of operations for the three
months and six months ended June 30, 1995 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 1994 Annual Report
as supplemented by the first quarter 1995 Form 10-Q.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 35
SIGNATURE 36
<PAGE> 2
PART I. FINANCIAL INFORMATION
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Increase
THREE MONTHS ENDED JUNE 30, 1995 1994 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $1,520 $1,255 $ 265
Interest expense 1,298 946 352
Net interest revenue 222 309 (87)
Provision for credit losses - - -
Net interest revenue after provision
for credit losses 222 309 (87)
NONINTEREST REVENUE
Trading 79 124 (45)
Fiduciary and funds management 166 187 (21)
Fees and commissions 211 195 16
Securities available for sale gains 17 19 (2)
Other 114 112 2
Total noninterest revenue 587 637 (50)
NONINTEREST EXPENSES
Salaries 194 189 5
Incentive compensation and employee benefits 135 202 (67)
Occupancy, net 38 38 -
Furniture and equipment 40 37 3
Other 271 222 49
Total noninterest expenses 678 688 (10)
Income before income taxes 131 258 (127)
Income taxes 40 77 (37)
NET INCOME $ 91 $ 181 $ (90)
NET INCOME APPLICABLE TO COMMON STOCK $ 79 $ 172 $ (93)
EARNINGS PER COMMON SHARE:
PRIMARY $.98 $2.09 $(1.11)
FULLY DILUTED $.98 $2.09 $(1.11)
Cash dividends declared per common share $1.00 $.90 $.10
</TABLE>
<PAGE> 3
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Increase
SIX MONTHS ENDED JUNE 30, 1995 1994 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $2,873 $2,466 $ 407
Interest expense 2,469 1,787 682
Net interest revenue 404 679 (275)
Provision for credit losses 14 - 14
Net interest revenue after provision
for credit losses 390 679 (289)
NONINTEREST REVENUE
Trading 1 138 (137)
Fiduciary and funds management 337 375 (38)
Fees and commissions 356 377 (21)
Securities available for sale gains 19 23 (4)
Other 216 229 (13)
Total noninterest revenue 929 1,142 (213)
NONINTEREST EXPENSES
Salaries 402 366 36
Incentive compensation and employee benefits 268 364 (96)
Occupancy, net 79 75 4
Furniture and equipment 82 76 6
Provision for severance-related costs 50 - 50
Other 531 448 83
Total noninterest expenses 1,412 1,329 83
Income (loss) before income taxes (93) 492 (585)
Income taxes (27) 147 (174)
NET INCOME (LOSS) $ (66) $ 345 $(411)
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (86) $ 331 $(417)
EARNINGS (LOSS) PER COMMON SHARE:
PRIMARY $(1.10) $3.99 $(5.09)
FULLY DILUTED $(1.10) $3.99 $(5.09)
Cash dividends declared per common share $2.00 $1.80 $.20
</TABLE>
<PAGE> 4
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in millions, except par value)
(unaudited)
<TABLE>
<CAPTION>
June 30,December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,739 $ 1,985
Interest-bearing deposits with banks 1,357 3,390
Federal funds sold 238 2,544
Securities purchased under resale agreements 17,629 9,943
Securities borrowed 6,929 6,197
Trading assets 50,565 47,514
Securities available for sale 6,479 7,475
Loans 11,537 12,501
Allowance for credit losses (1,243) (1,252)
Premises and equipment, net 931 915
Due from customers on acceptances 370 378
Accounts receivable and accrued interest 2,697 2,356
Other assets 3,709 3,070
Total $102,937 $97,016
LIABILITIES
Deposits
Noninterest-bearing
In domestic offices $ 2,465 $ 3,285
In foreign offices 527 541
Interest-bearing
In domestic offices 5,170 5,769
In foreign offices 14,443 15,344
Total deposits 22,605 24,939
Trading liabilities 28,404 20,949
Securities sold under repurchase agreements 18,933 15,617
Other short-term borrowings 14,010 18,222
Acceptances outstanding 370 378
Accounts payable and accrued expenses 3,615 3,174
Other liabilities 2,347 2,328
Long-term debt 7,514 6,455
Total liabilities 97,798 92,062
PREFERRED STOCK OF SUBSIDIARY 250 250
STOCKHOLDERS' EQUITY
Preferred stock 863 395
Common stock, $1 par value
Authorized, 300,000,000 shares
Issued, 83,678,973 shares 84 84
Capital surplus 1,300 1,317
Retained earnings 3,240 3,494
Common stock in treasury, at cost: 1995, 5,327,632 shares;
1994, 5,609,707 shares (391) (416)
Other (207) (170)
Total stockholders' equity 4,889 4,704
Total $102,937 $97,016
</TABLE>
<PAGE> 5
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995 1994
<S> <C> <C>
PREFERRED STOCK
Balance, January 1 $ 395 $ 250
Preferred stock issued 468 200
Balance, June 30 863 450
COMMON STOCK
Balance, January 1 and June 30 84 84
CAPITAL SURPLUS
Balance, January 1 1,317 1,321
Preferred stock issuance and conversion costs (16) (4)
Common stock distributed under employee
benefit plans (1) 2
Balance, June 30 1,300 1,319
RETAINED EARNINGS
Balance, January 1 3,494 3,226
Net income (loss) (66) 345
Cash dividends declared
Preferred stock (18) (13)
Common stock (157) (143)
Treasury stock distributed under employee benefit plans (13) (11)
Balance, June 30 3,240 3,404
COMMON STOCK IN TREASURY, AT COST
Balance, January 1 (416) (233)
Purchases of stock (13) (156)
Restricted stock granted, net 4 6
Treasury stock distributed under employee benefit plans 34 25
Balance, June 30 (391) (358)
COMMON STOCK ISSUABLE - STOCK AWARDS
Balance, January 1 160 143
Deferred stock awards granted, net 31 35
Deferred stock distributed (16) -
Balance, June 30 175 178
DEFERRED COMPENSATION - STOCK AWARDS
Balance, January 1 (63) (47)
Deferred stock awards granted, net (22) (36)
Restricted stock granted, net (2) (5)
Amortization of deferred compensation, net 19 31
Balance, June 30 (68) (57)
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, January 1 (336) (319)
Translation adjustments 13 (46)
Income taxes applicable to translation adjustments (24) 42
Balance, June 30 (347) (323)
SECURITIES VALUATION ALLOWANCE
Balance, January 1 69 109
Change in unrealized net gains, after applicable
income taxes and minority interest (36) (13)
Balance, June 30 33 96
TOTAL STOCKHOLDERS' EQUITY, JUNE 30 $4,889 $4,793
</TABLE>
<PAGE> 6
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (66) $ 345
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for credit losses 14 -
Provision for severance-related costs 50 -
Provision for policyholder benefits 127 107
Deferred income taxes (33) (74)
Depreciation and amortization of premises
and equipment 67 60
Other, net (45) (69)
Earnings adjusted for noncash charges and credits 114 369
Net change in:
Trading assets (3,874) (5,615)
Trading liabilities 7,914 15,577
Receivables and payables from securities
transactions 126 (330)
Other operating assets and liabilities, net (759) 401
Securities available for sale gains (19) (23)
Net cash provided by operating activities 3,502 10,379
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in:
Interest-bearing deposits with banks 1,903 32
Federal funds sold 2,306 (1,212)
Securities purchased under resale agreements (7,616) (2,683)
Securities borrowed (732) (2,459)
Loans 960 1,892
Securities available for sale:
Purchases (1,621) (3,352)
Maturities and other redemptions 1,687 1,723
Sales 1,163 1,307
Acquisitions of premises and equipment (73) (100)
Other, net (64) 4
Net cash used in investing activities (2,087) (4,848)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in:
Deposits (2,135) (2,821)
Securities sold under repurchase agreements 3,240 (2,378)
Other short-term borrowings (3,990) 670
Issuances of long-term debt 2,196 916
Repayments of long-term debt (1,000) (958)
Issuances of preferred stock 221 196
Purchases of treasury stock (13) (156)
Cash dividends paid (174) (157)
Other, net 11 17
Net cash used in financing activities (1,644) (4,671)
Net effect of exchange rate changes on cash (17) 52
NET INCREASE (DECREASE)IN CASH AND DUE FROM BANKS (246) 912
Cash and due from banks, beginning of year 1,985 1,750
Cash and due from banks, end of period $1,739 $ 2,662
Interest paid $2,310 $1,756
Income taxes paid, net $182 $156
Noncash investing activities $41 $120
Noncash financing activities:
Conversion of debt to preferred stock $243 $-
Other - 6
Total noncash financing activities $243 $6
</TABLE>
<PAGE> 7
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF NET INTEREST REVENUE
(in millions)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST REVENUE
Interest-bearing deposits with banks $ 60 $ 24 $ 109 $ 58
Federal funds sold 21 4 56 6
Securities purchased under resale agreements 284 108 495 204
Securities borrowed 125 43 233 73
Trading assets 714 761 1,330 1,521
Securities available for sale
Taxable 81 64 170 125
Exempt from federal income taxes 15 22 31 43
Loans 220 229 449 436
Total interest revenue 1,520 1,255 2,873 2,466
INTEREST EXPENSE
Deposits
In domestic offices 98 62 191 107
In foreign offices 237 149 478 302
Trading liabilities 237 237 450 433
Securities sold under repurchase agreements 310 234 546 448
Other short-term borrowings 307 204 605 378
Long-term debt 109 60 199 119
Total interest expense 1,298 946 2,469 1,787
NET INTEREST REVENUE $ 222 $ 309 $ 404 $ 679
</TABLE>
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Bankers Trust New York Corporation (the "Parent Company") and
subsidiaries (collectively, the "Corporation", or the "Firm") earned $91
million for the quarter ended June 30, 1995, or $.98 primary earnings per
share. In the second quarter of 1994, the Corporation earned $181 million,
or $2.09 primary earnings per share.
