<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, 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 April 30, 1995: Common Stock, $1 par value,
78,292,549 shares.
<PAGE> 1
BANKERS TRUST NEW YORK CORPORATION
March 31, 1995 FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
Three Months Ended March 31, 1995 and 1994 2
Consolidated Balance Sheet
At March 31, 1995 and December 31, 1994 3
Consolidated Statement of Changes in Stockholders'
Equity
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1995 and 1994 5
Consolidated Schedule of Net Interest Revenue
Three Months Ended March 31, 1995 and 1994 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. The results of operations for the three
months ended March 31, 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.
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 35
Item 6. Exhibits and Reports on Form 8-K 36
SIGNATURE 37
<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 MARCH 31, 1995 1994 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $1,353 $1,211 $ 142
Interest expense 1,171 841 330
Net interest revenue 182 370 (188)
Provision for credit losses 14 - 14
Net interest revenue after provision
for credit losses 168 370 (202)
NONINTEREST REVENUE
Trading (78) 14 (92)
Fiduciary and funds management 171 188 (17)
Fees and commissions 145 182 (37)
Securities available for sale gains 2 4 (2)
Other 102 117 (15)
Total noninterest revenue 342 505 (163)
NONINTEREST EXPENSES
Salaries 208 177 31
Incentive compensation and employee benefits 133 162 (29)
Occupancy, net 41 37 4
Furniture and equipment 42 39 3
Provision for severance-related costs 50 - 50
Other 260 226 34
Total noninterest expenses 734 641 93
Income (loss) before income taxes (224) 234 (458)
Income taxes (67) 70 (137)
NET INCOME (LOSS) $ (157) $ 164 $(321)
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (165) $ 159 $(324)
EARNINGS (LOSS) PER COMMON SHARE:
PRIMARY $(2.11) $1.90 $(4.01)
FULLY DILUTED $(2.11) $1.90 $(4.01)
Cash dividends declared per common share $1.00 $.90 $.10
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 3
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in millions, except par value)
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,603 $ 1,985
Interest-bearing deposits with banks 2,900 3,390
Federal funds sold 2,115 2,544
Securities purchased under resale agreements 18,280 9,943
Securities borrowed 7,633 6,197
Trading assets 51,603 47,514
Securities available for sale 6,019 7,475
Loans 11,731 12,501
Allowance for credit losses (1,245) (1,252)
Premises and equipment, net 932 915
Due from customers on acceptances 387 378
Accounts receivable and accrued interest 2,034 2,356
Other assets 3,370 3,070
Total $107,362 $97,016
LIABILITIES
Deposits
Noninterest-bearing
In domestic offices $ 2,352 $ 3,285
In foreign offices 532 541
Interest-bearing
In domestic offices 5,433 5,769
In foreign offices 16,279 15,344
Total deposits 24,596 24,939
Trading liabilities 29,383 20,949
Securities sold under repurchase agreements 18,631 15,617
Other short-term borrowings 16,396 18,222
Acceptances outstanding 387 378
Accounts payable and accrued expenses 4,137 3,174
Other liabilities 2,293 2,328
Long-term debt 6,621 6,455
Total liabilities 102,444 92,062
PREFERRED STOCK OF SUBSIDIARY 250 250
STOCKHOLDERS' EQUITY
Preferred stock 639 395
Common stock, $1 par value
Authorized, 300,000,000 shares
Issued, 83,678,973 shares 84 84
Capital surplus 1,306 1,317
Retained earnings 3,243 3,494
Common stock in treasury, at cost:
1995, 5,340,654 shares;
1994, 5,609,707 shares (393) (416)
Other (211) (170)
Total stockholders' equity 4,668 4,704
Total $107,362 $97,016
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 4
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1995 1994
<S> <C> <C>
PREFERRED STOCK
Balance, January 1 $ 395 $ 250
Preferred Stock Issued 244 200
Balance, March 31 639 450
COMMON STOCK
Balance, January 1 and March 31 84 84
CAPITAL SURPLUS
Balance, January 1 1,317 1,321
Preferred stock issuance costs (10) (4)
Common stock distributed under employee
benefit plans (1) 2
Balance, March 31 1,306 1,319
RETAINED EARNINGS
Balance, January 1 3,494 3,226
Net income (loss) (157) 164
Cash dividends declared
Preferred stock (7) (5)
Common stock (78) (72)
Treasury stock distributed under employee benefit plans (9) (8)
Balance, March 31 3,243 3,305
COMMON STOCK IN TREASURY, AT COST
Balance, January 1 (416) (233)
Purchases of stock (11) (99)
Restricted stock granted, net 7 1
Treasury stock distributed under employee benefit plans 27 15
Balance, March 31 (393) (316)
COMMON STOCK ISSUABLE - STOCK AWARDS
Balance, January 1 160 143
Deferred stock awards granted, net 10 33
Deferred stock distributed (15) -
Balance, March 31 155 176
DEFERRED COMPENSATION - STOCK AWARDS
Balance, January 1 (63) (47)
Deferred stock awards granted, net (9) (34)
Restricted stock granted, net (6) -
Amortization of deferred compensation, net 11 16
Balance, March 31 (67) (65)
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, January 1 (336) (319)
Translation adjustments 3 (23)
Income taxes applicable to translation adjustments (12) 21
Balance, March 31 (345) (321)
SECURITIES VALUATION ALLOWANCE
Balance, January 1 69 109
Change in unrealized net gains, after applicable
income taxes and minority interest (23) 4
Balance, March 31 46 113
TOTAL STOCKHOLDERS' EQUITY, MARCH 31 $4,668 $4,745
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 5
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (157) $ 164
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 56 60
Deferred income taxes 53 (98)
Depreciation and amortization of premises
and equipment 34 30
Other, net (34) (28)
Earnings adjusted for noncash charges and credits 16 128
Net change in:
Trading assets (4,980) (7,191)
Trading liabilities 8,896 13,630
Receivables and payables from securities
transactions 1,289 (1,656)
Other operating assets and liabilities, net (363) 193
Securities available for sale gains (2) (4)
Net cash provided by operating activities 4,856 5,100
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in:
Interest-bearing deposits with banks 332 486
Federal funds sold 429 (77)
Securities purchased under resale agreements (8,299) (4,639)
Securities borrowed (1,436) (915)
Loans 679 1,472
Securities available for sale:
Purchases (439) (1,116)
Maturities and other redemptions 1,049 726
Sales 914 1,176
Acquisitions of premises and equipment (50) (41)
Other, net 37 16
Net cash used in investing activities (6,784) (2,912)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in:
