<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, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-5920
BANKERS TRUST 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.)
130 Liberty Street
New York, New York 10006
(Address of principal executive offices) (Zip code)
(212) 250-2500
(Registrant's telephone number, including area code)
BANKERS TRUST NEW YORK CORPORATION
(Former name, former address and former fiscal year, if changed since last
report)
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, 1998: Common Stock, $1 par value,
97,984,523 shares.
<PAGE> 1
BANKERS TRUST CORPORATION
MARCH 31, 1998 FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
Three Months Ended March 31, 1998 and 1997 2
Consolidated Statement of Comprehensive Income
Three Months Ended March 31, 1998 and 1997 3
Consolidated Balance Sheet
At March 31, 1998 and December 31, 1997 4
Consolidated Statement of Changes in Stockholders'
Equity
Three Months Ended March 31, 1998 and 1997 5
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1998 and 1997 6
Consolidated Schedule of Net Interest Revenue
Three Months Ended March 31, 1998 and 1997 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, 1998 are not necessarily indicative
of the results of operations for the full year or any other
interim period.
On April 21, 1998, the shareholders of the Corporation
approved the change of the Corporation's name from "Bankers
Trust New York Corporation" to "Bankers Trust Corporation"
and an amendment to the Corporation's Certificate of Incor-
poration effecting the change was filed with the Secretary
of State of the State of New York, on April 23, 1998.
The financial statements included in this Form 10-Q
should be read with reference to the Bankers Trust
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-23;25
Item 3. Quantitative and Qualitative Disclosure about Market Risk 24
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 30
Item 6. Exhibits and Reports on Form 8-K 32
SIGNATURE 33
<PAGE> 2
PART I. FINANCIAL INFORMATION
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Increase
THREE MONTHS ENDED MARCH 31, 1998 1997 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $1,989 $1,680 $ 309
Interest expense 1,587 1,349 238
Net interest revenue 402 331 71
Credit loss provision - - -
Net interest revenue after credit loss provision 402 331 71
NONINTEREST REVENUE
Trading 251 311 (60)
Credit loss provision-trading (60) - (60)
Fiduciary and funds management 261 235 26
Corporate finance fees 331 215 116
Other fees and commissions 160 135 25
Net revenue from equity investments 131 47 84
Securities available for sale gains (losses) (6) 14 (20)
Insurance premiums 69 63 6
Other 94 46 48
Total noninterest revenue 1,231 1,066 165
NONINTEREST EXPENSES
Salaries and commissions 336 304 32
Incentive compensation and employee benefits 497 377 120
Agency and other professional service fees 105 89 16
Communication and data services 54 58 (4)
Occupancy, net 46 43 3
Furniture and equipment 54 53 1
Travel and entertainment 37 29 8
Provision for policyholder benefits 85 68 17
Other 111 83 28
Total noninterest expenses 1,325 1,104 221
Income before income taxes 308 293 15
Income taxes 86 93 (7)
NET INCOME $ 222 $ 200 $ 22
NET INCOME APPLICABLE TO COMMON STOCK* $ 211 $ 186 $ 25
Cash dividends declared per common share $1.00 $1.00 $-
EARNINGS PER COMMON SHARE:
BASIC $2.08 $1.86 $.22
DILUTED $2.01 $1.76 $.25
<FN>
* Amounts shown are used to calculate basic earnings per common share.
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 3
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998 1997
<S> <C> <C>
NET INCOME $ 222 $200
Other comprehensive income (loss) net of tax:
Foreign currency translation adjustments, net of tax* (9) 3
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during
period, net of tax** (24) (10)
Reclassification adjustment for (gains) losses in
net income, net of tax*** 4 (8)
Other comprehensive income (loss) (29) (15)
COMPREHENSIVE INCOME $193 $185
<FN>
* Amounts are net of an income tax (benefit) expense of ($9) million and
$8 million for the three months ended March 31, 1998 and March 31, 1997,
respectively
** Amounts are net of an income tax benefit of $12 million and $6 million
for the three months ended March 31, 1998 and March 31, 1997, respectively.
*** Amounts are net of an income tax (benefit) expense of ($2) million and
$6 million for the three months ended March 31, 1998 and March 31, 1997,
respectively.
</TABLE>
<PAGE> 4
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in millions, except par value)
<TABLE>
<CAPTION>
March 31, December 31,
1998* 1997
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,504 $ 2,188
Interest-bearing deposits with banks 2,068 4,272
Federal funds sold 1,630 1,382
Securities purchased under resale
agreements 22,843 19,163
Securities borrowed 22,832 16,751
Trading assets:
Government securities 13,517 11,397
Corporate debt securities 9,495 8,128
Equity securities 8,963 7,914
Swaps, options and other derivatives, net of
allowance for credit losses of $298 at
March 31, 1998 and $285 at December 31, 1997 14,797 17,673
Other trading assets 13,591 11,460
Total trading assets 60,363 56,572
Securities available for sale 12,893 8,081
Loans, net of allowance for credit losses
of $695 at March 31, 1998 and $699
at December 31, 1997 21,178 19,106
Customer receivables 1,572 1,547
Accounts receivable and accrued interest 4,729 4,785
Other assets 5,925 6,255
Total $157,537 $140,102
LIABILITIES
Noninterest-bearing deposits
Domestic offices $ 2,969 $ 2,776
Foreign offices 1,624 1,952
Interest-bearing deposits
Domestic offices 24,180 22,353
Foreign offices 17,568 15,749
Total deposits 46,341 42,830
Trading liabilities:
Securities sold, not yet purchased
Government securities 8,821 4,389
Equity securities 5,235 5,273
Other trading liabilities 789 519
Swaps, options and other derivatives 14,273 17,065
Total trading liabilities 29,118 27,246
Securities loaned and securities sold under
repurchase agreements 21,881 17,896
Other short-term borrowings 24,868 19,577
Accounts payable and accrued expenses 5,875 6,536
Other liabilities, including allowance for
credit losses of $13 at March 31, 1998
and December 31, 1997 5,819 4,250
Long-term debt not included in risk-based capital 12,740 11,275
Long-term debt included in risk-based capital 3,306 3,312
Mandatorily redeemable capital securities of
subsidiary trusts holding solely junior
subordinated deferrable interest debentures
included in risk-based capital 1,473 1,472
Total liabilities 151,421 134,394
PREFERRED STOCK OF SUBSIDIARY 304 -
STOCKHOLDERS' EQUITY
Preferred stock 658 658
Common stock, $1 par value
Authorized, 300,000,000 shares
Issued, 105,378,741 shares at March 31, 1998 and
December 31, 1997 105 105
Capital surplus 1,592 1,563
Retained earnings 4,225 4,202
Common stock in treasury, at cost: 1998,
7,522,025 shares; 1997, 8,422,401 shares (803) (889)
Other stockholders' equity 458 463
Accumulated other comprehensive income:
Net unrealized (losses) on securities available
for sale, net of taxes (52) (32)
Foreign currency translation, net of taxes (371) (362)
Total stockholders' equity 5,812 5,708
Total $157,537 $140,102
<FN>
* Unaudited
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 5
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998 1997
<S> <C> <C>
PREFERRED STOCK
Balance, January 1 $ 658 $ 810
Preferred stock redeemed - (100)
Preferred stock repurchased - (6)
Balance, March 31 658 704
COMMON STOCK
Balance, January 1 105 104
Issuance of common stock - 1
Balance, March 31 105 105
CAPITAL SURPLUS
Balance, January 1 1,563 1,437
Issuance of common stock - 19
Common stock distributed under employee
benefit plans 29 21
Balance, March 31 1,592 1,477
RETAINED EARNINGS
Balance, January 1 4,202 3,988
Net income 222 200
Cash dividends declared
Preferred stock (11) (14)
Common stock (98) (82)
Treasury stock distributed under employee
benefit plans (90) (27)
Balance, March 31 4,225 4,065
COMMON STOCK IN TREASURY, AT COST
Balance, January 1 (889) (372)
Purchases of stock (143) (244)
Restricted stock (cancelled), net - (14)
Treasury stock distributed under employee
benefit plans 229 103
Balance, March 31 (803) (527)
COMMON STOCK ISSUABLE - STOCK AWARDS
Balance, January 1 901 526
Deferred stock awards granted, net 64 66
Restricted stock awards granted, net 13 -
Deferred stock distributed (89) (14)
Balance, March 31 889 578
DEFERRED COMPENSATION - STOCK AWARDS
Balance, January 1 (438) (308)
Deferred stock awards (granted), net (67) (66)
Restricted stock (granted) cancelled, net (13) 14
Amortization of deferred compensation, net 87 63
Balance, March 31 (431) (297)
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, January 1 (362) (364)
Translation adjustments (18) 11
Income taxes applicable to translation adjustments 9 (8)
Balance, March 31 (371) (361)
SECURITIES VALUATION ALLOWANCE
Balance, January 1 (32) 57
Change in unrealized net gains, after applicable
income taxes and minority interest (20) (18)
Balance, March 31 (52) 39
TOTAL STOCKHOLDERS' EQUITY, MARCH 31 $5,812 $5,783
</TABLE>
<PAGE> 6
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 222 $ 200
Adjustments to reconcile net income to net cash
provided by operating activities:
Credit loss provision-trading 60 -
Provision for policyholder benefits 85 68
Deferred income taxes (23) (43)
Depreciation and other amortization
and accretion 102 64
Other, net 17 25
Earnings adjusted for noncash charges and credits 463 314
Net change in:
Trading assets (3,219) 2,030
Trading liabilities 1,805 (3,031)
Receivables and payables from securities
transactions (109) 271
Customer receivables (25) (53)
Other operating assets and liabilities, net (87) 122
Securities available for sale (gains) losses 6 (14)
Net cash used in operating activities (1,166) (361)
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in:
Interest-bearing deposits with banks 2,195 (360)
Federal funds sold (248) 489
Securities purchased under resale agreements (3,679) (4,314)
Securities borrowed (6,081) 2,760
Loans (2,059) (2,359)
Securities available for sale:
Purchases (6,373) (1,799)
Maturities and other redemptions 441 593
Sales 424 84
Acquisitions of premises and equipment (72) (71)
Other, net 1,466 (3)
Net cash used in investing activities (13,986) (4,980)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in:
Deposits 3,567 5,070
Securities loaned and securities sold under
repurchase agreements 4,035 (870)
Other short-term borrowings 5,299 978
Issuances of long-term debt* 1,983 2,500
Repayments of long-term debt (510) (1,601)
Issuances of common stock - 19
Issuance of preferred stock of subsidiary 304 -
Redemption of preferred stock of subsidiary - (250)
Redemptions and repurchases of preferred stock - (106)
Purchases of treasury stock (143) (244)
Cash dividends paid (108) (97)
Other, net 44 61
Net cash provided by financing activities 14,471 5,460
Net effect of exchange rate changes on cash (3) (8)
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (684) 111
Cash and due from banks, beginning of period 2,188 1,568
Cash and due from banks, end of period $ 1,504 $1,679
Interest paid $1,372 $1,173
Income taxes paid (refunded), net $165 $(1)
Noncash investing activities $(15) $44
Noncash financing activities:
Conversion of debt to equity $9 $9
<FN>
* Includes $739 million for the three months ended March 31, 1997, related
to mandatorily redeemable capital securities of subsidiary trusts holding
solely junior subordinated deferrable interest debentures included in
risk-based capital ("trust preferred capital securities").