For the first six months of 1995, the Corporation recorded a loss of
$31 million, or $.65 primary loss per share excluding an after-tax
provision for severance-related costs of $35 million taken in connection
with the Corporation's expense reduction programs. Net loss for the first
six months, including the effect of this provision was $66 million, or
$1.10 primary loss per share. For the six months ended June 30, 1994, net
income was $345 million, or $3.99 primary earnings per share.
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 1994 Annual Report on Form 10-K.
<PAGE> 9
BUSINESS FUNCTIONS (continued)
<TABLE>
<CAPTION>
Business Functions Profitability
(in millions)
Quarter Ended Six Months Ended
June 30, Increase June 30, Increase
1995 1994 (Decrease) 1995 1994 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Client Finance $ 48 $ 36 $ 12 $ 62 $ 79 $ (17)
Client Advisory 19 23 (4) 39 53 (14)
Client Financial Risk
Management (49) 50 (99) (171) 164 (335)
Client Transaction Processing 25 26 (1) 33 58 (25)
Trading and Positioning 53 52 1 17 3 14
Unallocated (5) (6) 1 (46) (12) (34)
Income (Loss) $ 91 $181 $(90) $ (66) $345 $(411)
</TABLE>
Client Finance - Client Finance income was $48 million in the second
quarter of 1995, up $12 million, or 33 percent, from last year's second
quarter. This increase was primarily attributable to strong levels of loan
syndication and private placement fees. Income for the first half of 1995
was $62 million, down from $79 million recorded in the comparable period in
1994.
Client Advisory - Client Advisory income was $19 million in the
current quarter, a decline of $4 million from the prior year's second
quarter. This decline was primarily due to decreased revenue from merger
and acquisition, financial advisory and funds management activities offset
in part by higher revenue from the Corporation's Chilean insurance
subsidiaries. Income for the first six months of 1995 was $39 million,
down from $53 million recorded in 1994.
Client Financial Risk Management - As a result of a successful
reduction of loss making positions, principally in Latin American
derivatives, the net loss in Client Financial Risk Management has been
reduced by $73 million, to $49 million in the second quarter of 1995.
Additionally, though comprised of low margin transactions, client
derivatives volume remained steady during the second quarter. Income for
the three and six months ended June 30, 1995 declined by $99 million and
$335 million, respectively as compared to the same periods in 1994.
Client Transaction Processing - Client Transaction Processing income
was $25 million, down $1 million from the prior year's second quarter due
to a decline in transaction volumes in fiduciary services. This was offset
in part by a small gain on the sale of one of the Corporation's trust
businesses. Client Transaction Processing revenue for the first half of
1995 declined $25 million from the first half of 1994.
<PAGE> 10
BUSINESS FUNCTIONS (continued)
Trading and Positioning - Trading and Positioning income of $53
million during the current quarter was virtually unchanged from the prior
year's second quarter. The results of the current quarter were a
significant improvement over the weak first quarter as trading performance
generally improved in the Latin American, Australian and Asian markets.
Trading and Positioning income for the first six months of 1995 improved by
$14 million over the comparable 1994 period.
Unallocated - Included in the unallocated category for the first six
months of 1995 was a $35 million after-tax provision for severance-related
costs associated with the expense reduction programs.
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>
Quarter Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET INTEREST REVENUE (in millions)
Book basis $222 $309 $404 $679
Tax equivalent adjustment 9 21 24 42
Fully taxable basis $231 $330 $428 $721
AVERAGE BALANCES (in millions)
Interest-earning assets $81,393 $74,107 $79,819 $77,553
Interest-bearing liabilities 77,674 71,197 76,664 74,547
Earning assets financed by
noninterest-bearing funds $ 3,719 $ 2,910 $ 3,155 $ 3,006
AVERAGE RATES (fully taxable basis)
Yield on interest-earning assets 7.53% 6.91% 7.32% 6.52%
Cost of interest-bearing liabilities 6.70 5.33 6.49 4.83
Interest rate spread .83 1.58 .83 1.69
Contribution of noninterest-bearing
funds .31 .21 .25 .18
Net interest margin 1.14% 1.79% 1.08% 1.87%
</TABLE>
Net interest revenue for the second quarter of 1995 totaled $222
million, down $87 million, or 28 percent, from the second quarter of 1994.
Of this decline, $64 million was from trading-related net interest revenue.
<PAGE> 11
REVENUE (continued)
Net interest revenue was $404 million for the first six months of
1995, down $275 million, or 41 percent, from the first half of 1994. Of
this decline, $240 million was from trading-related net interest revenue.
A significant portion of the Firm's trading and risk management
activities involve positions in interest rate instruments and related
derivatives. The revenue from these activities can periodically shift
between trading and net interest, depending on a variety of factors,
including risk management strategies. Therefore, the Corporation views
trading revenue and trading-related net interest revenue together.
<TABLE>
<CAPTION>
Trading-
Related
Net
Trading Interest
(in millions) Revenue Revenue Total
<S> <C> <C> <C>
Quarter ended June 30, 1995
Interest rate risk $ 10 $ 72 $ 82
Foreign exchange risk 5 - 5
Equity and commodity risk 64 (15) 49
Total $ 79 $ 57 $ 136
Quarter ended June 30, 1994
Interest rate risk $ 197 $122 $319
Foreign exchange risk (111) - (111)
Equity and commodity risk 38 (1) 37
Total $ 124 $121 $245
Six months ended June 30, 1995
Interest rate risk $(47) $ 90 $ 43
Foreign exchange risk (38) - (38)
Equity and commodity risk 86 (32) 54
Total $ 1 $ 58 $ 59
Six months ended June 30, 1994
Interest rate risk $229 $307 $536
Foreign exchange risk (221) - (221)
Equity and commodity risk 130 (9) 121
Total $138 $298 $436
</TABLE>
<PAGE> 12
REVENUE (continued)
Second Quarter 1995 vs. Second Quarter 1994
Interest Rate Risk - The Firm's positions in interest rate instruments
and related derivative products remained adversely affected by the general
market downturn. Although volumes in these products remained relatively
steady, activity during the second quarter of 1995 was comprised mainly of
relatively low margin transactions. As a result, trading and trading-
related net interest revenue declined by $237 million, compared to an
exceptionally strong second quarter of 1994.