Deposits (61) (2,920)
Securities sold under repurchase agreements 3,028 1,979
Other short-term borrowings (1,654) (1,372)
Issuances of long-term debt 1,007 512
Repayments of long-term debt (781) (429)
Issuances of preferred stock 100 196
Purchases of treasury stock (11) (99)
Cash dividends paid (85) (78)
Other, net 7 10
Net cash provided by (used in) financing activities 1,550 (2,201)
Net effect of exchange rate changes on cash (4) 38
NET INCREASE (DECREASE)IN CASH AND DUE FROM BANKS (382) 25
Cash and due from banks, beginning of year 1,985 1,750
Cash and due from banks, end of period $ 1,603 $ 1,775
Interest paid $808 $913
Income taxes paid, net $29 $70
Noncash investing activities $25 $57
Noncash financing activities:
conversion of debt to preferred stock $144 $-
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE> 6
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF NET INTEREST REVENUE
(in millions)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
INTEREST REVENUE
Interest-bearing deposits with banks $ 49 $ 34 $ 15
Federal funds sold 35 2 33
Securities purchased under resale agreements 211 96 115
Securities borrowed 108 30 78
Trading assets 616 760 (144)
Securities available for sale
Taxable 89 61 28
Exempt from federal income taxes 16 21 (5)
Loans 229 207 22
Total interest revenue 1,353 1,211 142
INTEREST EXPENSE
Deposits
In domestic offices 93 45 48
In foreign offices 241 153 88
Trading liabilities 213 196 17
Securities sold under repurchase agreements 236 214 22
Other short-term borrowings 298 174 124
Long-term debt 90 59 31
Total interest expense 1,171 841 330
NET INTEREST REVENUE $ 182 $ 370 $(188)
</TABLE>
<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, 1995.
Loan Impairment
On January 1, 1995, the Corporation adopted Statement of Financial
Accounting Standards ("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 Disclosures." SFAS 114 requires the
creation of a valuation allowance for impaired loans based on one of the
following: the present value of expected future cash flows discounted at
the loan's effective interest rate, the loan's observable market price or
the fair value of the collateral. 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 March 31, 1995, adoption of this standard resulted
in a $111 million allocation of the existing allowance for credit losses to
a specific valuation allowance for impaired loans.
Additionally, under SFAS 114, a loan is classified as in-substance
foreclosure when possession of the collateral has been taken regardless of
whether formal foreclosure proceedings have taken place. As a result,
during the first quarter of 1995, loans previously classified as in-
substance foreclosure but for which the Corporation had not taken
possession of the collateral have been transferred from other real estate
to cash basis loans.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Corporation recorded a loss of $122 million for the quarter ended
March 31, 1995, or $1.66 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
quarter, including the effect of this provision, was $157 million, or $2.11
primary loss per share. In the first quarter of 1994, the Corporation
earned $164 million, or $1.90 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.
<TABLE>
<CAPTION>
Business Functions Profitability
(in millions)
First First
Qtr. Qtr. Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
Client Finance $ 14 $ 43 $ (29)
Client Advisory 20 30 (10)
Client Financial Risk Management (122) 114 (236)
Client Transaction Processing 8 32 (24)
Trading and Positioning (36) (49) 13
Unallocated (41) (6) (35)
Income (Loss) $(157) $164 $(321)
</TABLE>
<PAGE> 9
BUSINESS FUNCTIONS (continued)
Client Finance - Client Finance income was $14 million in the first
quarter of 1995, down from $43 million in last year's first quarter. This
decline was principally attributable to lower levels of securities
underwriting and loan syndication fees as general market activity for
financings was relatively slower than the year-ago quarter.
Client Advisory - Client Advisory income was $20 million in the first
quarter of 1995, a decline of $10 million from the prior year's first
quarter. This decline was primarily due to a decrease in revenue from
funds management activities offset in part by higher revenue from merger
and acquisition and financial advisory activities.
Client Financial Risk Management - Client Financial Risk Management
income decreased by $236 million from the exceptionally strong period last
year principally due to a sudden absence of liquidity in selected emerging
markets of Latin America. Additionally, while the volume of transactions
from risk management products remained relatively steady, revenue has been
reduced as the mix of business has shifted to lower-margin transactions.
Client Transaction Processing - Client Transaction Processing income
was $8 million in the first quarter of 1995, down $24 million from the
prior year's first quarter. This decline was primarily due to a decrease
in processing volumes. Also impacting this function was a higher level of
expenses in the Firm's Australian subsidiary.
Trading and Positioning - The Corporation recorded a Trading and
Positioning net loss of $36 million during the first quarter of 1995
principally due to losses in fixed income securities, primarily in Latin
America. In the first quarter of 1994 the Corporation recorded a net loss
of $49 million.
Unallocated - Included in the unallocated category during the first
quarter of 1995 was a $35 million after-tax provision for severance-related
costs associated with the expense reduction programs.
<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
1995 1994 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE (in millions)
Book basis $182 $370 $(188)
Tax equivalent adjustment 15 21 (6)
Fully taxable basis $197 $391 $(194)
AVERAGE BALANCES (in millions)
Interest-earning assets $78,228 $81,037 $(2,809)
Interest-bearing liabilities 75,642 77,935 (2,293)
Earning assets financed by
noninterest-bearing funds $ 2,586 $ 3,102 $ (516)
AVERAGE RATES (fully taxable basis)
Yield on interest-earning assets 7.09% 6.17% .92%
Cost of interest-bearing liabilities 6.28 4.38 1.90
Interest rate spread .81 1.79 (.98)
Contribution of noninterest-bearing
funds .21 .17 .04
Net interest margin 1.02% 1.96% (.94)%
</TABLE>
<PAGE> 11
REVENUE (continued)
Net interest revenue for the first quarter of 1995 totaled $182
million, down $188 million, or 51 percent, from the first quarter of 1994.