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 7
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF NET INTEREST REVENUE
(in millions)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Increase
1998 1997 (Decrease)
<S> <C> <C> <C>
INTEREST REVENUE
Interest-bearing deposits with banks $ 98 $ 65 $ 33
Federal funds sold 52 49 3
Securities purchased under
resale agreements 330 330 -
Securities borrowed 275 183 92
Trading assets 634 599 35
Securities available for sale
Taxable 137 110 27
Exempt from federal income taxes 10 10 -
Loans 418 302 116
Customer receivables 35 32 3
Total interest revenue 1,989 1,680 309
INTEREST EXPENSE
Interest-bearing deposits
Domestic offices 312 146 166
Foreign offices 259 250 9
Trading liabilities 99 151 (52)
Securities loaned and securities sold under
repurchase agreements 386 339 47
Other short-term borrowings 286 291 (5)
Long-term debt 215 148 67
Trust preferred capital securities 30 24 6
Total interest expense 1,587 1,349 238
NET INTEREST REVENUE $ 402 $ 331 $ 71
</TABLE>
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Bankers Trust Corporation (the "Parent Company") and subsidiaries
(collectively, the "Corporation", or the "Firm") earned $222 million for
the three months ended March 31, 1998, or $2.01 diluted earnings per share.
In the first quarter of 1997, the Corporation earned $200 million, or $1.76
diluted earnings per share.
ORGANIZATIONAL UNIT RESULTS
Organizational Unit business results are determined based on the
Corporation's internal management accounting process, which allocates
revenue and expenses among the organizational units. Because the
Corporation's business is diverse in nature and its operations are
integrated, it is impractical to segregate respective contributions of the
organizational units with precision. As a result, estimates and judgments
have been made to apportion revenue and expense items. In addition,
certain revenue and expenses have been segregated and reported in
Corporate/Other because in the opinion of management, they could not be
reasonably allocated or because their contributions to a particular
organizational unit would be distortive. The internal management
accounting process is based on the way management views its business and is
not necessarily comparable with similar information disclosed by other
financial institutions. In order to provide comparability from one period
to the next, the Corporation will generally restate this analysis to
conform with material changes in the allocation process and/or significant
changes in organizational structure.
The following tables present results by Organizational Unit:
<TABLE>
<CAPTION> Total Non- Pretax Net
Three Months Ended March 31, 1998 Total Net interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
<S> <C> <C> <C> <C>
Investment Banking $ 670 $ 424 $ 246 $177
Trading & Sales 215 128 87 63
Global Institutional Services 254 228 26 19
Private Client Services Group 171 147 24 17
Australia/New Zealand 145 107 38 27
Emerging Markets Group:
Latin America 167 145 22 16
Emerging Europe, Middle East & Africa 34 25 9 7
Asia (51) 49 (100) (72)
Corporate/Other 28 72 (44) (32)
Total $1,633 $1,325 $ 308 $222
</TABLE>
<TABLE>
<CAPTION>
Total Non- Pretax Net
Three Months Ended March 31, 1997 Total Net interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
<S> <C> <C> <C> <C>
Investment Banking $ 450 $ 314 $ 136 $93
Trading & Sales 171 118 53 37
Global Institutional Services 218 209 9 6
Private Client Services Group 150 126 24 17
Australia/New Zealand 143 90 53 36
Emerging Markets Group:
Latin America 145 117 28 19
Emerging Europe, Middle East & Africa 28 19 9 6
Asia 66 48 18 12
Corporate/Other 26 63 (37) (26)
Total $1,397 $1,104 $293 $200
</TABLE>
<PAGE> 9
ORGANIZATIONAL UNIT RESULTS (continued)
Changes in Organizational Structure
Risk Management Services businesses have been realigned within
Investment Banking, Trading & Sales, and Emerging Markets Group.
In addition, expenses related to certain staff functions which were
previously included in Corporate/Other have been assigned or allocated to
the organizational units. The funding benefit attributed to the
Corporation's capital, which was previously included in Corporate/Other, is
now allocated to the organizational units based on management's best
estimate of the risk-adjusted capital.
Prior period results have been restated for the changes in
organizational structure and management accounting.
Organizational Unit Results
The Investment Banking business contributed net income of $177 million
in the first quarter of 1998, up $84 million from a year ago. The increase
reflected higher corporate finance fees and higher revenue from private
equity investments.
Trading & Sales contributed $63 million of net income in the first
quarter of 1998, up $26 million from the 1997 first quarter. Higher
revenue from interest rate products contributed to the increase from the
prior year period.
Global Institutional Services contributed $19 million of net income in
the first quarter of 1998, up $13 million from the 1997 first quarter. The
current quarter reflected improved revenue from corporate trust and agency
services and asset management services. Operating results improved in the
current quarter as a result of the sale of the Corporation's defined
contribution recordkeeping and participant services business in the fourth
quarter of 1997. First quarter 1998 results were also impacted by higher
application development costs associated with Year 2000 initiatives. At
March 31, 1998, assets under management in the Global Institutional
Services investment management business were approximately $251 billion,
compared to $182 billion at March 31, 1997.
The Corporation's Private Client Services Group business reported net
income of $17 million for the current quarter, essentially unchanged from
the prior year period. At March 31, 1998, assets under management in the
Private Client Services Group investment management business were
approximately $37 billion, compared to $26 billion at March 31, 1997.
Net income of the Australia/NZ business was $27 million in the first
quarter of 1998, down $9 million from the first quarter of 1997. The
decline in net income was mainly due to a 13 percent decline in Australian
exchange rates and an increase in personnel-related costs as a result of
higher staff levels offset partly by higher revenue from corporate finance
activities and improved revenue from fiduciary and funds management. At
March 31, 1998, assets under management in Australia/NZ's investment
management business were approximately $46 billion, compared to $37 billion
at March 31, 1997.
<PAGE> 10
ORGANIZATIONAL UNIT RESULTS (continued)
Emerging Markets Group
Latin America contributed net income of $16 million in the current
quarter, down $3 million from the prior year period.
Emerging Europe, Middle East & Africa contributed net income of $7
million in the current quarter and $6 million in the first quarter of 1997.
Asia net loss was $72 million in the current quarter, compared to net
income of $12 million in the prior year period. The $72 million loss in
the current quarter reflected both the impact of a $60 million provision
for trading-related credit losses as well as mark-to-market valuation
adjustments to trading assets, for widening counterparty credit spreads.
These two charges were principally associated with Indonesian and Thai
trading assets.
Corporate/Other includes the income and expenses of smaller businesses
that are not included in the main organizational units as well as some
activities not associated with specific business lines. It also includes
the funding benefit attributed to the Corporation's capital related to
these areas. Corporate/Other net loss was $32 million in the first quarter
of 1998, compared with a net loss of $26 million in the first quarter of
1997.
REVENUE
Net Interest Revenue
The table below presents 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
1998 1997 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE (in millions)
Book basis $ 402 $ 331 $ 71
Tax equivalent adjustment 9 7 2
Fully taxable basis $ 411 $ 338 $ 73
AVERAGE BALANCES (in millions)
Interest-earning assets $113,044 $97,932 $15,112
Interest-bearing liabilities 110,259 92,284 17,975
Earning assets financed by
noninterest-bearing funds $ 2,785 $ 5,648 $ (2,863)
AVERAGE RATES (fully taxable basis)
Yield on interest-earning assets 7.17% 6.99% .18%
Cost of interest-bearing liabilities 5.84 5.93 (.09)
Interest rate spread 1.33 1.06 .27
Contribution of noninterest-bearing
funds .14 .34 (.20)
Net interest margin 1.47% 1.40% .07%
</TABLE>
<PAGE> 11
REVENUE (continued)
Net interest revenue for the first quarter of 1998 totaled $402
million, up $71 million, or 21 percent, from the first quarter of 1997.