Foreign Exchange Risk - Foreign exchange risk revenue was weak due to
the continued volatility in foreign currency markets, however, the second
quarter performance reflected an increase of $116 million compared to the
same period in 1994. The variance was affected by a significant loss in
1994 related to Latin American markets.
Equity and Commodity Risk - Total trading and trading-related net
interest revenue increased $12 million compared to the second quarter in
1994. Improved performance in equity and equity derivatives spurred an
increase in this category.
Six Months 1995 vs. Six Months 1994
Interest Rate Risk - The Firm's positions in interest rate instruments
were adversely affected by the general volatility in interest rates that
occurred in the first half of 1995, coupled with liquidity problems
affecting the Firm's derivatives products in the emerging markets of Latin
America.
Foreign Exchange Risk - Foreign exchange results improved
significantly compared to a weak first half of 1994. The improvement was
principally due to a rebound in the Firm's proprietary trading businesses,
as well as the previously mentioned effect of the loss in 1994 related to
Latin American markets.
Equity Risk and Commodity Risk - Trading and trading-related net
interest revenue declined by $67 million compared to the first half of 1994
primarily due to the overall downturn in derivative products in this
category.
<PAGE> 13
REVENUE (continued)
Shown below is a comparison of the components of noninterest revenue
(in millions).
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, Increase June 30, Increase
1995 1994 (Decrease) 1995 1994(Decrease)
<S> <C> <C> <C> <C> <C> <C>
Trading $ 79 $124 $(45) $ 1 $138 $(137)
Fiduciary and funds
management 166 187 (21) 337 375 (38)
Fees and commissions
Corporate finance fees 127 115 12 199 223 (24)
Service charges on
deposit accounts 17 22 (5) 36 44 (8)
Acceptances and letters
of credit commissions 11 10 1 21 21 -
Other 56 48 8 100 89 11
Total fees and commissions 211 195 16 356 377 (21)
Securities available for
sale gains 17 19 (2) 19 23 (4)
Other noninterest revenue
Insurance premiums 63 41 22 112 96 16
Net revenue from equity
investment transactions 13 26 (13) 39 55 (16)
Other 38 45 (7) 65 78 (13)
Total other noninterest
revenue 114 112 2 216 229 (13)
Total noninterest revenue $587 $637 $(50) $929 $1,142 $(213)
</TABLE>
Second Quarter 1995 vs. Second Quarter 1994
Fiduciary and funds management revenue totaled $166 million for the
second quarter, down $21 million, or 11 percent, from the same period last
year. The decrease in revenue was due primarily to a decline in
transaction volumes in fiduciary services.
Fees and commissions of $211 million increased by $16 million, or 8
percent, from the second quarter of 1994. Corporate finance fees of $127
million increased by $12 million, or 10 percent, from the same period last
year. Higher revenue from loan syndication and private placement fees were
partially offset by lower revenue from securities underwriting and
financial advisory activities.
The Corporation's securities available for sale gains were $17
million, compared with $19 million in the prior year's second quarter.
<PAGE> 14
REVENUE (continued)
Other noninterest revenue totaled $114 million, up $2 million, from
the prior year's quarter. This increase was primarily a result of higher
insurance premium revenue recorded in the Corporation's Chilean
subsidiaries due to an increase in the number of annuity policies sold.
This was partially offset by lower net gains from sales of equity
investments.
Six Months 1995 vs. Six Months 1994
Fiduciary and funds management revenue of $337 million decreased $38
million, or 10 percent, from the first six months of 1994. Decreased
revenue was recorded by most business activities within this revenue
category, primarily due to a decline in transaction volumes.
Fees and commissions decreased $21 million, or 6 percent, from the
first half of 1994. The $24 million, or 11 percent, decrease in corporate
finance fees was due to lower revenue from securities underwriting fees,
offset in part by higher revenue from private placement and loan
syndication fees.
Other noninterest revenue totaled $216 million, down $13 million from
the first half of 1994. The decrease was due to lower net gains from sales
of equity investments, offset in part by higher insurance premium revenue
recorded in the Corporation's Chilean subsidiaries due to an increase in
the number of annuity policies sold. Also contributing to the year-to-year
decline was the impact of the 1994 insurance settlement related to the fire
at the Corporation's headquarters at 280 Park Avenue. This was offset in
part by charges taken in 1994 related to the funds management business.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The provision for credit losses is dependent upon management's
evaluation as to the amount needed to maintain the allowance for credit
losses at a level considered appropriate in relation to the risk of losses
inherent in the portfolio.
No provision for credit losses was required for the current or prior
year's second quarter. Net charge-offs for the quarter were $2 million,
compared with $5 million a year ago. Nonrefinancing country net charge-
offs for the current quarter were $3 million, compared with $16 million in
the prior year's second quarter, which all related to real estate loans.
Refinancing country recoveries for the second quarter of 1995 were $1
million, compared with $11 million of recoveries in last year's second
quarter.
<PAGE> 15
PROVISION AND ALLOWANCE FOR CREDIT LOSSES (continued)
The provision for credit losses and the other changes in the allowance
for credit losses are shown below (in millions).
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
Allowance for credit losses 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Balance, beginning of period $1,245 $1,345 $1,252 $1,324
Net charge-offs (recoveries)
Charge-offs 13 17 47 38
Recoveries 11 12 24 54
Total net charge-offs (recoveries)* 2 5 23 (16)
Provision for credit losses - - 14 -
Balance, end of period $1,243 $1,340 $1,243 $1,340
*Components:
Secured by real estate $(3) $ 14 $ 3 $ 12
Real estate related - 2 2 2
Highly leveraged 2 - 22 (9)
Other 4 - 4 9
Refinancing country (1) (11) (8) (30)
Total $ 2 $ 5 $23 $(16)
</TABLE>
The allowance for credit losses, at $1.243 billion at June 30, 1995,
was down $2 million from its level at March 31, 1995, and down $9 million
from December 31, 1994. The allowance was equal to 134 percent, 127
percent and 126 percent of total cash basis loans at June 30, 1995, March
31, 1995 and December 31, 1994, 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.
On January 1, 1995, the Corporation adopted SFAS 114, "Accounting by
Creditors for Impairment of a Loan" as amended by SFAS 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosure."
SFAS 114 requires the creation of a valuation allowance for impaired loans.
Under SFAS 114, a loan is impaired when, based on current information and
events, it is probable that a creditor will be unable to collect all
amounts due according to the loan's contractual terms.
At June 30, 1995, the recorded investment in loans that was considered
to be impaired under SFAS 114 was $1.026 billion which consisted of total
cash basis loans and renegotiated loans. Included in this amount was $578
million of loans for which the related valuation allowance was $98 million.
<PAGE> 16
EXPENSES
Second Quarter 1995 vs. Second Quarter 1994
Total noninterest expenses of $678 million decreased by $10 million
from the second quarter of 1994. Incentive compensation and employee
benefits expense decreased $67 million, or 33 percent, due principally to
lower bonus expense reflecting the reduced earnings. Salaries expense
increased $5 million, or 3 percent, from the second quarter of 1994 due
mostly to salary increases.
All other expenses totaled $349 million for the quarter, up $52
million, or 18 percent, from last year's second quarter. The provision for
policyholder benefits accounted for approximately half of this increase due
to an increase in the number of annuity policies sold at the Corporation's
Chilean insurance subsidiaries.
Six Months 1995 vs. Six Months 1994
Total noninterest expenses of $1.412 billion for the first six months
of 1995 increased by $83 million, or 6 percent, from the first half of
1994. Excluding the provision for severance-related costs of $50 million,
noninterest expenses were $1.362 billion, an increase of $33 million, or 2
percent, from the first six months of 1994. Incentive compensation and
employee benefits expense decreased $96 million, or 26 percent, due to
lower bonus expense reflecting the reduced earnings. Salaries expense
increased $36 million, or 10 percent, from the first half of 1994. The
number of full time staff at June 30, 1995 decreased by 742, to 13,787 from
December 31, 1994. Management has implemented expense reduction programs
designed to reduce overall operating expenses -- principally noninterest
expenses before bonus, policyholder benefits and minority interest. At
this operating expense level, the Corporation previously announced that it
would be reducing these expenses by approximately $200 million in 1995 and
approximately $275 million annually thereafter. Operating expense trends
in the first and second quarters of 1995 show that the Corporation is on
target to achieve these cost reductions.
