<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 23, 1998
BANKERS TRUST CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
1-5920 13-6180473
(Commission file number) (IRS employer identification no.)
130 LIBERTY STREET, NEW YORK, NEW YORK 10006
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 250-2500
<PAGE>
Item 5. Other Events
A) On July 23, 1998, Bankers Trust Corporation (the
"Registrant") released financial information with respect to the
quarter ended June 30, 1998. This Current Report on Form 8-K
files the Press Release which contains certain financial
information to be incorporated into currently effective
registration statements filed by the Registrant with the
Securities and Exchange Commission under the Securities Act of
1933, as amended. Such financial information contained in the
Registrant's Press Release dated July 23, 1998, is described
below and is incorporated herein by reference.
1. Review of certain financial information.
2. The unaudited consolidated financial position of
Bankers Trust Corporation and its subsidiaries at June 30, 1998,
March 31, 1998 and June 30, 1997, the audited consolidated
financial position at December 31, 1997 and its unaudited
condensed consolidated results of operations for each of the
three-month and six-month periods ended June 30, 1998, and June
30, 1997 and the three-month period ended March 31, 1998.
In the opinion of the Registrant's management, all material
adjustments necessary for a fair presentation of the
Corporation's consolidated financial position at June 30, 1998,
March 31, 1998, December 31, 1997 and June 30, 1997 and its
condensed consolidated results of operations for the three-month
and six-month periods ended June 30, 1998 and June 30, 1997 and
the three-month period ended March 31, 1998 have been made. All
such adjustments were of a normal recurring nature. The results
of operations for the three-month and six-month periods ended
June 30, 1998 and for the three-month period ended March 31, 1998
are not necessarily indicative of operations for the full year or
any other interim period.
B) The following schedules were distributed at the analysts
meeting held by the Corporation on July 23, 1998:
- Preliminary Selected Asian Cross Border Exposures at
June 30, 1998 is contained in Exhibit 99.2
- Adjusted ROCE by Organizational Unit is contained in
Exhibit 99.2
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
(99.1) Earnings Press Release of the Registrant
dated July 23, 1998.
(99.2) Preliminary Selected Asian Cross Border
Exposures at June 30, 1998
(99.2) Adjusted ROCE by Organizational Unit
<PAGE>
SIGNATURES
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, hereunto duly
authorized.
BANKERS TRUST CORPORATION
By /s/ RONALD HASSEN
RONALD HASSEN
Senior Vice President
July 24, 1998
<PAGE>
BANKERS TRUST CORPORATION
FORM 8-K DATED JULY 23, 1998
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
(99.1) Earnings Press Release of the
Registrant dated July 23, 1998.
(99.2) Preliminary Selected Asian Cross Border Exposures
at June 30, 1998
(99.2) Adjusted ROCE by Organizational Unit
THURSDAY, JULY 23, 1998
BANKERS TRUST EARNS $2.06 PER SHARE IN THE SECOND QUARTER OF 1998
BEFORE CHARGES TO REPOSITION EUROPEAN EQUITY BUSINESSES, UP 9%
FROM THE SECOND QUARTER OF 1997
New York, July 23, 1998 -- Bankers Trust Corporation (BT) today
reported diluted earnings per share for the second quarter of
$2.06, before charges to reposition the Corporation's European
equity businesses. After these charges, which also include costs
associated with the integration of NatWest Markets' European
equities business, net income per share was $1.46, compared to
net income per share in the second quarter of 1997 of $1.89. Net
income for the second quarter of 1998 was $228 million, before
the after-tax effect from these charges of $64 million. Net
income in the second quarter of 1997 was $213 million. As
previously reported, the acquisition of the NatWest Markets'
European equities business was completed on April 27.
Frank Newman, chairman of the board and chief executive officer,
said: "Strong results across our corporate finance and advisory
activities and our institutional and private client service
businesses as well as in Australia/NZ more than offset the effect
of continuing difficult conditions in emerging markets.
Corporate finance fees increased 46% from a year ago, reflecting
substantial momentum in securities underwriting activities and
our merger and acquisition services."
He added: "The acquisition of NatWest's European equities
business is off to a strong start and was accretive to operating
earnings in the second quarter. This acquisition is an excellent
and important addition to our global investment banking
capabilities. We look forward to building on our expanded base
to pursue growing opportunities in Europe."
For the current quarter, total revenue before the provision for
trading-related credit losses was up $74 million from second
quarter 1997. Higher corporate finance fees, higher other fees &
commissions and improved revenue from equity investments were
partially offset by lower trading revenue. Total noninterest
expenses of $1.320 billion for the second quarter of 1998
increased $95 million from the second quarter of 1997. This
increase was primarily attributable to the integration and
ongoing operating costs associated with the NatWest acquisition.
Total noninterest expenses for the second quarter of 1998 were
down $5 million from the previous quarter.