The $71 million increase in net interest revenue was primarily due to a $57
million increase in trading-related net interest revenue, which totaled
$199 million for the first quarter of 1998. Nontrading-related net
interest revenue totaled $203 million for the first quarter of 1998 versus
$189 million for the comparable period in 1997.
In the first quarter of 1998, the interest rate spread was 1.33
percent compared to 1.06 percent in the prior year period. Net interest
margin increased to 1.47 percent from 1.40 percent. The yield on interest-
earning assets increased by 18 basis points and the cost of interest-
bearing liabilities declined by 9 basis points. Average interest-earning
assets totaled $113.0 billion for the first quarter of 1998, up $15.1
billion from the same period in 1997. The increase was primarily
attributable to growth in the loan portfolio and an increase in securities
borrowed. Average interest-bearing liabilities totaled $110.3 billion for
the first quarter of 1998, up $18.0 billion from the same period in 1997.
The increase was primarily attributable to a rise in interest-bearing
deposits.
Trading Revenue
The Firm's trading and risk management businesses include significant
activities in interest rate instruments and related derivatives. These
activities can periodically shift revenue 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.
Combined trading revenue and trading-related net interest revenue for
the first quarter of 1998 totaled $450 million, down $3 million from the
first quarter of 1997.
The table below presents the Corporation's trading revenue and trading-
related net interest revenue by major category of market risk. These
categories are based on management's view of the predominant underlying
risk exposure of each of the Firm's trading positions.
<TABLE>
<CAPTION>
Trading-
Related
Net
Trading Interest
(in millions) Revenue Revenue Total
<S> <C> <C> <C>
Three months ended March 31, 1998
Interest rate risk $ 63 $180 $243
Foreign exchange risk 117 - 117
Equity and commodity risk 71 19 90
Total $251 $199 $450
Three months ended March 31, 1997
Interest rate risk $152 $162 $314
Foreign exchange risk 38 - 38
Equity and commodity risk 121 (20) 101
Total $311 $142 $453
</TABLE>
<PAGE> 12
REVENUE (continued)
Interest Rate Risk - The decrease is primarily due to mark-to-market
valuation adjustments to trading assets for widening counterparty credit
spreads in Asia.
Foreign Exchange Risk - The increase in foreign exchange revenue is
primarily related to gains in Asian foreign exchange markets.
Equity and Commodity Risk - The decrease resulted from losses incurred
in equity derivatives and the commodities derivative books. These
decreases were partially offset by increased revenue from equity arbitrage
trading activities.
Noninterest Revenue (Excluding Trading)
Fiduciary and funds management revenue was $261 million in the first
quarter of 1998, up $26 million from the prior year period. Funds
management and global private banking commissions contributed to this
increase.
Corporate finance fees of $331 million increased 54% from the $215
million earned in the first quarter of 1997, primarily due to higher
underwriting fees, loan syndication fees and merger and acquisition fees.
Other fees and commissions of $160 million increased $25 million from
the prior year quarter primarily resulting from higher fees for brokerage
services.
Net revenue from equity investments increased $84 million from the
first quarter of 1997. Gains on direct equity investments contributed
principally to the increase.
Other noninterest revenue totaled $94 million in the current quarter,
compared to $46 million in the first quarter of 1997. The current quarter
included higher revenue from mark-to-market adjustments on venture capital
equity securities.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The total credit loss provision is determined based 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.
In accordance with the American Institute of Certified Public
Accountants Banks and Savings Institutions Audit and Accounting Guide, the
Corporation has allocated its total allowance for credit losses as
presented below. The Corporation continues to believe that the total
allowance for credit losses is available for credit losses in its entire
portfolio, which is comprised of loans, credit-related commitments,
derivatives and other financial instruments. Due to a multitude of complex
and changing factors that are collectively weighed in determining the
adequacy of the allowance for credit losses, management expects that the
allocation of the allowance for credit losses may be adjusted as risk
factors change.
<PAGE> 13
PROVISION AND ALLOWANCE FOR CREDIT LOSSES (continued)
The total credit loss provision and the other changes in the allowance
for credit losses are shown below (in millions).
<TABLE>
<CAPTION>
Quarter Ended
March 31,
Total allowance for credit losses 1998 1997
<S> <C> <C>
Balance, beginning of quarter $997 $973
Net charge-offs
Charge-offs
Loans 7 33
Trading assets 47 -
Total charge-offs 54 33
Recoveries
Loans 3 18
Trading assets - -
Total recoveries 3 18
Total net charge-offs 51 15
Credit loss provision - -
Credit loss provision-trading 60 -
Total credit loss provision 60 -
Balance, end of quarter (a) $1,006 $958
(a) Allocation of allowance for credit losses:
Loans $695 $758
Trading assets 298 190
Other liabilities 13 10
Balance, end of quarter $1,006 $958
</TABLE>
The allowance for credit losses that has been allocated to loans was
$695 million at March 31, 1998 compared to $699 million at December 31,
1997. This allowance was equal to 281 percent and 291 percent of total
cash basis loans at March 31, 1998 and December 31, 1997, respectively.
These ratios were computed using the amounts that were allocated to loans.
Impaired loans under SFAS 114, which consisted of total cash basis
loans and renegotiated loans, were $272 million and $265 million at March
31, 1998 and December 31, 1997, respectively. Included in these amounts
were $130 million and $78 million of loans which required a valuation
allowance of $27 million and $13 million at those same dates, respectively.
<PAGE> 14
EXPENSES
Total noninterest expenses of $1.325 billion increased by $221
million, or 20 percent, from the first quarter of 1997. Salaries and
commissions expense increased $32 million, or 11%, principally due to an
increase in the average number of employees and higher annual salaries.
Incentive compensation and employee benefits, the largest component of
noninterest expenses, increased $120 million, or 32 percent, from the prior
year period, primarily due to the Firm's improved financial performance,
and employee stock awards granted in 1997.
The Corporation continues to prepare its computer systems,
applications and infrastructure for properly processing dates after
December 31, 1999. The Corporation currently expects its Year 2000
expenditures for 1998 and over the next two years to be approximately $180
million to $230 million. A significant portion of these costs are not
likely to be incremental costs to the Firm, but rather will represent the
redeployment of existing information technology resources. Computer
systems, applications and infrastructure are also being modified to prepare
for the introduction, on January 1, 1999, of the European Monetary Unit
("EMU"). The Corporation's 1997 Annual Report on Form 10-K, on page 16,
provides further detailed discussion on the Year 2000 and EMU.
INCOME TAXES
Income tax expense for the first quarter of 1998 amounted to $86
million, compared to $93 million in the first quarter of 1997. The
effective tax rate was 28 percent for the current quarter and 32 percent
for the prior year quarter.
EARNINGS PER COMMON SHARE
Basic earnings per common share amounts were computed by subtracting
from net income the dividend requirements on preferred stock to arrive at
net income applicable to common stockholders and dividing this amount by
the average number of common shares outstanding during the period. The
average number of common shares outstanding is the sum of the average
number of shares of common stock outstanding and vested but undistributed
shares awarded under deferred stock plans.
Diluted earnings per share amounts were calculated by adding back to
net income applicable to common stockholders the interest expense on the
convertible subordinated debentures and dividing this amount by the average
number of common shares and dilutive potential common shares outstanding
during the period.
Diluted earnings per share assumes the conversion into common stock of
outstanding stock options, deferred stock awards (including restricted
stock awards) and convertible subordinated debentures, as computed under
the treasury stock method, if dilutive. Under the treasury stock method,
the number of incremental shares is determined by assuming the issuance of
the outstanding stock options, deferred stock awards, and shares from
convertible subordinated debentures, reduced by the number of shares
assumed to be repurchased from the issuance proceeds, using the average
market price for the period of the Parent Company's common stock.
<PAGE> 15
EARNINGS PER COMMON SHARE (continued)
The following table sets forth the computation of basic and diluted
earnings per share (in millions, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998 1997
<S> <C> <C>
Numerator
Net income $ 222 $200
Preferred stock dividends (11) (14)
Numerator for basic earnings per share - net
income applicable to common stockholders 211 186
Effect of dilutive securities
Convertible subordinated debentures - 1
Numerator for diluted earnings per share - net
income applicable to common stockholders after
assumed conversions $211 $187
Denominator
Denominator for basic earnings per share -
weighted average shares outstanding 101.357 100.540
Effect of dilutive securities
Options 1.811 1.688
Convertible subordinated debentures .463 3.138
Deferred stock 1.492 1.660
Dilutive potential common shares 3.766 6.486
Denominator for diluted earnings per share -
adjusted weighted-average shares after
assumed conversions 105.123 107.026
Basic earnings per share $2.08 $1.86
Diluted earnings per share $2.01 $1.76
</TABLE>
<PAGE> 16
BALANCE SHEET ANALYSIS
The following table highlights the changes in the balance sheet.
Since quarter-end balances can be distorted by one-day fluctuations, an
analysis of changes in the quarterly averages is provided to give a better
indication of balance sheet trends.