Of this decline, $176 million was from trading-related net interest
revenue.
Combined trading revenue and trading-related net interest revenue for
the first quarter of 1995 was a loss of $77 million, a $268 million
decrease from the first quarter of 1994. The first quarter loss was
primarily attributable to losses sustained in the emerging markets of Latin
America. The devaluation of the Mexican peso and the associated sudden
absence of liquidity adversely affected the Corporation's positions.
Additionally, while the volume of transactions from the Firm's Client
Financial Risk Management activities remained relatively steady, revenue
has been reduced as the mix of business has shifted to lower-margin
transactions.
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, as
quantified below (in millions):
<TABLE>
<CAPTION>
Trading-
Related
Net
Trading Interest
Revenue Revenue Total
<S> <C> <C> <C>
Three months ended March 31, 1995
Interest rate risk $(57) $ 18 $ (39)
Foreign exchange risk (43) - (43)
Equity and commodity risk 22 (17) 5
Total $(78) $ 1 $ (77)
Three months ended March 31, 1994
Interest rate risk $ 32 $185 $ 217
Foreign exchange risk (110) - (110)
Equity and commodity risk 92 (8) 84
Total $ 14 $177 $ 191
</TABLE>
Interest Rate Risk - The Firm's positions in interest rate instruments
and related derivatives were adversely affected by the general volatility
in interest rates that occurred during the first quarter of 1995 coupled
with unusual fluctuations and associated liquidity problems in the emerging
markets of Latin America. As a result, total trading and trading-related
net interest revenue declined $256 million from the exceptionally strong
results recorded in the first quarter of 1994.
Foreign Exchange Risk - Trading revenue improved compared to the first
quarter of 1994, however, the results were negatively affected by the
continued volatility in foreign exchange markets which saw the dollar fall
to record lows against the mark and yen.
<PAGE> 12
REVENUE (continued)
Equity and Commodity Risk - The first quarter trading and trading-
related net interest revenue was down $79 million compared to the first
quarter of 1994. The devaluation of the Mexican peso and continued
uncertainty regarding the Argentine economy had a ripple effect on equity
prices throughout Latin America. During the quarter actions by the
International Monetary Fund, the announcement of economic reforms in
Argentina, Brazil and Mexico and considerable public debate about the
financial stability in the region contributed to considerable volatility in
the markets.
Shown below is a comparison of the components of noninterest revenue
(in millions).
<TABLE>
<CAPTION>
Three Months Ended
March 31. Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
Trading $(78) $ 14 $(92)
Fiduciary and funds
management 171 188 (17)
Fees and commissions
Corporate finance fees 72 108 (36)
Service charges on
deposit accounts 19 22 (3)
Acceptances and letters
of credit commissions 10 11 (1)
Other 44 41 3
Total fees and commissions 145 182 (37)
Securities available for
sale gains 2 4 (2)
Other noninterest revenue
Insurance premiums 49 55 (6)
Net revenue from equity
investment transactions 26 29 (3)
Other 27 33 (6)
Total other noninterest
revenue 102 117 (15)
Total noninterest revenue $342 $505 $(163)
</TABLE>
Fiduciary and funds management revenue totaled $171 million for the
first quarter, down $17 million, or 9 percent, from the same period last
year. Decreased revenue was recorded by most business activities within
this revenue category, primarily due to a decline in transaction volumes.
Fees and commissions of $145 million decreased by $37 million, or 20
percent, from the first quarter of 1994. Corporate finance fees of $72
million decreased by $36 million from the same period last year, due to
lower revenue from securities underwriting and loan syndication fees.
These results were partially offset by higher revenue from merger and
acquisition and financial advisory activities.
<PAGE> 13
REVENUE (continued)
The Corporation's securities available for sale gains were $2 million,
compared with $4 million in the prior year's first quarter.
Other noninterest revenue totaled $102 million, down $15 million, or
13 percent, from the prior year's quarter. This decrease was due to a
decline in the category of equity in income of unconsolidated subsidiaries,
lower insurance premium revenue as well as lower net gains from sales of
equity investments and other assets. These factors were partially offset
by a lower level of losses from the revaluation of non-trading foreign
currency investments.
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.
The Corporation recorded $21 million of net charge-offs and a $14
million provision for credit losses in the first quarter of 1995. In the
prior year's first quarter, $21 million of net recoveries was recognized
and no provision for credit losses was required. Nonrefinancing country
net charge-offs for the current quarter were $28 million, which included
$20 million of loans to highly leveraged borrowers and $8 million of real
estate loans, compared with $2 million of nonrefinancing country net
recoveries in the prior year's first quarter. Leveraged derivative
transaction charge-offs for the quarter were immaterial. Refinancing
country recoveries for the first quarter of 1995 were $7 million, compared
with $19 million of recoveries in last year's first quarter.
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,
Allowance for credit losses 1995 1994
<S> <C> <C>
Balance, beginning of period $1,252 $1,324
Net charge-offs
Charge-offs 34 21
Recoveries 13 42
Total net charge-offs (recoveries)* 21 (21)
Provision for credit losses 14 -
Balance, end of period $1,245 $1,345
*Components:
Secured by real estate $ 6 $ (2)
Real estate related 2 -
Highly leveraged 20 (9)
Other - 9
Refinancing country (7) (19)
Total $21 $(21)
</TABLE>
<PAGE> 14
PROVISION AND ALLOWANCE FOR CREDIT LOSSES (continued)
The allowance for credit losses, at $1.245 billion at March 31, 1995,
was down $7 million from its level at December 31, 1994. The allowance was
equal to 127 percent and 126 percent of total cash basis loans at March 31,
1995 and December 31, 1994, respectively. The allowance for credit losses
is available for credit losses in the entire portfolio, which is comprised
of loans, credit-related commitments, derivatives and other financial
instruments. Therefore, the Corporation believes that the allowance must
be viewed in its entirety.
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 March 31, 1995, the recorded investment in loans that was
considered to be impaired under SFAS 114 was $1.079 billion which consisted
of total cash basis loans and renegotiated loans. Included in this amount
was $632 million of impaired loans for which the related valuation
allowance was $111 million.