All other expenses, excluding the provision for severance-related
costs, totaled $692 million for the first six months of 1995, up $93
million, or 16 percent, from the first half of 1994. Increases in
professional fees, provision for policyholder benefits, agency personnel
fees and minority interest accounted for approximately two-thirds of this
increase.
INCOME TAXES
Income tax expense for the second quarter of 1995 amounted to $40
million, compared with $77 million for the second quarter of 1994. For the
first six months of 1995, income tax benefit was $27 million, compared with
income tax expense of $147 million for the first half of 1994. The
effective tax rates for the quarter and six months ended June 30, 1995,
were 31 percent and 29 percent, respectively, compared with 30 percent for
the quarter and six months ended June 30, 1994.
<PAGE> 17
EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per common share amounts are
computed by subtracting from earnings the dividend requirements on
preferred stock to arrive at earnings applicable to common stock and
dividing this amount by the average number of common and common equivalent
shares outstanding during the period. For the first six months of 1995,
common stock equivalents were excluded from the computation as the effect
would have been anti-dilutive.
For the second quarter of 1995 and the second quarter and six months
ended June 30, 1994, 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 and six month periods ended June 30, 1995
and 1994 did the Corporation have outstanding any securities which were
convertible to the Parent Company's common stock.
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>
Quarter Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income (loss) applicable to common stock $79 $172 $(86) $331
Average number of common
shares outstanding 78.318 79.432 78.332 79.870
Primary earnings (loss) per share
Average number of common and common
equivalent shares outstanding (1) 80.564 82.168 78.332 82.914
Fully diluted earnings (loss) per share
Average number of common and common
equivalent shares outstanding -
assuming full dilution (1) 80.796 82.213 78.332 82.936
<FN>
(1) Common stock equivalents are excluded from the six months ended June
30, 1995 computation as the effect would be anti-dilutive.
</TABLE>
<PAGE> 18
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)
2nd Qtr 1st Qtr 4th Qtr
1995 1995 1994
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits with banks $ 2,276 $ 2,634 $ 2,139
Federal funds sold 1,331 2,396 1,497
Securities purchased under resale
agreements 23,020 18,596 14,380
Securities borrowed 8,533 7,658 6,494
Trading assets 29,477 28,368 33,106
Securities available for sale
Taxable 4,231 4,929 5,240
Exempt from federal income taxes 1,749 1,964 2,238
Total securities available for sale 5,980 6,893 7,478
Loans 10,776 11,683 12,548
Total interest-earning assets 81,393 78,228 77,642
Cash and due from banks 1,615 1,629 1,835
Noninterest-earning trading assets 20,884 17,520 19,778
All other assets 7,137 8,415 8,081
Allowance for credit losses (1,256) (1,253) (1,327)
Total $109,773 $104,539 $106,009
LIABILITIES
Interest-bearing deposits
In domestic offices $ 5,802 $ 5,764 $ 5,584
In foreign offices 16,042 15,786 15,611
Total interest-bearing deposits 21,844 21,550 21,195
Trading liabilities 10,000 11,438 8,856
Securities sold under repurchase agreements 23,967 19,021 20,833
Other short-term borrowings 14,750 17,166 18,327
Long-term debt 7,113 6,467 6,310
Total interest-bearing liabilities 77,674 75,642 75,521
Noninterest-bearing deposits 3,169 3,296 3,728
Noninterest-bearing trading liabilities 17,821 15,003 15,539
All other liabilities 6,124 5,662 6,212
Total liabilities 104,788 99,603 101,000
PREFERRED STOCK OF SUBSIDIARY 250 250 250
STOCKHOLDERS' EQUITY
Preferred stock 691 479 395
Common stockholders' equity 4,044 4,207 4,364
Total stockholders' equity 4,735 4,686 4,759
Total $109,773 $104,539 $106,009
<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, excluding noninterest-earning/bearing trading
assets/liabilities, are included in "all other assets" and "all other
liabilities" in the condensed average balance sheets.
</TABLE>
<PAGE> 19
BALANCE SHEET ANALYSIS (continued)
Second Quarter 1995 vs. First Quarter 1995
The Corporation's average total assets amounted to $109.8 billion for
the second quarter of 1995, an increase of $5.2 billion or 5 percent, from
the first quarter of 1995. Average interest-earning assets increased $3.2
billion, or 4 percent, and the proportion of interest-earning assets to
total assets decreased slightly, from 75 percent to 74 percent. The
increase in interest-earning assets was primarily due to increases in
securities purchased under resale agreements (up $4.4 billion, or 24
percent) and trading assets (up $1.1 billion, or 4 percent) offset in part
by a decrease in federal funds sold (down $1.1 billion, or 44 percent).
Interest-earning trading assets as a percentage of average total assets was
unchanged at 27 percent. Noninterest-earning trading assets increased $3.4
billion, or 19 percent, from the first quarter of 1995.
Average total liabilities increased $5.2 billion, or 5 percent, from
the first quarter of 1995. Interest-bearing liabilities increased $2.0
billion, or 3 percent, from the first quarter of 1995. This increase was
primarily attributable to an increase in securities sold under repurchase
agreements (up $4.9 billion, or 26 percent) offset in part by a decrease in
other short-term borrowings (down $2.4 billion or 14 percent). Total short-
term borrowings (securities sold under repurchase agreements and other
short-term borrowings) as a percentage of total interest-bearing
liabilities increased from 48 percent to 50 percent in the second quarter
of 1995. Noninterest-bearing trading liabilities increased $2.8 billion,
or 19 percent, from the first quarter of 1995.
Second Quarter 1995 vs. Fourth Quarter 1994
The Corporation's average total assets for the second quarter of 1995,
increased $3.8 billion, or 4 percent, from the fourth quarter of 1994.
Average interest-earning assets increased $3.8 billion, or 5 percent, and
the proportion of interest-earning assets to total assets increased
slightly, from 73 percent to 74 percent. The increase in interest-earning
assets was primarily due to increases in securities purchased under resale
agreements (up $8.6 billion, or 60 percent) and securities borrowed (up
$2.0 billion, or 31 percent) offset by a decrease in interest-earning
trading assets (down $3.6 billion, or 11 percent). As a percentage of
average total assets, interest-earning trading assets decreased from 31
percent to 27 percent in the second quarter of 1995, while loans decreased
from 12 percent to 10 percent. Noninterest-earning trading assets
increased $1.1 billion from the fourth quarter of 1994.
Average total liabilities increased $3.8 billion, or 4 percent, from
the fourth quarter of 1994. Interest-bearing liabilities increased $2.2
billion from last year's fourth quarter. This increase was primarily
attributable to increases in securities sold under repurchase agreements
(up $3.1 billion, or 15 percent) and trading liabilities (up $1.1 billion,
or 13 percent) offset in part by a decrease in other short-term borrowings
(down $3.6 billion, or 20 percent). Total short-term borrowings
(securities sold under repurchase agreements and other short-term
<PAGE> 20
BALANCE SHEET ANALYSIS (continued)
borrowings) as a percentage of total interest-bearing liabilities decreased
from 52 percent to 50 percent in the first half of 1995. Noninterest-
bearing trading liabilities increased $2.3 billion from the fourth quarter
of 1994.
Trading Assets and Trading Liabilities
The components of these accounts, which are carried at fair value,
were as follows (in millions):
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
TRADING ASSETS
U.S. government and agency securities $ 9,774 $10,974
Obligations of U.S. states and
political subdivisions 560 179
Foreign government securities 10,692 8,359
Corporate debt securities 4,767 5,571
Equity securities 3,830 3,850
Bankers acceptances and certificates
of deposit 1,976 1,316
Swaps, options and other
derivative contracts (1) 15,560 14,071
Other 3,406 3,194
Total trading assets $50,565 $47,514
TRADING LIABILITIES
Securities sold, not yet purchased
U.S. government and agency securities $ 6,220 $4,159
Foreign government securities 4,188 2,751
Equity securities 2,523 2,298
Other 365 174
Swaps, options and other
derivative contracts (1) 15,108 11,567
Total trading liabilities $28,404 $20,949
<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.