<TABLE>
<CAPTION>
CONDENSED AVERAGE BALANCE SHEETS
(in millions)
1st Qtr 4th Qtr Increase
1998 1997 (Decrease)
<S> <C> <C> <C>
ASSETS
Interest-earning
Interest-bearing deposits with banks $ 4,073 $ 6,211 $(2,138)
Federal funds sold 3,899 4,950 (1,051)
Securities purchased under resale
agreements 19,945 23,074 (3,129)
Securities borrowed 21,749 16,588 5,161
Trading assets 30,097 30,447 (350)
Securities available for sale
Taxable 9,011 6,876 2,135
Exempt from federal income taxes 1,353 1,237 116
Total securities available for sale 10,364 8,113 2,251
Loans
Domestic offices 10,654 10,800 (146)
Foreign offices 10,697 9,580 1,117
Total loans 21,351 20,380 971
Customer receivables 1,566 1,612 (46)
Total interest-earning assets 113,044 111,375 1,669
Noninterest-earning
Cash and due from banks 1,903 1,476 427
Noninterest-earning trading assets 25,821 25,356 465
All other assets 10,724 10,694 30
Allowance for credit losses (991) (979) (12)
Total $150,501 $147,922 $ 2,579
LIABILITIES
Interest-bearing
Interest-bearing deposits
Domestic offices $ 23,293 $ 21,881 $ 1,412
Foreign offices 18,740 20,966 (2,226)
Total interest-bearing deposits 42,033 42,847 (814)
Trading liabilities 6,531 5,587 944
Securities loaned and securities sold
under repurchase agreements 24,947 24,200 747
Other short-term borrowings 20,019 20,078 (59)
Long-term debt 15,256 13,050 2,206
Trust preferred capital securities 1,473 1,472 1
Total interest-bearing liabilities 110,259 107,234 3,025
Noninterest-bearing
Noninterest-bearing deposits 3,639 3,366 273
Noninterest-bearing trading liabilities 19,731 20,803 (1,072)
All other liabilities 10,818 10,591 227
Total liabilities 144,447 141,994 2,453
PREFERRED STOCK OF SUBSIDIARY 262 - 262
STOCKHOLDERS' EQUITY
Preferred stock 658 688 (30)
Common stockholders' equity 5,134 5,240 (106)
Total stockholders' equity 5,792 5,928 (136)
Total $150,501 $147,922 $ 2,579
</TABLE>
<PAGE> 17
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 are as follows.
<TABLE>
<CAPTION> March 31, December 31,
(in millions) 1998 1997
<S> <C> <C>
Fair value $12,893 $8,081
Amortized cost 13,016 8,128
Excess of amortized cost over
fair value* $ (123) $ (47)
* Components:
Unrealized gains $ 38 $ 128
Unrealized losses (161) (175)
$(123) $ (47)
</TABLE>
Preferred Stock of Subsidiary
On January 9, 1998, BT Holdings (Europe) Limited ("BTH"), an indirect
wholly-owned subsidiary of BTCo issued $304 million, or 3,040 shares, of
Money Market Cumulative Preferred Stock in four series of 760 shares each -
Series A-D ("BTH Preferred"). The BTH Preferred has contingent voting
rights and a liquidation preference of $100,000 per share plus accrued and
unpaid dividends. Each of the four series is identical, except that
dividend payment dates vary and separate auctions on different auction
dates are held for each series.
The shares of each series of BTH Preferred are redeemable at the
option of the Corporation, as a whole or in part, upon at least 10 but not
more than 45 days notice pursuant to a notice of redemption, at a
redemption price of $100,000 per share, plus accrued and unpaid dividends
to the date of redemption.
Any redemption will be with the approval of the Federal Reserve Board,
unless at the time the Federal Reserve Board determines that approval is
not necessary.
Dividends on each series of BTH Preferred are cumulative and payable
generally every 49 days at a rate per annum determined by auction. The
initial rate on each of the Series A-D was 4.10 percent. The maximum rate
for any dividend period was based on a percentage based upon the lower of
the prevailing ratings by selected rating agencies of the shares in effect
at the close of business on the business day immediately preceding the date
of determination.
<PAGE> 18
BALANCE SHEET ANALYSIS (continued)
TRADING DERIVATIVES
The Corporation actively manages trading positions in a variety of
derivative contracts. Many 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 markets 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 derivative financial instruments:
<TABLE>
<CAPTION>
At March 31, Average During
1998 1st Qtr. 1998
(Liabi- (Liabi-
(in millions) Assets lities) Assets lities)
<S> <C> <C> <C> <C>
OTC Financial Instruments
Interest Rate and Currency
Swap Contracts $ 20,892 $(18,722) $ 21,255 $(19,551)
Interest Rate Contracts
Forwards 371 (360) 141 (127)
Options purchased 1,240 1,164
Options written (1,450) (1,319)
Foreign Exchange Rate Contracts
Spot and Forwards 14,793 (15,225) 14,697 (14,438)
Options purchased 1,441 1,326
Options written (1,320) (1,205)
Equity-related contracts 4,652 (5,613) 4,408 (4,999)
Commodity-related and other contracts 812 (823) 651 (701)
Exchange-Traded Options
Interest Rate 6 (15) 3 (4)
Foreign exchange 9 (7) 10 (7)
Equity 464 (323) 402 (303)
Total Gross Fair Values 44,680 (43,858) 44,057 (42,654)
Impact of Netting Agreements (29,585) 29,585 (27,848) 27,848
Less allowance for credit losses (298) - (285) -
$ 14,797(1) $15,924
$(14,273)(1) $(14,806)
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading
Liabilities."
</TABLE>
<PAGE> 19
TRADING DERIVATIVES (continued)
<TABLE>
<CAPTION>
At December 31, Average During
1997 4th Qtr. 1997
(Liabi- (Liabi-
(in millions) Assets lities) Assets lities)
<S> <C> <C> <C> <C>
OTC Financial Instruments
Interest Rate and Currency
Swap Contracts $ 20,793 $(19,103) $19,730 $(18,138)
Interest Rate Contracts
Forwards 48 (40) 46 (48)
Options purchased 1,147 1,149
Options written (1,355) (1,309)
Foreign Exchange Rate Contracts
Spot and Forwards 17,846 (18,031) 14,694 (14,416)
Options purchased 1,299 1,187
Options written (1,192) (1,075)
Equity-related contracts 4,082 (4,607) 3,919 (4,294)
Commodity-related and other contracts 597 (680) 742 (785)
Exchange-Traded Options
Interest Rate 4 (3) 8 (1)
Foreign exchange (5) (4)
Equity 411 (318) 436 (330)
Total Gross Fair Values 46,227 (45,334) 41,911 (40,400)
Impact of Netting Agreements (28,269) 28,269 (25,249) 25,249
Less allowance for credit losses (285) - (200) -
$17,673(1) $16,462
$(17,065)(1) $(15,151)
<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 and currency 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 securities available for sale,
loans, 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.
Total net end-user derivative unrealized gains was $223 million at
March 31, 1998 which has remained unchanged from December 1997.
<PAGE> 20
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
loans, 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, 1998 for sale Loans assets deposits ings debt(1) diaries Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Pay Variable
Unrealized Gain $ 4 $ - $ - $140 $ 11 $458 $ - $ 613
Unrealized (Loss) (36) (7) - (30) (15) (65) - (153)
Pay Variable Net (32) (7) - 110 (4) 393 - 460
Pay Fixed
Unrealized Gain 2 10 - 6 3 10 - 31
Unrealized (Loss) (15) (185) - (38) (15) (24) - (277)
Pay Fixed Net (13) (175) - (32) (12) (14) - (246)
Total Unrealized
Gain 6 10 - 146 14 468 - 644
Total Unrealized
(Loss) (51) (192) - (68) (30) (89) - (430)
Total Net $(45) $(182) $ - $ 78 $(16) $379 $ - $ 214
Forward Rate Agreements
Unrealized Gain $ - $ - $ - $ - $ - $ - $ - $ -
Unrealized (Loss) - - - (2) - - - (2)
Net $ - $ - $ - $(2) $ - $ - $ - $(2)
Currency Swaps and Forwards
Unrealized Gain $7 $6 $ - $ 8 $15 $ 51 $ 45 $ 132
Unrealized (Loss) - - (1) (21) (4) (46) (44) (116)
Net $7 $6 $(1) $(13) $11 $ 5 $ 1 $ 16
Other Contracts (2)
Unrealized Gain $ - $- $ - $ 1 $ - $ - $ - $ 1
Unrealized (Loss) (4) - (2) - - - - (6)
Net $(4) $- $(2) $ 1 $ - $ - $ - $ (5)
Total Unrealized
Gain $ 13 $ 16 $ - $155 $ 29 $ 519 $ 45 $ 777
Total Unrealized
(Loss) (55) (192) (3) (91) (34) (135) (44) (554)
Total Net $(42) $(176) $ (3) $ 64 $ (5) $ 384 $ 1 $ 223
<FN>
(1) Includes trust preferred capital securities.
(2) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 21
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-
Dec 31, 1997 for sale Loans assets deposits ings debt(1) diaries Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Pay Variable
Unrealized Gain $ 3 $ 8 $ - $ 61 $ 20 $ 524 $ - $ 616
Unrealized (Loss) - (3) - (13) (27) (94) - (137)
Pay Variable Net 3 5 - 48 (7) 430 - 479
Pay Fixed
Unrealized Gain 2 1 - 32 11 3 - 49
Unrealized (Loss) (51) (184) - (42) (30) (25) - (332)
Pay Fixed Net (49) (183) - (10) (19) (22) - (283)
Total Unrealized
Gain 5 9 - 93 31 527 - 665
Total Unrealized
(Loss) (51) (187) - (55) (57) (119) - (469)
Total Net $(46) $(178) $ - $ 38 $ (26) $ 408 $ - $ 196
Forward Rate Agreements
Unrealized Gain $ - $ - $ - $ - $ - $ - $ - $ -
Unrealized (Loss) - - - (1) - - - (1)
Net $ - $ - $ - $ (1) $ - $ - $ - $ (1)
Currency Swaps and Forwards
Unrealized Gain $ 14 $ 6 $ 2 $ 25 $ 34 $ 36 $ 40 $ 157
Unrealized (Loss) - - - - (16) (63) (46) (125)
Net $ 14 $ 6 $ 2 $ 25 $ 18 $(27) $ (6) $ 32
Other Contracts (2)
Unrealized Gain $ - $ 1 $ - $ - $ - $ - $ - $ 1
Unrealized (Loss) (4) - (1) - - - - (5)
Net $(4) $ 1 $(1) $ - $ - $ - $ - $ (4)
Total Unrealized
Gain $ 19 $ 16 $ 2 $118 $65 $ 563 $ 40 $ 823
Total Unrealized
(Loss) (55) (187) (1) (56) (73) (182) (46) (600)
Total Net $(36) $(171) $ 1 $ 62 $ (8) $ 381 $ (6) $ 223
<FN>
(1) Includes trust preferred capital securities.