EXPENSES
In response to the lower revenue and reduced market activity in
certain businesses, management has implemented a wide range of expense
reduction programs. These programs were designed to reduce overall
operating expenses (principally, noninterest expenses before bonus and
policyholder benefits) by approximately $200 million in 1995. Management
anticipates that these actions will result in savings of approximately $275
million in 1996.
In order to accomplish these expense reductions, it is anticipated
that total staff will be reduced by approximately 1,400, comprised of 1,000
regular staff and 400 temporary employees. In order to provide for
appropriate cost of severance, the Corporation has recorded a provision for
severance-related costs of $50 million, pre-tax, in the first quarter. As
of the end of the first quarter, approximately half of the planned staff
reductions had been achieved. The plan will be implemented fully in 1995.
Total noninterest expenses of $734 million increased by $93 million,
or 15 percent, from the first quarter of 1994. Excluding the provision for
severance-related costs of $50 million, noninterest expenses were $684
million, an increase of $43 million, or 7 percent, from last year's first
<PAGE> 15
EXPENSES (continued)
quarter. Incentive compensation and employee benefits expense decreased
$29 million, or 18 percent, due primarily to lower bonus expense reflecting
the reduced earnings. Salaries expense increased $31 million, or 18
percent, from the first quarter of 1994. The average number of employees
increased by 5 percent versus the same period, to 14,369, whereas the
number of employees at March 31, 1995 decreased by 3 percent, to 14,144
from December 31, 1994 as a result of the initial effect of the expense
reduction programs.
All other expenses, excluding the provision for severance-related
costs, totaled $343 million for the quarter, up $41 million, or 14 percent,
from last year's first quarter. Increases in professional fees and agency
personnel fees accounted for more than half of this increase.
INCOME TAXES
Income tax benefit for the first quarter of 1995 amounted to $67
million, compared with income tax expense of $70 million for the first
quarter of 1994. The effective tax rate was 30 percent for the current and
prior year quarters.
<PAGE> 16
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 quarter of 1995,
common stock equivalents were excluded from the computation as the effect
would have been anti-dilutive.
For the first quarter of 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 month period ended March 31, 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>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Net income (loss) applicable to common stock $(165) $159
Average number of common shares outstanding 78.346 80.313
Primary earnings (loss) per share
Average number of common and common
equivalent shares outstanding (1) 78.346 83.665
Fully diluted earnings (loss) per share
Average number of common and common
equivalent shares outstanding -
assuming full dilution (1) 78.346 83.665
<FN>
(1) Common stock equivalents are excluded from the March 31, 1995
computation as the effect would be anti-dilutive.
</TABLE>
<PAGE> 17
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
1995 1994 (Decrease)
<S> <C> <C> <C>
ASSETS
Interest-bearing deposits with banks $ 2,634 $ 2,139 $ 495
Federal funds sold 2,396 1,497 899
Securities purchased under resale
agreements 18,596 14,380 4,216
Securities borrowed 7,658 6,494 1,164
Trading assets 28,368 33,106 (4,738)
Securities available for sale
Taxable 4,929 5,240 (311)
Exempt from federal income taxes 1,964 2,238 (274)
Total securities available for sale 6,893 7,478 (585)
Loans 11,683 12,548 (865)
Total interest-earning assets 78,228 77,642 586
Cash and due from banks 1,629 1,835 (206)
Noninterest-earning trading assets 17,520 19,778 (2,258)
All other assets 8,415 8,081 334
Allowance for credit losses (1,253) (1,327) 74
Total $104,539 $106,009 $(1,470)
LIABILITIES
Interest-bearing deposits
In domestic offices $ 5,764 $ 5,584 $ 180
In foreign offices 15,786 15,611 175
Total interest-bearing deposits 21,550 21,195 355
Trading liabilities 11,438 8,856 2,582
Securities sold under repurchase agreements 19,021 20,833 (1,812)
Other short-term borrowings 17,166 18,327 (1,161)
Long-term debt 6,467 6,310 157
Total interest-bearing liabilities 75,642 75,521 121
Noninterest-bearing deposits 3,296 3,728 (432)
Noninterest-bearing trading liabilities 15,003 15,539 (536)
All other liabilities 5,662 6,212 (550)
Total liabilities 99,603 101,000 (1,397)
PREFERRED STOCK OF SUBSIDIARY 250 250 -
STOCKHOLDERS' EQUITY
Preferred stock 479 395 84
Common stockholders' equity 4,207 4,364 (157)
Total stockholders' equity 4,686 4,759 (73)
Total $104,539 $106,009 $(1,470)
<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> 18
BALANCE SHEET ANALYSIS (continued)
The Corporation's average total assets for the first quarter of 1995,
decreased $1.5 billion, or 1 percent, from the fourth quarter of 1994.
Average interest-earning assets increased $586 million, and the proportion
of interest-earning assets to total assets increased, from 73 percent to 75
percent. The increase in interest-earning assets was primarily due to
increases in securities purchased under resale agreements (up $4.2 billion,
or 29 percent) and securities borrowed (up $1.2 billion, or 18 percent),
offset by a decrease in interest-earning trading assets (down $4.7 billion,
or 14 percent). As a percentage of average total assets, interest-earning
trading assets decreased from 31 percent to 27 percent in the first quarter
of 1995, while loans decreased from 12 percent to 11 percent. Noninterest-
earning trading assets decreased $2.3 billion during the first quarter of
1995.
Average total liabilities decreased $1.4 billion, or 1 percent, from
the fourth quarter of 1994. Interest-bearing liabilities increased $121
million from last year's fourth quarter. This increase was primarily
attributable to higher levels of trading liabilities (up $2.6 billion, or
29 percent), offset by a decrease in securities sold under repurchase
agreements (down $1.8 billion, or 9 percent) and other short-term
borrowings (down $1.2 billion, or 6 percent). Total short-term borrowings
(securities sold under repurchase agreements and other short-term
borrowings) as a percentage of total interest-bearing liabilities decreased
from 52 percent to 48 percent in the first quarter of 1995.