</TABLE>
<PAGE> 21
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>
June 30, March 31,December 31,
1995 1995 1994
<S> <C> <C> <C>
Fair value $6,479 $6,019 $7,475
Amortized cost 6,396 5,898 7,306
Excess of fair value over
amortized cost (1) $ 83 $ 121 $ 169
(1) Components:
Unrealized gains $ 168 $189 $ 270
Unrealized losses (85) (68) (101)
$ 83 $121 $ 169
</TABLE>
Long-term Debt
During the second quarter of 1995, the Corporation obtained $1.189
billion of cash proceeds from the issuances of long-term debt and repaid
$219 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
Floating Rate Notes due May 1998 $300
Floating Rate Notes due June 2000 $200
8 1/4% Subordinated Notes due May 2005 $150
7 1/2% Subordinated Notes due June 2010 $75
7.50% Convertible Capital Securities
due August 2033 (1) $97
Bankers Trust Company
Redeemable Preference Securities due
December 1996 to April 1997 (2) $312
<FN>
(1) This debt was converted to Preferred Stock, Series P during the second
quarter of 1995. See Preferred Stock section for further details.
(2) At June 30, 1995, certain subsidiaries of Bankers Trust Company had
outstanding ($1.4 billion) of mandatorily redeemable preference securities with
maturities ranging from September 1996 to April 1997.
</TABLE>
<PAGE> 22
BALANCE SHEET ANALYSIS (continued)
Preferred Stock Issuance
On May 15, 1995, the Corporation reset the interest rate on its $100
million 7.50% Convertible Capital Securities giving the holders the right
to convert the debt securities into depositary shares. Holders of more
than $96.4 million aggregate principal amount of the 7.50% Convertible
Capital Securities have converted their securities into approximately 3.9
million depositary receipts, each representing a one-fortieth interest in a
share of the Parent Company's 7.50% Cumulative Preferred Stock, Series P
(Liquidation Preference - $1,000 per share) ("Series P").
Dividends on the Series P are cumulative and payable quarterly on
February 15, May 15, August 15 and November 15 of each year, commencing
with the date succeeding original issuance. At the option of the
Corporation, the Series P may be redeemed, in whole or in part, at $1,200
per share (or $30 per depositary share) on or before August 15, 1998 and
thereafter at $1,000 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.
On June 30, 1995, the Corporation issued $125 million, or 5 million
depositary shares at $25 per share, each representing a one-hundredth
interest in a share of the Corporation's 7 3/4% Cumulative Preferred Stock,
Series S (Liquidation Preference - $2,500 per share) ("Series S").
Dividends on the Series S are cumulative and payable quarterly on
March 1, June 1, September 1 and December 1 of each year, commencing with
the date succeeding original issuance. At the option of the Corporation,
the Series S may be redeemed, in whole or in part, on or after June 1,
2000, 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.
The preferred stock component of total stockholders' equity increased
by approximately $224 million during the second quarter of 1995 primarily
as a result of the above.
<PAGE> 23
TRADING DERIVATIVES
The Corporation actively manages trading positions in a variety of
derivative contracts. Most of the Corporation's trading positions are
established as a result of providing derivative products to meet customers'
demands. To anticipate customer demand for such transactions, the
Corporation also carries an inventory of capital market instruments and
maintains its access to market liquidity by quoting bid and offer prices
to, and trading with, other market makers. These two activities are
essential to provide customers with capital market products at competitive
prices. All positions are reported at fair value and changes in fair
values are reflected in trading revenue as they occur.
The following tables reflect the gross fair values and balance sheet
amounts of trading derivatives:
<TABLE>
<CAPTION>
At June 30, Average During
1995 2nd Qtr.1995
(Liabi- (Liabi-
(in millions) Assets lities) Assets lities)
<S> <C> <C> <C> <C>
OTC Financial Instruments
Interest Rate and Currency
Swap Contracts $17,515 $(19,039) $17,272 $(17,802)
Interest Rate Contracts
Forwards 142 (138) 135 (150)
Options purchased 1,204 1,024
Options written (1,514) (1,632)
Foreign Exchange Rate Contracts
Spot and Forwards 12,574 (11,029) 20,112 (18,447)
Options purchased 1,526 1,784
Options written (1,117) (1,437)
Equity-related contracts 1,718 (1,799) 1,452 (1,604)
Commodity-related and other contracts 692 (497) 574 (421)
Exchange-Traded Options
Interest Rate 187 (67) 147 (59)
Foreign Exchange - - - -
Equity 147 (53) 138 (50)
Commodity - - 27 (19)
Total Gross Fair Values 35,705 (35,253) 42,665 (41,621)
Impact of Netting Agreements (20,145) 20,145 (25,094) 25,094
$15,560(1) $17,571
$(15,108)(1) $(16,527)
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading
Liabilities."
</TABLE>
<PAGE> 24
TRADING DERIVATIVES (continued)
<TABLE>
<CAPTION>
At December 31, Average During
1994 4th Qtr.1994
(Liabi- (Liabi-
(in millions) Assets lities) Assets lities)
<S> <C> <C> <C> <C>
OTC Financial Instruments
Interest Rate and Currency
Swap Contracts $15,055 $(11,388) $15,087 $(12,042)
Interest Rate Contracts
Forwards 91 (127) 77 (96)
Options purchased 1,211 1,363
Options written (2,330) (2,109)
Foreign Exchange Rate Contracts
Spot and Forwards 8,127 (7,988) 12,133 (12,150)
Options purchased 1,504 1,378
Options written (1,522) (1,280)
Equity-related contracts 1,005 (1,316) 1,660 (1,778)
Commodity-related and other contracts 578 (451) 479 (411)
Exchange-Traded Options
Interest Rate 191 (113) 105 (80)
Foreign Exchange - (62) 19 (54)
Equity 82 (43) 90 (63)
Total Gross Fair Values 27,844 (25,340) 32,391 (30,063)
Impact of Netting Agreements (13,773) 13,773 (17,843) 17,843
$14,071 (1) $14,548
$(11,567) (1) $(12,220)
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading
Liabilities."
</TABLE>
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 certain 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. Revenue or expense pertaining to
management of interest rate exposure is predominantly recognized over the
life of the contract as an adjustment to interest revenue or expense.
At June 30, 1995, total net end-user derivative unrealized losses were
$58 million, compared to $330 million of total net end-user derivative
unrealized losses at December 31, 1994. The $272 million improvement
during the first half of 1995 was due to decreases in interest rates.
<PAGE> 25
END-USER DERIVATIVES (continued)
The following tables provide the gross unrealized gains and losses for
end-user derivatives. Gross unrealized gains and losses for hedges of
securities available for sale are recognized in the financial statements
with the offset as an adjustment to securities valuation allowance in
stockholders' equity. Gross unrealized gains and losses for hedges of
other assets, interest-bearing deposits, other short-term borrowings, long-
term debt and net investments in foreign subsidiaries are not yet
recognized in the financial statements.