(2) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 22
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 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, 1998
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>
1998 $57,978 5.80% 5.67% $8,632 5.45% 5.79% $66,610
1999-2000 21,522 5.95 5.75 4,076 5.02 5.57 25,598
2001-2002 3,450 6.49 5.70 1,244 5.30 9.76 4,694
2003 and
thereafter 7,688 6.73 5.32 1,347 5.16 6.47 9,035
Total $90,638 $15,299 $105,937
</TABLE>
All rates were those in effect at March 31, 1998. Variable rates are
primarily based on LIBOR and may change significantly, affecting future
cash flows.
<TABLE>
<CAPTION>
At December 31, 1997
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>
1998 $74,471 5.79% 5.84% $6,799 5.83% 6.00% $81,270
1999-2000 11,222 5.97 5.72 3,006 5.04 5.62 14,228
2001-2002 3,282 6.56 5.75 1,437 5.32 9.66 4,719
2003 and
thereafter 6,730 6.89 5.43 1,106 5.75 7.26 7,836
Total $95,705 $12,348 $108,053
</TABLE>
All rates were those in effect at December 31, 1997. Variable rates
are primarily based on LIBOR and may change significantly, affecting future
cash flows.
<PAGE> 23
REGULATORY CAPITAL
The Corporation and its banking subsidiaries are subject to various
regulatory capital requirements administered by the federal banking
agencies. The Federal Reserve Board's ("FRB") risk-based capital
guidelines address the capital adequacy of bank holding companies and banks
(collectively, "banking organizations"). These guidelines include: a
definition of capital, a framework for calculating risk-weighted assets,
and minimum risk-based capital ratios to be maintained by banking
organizations. A banking organization's risk-based capital ratios are
calculated by dividing its qualified capital by its risk-weighted assets.
The FRB also has a minimum leverage ratio which is used as a supplement to
the risk-based capital ratios in evaluating the capital adequacy of banks
and bank holding companies. The Leverage ratio is calculated by dividing
Tier 1 Capital by adjusted quarterly average assets. The Corporation's
1997 Annual Report on Form 10-K, on pages 20 and 59, provides a detailed
discussion of these guidelines and regulations.
The Corporation adopted the new market risk amendment to the risk-
based capital guidelines issued by the FRB and the Bank for International
Settlements in March 1997. The Corporation's 1997 Annual Report on Form 10-
K, on page 24, provides further detailed discussion on the market risk
amendment.
Based on their respective regulatory capital ratios as of March 31,
1998, both the Corporation and Bankers Trust Company ("BTCo") are well
capitalized, as defined in the regulations issued by the FRB and the other
federal bank regulatory agencies setting forth the general capital
requirements mandated by FDICIA, as applicable.
The Corporation's and BTCo's ratios are presented in the table below.
<TABLE>
<CAPTION>
FRB
Minimum To Be Well
Actual Actual for Capitalized
as of as of Capital Under
March 31, December 31, Adequacy Regulatory
1998 1997 Purposes Guidelines
<S> <C> <C> <C> <C>
Tier 1 Capital
Corporation 8.2% 8.3% 4.0% 6.0%
BTCo 8.6% 9.0% 4.0% 6.0%
Total Capital
Corporation 14.2% 14.1% 8.0% 10.0%
BTCo 12.3% 12.3% 8.0% 10.0%
Leverage
Corporation 4.5% 4.4% 3.0%-5.0% 3.0%-5.0%
BTCo 5.4% 5.4% 3.0%-5.0% 5.0%
</TABLE>
<PAGE> 24
REGULATORY CAPITAL (continued)
The following are the essential components of the Corporation's and
BTCo's risk-based capital ratios.
<TABLE>
<CAPTION>
Actual as of Actual as of
March 31, December 31,
(in millions) 1998 1997
<S> <C> <C>
Corporation
Tier 1 Capital $ 6,599 $ 6,431
Tier 2 Capital 4,429 4,138
Tier 3 Capital 400 400
Total Capital $11,428 $10,969
Total risk-weighted assets $80,637 $77,726
BTCo
Tier 1 Capital $6,049 $ 5,999
Tier 2 Capital 2,614 2,262
Total Capital $8,663 $ 8,261
Total risk-weighted assets $70,250 $66,975
</TABLE>
Comparing March 31, 1998 to December 31, 1997, the Corporation's Tier
1 Capital ratio declined by 10 basis points as the increase in Tier 1
Capital of $168 million was not sufficient to offset the increase in risk-
weighted assets of $2.9 billion. Total Capital ratio increased 10 basis
points as the increase in risk-weighted assets was offset by the increase
in Tier 2 Capital of $291 million. The additional Tier 2 Capital is
attributable to the issuance of $304 million of preferred stock by BT
Holdings (Europe) Limited. The Leverage ratio increased by 10 basis points
due to the increase in Tier 1 Capital relative to the change in the
quarterly average assets.
BTCo's Tier 1 Capital ratio decreased by 40 basis points as a result
of a $3.3 billion increase in risk-weighted assets. Total Capital ratio
was unchanged as the increase in risk-weighted assets was offset by the
issuance of $304 million of preferred stock. The Leverage ratio also was
unchanged as the proportionate change in Tier 1 Capital was equal to the
change in quarterly average assets.
RISK MANAGEMENT
The risk management policies and practices described in the
Corporation's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 ("Annual Report") remain in effect. Risk management continues to
be an area of focus and a core competency of the Corporation. There has
been no material change in the Corporation's risk profile as characterized
by the quantitative information presented in the Risk Management section of
the Annual Report.
<PAGE> 25
LIQUIDITY
Liquidity is the ability to have funds available at all times to meet
the commitments of the Corporation. The Corporation has a formal process
for managing global liquidity for the Firm as a whole and for each of its
significant subsidiaries. Management's policy is to maintain conservative
levels of liquidity designed to ensure that the Firm has the ability to
meet its obligations under reasonably foreseeable circumstances. The
fundamental objective is to ensure that, even in the event of a complete
loss of market access, the Corporation will be able to fund those assets
that cannot be liquidated on a timely basis. While the Corporation manages
its liquidity position on a day-to-day basis to meet its ongoing funding
needs at the lowest possible cost, the Firm's planning and management
process also encompasses contingency planning to address even the most
severe liquidity events.
One of the Corporation's principal liquidity strengths is its stock of
highly liquid assets; at March 31, 1998 and December 31, 1997, liquid
assets accounted for approximately 78 percent and a 77 percent of the
Corporation's gross assets, respectively. An important component of these
liquid assets is the "liquidity warehouse" and the aggregate warehouse size
relative to maturing liabilities. The "liquidity warehouse" is defined as
liquid assets which are under the direct control of the Treasury/Funding
area and which can be liquidated immediately at current market value.
Interest Rate Sensitivity
Condensed interest rate sensitivity data for the Corporation at March
31, 1998 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-
(in billions) Within 1 - 5 After bearing
March 31, 1998 1 year years 5 years funds Total
<S> <C> <C> <C> <C> <C>
Assets $ 107.6 $ 6.5 $ 6.7 $ 36.7 $ 157.5
Liabilities, preferred
stock of subsidiary and
preferred stock (100.1) (11.3) (5.1) (35.9) (152.4)
Common stockholders' equity - - - (5.1) (5.1)
Effect of off-balance sheet
hedging instruments (14.1) 8.4 5.7 - -
Interest rate
sensitivity gap $ (6.6) $ 3.6 $ 7.3 $ (4.3) $ -
</TABLE>
<PAGE> 26
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,
1998 1997
<S> <C> <C>
CASH BASIS LOANS
Domestic
Commercial and industrial $ 31 $ 49
Secured by real estate 68 92
Total domestic 99 141
International
Commercial and industrial 112 65
Secured by real estate 24 25
Other 12 9
Total international 148 99
Total cash basis loans $247 $240
Ratio of cash basis loans to total gross loans 1.1% 1.2%
Ratio of allowance for credit losses to cash
basis loans (1) 281% 291%
RENEGOTIATED LOANS - Secured by real estate $25 $25
OTHER REAL ESTATE $190 $194
OTHER NONPERFORMING ASSETS
Derivatives $330 $34
Assets acquired in credit workouts 4 4
Total other nonperforming assets $334 $38
Loans 90 days or more past due and still
accruing interest $- $-
<FN>
(1) Ratio was computed using the allowance for credit losses that had been
allocated to loans of $695 million and $699 million at March 31, 1998 and
December 31, 1997, respectively.
</TABLE>
<PAGE> 27
NONPERFORMING ASSETS (continued)
An analysis of the changes in the Corporation's total cash basis loans
during the first three months of 1998 follows (in millions).
<TABLE>
<CAPTION>
<S> <C>
Balance, December 31, 1997 $ 240
Net transfers to cash basis loans 49
Net paydowns (18)
Charge-offs (7)
Other (17)
Balance, March 31, 1998 $ 247
</TABLE>
The Corporation's total cash basis loans amounted to $247 million at
March 31, 1998, up $7 million, or 3 percent, from December 31, 1997.