<PAGE> 19
BALANCE SHEET ANALYSIS (continued)
Trading Assets and Trading Liabilities
The components of these accounts, which are carried at fair value,
were as follows (in millions):
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
TRADING ASSETS
U.S. government and agency securities $9,846 $10,974
Obligations of U.S. states and
political subdivisions 322 179
Foreign government securities 9,926 8,359
Corporate debt securities 4,012 5,571
Equity securities 3,639 3,850
Bankers acceptances and certificates
of deposit 1,685 1,316
Swaps, options and other
derivative contracts (1) 18,581 14,071
Other 3,592 3,194
Total trading assets $51,603 $47,514
TRADING LIABILITIES
Securities sold, not yet purchased
U.S. government and agency securities $ 6,521 $4,159
Foreign government securities 3,410 2,751
Equity securities 2,230 2,298
Other 139 174
Swaps, options and other
derivative contracts (1) 17,083 11,567
Total trading liabilities $29,383 $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> 20
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,
1995 1994
<S> <C> <C>
Fair value $6,019 $7,475
Amortized cost 5,898 7,306
Excess of fair value over
amortized cost (1) $ 121 $ 169
(1) Components:
Unrealized gains $189 $ 270
Unrealized losses (68) (101)
$121 $ 169
</TABLE>
Long-term Debt
During the first quarter of 1995, the Corporation obtained $1.007
billion of cash proceeds from the issuances of long-term debt and repaid
$781 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 March 2000 $250
8 1/8% Subordinated Notes due April 2002 $150
5.25% Debentures due January 1995 $300
7 5/8% Convertible Capital Securities
due June 2033 (1) $144
Bankers Trust Company
Redeemable Preference Securities due
September 1996 to March 1997 (2) $489
6.9% Subordinated Notes due March 1995 $100
Bank Notes due March 1995 $75
<FN>
(1) This debt was converted to Preferred Stock, Series O during the first
quarter of 1995. See Preferred Stock section for further details.
(2) At March 31, 1995, certain subsidiaries of Bankers Trust Company had
outstanding ($1.1 billion) of mandatorily redeemable preference
securities with maturities ranging from September 1996 to March 1997.
</TABLE>
<PAGE> 21
BALANCE SHEET ANALYSIS (continued)
Preferred Stock Issuance
On March 1, 1995, the Corporation's $100 million 6.90% Subordinated
Notes matured and, in accordance with their original terms, the holders of
this issue were required to purchase 4 million depositary shares, at $25
per share, each representing a one-fourth interest in a share of the Parent
Company's 8.55% Cumulative Preferred Stock, Series I (Liquidation
Preference - $100 per share) ("Series I").
Dividends on the Series I are cumulative and payable quarterly on
March 1, June 1, September 1 and December 1 of each year, commencing on
June 1, 1995, at a fixed rate of 8.55 percent of the liquidation preference
per annum. Shares of the Series I are not redeemable prior to March 1,
1997, when they will become redeemable at the Parent Company's option at
$100 per share, plus an amount equal to accrued and unpaid dividends. 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.
Also, on March 1, 1995, the Corporation reset the interest rate on its
$150 million 7 5/8% Convertible Capital Securities giving the holders the
right to convert the debt securities into depositary shares, at $25 per
share, each representing a one-tenth interest in a share of the Parent
Company's 7 5/8% Cumulative Preferred Stock, Series O (Liquidation
Preference - $250 per share) ("Series O"). Approximately 5.8 million
depositary receipts were issued each evidencing a depositary share
representing a one-tenth interest in a share of the Corporation's Series O.
Dividends on the Series O are cumulative and payable quarterly on each
March 1, June 1, September 1 and December 1, commencing with the date
succeeding original issuance. Shares of the Series O are redeemable at the
Parent Company's option at $300 per share on or before June 1, 1998 and
thereafter at $250 per 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.
As a result of the above, the preferred stock component of total
stockholders' equity increased by approximately $244 million during the
first quarter of 1995.
<PAGE> 22
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 March 31, Average During
1995 1st Qtr.1995
(Liabi- (Liabi-
(in millions) Assets lities) Assets lities)
<S> <C> <C> <C> <C>
OTC Financial Instruments
Interest Rate and Currency
Swap Contracts $17,037 $(16,745) $14,706 $(11,863)
Interest Rate Contracts
Forwards 105 (128) 67 (84)
Options purchased 1,038 1,143
Options written (1,854) (1,905)
Foreign Exchange Rate Contracts
Spot and Forwards 23,399 (22,003) 8,397 (8,373)
Options purchased 1,839 1,545
Options written (1,599) (1,429)
Equity-related contracts 1,352 (1,293) 1,255 (1,557)
Commodity-related and other contracts 643 (461) 750 (580)
Exchange-Traded Options
Interest Rate 126 (54) 154 (96)
Foreign Exchange - - 1 (44)
Equity 136 (45) 88 (37)
Commodity 6 (1) 2 -
Total Gross Fair Values 45,681 (44,183) 28,108 (25,968)
Impact of Netting Agreements (27,100) 27,100 (14,422) 14,422
$18,581(1) $13,686
$(17,083)(1) $(11,546)
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading
Liabilities."
</TABLE>
<PAGE> 23
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)
Commodity - - - -
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 March 31, 1995, total net end-user derivative unrealized losses
were $234 million, compared to $330 million of total net end-user
derivative unrealized losses at December 31, 1994. The $96 million
improvement during the first quarter of 1995 was due to decreases in
interest rates.