<TABLE>
<CAPTION>
Other Net invest-
short- ments in
Securities Interest -term Long- foreign
(in millions) available Other bearing borrow- term subsi-
June 30, 1995 for sale assets deposits ings debt diaries Total
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Pay Variable
Unrealized Gain $ - $- $ 114 $ 7 $ 224 $- $ 345
Unrealized (Loss) - - (28) (5) (65) - (98)
Pay Variable Net - - 86 2 159 - 247
Pay Fixed
Unrealized Gain 1 - 31 - 4 - 36
Unrealized (Loss) (57) - (70) (1) (78) - (206)
Pay Fixed Net (56) - (39) (1) (74) - (170)
Total Unrealized
Gain 1 - 145 7 228 - 381
Total Unrealized
(Loss) (57) - (98) (6) (143) - (304)
Total Net $(56) $- $ 47 $ 1 $ 85 $- $ 77
Forward Rate Agreements
Unrealized Gain $- $- $ 7 $- $- $- $ 7
Unrealized (Loss) - - (7) - - - (7)
Net $- $- $ - $- $- $- $ -
Currency Swaps
Unrealized Gain $- $- $ 17 $ - $ 9 $ 2 $ 28
Unrealized (Loss) - - (18) - (52) (26) (96)
Net $- $- $ (1) $ - $(43) $(24) $(68)
Other Contracts (1)
Unrealized Gain $ - $ 1 $ - $- $- $- $ 1
Unrealized (Loss) (5) (57) (10) - - - (72)
Net $(5) $(56) $(10) $- $- $- $(71)
Total Unrealized
Gain $ 1 $ 1 $ 169 $ 7 $ 237 $ 2 $ 417
Total Unrealized
(Loss) (62) (57) (133) (6) (195) (26) (479)
Total Net $(61) $(56) $ 36 $ 1 $ 42 $(24) $ (62)
<FN>
(1) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 26
END-USER DERIVATIVES (continued)
<TABLE>
<CAPTION>
Other Net invest-
short- ments in
Securities Interest- term Long- foreign
(in millions) available Other bearing borrow- term subsi-
December 31, 1994for sale assets deposits ings debt diaries Total
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Pay Variable
Unrealized Gain $ - $- $ 17 $ 4 $ 62 $- $ 83
Unrealized (Loss) (1) - (191) (4) (200) - (396)
Pay Variable Net (1) - (174) - (138) - (313)
Pay Fixed
Unrealized Gain 48 - 105 - 28 - 181
Unrealized (Loss) (19) - (31) - (15) - (65)
Pay Fixed Net 29 - 74 - 13 - 116
Total Unrealized
Gain 48 - 122 4 90 - 264
Total Unrealized
(Loss) (20) - (222) (4) (215) - (461)
Total Net $ 28 $- $(100) $ - $(125) $- $(197)
Forward Rate Agreements
Unrealized Gain $- $- $ 4 $- $- $- $ 4
Unrealized (Loss) - - (5) - - - (5)
Net $- $- $(1) $- $- $- $(1)
Currency Swaps
Unrealized Gain $- $- $ 9 $ - $ 4 $ - $ 13
Unrealized (Loss) - - (2) (1) (74) (22) (99)
Net $- $- $ 7 $(1) $(70) $(22) $(86)
Other Contracts (1)
Unrealized Gain $5 $ 2 $- $- $- $- $ 7
Unrealized (Loss) - (53) - - - - (53)
Net $5 $(51) $- $- $- $- $(46)
Total Unrealized
Gain $ 53 $ 2 $ 135 $ 4 $ 94 $ - $ 288
Total Unrealized
(Loss) (20) (53) (229) (5) (289) (22) (618)
Total Net $ 33 $(51) $ (94) $(1) $(195) $(22) $(330)
<FN>
(1) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 27
END-USER DERIVATIVES (continued)
For pay variable and pay fixed interest rate swaps entered into as an
end user, the weighted average receive rate and weighted average pay rate
(interest rates were based on the weighted averages of both U.S. and non-
U.S. currencies) by maturity and corresponding notional amounts were as
follows ($ in millions):
<TABLE>
<CAPTION>
At June 30, 1995
Notional
Amount Paying Variable 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>
1995 $ 8,458 5.97% 5.91% $3,241 6.10% 6.24% $11,699
1996-1997 15,371 6.30 5.17 7,531 4.83 6.25 22,902
1998-1999 2,431 6.20 5.90 843 4.38 5.07 3,274
2000 and thereafter 4,969 6.67 5.92 1,629 5.85 7.60 6,598
Total $31,229 $13,244 $44,473
<FN>
All rates were those in effect at June 30, 1995. Variable rates are
primarily based on LIBOR and may change significantly, affecting future
cash flows.
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1994
Notional
Amount Paying Variable 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>
1995 $11,211 5.88% 6.09% $2,908 5.90% 6.00% $14,119
1996-1997 7,830 6.03 5.77 3,219 5.92 5.78 11,049
1998-1999 2,444 5.81 5.83 993 5.34 5.38 3,437
2000 and thereafter 4,113 6.79 5.72 1,730 5.83 8.13 5,843
Total $25,598 $8,850 $34,448
<FN>
All rates were those in effect at December 31, 1994. Variable rates are
primarily based on LIBOR and may change significantly, affecting future
cash flows.
The December 31, 1994 table corrects a typographical error which transposed
the rates shown under the respective headings "Receive Rate" and "Pay Rate"
that appeared on page 73 of the 1994 10-K.
</TABLE>
<PAGE> 28
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 1994 Annual Report on Form
10-K, on page 31, 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 June 30, 1995,
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.
All three regulatory capital ratios, at both June 30, 1995 and
December 31, 1994, excluded any benefit from the adoption of SFAS 115.
The table below indicates the regulatory capital ratios of the
Corporation and BTCo. and the minimum regulatory guidelines.
<TABLE>
<CAPTION>
FRB
Minimum
June 30, December 31, Regulatory
1995 1994 Guidelines
<S> <C> <C> <C>
CORPORATION
Risk-Based Ratios
Tier 1 Capital 8.64% 9.05% 4.0%
Total Capital 13.93% 14.77% 8.0%
Leverage Ratio 5.52% 5.26% 3.0%
BTCo.
Risk-Based Ratios
Tier 1 Capital 9.25% 9.92% 4.0%
Total Capital 11.91% 12.90% 8.0%
Leverage Ratio 5.31% 5.91% 3.0%
</TABLE>
The following were the essential components of the Corporation's risk-
based capital ratios (in millions):
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Tier 1 Capital $4,613 $4,372
Tier 2 Capital 2,826 2,760
Total Capital $7,439 $7,132
Total risk-weighted assets $53,385 $48,285
</TABLE>
<PAGE> 29
REGULATORY CAPITAL (continued)
During the first half of 1995, the Corporation's Tier 1 Capital and
Total Capital ratios declined by 41 basis points and 84 basis points,
respectively, as the increase in capital was more than offset by the
increase in total risk-weighted assets. The Leverage Ratio increased by 26
basis points during the first half of 1995 as a result of the increase in
Tier 1 Capital. The $241 million increase in Tier 1 Capital was primarily
attributable to the issuances of preferred stock offset by the decrease in
retained earnings due to the cash dividends declared as well as the net
loss recorded during the first half of 1995. The Corporation's total risk-
weighted assets at June 30, 1995 were $5.100 billion higher than at year-
end 1994.
LIQUIDITY
Liquidity management at the Corporation focuses on both asset
liquidity and liability management. Enhancing asset liquidity remains a
particularly important element of our 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 June 30, 1995, the Corporation's liquid assets amounted to
$84.9 billion, or 82 percent of gross total assets, compared with 83
percent and 80 percent, respectively, at March 31, 1995 and December 31,
1994.
Cash Flows
The following comments apply to the consolidated statement of cash
flows, which appears on page 6.
Cash and due from banks decreased $246 million during the first six
months of 1995, 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 net changes in
securities purchased under resale agreements ($7.6 billion) was offset in
part by cash inflows from sales, maturities and other redemptions of
securities available for sale ($2.9 billion) as well as net changes in
federal funds sold ($2.3 billion). The $1.6 billion of net cash used in
financing activities was largely the result of cash outflows from the net
changes in other short-term borrowings ($4.0 billion) and deposits ($2.1
billion) as well as from repayments of long-term debt ($1.0 billion) offset
in part by the cash inflows from the net change in securities sold under
repurchase agreements ($3.2 billion) and issuances of long-term debt ($2.2
billion). The $3.5 billion of net cash provided by operating activities
primarily resulted from a $4.0 billion net change in trading assets and
liabilities.
<PAGE> 30
LIQUIDITY (continued)
For the six months ended June 30, 1994, cash and due from banks
increased $912 million, as the net cash provided by operating activities
exceeded the sum of net cash used in investing and financing activities.
The $10.4 billion of net cash provided by operating activities primarily
resulted from a $10.0 billion net change in trading assets and liabilities.