Within cash basis loans, loans secured by real estate were $92 million
and $117 million at March 31, 1998 and December 31, 1997, respectively.
Commercial and industrial loans to highly leveraged borrowers were $25
million and $41 million at March 31, 1998 and December 31, 1997,
respectively.
Other nonperforming assets (excluding other real estate) at March 31,
1998 were $334 million, up from $38 million at December 31, 1997. This
increase is primarily due to swaps with Indonesian and Thai counterparties.
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 which 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) 1998 1997
<S> <C> <C>
Domestic Loans
Gross amount of interest that would have
been recorded at original rate $3 $6
Less, interest, net of reversals, recognized
in interest revenue 2 1
Reduction of interest revenue 1 5
International Loans
Gross amount of interest that would have
been recorded at original rate 2 2
Less, interest, net of reversals, recognized
in interest revenue 1 -
Reduction of interest revenue 1 2
Total reduction of interest revenue $2 $7
</TABLE>
<PAGE> 28
ACCOUNTING DEVELOPMENTS
As of January 1, 1998, the Corporation adopted Statement of Financial
Accounting Standards ("SFAS") 127 which had deferred for one year the
effective date of some portions of SFAS 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." The
deferred provisions related to collateral, repurchase agreements, dollar-
rolls, securities lending and similar transactions. The adoption as of
January 1, 1998 of the deferred portions of SFAS 125 did not have a
material impact on the Corporation's net income, stockholders' equity or
total assets.
On January 1, 1998, the Corporation adopted SFAS 130, "Reporting
Comprehensive Income." SFAS 130 establishes standards for reporting and
display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general-purpose financial statements.
SFAS 130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. SFAS 130 also requires that a company classify items
of other comprehensive income by their nature in a financial statement, and
display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in capital in the stockholders'
equity section of a statement of financial position. All periods presented
have been restated to conform with SFAS 130.
In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS 131 establishes standards for
the way that public enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and major
customers. SFAS 131 is effective for financial statement periods beginning
after December 15, 1997. Comparative information for earlier years is to
be restated. SFAS 131 need not be applied to interim financial statements
in the initial year of its application.
In February 1998, the FASB issued SFAS 132, "Employers" Disclosures
about Pensions and Other Postretirement Benefits," which revises and
standardizes pension and other postretirement benefit plan disclosures that
are to be included in the employers' financial statements. It does not
change the measurement or recognition rules for pensions and other
postretirement benefit plans. SFAS 132 is effective for financial
statement periods beginning after December 15, 1997.
SUBSEQUENT EVENTS
On April 24, 1998, the Corporation announced that it would redeem all
5,950,720 depositary shares of its 7 5/8% Cumulative Preferred Stock,
Series O on June 1, 1998. The shares will be redeemed at a redemption
price of $25 per depositary share plus accrued and unpaid dividends to the
redemption date. Dividends on these shares will cease to accumulate on the
redemption date, unless the Corporation fails to pay the redemption price.
On April 27, 1998, the Corporation completed its acquisition of
NatWest Markets' European cash equities business and the Wood McKenzie
Consulting business. This acquisition, which has been accounted for as a
purchase, brings to the Corporation equities research, institutional sales
and trading, and primary markets origination businesses in the U.K. and
Continental Europe. In the second quarter of 1998, the Corporation will
incur a one-time charge associated with the NatWest integration and the
repositioning of its equity businesses in Europe. The effect of this charge
is not currently expected to be material to the Corporation's annual earnings.
<PAGE> 29
FORWARD LOOKING STATEMENTS
Certain sections of this report contain forward looking statements and can
be identified by the use of such words as "anticipates," "expects," and
"estimates," and similar expressions. These statements are subject to
cretain risks and uncertainties. These risks and uncertainties could cause
actual results to differ materially from the current statements. See also
"Important Factors Relating to Forward Looking Statements" contained
in the Corporation's Annual report.
<PAGE> 30
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders was held on April 21, 1998.
(b) Each of the persons named in the Proxy Statement as a nominee for
Director was elected.
(c) The following are the voting results on each of the matters which
were submitted to the stockholders:
<TABLE>
<CAPTION>
Withheld
or Broker
For Against Abstain Non-Votes
<S> <C> <C> <C> <C>
Election of Directors
Lee A. Ault III 84,790,651 534,500
Neil R. Austrian 84,723,243 601,908
George B. Beitzel 84,793,337 531,814
Phillip A. Griffiths 84,761,170 563,981
William R. Howell 84,769,746 555,405
Vernon E. Jordan, Jr. 83,693,889 1,631,262
Hamish Maxwell 84,739,954 585,197
Frank N. Newman 84,787,936 537,215
N. J. Nicholas Jr. 84,798,358 526,793
Russell E. Palmer 84,761,582 563,569
Donald L. Staheli 84,761,534 563,617
Patricia C. Stewart 84,767,220 557,931
G. Richard Thoman 84,766,858 558,293
George J. Vojta 84,795,142 530,009
Paul A. Volcker 84,793,959 531,192
Resolutions
. To ratify the appointment of
KPMG Peat Marwick LLP as
independent auditor for 1998. 85,032,444 85,619 207,084 2
. Authorization to permit the
issuance of Series Preferred
Stock with different rights. 67,597,352 5,563,524 456,335 11,707,940
. Authorization to amend the
Certificate of Incorporation
to permit distribution of one
class or series of Capital
Stock to the holders of a
different class or series. 67,996,417 5,146,744 474,047 11,707,943
. Authorization to amend the
Certificate of Incorporation
to count only the votes cast
for or against a corporate
action. 66,098,867 6,973,438 544,905 11,707,941
. Approval to change the name
of the Corporation to Bankers
Trust Corporation. 83,012,751 1,739,518 518,403 54,480
<PAGE> 31
PART II. OTHER INFORMATION (continued)
</TABLE>
<TABLE>
<CAPTION>
Withheld
or Broker
For Against Abstain Non-Votes
<S> <C> <C> <C> <C>
. To limit the term of service
of outside directors to no more
than six years. 7,101,899 64,494,018 2,017,890 11,711,344
. To provide for cumulative
voting in the election of
directors. 29,612,898 41,624,034 2,376,878 11,711,341
</TABLE>
The text of the matters referred to under this Item 4 is set forth
in the Proxy Statement dated March 16, 1998 previously filed with
the Commission and incorporated herein by reference.
<PAGE> 32
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 security holders
issued by Bankers Trust Corporation or
its subsidiaries.
(12) Statement re Computation of Ratios
(27) Financial Data Schedule
(b) Reports on Form 8-K - Bankers Trust Corporation filed one report
on Form 8-K during the quarter ended March 31, 1998.
- The report dated January 22, 1998, filed the Corporation's Press
Release dated January 22, 1998, which announced earnings for
the quarter ending December 31, 1997.
<PAGE> 33
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, 1998.
BANKERS TRUST CORPORATION
BY: /S/ RONALD HASSEN
RONALD HASSEN
Senior Vice President
(Acting Principal Accounting Officer)
<PAGE>
BANKERS TRUST CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
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
27.1 Financial Data Schedule at and for the three
months ended March 31, 1998
27.2 Restated Financial Data Schedule at and for the
three months ended March 31, 1997
27.3 Restated Financial Data Schedule at and for the
six months ended June 30, 1997
27.4 Restated Financial Data Schedule at and for the
nine months ended September 30, 1997
27.5 Restated Financial Data Schedule at and for the
three months ended March 31, 1996
27.6 Restated Financial Data Schedule at and for the
six months ended June 30, 1996
27.7 Restated Financial Data Schedule at and for the
nine months ended September 30, 1996
[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 Corporation or its subsidiaries.