<PAGE> 24
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-
March 31, 1995 for sale assets deposits ings debt diaries Total
<S> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Pay Variable
Unrealized Gain $ - $- $ 34 $ 1 $ 95 $- $ 130
Unrealized (Loss) - - (94) (9) (112) - (215)
Pay Variable Net - - (60) (8) (17) - (85)
Pay Fixed
Unrealized Gain 9 - 64 1 11 - 85
Unrealized (Loss) (36) - (42) - (35) - (113)
Pay Fixed Net (27) - 22 1 (24) - (28)
Total Unrealized
Gain 9 - 98 2 106 - 215
Total Unrealized
(Loss) (36) - (136) (9) (147) - (328)
Total Net $(27) $- $ (38) $(7) $ (41) $- $(113)
Forward Rate Agreements
Unrealized Gain $- $- $ 5 $- $- $- $ 5
Unrealized (Loss) - - (6) - - - (6)
Net $- $- $(1) $- $- $- $(1)
Currency Swaps
Unrealized Gain $- $- $ 17 $- $ 5 $ 1 $ 23
Unrealized (Loss) - - (17) - (52) (22) (91)
Net $- $- $ - $- $(47) $(21) $(68)
Other Contracts (1)
Unrealized Gain $- $ - $- $- $- $- $ -
Unrealized (Loss) - (52) - - - - (52)
Net $- $(52) $- $- $- $- $(52)
Total Unrealized
Gain $ 9 $ - $ 120 $ 2 $ 111 $ 1 $ 243
Total Unrealized
(Loss) (36) (52) (159) (9) (199) (22) (477)
Total Net $(27) $(52) $ (39) $(7) $ (88) $(21) $(234)
<FN>
(1) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 25
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, 1994 for 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) $(330)
<FN>
(1) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 26
END-USER DERIVATIVES (continued)
For pay variable and pay fixed interest rate swaps entered into as an
end user, the weighted average receive rate and weighted average pay rate
(interest rates were based on the weighted averages of both U.S. and non-
U.S. currencies) by maturity and corresponding notional amounts were as
follows ($ in millions):
<TABLE>
<CAPTION>
At March 31, 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 $12,207 6.22% 6.21% $3,214 5.77% 6.44% $15,421
1996-1997 10,308 6.44 5.97 3,865 5.72 6.33 14,173
1998-1999 2,409 6.27 6.00 868 4.59 5.37 3,277
2000 and
thereafter 4,357 6.99 6.27 1,423 6.48 8.32 5,780
Total $29,281 $9,370 $38,651
<FN>
All rates were those in effect at March 31, 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> 27
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 March 31, 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 March 31, 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
March 31, December 31, Regulatory
1995 1994 Guidelines
<S> <C> <C> <C>
CORPORATION
Risk-Based Ratios
Tier 1 Capital 8.73% 9.05% 4.0%
Total Capital 14.20% 14.77% 8.0%
Leverage Ratio 5.18% 5.26% 3.0%
BTCo.
Risk-Based Ratios
Tier 1 Capital 9.33% 9.92% 4.0%
Total Capital 12.31% 12.90% 8.0%
Leverage Ratio 5.27% 5.91% 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,
1995 1994
<S> <C> <C>
Tier 1 Capital $4,357 $4,372
Tier 2 Capital 2,733 2,760
Total Capital $7,090 $7,132
Total risk-weighted assets $49,915 $48,285
</TABLE>
<PAGE> 28
REGULATORY CAPITAL (continued)
During the first quarter of 1995, each of the Corporation's three
regulatory capital ratios declined. The Tier 1 Capital and Total Capital
ratios declined by 32 basis points and 57 basis points, respectively,
primarily as a result of the increase in total risk-weighted assets as well
as a slight decline in capital. The Leverage Ratio decreased by 8 basis
points as a result of the increase in quarterly average total assets as
well as a slight decline in capital. The $15 million decrease in Tier 1
Capital was primarily attributable to the decrease in retained earnings due
mostly to the net loss recorded in the current quarter offset by the
issuance of Series I and Series O Preferred Stock. The Corporation's total
risk-weighted assets at March 31, 1995 were $1.630 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 March 31, 1995, the Corporation's liquid assets amounted to
$90.2 billion, or 83 percent of gross total assets, compared with 80
percent at December 31, 1994.
Cash Flows
The following comments apply to the consolidated statement of cash
flows, which appears on page 5.
Cash and due from banks decreased $382 million during the first
quarter of 1995, as the net cash used in investing activities exceeded the
sum of net cash provided by operating and financing activities. The $6.8
billion of net cash used in investing activities was largely the result of
cash outflows from net changes in securities purchased under resale
agreements ($8.3 billion) and securities borrowed ($1.4 billion). These
factors were partially offset by cash inflows from sales, maturities and
other redemptions of securities available for sale ($2.0 billion). The
$4.9 billion of net cash provided by operating activities primarily
resulted from a $3.9 billion net change in trading assets and liabilities
as well as a $1.3 billion net change in receivables and payables from
securities transactions. Within the financing activities category, cash
inflows from the net changes in securities sold under repurchase agreements
($3.0 billion), as well as from the issuance of long-term debt ($1.0
billion) were offset in part by cash outflows from the net changes in other
short-term borrowings ($1.7 billion) and repayments of long-term debt ($781
million).
<PAGE> 29
LIQUIDITY (continued)
For the quarter ended March 31, 1994, cash and due from banks
increased $25 million, 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 $6.5
billion net increase in trading assets and liabilities, offset in part by
cash outflows from a $1.7 billion net change in receivables and payables
from securities transactions.
Interest Rate Sensitivity
Condensed interest rate sensitivity data for the Corporation at March
31, 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) March 31, 1995 1 year years 5 years funds Total
<S> <C> <C> <C> <C> <C>
Assets $ 73.2 $ 2.5 $ 2.1 $ 29.6 $ 107.4
Liabilities, preferred stock
of subsidiary and preferred
stock (67.6) (4.7) (2.1) (29.0) (103.4)
Common stockholders' equity - - - (4.0) (4.0)
Effect of off-balance sheet
hedging instruments (6.2) 5.9 .3 - -
Interest rate sensitivity gap $ (.6) $ 3.7 $ .3 $ (3.4) $ -
</TABLE>
<PAGE> 30
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,
1995 1994
<S> <C> <C>
CASH BASIS LOANS (NONREFINANCING COUNTRY)
Domestic
Commercial and industrial $299 $316
Secured by real estate 324 277
Financial institutions - 25
Total domestic 623 618
International
Commercial and industrial 236 247
Secured by real estate 79 79
Financial institutions 36 48
Other 3 2
Total international 354 376
Total cash basis loans (nonrefinancing country) 977 994
CASH BASIS LOANS (REFINANCING COUNTRY)
International - 2
Total cash basis loans $977 $996
Ratio of cash basis loans to total loans 8.3% 8.0%
Ratio of allowance for credit losses to cash
basis loans 127% 126%
RENEGOTIATED LOANS
Secured by real estate $ 90 $65
Other nonrefinancing country 12 1
Total renegotiated loans $102 $66
OTHER REAL ESTATE $265 $301
OTHER NONPERFORMING ASSETS
Assets acquired in credit workouts $64 $61
Nonperforming derivative contracts 2 2
Total other nonperforming assets $66 $63
Loans 90 days or more past due and still
accruing interest $- $-
</TABLE>
<PAGE> 31
NONPERFORMING ASSETS (continued)
An analysis of the changes in the Corporation's total cash basis loans
during the first quarter of 1995 follows (in millions).