Within the investing activities category, cash outflows from purchases of
securities available for sale ($3.4 billion) as well as net changes in
securities purchased under resale agreements ($2.7 billion), securities
borrowed ($2.5 billion) and federal funds sold ($1.2 billion) were offset
in part by cash inflows from sales, maturities and other redemptions of
securities available for sale ($3.0 billion) and a net change in loans
($1.9 billion). The $4.7 billion of net cash used in financing activities
primarily resulted from net changes of $2.8 billion in deposits and $2.4
billion in securities sold under repurchase agreements.
Interest Rate Sensitivity
Condensed interest rate sensitivity data for the Corporation at June
30, 1995 is presented in the table below. For purposes of this
presentation, the interest-earning/bearing components of trading assets and
trading liabilities are assumed to reprice within three months.
The interest rate gaps reported in the table arise when assets are
funded with liabilities having different repricing intervals, after
considering the effect of off-balance sheet hedging instruments. Since
these 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) June 30, 1995 1 year years 5 years funds Total
<S> <C> <C> <C> <C> <C>
Assets $ 70.8 $ 2.1 $ 2.2 $ 27.8 $102.9
Liabilities, preferred stock
of subsidiary and preferred
stock (63.9) (5.7) (2.3) (27.0) (98.9)
Common stockholders' equity - - - (4.0) (4.0)
Effect of off-balance sheet
hedging instruments (8.6) 6.3 2.3 - -
Interest rate sensitivity gap $ (1.7) $ 2.7 $ 2.2 $(3.2) $ -
</TABLE>
<PAGE> 31
NONPERFORMING ASSETS
The components of cash basis loans, renegotiated loans, other real
estate and other nonperforming assets are shown below ($ in millions).
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
CASH BASIS LOANS (NONREFINANCING COUNTRY)
Domestic
Commercial and industrial $310 $316
Secured by real estate 341 277
Financial institutions 10 25
Total domestic 661 618
International
Commercial and industrial 188 247
Secured by real estate 71 79
Financial institutions 3 48
Other 2 2
Total international 264 376
Total cash basis loans (nonrefinancing country) 925 994
CASH BASIS LOANS (REFINANCING COUNTRY)
International - 2
Total cash basis loans $925 $996
Ratio of cash basis loans to total loans 8.0% 8.0%
Ratio of allowance for credit losses to cash
basis loans 134% 126%
RENEGOTIATED LOANS
Secured by real estate $ 89 $65
Other nonrefinancing country 12 1
Total renegotiated loans $101 $66
OTHER REAL ESTATE $263 $301
OTHER NONPERFORMING ASSETS
Assets acquired in credit workouts $62 $61
Nonperforming derivative contracts 2 2
Total other nonperforming assets $64 $63
Loans 90 days or more past due and still
accruing interest $- $-
</TABLE>
<PAGE> 32
NONPERFORMING ASSETS (continued)
An analysis of the changes in the Corporation's total cash basis loans
during the first six months of 1995 follows (in millions).
<TABLE>
<CAPTION>
<S> <C>
Balance, December 31, 1994 $ 996
Net transfers to cash basis loans 124
Net paydowns (162)
Charge-offs (47)
Transfers from other real estate 35
Other (21)
Balance, June 30, 1995 $ 925
</TABLE>
The Corporation's total cash basis loans amounted to $925 million at
June 30, 1995, down $71 million, or 7 percent, from December 31, 1994.
Commercial and industrial loans to highly leveraged borrowers
decreased $40 million, to $110 million during the first half of 1995.
Within cash basis loans secured by real estate loans were $412 million and
$356 million at June 30, 1995 and December 31, 1994, respectively. Also
within cash basis loans were leveraged derivative contracts of $283 million
and $351 million at June 30, 1995 and December 31, 1994, respectively.
Approximately 60 percent of the June 30, 1995 amount related to
transactions with Procter & Gamble, which company, has filed a lawsuit
against certain subsidiaries of the Corporation in connection with these
leveraged derivative contracts. The suit seeks to void and rescind two
interest rate swap transactions entered into with Bankers Trust Company and
claims $195.5 million in compensatory damages and unspecified punitive
damages. The Corporation is contesting this litigation.
Other real estate decreased by $38 million during the first half of
1995 primarily as a result of the adoption of SFAS 114 during the first
quarter of 1995 which required the transfer of in-substance foreclosed
properties, where the Corporation had not taken possession of the
collateral, to cash basis.
<PAGE> 33
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 June 30 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>
Six Months Ended
June 30,
(in millions) 1995 1994
<S> <C> <C>
Domestic Loans
Gross amount of interest that would have
been recorded at original rate $32 $21
Less, interest, net of reversals, recognized
in interest revenue 4 2
Reduction of interest revenue 28 19
International Loans
Gross amount of interest that would have
been recorded at original rate 10 9
Less, interest, net of reversals, recognized
in interest revenue - 2
Reduction of interest revenue 10 7
Total reduction of interest revenue $38 $26
</TABLE>
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 1994 Annual Report on Form 10-K, on page 39,
provides a detailed discussion of the definition.
<TABLE>
<CAPTION>
Highly Leveraged Transactions
June 30, December 31,
(in millions) 1995 1994
<S> <C> <C>
Loans
Senior debt $628 $ 959
Subordinated debt 71 101
Total loans $699 $1,060
Unfunded commitments
Commitments to lend $501 $311
Letters of credit 137 198
Total unfunded commitments $638 $509
Equity investments $638 $413
Commitments to invest $308 $313
</TABLE>
<PAGE> 34
HIGHLY LEVERAGED TRANSACTIONS (continued)
The Corporation's outstanding loans were to 78 separate borrowers in
34 separate industry groups at June 30, 1995, compared to 76 separate
borrowers in 30 separate industry groups at December 31, 1994. The
industrial machinery group, at 18 percent, was the only industry
concentration which exceeded 10 percent of total HLT loans outstanding at
June 30, 1995.
In addition to the amounts shown in the table above, at June 30, 1995,
the Corporation had issued commitment letters which had been accepted,
subject to documentation and certain other conditions, of $1.2 billion
(which were in various stages of syndication) and had additional HLTs in
various stages of discussion and negotiation.
During the first half of 1995, the Corporation originated $690 million
of HLT commitments. It should be noted that the Corporation's loans and
commitments in connection with HLTs fluctuate as new loans and commitments
are made and as loans and commitments are syndicated, participated or paid.
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
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 June 30,
1995 was less than $9 million. However, at June 30, 1995, the Corporation
had total exposure (loans outstanding plus unfunded commitments) in excess
of $50 million to 8 separate highly leveraged borrowers.
At June 30, 1995, $110 million of the HLT loan portfolio was on a cash
basis. In addition, $7 million of the equity investments in HLT companies
represented assets acquired in credit workouts, which are reported as other
nonperforming assets. Net charge-offs of $22 million of HLT loans were
recorded in the first half of 1995. In addition, the Corporation recorded
a net gain of $28 million in connection with the sales and/or write-offs of
its equity investments in highly leveraged companies during the first half
of 1995.
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
$54 million during the first half of 1995 and that as of June 30, 1995,
approximately $19 million of fees were deferred and will be recognized as
future revenue.
<PAGE> 35
PART II. OTHER INFORMATION
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
(27) Financial Data Schedule
(b) Reports on Form 8-K - Bankers Trust New York Corporation filed
six reports on Form 8-K during the quarter ended June 30, 1995.
- The report dated April 18, 1995 filed the Corporation's Press
Release dated April 18, 1995, which announced earnings for the
quarter ended March 31, 1995.
- The report dated April 19, 1995 filed an underwriting agreement
covering the issuance and sale by Bankers Trust New York
Corporation of 8-1/4% Subordinated Notes due 2005 and various
other exhibits related to the issuance.
- The report dated May 16, 1995 filed the Corporation's Press
Release which announced that Charles S. Sanford, Jr., chairman
and chief executive officer of Bankers Trust New York
Corporation and Bankers Trust Company, announced his intention
to retire no later than the middle of 1996.
- The report dated June 19, 1995 filed an underwriting agreement
covering the issuance and sale by Bankers Trust New York
Corporation of 7-1/2% Subordinated Notes due 2010 and various
other exhibits related to the issuance.