<PAGE>
EXHIBIT 12(a)
BANKERS TRUST CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income before
income taxes and
cumulative effects
of accounting
changes $1,698 $ 987 $ 469 $1,131 $1,239 $ 308
2. Add: Fixed charges
excluding
capitalized
interest
(Line 10) 3,168 3,911 5,138 5,483 5,959 1,596
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 30 45 28 30 (117) 4
4. Earnings including
interest on deposits 4,836 4,853 5,579 6,584 7,315 1,900
5. Less: Interest on
deposits 1,013 965 1,360 1,355 2,076 571
6. Earnings excluding
interest on deposits $3,823 $3,888 $4,219 $5,229 $5,239 $1,329
Fixed Charges:
7. Interest Expense $3,137 $3,880 $5,105 $5,451 $5,926 $1,587
8. Estimated interest
component of net
rental expense 31 31 33 32 33 9
9. Amortization of debt
issuance expense - - - - - -
10. Total fixed charges
including interest on
deposits and excluding
capitalized interest 3,168 3,911 5,138 5,483 5,959 1,596
11. Add: Capitalized
interest - - - - - -
12. Total fixed charges 3,168 3,911 5,138 5,483 5,959 1,596
13. Less: Interest on
deposits
(Line 5) 1,013 965 1,360 1,355 2,076 571
14. Fixed charges
excluding
interest on deposits $2,155 $2,946 $3,778 $4,128 $3,883 $1,025
Consolidated Ratios of Earnings
to Fixed Charges:
Including interest on
deposits
(Line 4/Line 12) 1.53 1.24 1.09 1.20 1.23 1.19
Excluding interest on
deposits
(Line 6/Line 14) 1.77 1.32 1.12 1.27 1.35 1.30
</TABLE>
<PAGE>
EXHIBIT 12(b)
BANKERS TRUST CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(dollars in millions)
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income before
income taxes and
cumulative effect
of accounting
changes $1,698 $ 987 $ 469 $1,131 $1,239 $ 308
2. Add: Fixed charges
excluding
capitalized
interest
(Line 13) 3,168 3,911 5,138 5,483 5,959 1,596
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 30 45 28 30 (117) 4
4. Earnings including
interest on deposits 4,836 4,853 5,579 6,584 7,315 1,900
5. Less: Interest on
deposits 1,013 965 1,360 1,355 2,076 571
6. Earnings excluding
interest on deposits $3,823 $3,888 $4,219 $5,229 $5,239 $1,329
Preferred Stock Dividend Requirements:
7. Preferred stock dividend
requirements $ 23 $ 28 $ 51 $ 51 $ 49 $ 11
8. Ratio of income from
continuing operations
before income taxes to
income from continuing
operations after income
taxes 147% 144% 151% 148% 143% 139%
9. Preferred stock dividend
requirements on a
pretax basis $ 34 $ 40 $ 77 $ 75 $ 70 $ 15
Fixed Charges:
10. Interest Expense $3,137 $3,880 $5,105 $5,451 $5,926 $1,587
11. Estimated interest
component of net
rental expense 31 31 33 32 33 9
12. Amortization of debt
issuance expense - - - - - -
13. Total fixed charges
including interest on
deposits and excluding
capitalized interest 3,168 3,911 5,138 5,483 5,959 1,596
14. Add: Capitalized
interest - - - - - -
15. Total fixed charges 3,168 3,911 5,138 5,483 5,959 1,596
<PAGE>
16. Add: Preferred stock
dividend require-
ments - pretax
(Line 9) 34 40 77 75 70 15
17. Total combined fixed
charges and preferred
stock dividend require-
ments on a pretax
basis 3,202 3,951 5,215 5,558 6,029 1,611
18. Less: Interest on
deposits
(Line 5) 1,013 965 1,360 1,355 2,076 571
19. Combined fixed charges
and preferred stock
dividend requirements
on a pretax basis
excluding interest on
deposits $2,189 $2,986 $3,855 $4,203 $3,953 $1,040
Consolidated Ratios of Earnings
to Combined Fixed Charges
and Preferred Stock
Dividend Requirements:
Including interest on
deposits
(Line 4/Line 17) 1.51 1.23 1.07 1.18 1.21 1.18
Excluding interest on
deposits
(Line 6/Line 19) 1.75 1.30 1.09 1.24 1.32 1.28
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Bankers Trust Corporation and Subsidiaries consolidated statement of
condition at March 31, 1998 and the consolidated statement of income for
the three months ended March 31, 1998 and is qualified in its entirety
by reference to such financial statemnts.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1504
<INT-BEARING-DEPOSITS> 2068
<FED-FUNDS-SOLD> 1630
<TRADING-ASSETS> 60363<F1>
<INVESTMENTS-HELD-FOR-SALE> 12893
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 21873
<ALLOWANCE> 695
<TOTAL-ASSETS> 157537
<DEPOSITS> 46341
<SHORT-TERM> 46749<F2>
<LIABILITIES-OTHER> 11694<F3>
<LONG-TERM> 17519
0
658
<COMMON> 105
<OTHER-SE> 5049
<TOTAL-LIABILITIES-AND-EQUITY> 157537
<INTEREST-LOAN> 418
<INTEREST-INVEST> 147
<INTEREST-OTHER> 790<F4>
<INTEREST-TOTAL> 1989
<INTEREST-DEPOSIT> 571
<INTEREST-EXPENSE> 1587
<INTEREST-INCOME-NET> 402
<LOAN-LOSSES> 60<F5>
<SECURITIES-GAINS> (6)
<EXPENSE-OTHER> 1325
<INCOME-PRETAX> 308
<INCOME-PRE-EXTRAORDINARY> 308
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 222
<EPS-PRIMARY> 2.08
<EPS-DILUTED> 2.01
<YIELD-ACTUAL> 1.47
<LOANS-NON> 247
<LOANS-PAST> 0
<LOANS-TROUBLED> 25
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 997
<CHARGE-OFFS> 54
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 1006<F6>
<ALLOWANCE-DOMESTIC> 109
<ALLOWANCE-FOREIGN> 228
<ALLOWANCE-UNALLOCATED> 358
<FN>
<F1>Trading assets are net of allowance of 298.
<F2>Short-term borrowings include the following:
Securities loaned and securities sold under
repurchase agreements 21881
Other short-term borrowings 24868
Total 46749
<F3>Other liabilities include the following:
Accounts payable and accrued expenses 5875
Other liabilities 5277
Acceptances outstanding 542
Total 11694
<F4>Other interest income include the following:
Interest-bearing deposits with banks 98
Federal funds sold 52
Securities sold under resale agreements 330
Securities borrowed 275
Customer receivables 35
Total 790
<F5>Amount represents credit loss provision - trading.
<F6>The Corporation has allocated its total allowance for credit losses as
follows: 695 as a reduction of loans, 298 as a reduction of trading assets
and 13 as other liabilities related to all other credit-related items.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Bankers
Trust Corporation and Subsidiaries consolidated statement of condition at March
31, 1997 and the consolidated statement of income for the three months ended
March 31, 1997 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1679
<INT-BEARING-DEPOSITS> 2581
<FED-FUNDS-SOLD> 1195
<TRADING-ASSETS> 47502<F1>
<INVESTMENTS-HELD-FOR-SALE> 7986
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 18040
<ALLOWANCE> 758
<TOTAL-ASSETS> 125341
<DEPOSITS> 35589
<SHORT-TERM> 42896<F2>
<LIABILITIES-OTHER> 7720<F3>
<LONG-TERM> 12797
0
704
<COMMON> 105
<OTHER-SE> 4974
<TOTAL-LIABILITIES-AND-EQUITY> 125341
<INTEREST-LOAN> 302
<INTEREST-INVEST> 120
<INTEREST-OTHER> 659<F4>
<INTEREST-TOTAL> 1680
<INTEREST-DEPOSIT> 396
<INTEREST-EXPENSE> 1349
<INTEREST-INCOME-NET> 331
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 14
<EXPENSE-OTHER> 1104
<INCOME-PRETAX> 293
<INCOME-PRE-EXTRAORDINARY> 293
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 200
<EPS-PRIMARY> 1.86
<EPS-DILUTED> 1.76
<YIELD-ACTUAL> 1.40
<LOANS-NON> 332
<LOANS-PAST> 0
<LOANS-TROUBLED> 37
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 973
<CHARGE-OFFS> 33
<RECOVERIES> 18
<ALLOWANCE-CLOSE> 958<F5>
<ALLOWANCE-DOMESTIC> 136
<ALLOWANCE-FOREIGN> 143
<ALLOWANCE-UNALLOCATED> 479
<FN>
<F1>Tading assets are net of allowance of 190.
<F2>Short-term borrowings include the following:
Securities loaned and securities sold under
repurchase agreements 22576
Other short-term borrowings 20320
Total 42896
<F3>Other liabilities include the following:
Accounts payable and accrued expenses 4727
Other liabilities 2375
Acceptances outstanding 618
Total 7720
<F4>Other interest income include the following:
Interest-bearing deposits with banks 65
Federal funds sold 49
Securities purchased under resale agreements 330
Scurities borrowed 183
Customer receivables 32
Total 659
<F5>The Corporation has allocated its total allowance for credit losses as
follows: 758 as a reduction of loans, 190 as a reduction of trading assets
and 10 as other liabilities related to all other credit-related items.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Bankers
Trust Corporation and Subsidiaries consolidated statement of condition at June
30, 1997 and the consolidated statement of income for the six months ended June
30, 1997 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1756
<INT-BEARING-DEPOSITS> 2334
<FED-FUNDS-SOLD> 1305
<TRADING-ASSETS> 49005<F1>
<INVESTMENTS-HELD-FOR-SALE> 7478
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 19767
<ALLOWANCE> 767
<TOTAL-ASSETS> 131367
<DEPOSITS> 38430
<SHORT-TERM> 42500<F2>
<LIABILITIES-OTHER> 10169<F3>
<LONG-TERM> 12877
0
703
<COMMON> 105
<OTHER-SE> 5158
<TOTAL-LIABILITIES-AND-EQUITY> 131367
<INTEREST-LOAN> 616
<INTEREST-INVEST> 222
<INTEREST-OTHER> 1324<F4>
<INTEREST-TOTAL> 3411
<INTEREST-DEPOSIT> 855
<INTEREST-EXPENSE> 2740
<INTEREST-INCOME-NET> 671
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 82
<EXPENSE-OTHER> 2329
<INCOME-PRETAX> 602
<INCOME-PRE-EXTRAORDINARY> 602
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 413
<EPS-PRIMARY> 3.87
<EPS-DILUTED> 3.65
<YIELD-ACTUAL> 1.38
<LOANS-NON> 305
<LOANS-PAST> 0
<LOANS-TROUBLED> 37
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 973
<CHARGE-OFFS> 36
<RECOVERIES> 19
<ALLOWANCE-CLOSE> 973<F5>
<ALLOWANCE-DOMESTIC> 134
<ALLOWANCE-FOREIGN> 208
<ALLOWANCE-UNALLOCATED> 425
<FN>
<F1>Trading assets are net of allowance of 196.