<TABLE>
<CAPTION>
<S> <C>
Balance, December 31, 1994 $996
Net transfers to cash basis loans 68
Net paydowns (70)
Charge-offs (34)
Transfers from other real estate 35
Other (18)
Balance, March 31, 1995 $977
</TABLE>
The Corporation's total cash basis loans amounted to $977 million at
March 31, 1995, down $19 million, or 2 percent, from December 31, 1994.
Commercial and industrial loans to highly leveraged borrowers
decreased $39 million, to $111 million during the first quarter of 1995.
Also within cash basis loans were loans secured by real estate of $403
million and $356 million at March 31, 1995 and December 31, 1994,
respectively.
Other real estate decreased by $36 million during the current quarter
primarily as a result of the adoption of SFAS 114 which required the
transfer of in-substance foreclosed properties, where the Corporation had
not taken possession of the collateral, to cash basis loans.
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) 1995 1994
<S> <C> <C>
Domestic Loans
Gross amount of interest that would have
been recorded at original rate $14 $11
Less, interest, net of reversals, recognized
in interest revenue 1 1
Reduction of interest revenue 13 10
International Loans
Gross amount of interest that would have
been recorded at original rate 6 5
Less, interest, net of reversals, recognized
in interest revenue - 3
Reduction of interest revenue 6 2
Total reduction of interest revenue $19 $12
</TABLE>
<PAGE> 32
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
March 31, December 31,
(in millions) 1995 1994
<S> <C> <C>
Loans
Senior debt $690 $ 959
Subordinated debt 70 101
Total loans $760 $1,060
Unfunded commitments
Commitments to lend $317 $311
Letters of credit 252 198
Total unfunded commitments $569 $509
Equity investments $619 $413
Commitments to invest $308 $313
</TABLE>
The Corporation's outstanding loans were to 73 separate borrowers in
33 separate industry groups at March 31, 1995, compared to 76 separate
borrowers in 30 separate industry groups at December 31, 1994. The
industrial machinery group, at 27 percent, was the only industry
concentration which exceeded 10 percent of total HLT loans outstanding at
March 31, 1995.
In addition to the amounts shown in the table above, at March 31,
1995, the Corporation had issued commitment letters which had been
accepted, subject to documentation and certain other conditions, of $261
million (which were in various stages of syndication) and had additional
HLTs in various stages of discussion and negotiation.
During the first quarter of 1995, the Corporation originated $450
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 March
31, 1995 was less than $11 million. However, at March 31, 1995, the
<PAGE> 33
HIGHLY LEVERAGED TRANSACTIONS (continued)
Corporation had total exposure (loans outstanding plus unfunded
commitments) in excess of $50 million to 5 separate highly leveraged
borrowers.
At March 31, 1995, $111 million of the HLT loan portfolio was on a
cash basis. In addition, $10 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 $20 million of
HLT loans were recorded in the first quarter of 1995. In addition, the
Corporation recorded a net gain of $21 million in connection with the sales
of its equity investments in highly leveraged companies during the first
quarter 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
$18 million during the first quarter of 1995 and that as of March 31, 1995,
approximately $13 million of fees were deferred and will be recognized as
future revenue.
<PAGE> 34
RECENT DEVELOPMENTS
At the Corporation's annual meeting of shareholders on April 18, 1995,
it was announced that, barring unforeseen events, the Corporation expected
to return to operating profitability during the second quarter of 1995 and
that management intended to recommend to the Board of Directors of the
Corporation the maintenance of the current dividend for the second quarter.
It was also noted that the amount of any profits will depend on future
activity in the quarter and will be reported in the normal course of
business after the end of the quarter. Dividends are considered by the
Board on a quarterly basis.
<PAGE> 35
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 18, 1995.
(b) Each of the persons named in the Proxy Statement as a nominee for
Directors was elected.
(c) The following are the voting results on each of the matters which
were submitted to the stockholders:
<TABLE>
<CAPTION>
Against
or Broker
For Withheld Abstain Non-Votes
<S> <C> <C> <C> <C>
Election of Directors
George B. Beitzel 69,959,163 1,109,710
Phillip A. Griffiths 69,948,303 1,120,570
William R. Howell 69,961,604 1,107,269
Jon M. Huntsman 69,961,401 1,107,472
Vernon E. Jordan, Jr. 69,908,681 1,160,192
Hamish Maxwell 69,941,752 1,127,121
Donald F. McCullough 69,958,526 1,110,347
N. J. Nicholas Jr. 69,959,011 1,109,862
Russell E. Palmer 69,965,659 1,103,214
Charles S. Sanford, Jr. 69,882,579 1,186,294
Eugene B. Shanks, Jr. 69,897,585 1,171,288
Patricia C. Stewart 69,941,289 1,127,584
George J. Vojta 69,943,991 1,124,882
Resolutions
. To ratify the appointment of
Ernst & Young LLP as indepen-
dent auditor for 1995. 70,671,789 146,961 250,123
. To prescribe certain methods
for conducting the activities
of the Corporation's political
action committee. 1,902,047 59,461,063 3,519,898 6,185,865
. To provide for cumulative
voting in the election of
directors. 12,253,423 52,028,712 600,874 6,185,864
. To report the Corporation's
structural adjustment programs
being undertaken in less
developed countries and analyze
the programs' impact on the
Corporation's loans to those
countries. 1,020,632 61,755,916 2,106,310 6,186,015
</TABLE>
The text of the matters referred to under this Item 4 is set forth
in the Proxy Statement dated March 13, 1995 previously filed with
the Commission and incorporated herein by reference.
<PAGE> 36
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
(99) Additional Exhibits
Proxy Statement dated March 13, 1995 - Notice of Annual
Meeting of Bankers Trust New York Corporation on
April 18, 1995 - 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, 1995.