- The report dated June 22, 1995 filed the Corporation's Press
Release which announced that Timothy T. Yates, chief financial
officer and controller of Bankers Trust New York Corporation,
announced his intention to retire in the summer of 1996.
- The report dated June 27, 1995 filed an underwriting agreement
covering the issuance and sale of 5,000,000 Depositary Shares,
each representing a one-hundredth interest in a share of 7 3/4%
Cumulative Preferred Stock, Series S, an Amendment to the
Restated Certificate of Incorporation and various other exhibits
related to the issuance.
<PAGE> 36
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 August 14, 1995.
BANKERS TRUST NEW YORK CORPORATION
BY: GEOFFREY M. FLETCHER
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
<PAGE> 37
BANKERS TRUST NEW YORK CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1995
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
(27) Financial Data Schedule
[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.
<PAGE> 38
<PAGE> 39
<PAGE>
<TABLE>
EXHIBIT 12(a)
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<CAPTION>
Six Months
Ended
Year Ended December 31, June 30,
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income (loss) before
income taxes and
cumulative effects
of accounting
changes $ 815 $ 834 $ 906 $1,550 $ 869 $ (93)
2. Add: Fixed charges
excluding
capitalized
interest
(Line 10) 4,826 3,614 3,099 3,148 3,884 2,482
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 47 31 40 30 45 10
4. Earnings including
interest on deposits 5,594 4,417 3,965 4,668 4,708 2,379
5. Less: Interest on
deposits 2,226 1,589 1,119 1,013 965 669
6. Earnings excluding
interest on deposits$3,368 $2,828 $2,846 $3,655 $3,743 $1,710
Fixed Charges:
7. Interest Expense $4,799 $3,585 $3,072 $3,122 $3,858 $2,469
8. Estimated interest
component of net
rental expense 27 29 27 26 26 13
9. Amortization of debt
issuance expense - - - - - -
10. Total fixed charges
including interest on
deposits and excluding
capitalized interest 4,826 3,614 3,099 3,148 3,884 2,482
11. Add: Capitalized
interest - - - - - -
12. Total fixed charges 4,826 3,614 3,099 3,148 3,884 2,482
13. Less: Interest on
deposits
(Line 5) 2,226 1,589 1,119 1,013 965 669
14. Fixed charges excluding
interest on deposits $2,600 $2,025 $1,980 $2,135 $2,919 $1,813
Consolidated Ratios of Earnings
to Fixed Charges:
Including interest on
deposits
(Line 4/Line 12) 1.16 1.22 1.28 1.48 1.21 .96
Excluding interest on
deposits
(Line 6/Line 14) 1.30 1.40 1.44 1.71 1.28 .94
<FN>
For the six months ended June 30, 1995, earnings, as defined, did not cover
fixed charges, by $103 million, as a result of a net loss recorded during
the period.
</TABLE>
<PAGE>
<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>
Six Months
Ended
Year Ended December 31, June 30,
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income (loss) before
income taxes and
cumulative effect
of accounting
changes $ 815 $ 834 $ 906 $1,550 $ 869 $ (93)
2. Add: Fixed charges
excluding
capitalized
interest
(Line 13) 4,826 3,614 3,099 3,148 3,884 2,482
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 47 31 40 30 45 10
4. Earnings including
interest on deposits 5,594 4,417 3,965 4,668 4,708 2,379
5. Less: Interest on
deposits 2,226 1,589 1,119 1,013 965 669
6. Earnings excluding
interest on deposits$3,368 $2,828 $2,846 $3,655 $3,743 $1,710
Preferred Stock Dividend Requirements:
7. Preferred stock dividend
requirements $ 31 $ 34 $ 30 $ 23 $ 28 $ 20
8. Ratio of income from
continuing operations
before income taxes to
income from continuing
operations after income
taxes 123% 125% 142% 145% 141% 141%
9. Preferred stock dividend
requirements on a pretax
basis $ 38 $ 43 $ 43 $ 33 $ 39 $ 28
Fixed Charges:
10. Interest Expense $4,799 $3,585 $3,072 $3,122 $3,858 $2,469
11. Estimated interest
component of net
rental expense 27 29 27 26 26 13
12. Amortization of debt
issuance expense - - - - - -
13. Total fixed charges
including interest on
deposits and excluding
capitalized interest 4,826 3,614 3,099 3,148 3,884 2,482
14. Add: Capitalized
interest - - - - - -
15. Total fixed charges 4,826 3,614 3,099 3,148 3,884 2,482
16. Add: Preferred stock
dividend require-
ments - pretax
(Line 9) 38 43 43 33 39 28
<PAGE>
17. Total combined fixed
charges and preferred
stock dividend require-
ments on a pretax
basis 4,864 3,657 3,142 3,181 3,923 2,510
18. Less: Interest on
deposits
(Line 5) 2,226 1,589 1,119 1,013 965 669
19. Combined fixed charges
and preferred stock
dividend requirements
on a pretax basis
excluding interest on
deposits $2,638 $2,068 $2,023 $2,168 $2,958 $1,841
Consolidated Ratios of Earnings
to Combined Fixed Charges
and Preferred Stock
Dividend Requirements:
Including interest on
deposits
(Line 4/Line 17) 1.15 1.21 1.26 1.47 1.20 .95
Excluding interest on
deposits
(Line 6/Line 19) 1.28 1.37 1.41 1.69 1.27 .93
<FN>
For the six months ended June 30, 1995, earnings, as defined, did not cover
combined fixed charges and preferred stock dividend requirements, by $131
million, as a result of a net loss recorded during the period.
</TABLE>
<PAGE>
BANKERS TRUST NEW YORK CORPORATION
280 PARK AVENUE
NEW YORK, NEW YORK 10017
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
August 14, 1995
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 June 30, 1995 (the
"Form 10-Q"). The Form 10-Q is being filed electronically through the
EDGAR System.
If there are any question 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
Attachment
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BANKERS
TRUST NEW YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CONDITION
AT JUNE 30, 1995 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS
ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,739
<INT-BEARING-DEPOSITS> 1,357
<FED-FUNDS-SOLD> 238
<TRADING-ASSETS> 50,565
<INVESTMENTS-HELD-FOR-SALE> 6,479
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 11,537
<ALLOWANCE> 1,243
<TOTAL-ASSETS> 102,937
<DEPOSITS> 22,605
<SHORT-TERM> 32,943<F1>
<LIABILITIES-OTHER> 5,962<F2>
<LONG-TERM> 7,514
<COMMON> 84
0
863
<OTHER-SE> 3,942
<TOTAL-LIABILITIES-AND-EQUITY> 102,937
<INTEREST-LOAN> 449
<INTEREST-INVEST> 201
<INTEREST-OTHER> 893<F3>
<INTEREST-TOTAL> 2,873
<INTEREST-DEPOSIT> 669
<INTEREST-EXPENSE> 2,469
<INTEREST-INCOME-NET> 404
<LOAN-LOSSES> 14
<SECURITIES-GAINS> 19
<EXPENSE-OTHER> 1,412
<INCOME-PRETAX> (93)
<INCOME-PRE-EXTRAORDINARY> (93)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66)
<EPS-PRIMARY> (1.10)
<EPS-DILUTED> (1.10)
<YIELD-ACTUAL> 1.08
<LOANS-NON> 925
<LOANS-PAST> 0
<LOANS-TROUBLED> 101
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,252
<CHARGE-OFFS> 47
<RECOVERIES> 24
<ALLOWANCE-CLOSE> 1,243
<ALLOWANCE-DOMESTIC> 252
<ALLOWANCE-FOREIGN> 247
<ALLOWANCE-UNALLOCATED> 744
<FN>
<F1>Short-term borrowings include the following:
Securities sold under repurchase agreements 18,933
Other short-term borrowings 14,010
Total 32,943
<F2>Other liabilities include the following:
Accounts payable and accrued expenses 3,615
Other liabilities 2,347
Total 5,962
<F3>Other interest income includes the following:
Interest-bearing deposits with banks 109
Federal funds sold 56
Securities purchased under resale agreements 495
Securities borrowed 233
Total 893
</FN>
</TABLE>