<F2>Short-term borrowings include the following:
Securities loaned and securities sold under
repurchase agreements 22973
Other short-term borrowings 19527
Total 42500
<F3>Other liabilities include the following:
Accounts payable and accrued expenses 6170
Other liabilities 3308
Acceptances outstanding 691
Total 10169
<F4>Other interest income include the following:
Interest-bearing deposits with banks 147
Federal funds sold 110
Securities repurchased under resale agreements 644
Securities borrowed 359
Customer receivables 64
Total 1324
<F5>The Corporation has allocated its total allowance for credit losses as
follows: 767 as a reduction of loans, 196 as a reduction of trading assets
and 10 as other liabilities related to all other credit-related items.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Bankers
Trust Corporation and Subsidiaries consolidated statement of condition at
September 30, 1997 and the consolidated statement of income for the nine months
ended September 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1625
<INT-BEARING-DEPOSITS> 2522
<FED-FUNDS-SOLD> 2241
<TRADING-ASSETS> 52375<F1>
<INVESTMENTS-HELD-FOR-SALE> 7577
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 21303
<ALLOWANCE> 759
<TOTAL-ASSETS> 139887
<DEPOSITS> 46079
<SHORT-TERM> 39487<F2>
<LIABILITIES-OTHER> 10053<F3>
<LONG-TERM> 12044
0
703
<COMMON> 105
<OTHER-SE> 5323
<TOTAL-LIABILITIES-AND-EQUITY> 139887
<INTEREST-LOAN> 985
<INTEREST-INVEST> 337
<INTEREST-OTHER> 2061<F4>
<INTEREST-TOTAL> 5200
<INTEREST-DEPOSIT> 1406
<INTEREST-EXPENSE> 4214
<INTEREST-INCOME-NET> 986
<LOAN-LOSSES> 10
<SECURITIES-GAINS> 100
<EXPENSE-OTHER> 3748
<INCOME-PRETAX> 953
<INCOME-PRE-EXTRAORDINARY> 953
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 659
<EPS-PRIMARY> 6.20
<EPS-DILUTED> 5.85
<YIELD-ACTUAL> 1.32
<LOANS-NON> 298
<LOANS-PAST> 0
<LOANS-TROUBLED> 37
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 973
<CHARGE-OFFS> 66
<RECOVERIES> 38
<ALLOWANCE-CLOSE> 972<F5>
<ALLOWANCE-DOMESTIC> 117
<ALLOWANCE-FOREIGN> 206
<ALLOWANCE-UNALLOCATED> 436
<FN>
<F1>Trading assets are net of allowance of 200.
<F2>Short-term borrowings include the following:
Securities loaned and securities sold under
repurchase agreements 20158
Other short-term borrwings 19329
Total 39487
<F3>Other liabilities include the following:
Accounts payable and accrued expenses 6255
Other liabilities 3096
Acceptances outstanding 702
Total 10053
<F4>Other interest income include the following:
Interest-bearing deposits with banks 253
Federal funds sold 196
Securities purchased under repurchase agreements 983
Securities borrowed 532
Customer receivables 97
Total 2061
<F5>The Corporation has allocated its total allowance for credit losses as
follows: 759 as a reduction of loans, 200 as a reduction of trading assets
and 13 as other liabilities related to all other credit-related items.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Bankers Trust Corporation and Subsidiaries consolidated statement of
condition at March 31, 1996 and the consolidated statement of income for
the three months ended March 31, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1199
<INT-BEARING-DEPOSITS> 1377
<FED-FUNDS-SOLD> 1038
<TRADING-ASSETS> 45672
<INVESTMENTS-HELD-FOR-SALE> 6880
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 13138
<ALLOWANCE> 987
<TOTAL-ASSETS> 110518
<DEPOSITS> 22556
<SHORT-TERM> 36452<F1>
<LIABILITIES-OTHER> 8329<F2>
<LONG-TERM> 10322
0
866
<COMMON> 104
<OTHER-SE> 4631
<TOTAL-LIABILITIES-AND-EQUITY> 110518
<INTEREST-LOAN> 232
<INTEREST-INVEST> 97
<INTEREST-OTHER> 521<F3>
<INTEREST-TOTAL> 1623
<INTEREST-DEPOSIT> 335
<INTEREST-EXPENSE> 1389
<INTEREST-INCOME-NET> 234
<LOAN-LOSSES> 5
<SECURITIES-GAINS> 15
<EXPENSE-OTHER> 953
<INCOME-PRETAX> 264
<INCOME-PRE-EXTRAORDINARY> 264
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 179
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.58
<YIELD-ACTUAL> 1.09
<LOANS-NON> 715
<LOANS-PAST> 0
<LOANS-TROUBLED> 89
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 992
<CHARGE-OFFS> 28
<RECOVERIES> 18
<ALLOWANCE-CLOSE> 987
<ALLOWANCE-DOMESTIC> 272
<ALLOWANCE-FOREIGN> 219
<ALLOWANCE-UNALLOCATED> 496
<FN>
<F1>Short-term borrowings include the following:
Securities loaned and securities sold under
repurchase agreements 23786
Other short-term borrowings 12666
Total 36452
<F2>Other liabilities include the following:
Accounts payable and accrued expenses 5484
Other liabilities 2755
Total 8239
<F3>Other interest income includes the following:
Interest-bearing deposits with banks 43
Federal funds sold 28
Securities sold under resale agreements 194
Securities borrowed 228
Customer receivables 28
Total 521
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Bankers
Trust Corporation and Subsidiaries consolidated statement of condition at
June 30, 1996 and the consolidated statement of income for the six months ended
June 30, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1690
<INT-BEARING-DEPOSITS> 2065
<FED-FUNDS-SOLD> 365
<TRADING-ASSETS> 43985
<INVESTMENTS-HELD-FOR-SALE> 6851
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 14304
<ALLOWANCE> 972
<TOTAL-ASSETS> 117199
<DEPOSITS> 25293
<SHORT-TERM> 40429<F1>
<LIABILITIES-OTHER> 8205<F2>
<LONG-TERM> 10910
0
866
<COMMON> 104
<OTHER-SE> 4793
<TOTAL-LIABILITIES-AND-EQUITY> 117199
<INTEREST-LOAN> 473
<INTEREST-INVEST> 212
<INTEREST-OTHER> 1141<F3>
<INTEREST-TOTAL> 3118
<INTEREST-DEPOSIT> 635
<INTEREST-EXPENSE> 2618
<INTEREST-INCOME-NET> 500
<LOAN-LOSSES> 5
<SECURITIES-GAINS> 40
<EXPENSE-OTHER> 1991
<INCOME-PRETAX> 564
<INCOME-PRE-EXTRAORDINARY> 564
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 380
<EPS-PRIMARY> 3.51
<EPS-DILUTED> 3.36
<YIELD-ACTUAL> 1.13
<LOANS-NON> 573
<LOANS-PAST> 2
<LOANS-TROUBLED> 89
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 992
<CHARGE-OFFS> 49
<RECOVERIES> 24
<ALLOWANCE-CLOSE> 972
<ALLOWANCE-DOMESTIC> 233
<ALLOWANCE-FOREIGN> 209
<ALLOWANCE-UNALLOCATED> 530
<FN>
<F1>Short-term borrowings include the following:
Securities loaned and securities sold under
repurchase agreements 24485
Other short-term borrowings 15944
Total 40429
<F2>Other liabilities include the following:
Accounts payable and accrued expenses 5632
Other liabilities 2573
Total 8205
<F3>Other interest income include the following:
Interest-bearing deposits with banks 83
Federal funds sold 59
Securities purchased under resale agreements 470
Securities borrowed 471
Customer receivables 58
Total 1141
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Bankers
Trust Corporation and Subsidiaries consolidated statement of financial
condition at September 30, 1996 and the consolidated statement of income for
the nine months ended September 30, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 866
<INT-BEARING-DEPOSITS> 4101
<FED-FUNDS-SOLD> 856
<TRADING-ASSETS> 47964
<INVESTMENTS-HELD-FOR-SALE> 7461
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 15318
<ALLOWANCE> 967
<TOTAL-ASSETS> 123481
<DEPOSITS> 28672
<SHORT-TERM> 43600<F1>
<LIABILITIES-OTHER> 8849<F2>
<LONG-TERM> 10707
0
816
<COMMON> 104
<OTHER-SE> 5010
<TOTAL-LIABILITIES-AND-EQUITY> 123481
<INTEREST-LOAN> 743
<INTEREST-INVEST> 331
<INTEREST-OTHER> 1860<F3>
<INTEREST-TOTAL> 4822
<INTEREST-DEPOSIT> 974
<INTEREST-EXPENSE> 4052
<INTEREST-INCOME-NET> 770
<LOAN-LOSSES> 5
<SECURITIES-GAINS> 51
<EXPENSE-OTHER> 2955
<INCOME-PRETAX> 859
<INCOME-PRE-EXTRAORDINARY> 859
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 582
<EPS-PRIMARY> 5.43
<EPS-DILUTED> 5.17
<YIELD-ACTUAL> 1.11
<LOANS-NON> 488
<LOANS-PAST> 0
<LOANS-TROUBLED> 89
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 992
<CHARGE-OFFS> 68
<RECOVERIES> 38
<ALLOWANCE-CLOSE> 967
<ALLOWANCE-DOMESTIC> 232
<ALLOWANCE-FOREIGN> 215
<ALLOWANCE-UNALLOCATED> 520
<FN>
<F1>Short-term borrowings include the following:
Securities loaned and securities sold under
repurchase agreements 24576
Other short-term borrowings 19024
Total 43600
<F2>Other liabilities include the following:
Accounts payable and accrued expenses 6199
Other liabilities 2650
Total 8849
<F3>Other interest income include the following:
Interest-bearing deposits with banks 142
Federal funds sold 92
Securities purchased under resale agreements 841
Securities borrowed 697
Customer receivables 88
Total 1860
</FN>
</TABLE>