- The report dated January 19, 1995 filed the Corporation's Press
Release dated January 19, 1995, which announced earnings for the
quarter and year ended December 31, 1994 and the Corporation and
its subsidiaries, Bankers Trust Company and BT Securities
Corporation, filed a Memorandum of Understanding with the New
York State Banking Department.
- The report dated March 24, 1995 filed an underwriting agreement
covering the issuance and sale of $150,000,000 aggregate
principal amount of 8-1/8% Subordinated Notes due 2002 and
various other exhibits related to the issuance.
<PAGE> 37
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 15, 1995.
BANKERS TRUST NEW YORK CORPORATION
BY: GEOFFREY M. FLETCHER
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
<PAGE> 38
BANKERS TRUST NEW YORK CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 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> 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>
Three Months
Ended
Year Ended December 31, March 31,
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 $ (224)
2. Add: Fixed charges
excluding
capitalized
interest
(Line 10) 4,826 3,614 3,099 3,148 3,884 1,178
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 47 31 40 30 45 7
4. Earnings including
interest on deposits 5,594 4,417 3,965 4,668 4,708 947
5. Less: Interest on
deposits 2,226 1,589 1,119 1,013 965 334
6. Earnings excluding
interest on deposits$3,368 $2,828 $2,846 $3,655 $3,743 $ 613
Fixed Charges:
7. Interest Expense $4,799 $3,585 $3,072 $3,122 $3,858 $1,171
8. Estimated interest
component of net
rental expense 27 29 27 26 26 7
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 1,178
11. Add: Capitalized
interest - - - - - -
12. Total fixed charges 4,826 3,614 3,099 3,148 3,884 1,178
13. Less: Interest on
deposits
(Line 5) 2,226 1,589 1,119 1,013 965 334
14. Fixed charges excluding
interest on deposits $2,600 $2,025 $1,980 $2,135 $2,919 $ 844
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 .80
Excluding interest on
deposits
(Line 6/Line 14) 1.30 1.40 1.44 1.71 1.28 .73
<FN>
For the three months ended March 31, 1995, earnings, as defined, did not
cover fixed charges, excluding and including interest on deposits, by $231
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>
Three Months
Ended
Year Ended December 31, March 31,
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 $ (224)
2. Add: Fixed charges
excluding
capitalized
interest
(Line 13) 4,826 3,614 3,099 3,148 3,884 1,178
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 47 31 40 30 45 7
4. Earnings including
interest on deposits 5,594 4,417 3,965 4,668 4,708 947
5. Less: Interest on
deposits 2,226 1,589 1,119 1,013 965 334
6. Earnings excluding
interest on deposits$3,368 $2,828 $2,846 $3,655 $3,743 $ 613
Preferred Stock Dividend Requirements:
7. Preferred stock dividend
requirements $ 31 $ 34 $ 30 $ 23 $ 28 $ 8
8. Ratio of income from
continuing operations
before income taxes to
income from continuing
operations after income
taxes 123% 125% 142% 145% 141% 143%
9. Preferred stock dividend
requirements on a pretax
basis $ 38 $ 43 $ 43 $ 33 $ 39 $ 11
Fixed Charges:
10. Interest Expense $4,799 $3,585 $3,072 $3,122 $3,858 $1,171
11. Estimated interest
component of net
rental expense 27 29 27 26 26 7
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 1,178
14. Add: Capitalized
interest - - - - - -
15. Total fixed charges 4,826 3,614 3,099 3,148 3,884 1,178
16. Add: Preferred stock
dividend require-
ments - pretax
(Line 9) 38 43 43 33 39 11
<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 1,189
18. Less: Interest on
deposits
(Line 5) 2,226 1,589 1,119 1,013 965 334
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 $ 855
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 .80
Excluding interest on
deposits
(Line 6/Line 19) 1.28 1.37 1.41 1.69 1.27 .72
<FN>
For the three months ended March 31, 1995, earnings, as defined, did not
cover combined fixed charges and preferred stock dividend requirements,
including and excluding interest on deposits, by $242 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
May 15, 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, 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 MARCH 31, 1995 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,603
<INT-BEARING-DEPOSITS> 2,900
<FED-FUNDS-SOLD> 2,115
<TRADING-ASSETS> 51,603
<INVESTMENTS-HELD-FOR-SALE> 6,019
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 11,731
<ALLOWANCE> 1,245
<TOTAL-ASSETS> 107,362
<DEPOSITS> 24,596
<SHORT-TERM> 35,027<F1>
<LIABILITIES-OTHER> 6,430<F2>
<LONG-TERM> 6,621
<COMMON> 84
0
639
<OTHER-SE> 3,945
<TOTAL-LIABILITIES-AND-EQUITY> 107,362
<INTEREST-LOAN> 229
<INTEREST-INVEST> 105
<INTEREST-OTHER> 403<F3>
<INTEREST-TOTAL> 1,353
<INTEREST-DEPOSIT> 334
<INTEREST-EXPENSE> 1,171
<INTEREST-INCOME-NET> 182
<LOAN-LOSSES> 14
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 734
<INCOME-PRETAX> (224)
<INCOME-PRE-EXTRAORDINARY> (224)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (157)
<EPS-PRIMARY> (2.11)
<EPS-DILUTED> (2.11)
<YIELD-ACTUAL> 1.02
<LOANS-NON> 977
<LOANS-PAST> 0
<LOANS-TROUBLED> 102
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,252
<CHARGE-OFFS> 34
<RECOVERIES> 13
<ALLOWANCE-CLOSE> 1,245
<ALLOWANCE-DOMESTIC> 214
<ALLOWANCE-FOREIGN> 278
<ALLOWANCE-UNALLOCATED> 753
<FN>
<F1>Short-term borrowings include the following:
Securities sold under repurchase agreements 18,631
Other short-term borrowings 16,396
Total 35,027
<F2>Other liabilities include the following:
Accounts payable and accrued expenses 4,137
Other liabilities 2,293
Total 6,430
<F3>Other interest income includes the following:
Interest-bearing deposits with banks 49
Federal funds sold 35
Securities purchased under resale agreements 211
Securities borrowed 108
Total 403
</FN>
</TABLE>