In response to the continuing economic developments in Asia, the
Corporation recorded a $60 million provision for trading-related
credit losses. During the second quarter of 1998, the
Corporation's net charge-offs were $55 million, which included
$38 million related to swaps with Asian counterparties. At June
30, 1998, the total allowance for credit losses was $1.011
billion as compared to $1.006 billion at March 31, 1998 and $973
million at June 30, 1997.
At June 30, 1998, total cash basis loans were $257 million, up
from $247 million at March 31, 1998 and down from $305 million at
June 30, 1997. Other nonperforming assets (primarily trading) at
June 30, 1998 were $447 million, up from $334 million at March
31, 1998 and $8 million at June 30, 1997. The increase in the
current quarter primarily resulted from swaps with Indonesian
counterparties. At June 30, 1998, the Corporation's cross-border
exposures in Korea, Indonesia, and Thailand were $2.5 billion,
down 28% from $3.5 billion at December 31, 1997 and down 10% from
$2.8 billion at March 31, 1998.
2
ORGANIZATIONAL HIGHLIGHTS*
Total Non- Pretax Net
Second Quarter 1998 Total Interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
Investment Banking $ 560 $ 433 $ 127 $ 91**
Trading & Sales 244 144 100 72
Global Institutional Services 262 233 29 21
Private Client Services Group 193 157 36 26
Australia/New Zealand 162 115 47 34
Emerging Markets Group:
Latin America 84 127 (43) (30)
Emerging Europe, Mid East
& Africa 29 26 3 2
Asia 8 42 (34) (25)
Corporate/Other 6 43 (37) (27)
Total $1,548 $1,320 $ 228 $164
Total Non- Pretax Net
First Quarter 1998 Total Interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
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, Mid East
& Africa 34 25 9 7
Asia (51) 49 (100) (72)
Corporate/Other 28 72 (44) (32)
Total $1,633 $1,325 $ 308 $222
Total Non- Pretax Net
Second Quarter 1997 Total Interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
Investment Banking $ 543 $ 353 $ 190 $130
Trading & Sales 198 130 68 47
Global Institutional Services 228 212 16 11
Private Client Services Group 154 134 20 13
Australia/New Zealand 146 107 39 27
Emerging Markets Group:
Latin America 174 134 40 28
Emerging Europe, Mid East
& Africa 40 26 14 10
Asia 24 52 (28) (19)
Corporate/Other 27 77 (50) (34)
Total $1,534 $1,225 $309 $213
* 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. 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.
** Includes after-tax charges of $64 million related to repositioning of
European equity businesses, consisting of valuation adjustments to Bankers
Trust's trading assets and NatWest integration costs.
3
Acquisition of NatWest Markets
The businesses associated with the acquisition of NatWest are
classified in Investment Banking.
Organizational Unit Results
The Investment Banking business contributed net income of $91
million in the second quarter of 1998. The decline in net income
from the prior periods was primarily due to charges related to
repositioning of European equity businesses, consisting of
valuation adjustments to Bankers Trust's trading assets and
NatWest integration costs. Excluding these charges, net income
for this unit was $155 million compared to $130 million in the
second quarter of 1997 and $177 million in the first quarter of
1998. The increase from the second quarter of 1997 was primarily
attributable to higher corporate finance fees. The decrease from
the prior quarter reflected trading losses and lower revenue from
private equity investments in the current quarter.
Trading & Sales contributed $72 million of net income in the
second quarter of 1998, up $25 million from the 1997 second
quarter and up $9 million from the previous quarter. The current
quarter reflected higher revenue from client-related activities
as compared to the prior periods.
Global Institutional Services contributed $21 million of net
income in the second quarter of 1998, up $10 million from the
1997 second quarter and up $2 million from the previous quarter.
As compared to the prior periods, the second quarter of 1998
included improved revenue from investment management and
securities lending.
The Corporation's Private Client Services Group business reported
net income of $26 million for the current quarter, up $13 million
from the prior year period and $9 million from the previous
quarter. Higher global private banking commissions and improved
funds management revenue contributed to these increases.
Net income of the Australia/NZ business was $34 million in the
second quarter of 1998, up $7 million from the prior periods
despite a decline in Australian dollar/US dollar exchange rates.
The current quarter benefited from higher corporate finance fees
as compared to the prior periods. In addition, the current
quarter benefited from improved revenue from funds management
activities as compared to the second quarter of 1997.
Emerging Markets Group net loss was $53 million in the current
quarter, compared to net income of $19 million in the prior year
period and a net loss of $49 million in the first quarter of
1998.
Latin America - Trading losses negatively impacted the second
quarter of 1998. The prior year's quarter included an after-tax
gain of $15 million resulting from the completion of the first
stage on the sale of 50% of the Corporation's stake in Consorcio.
Emerging Europe, Middle East & Africa - Trading revenue and
trading-related net interest revenue declined as a result of the
market turmoil in certain areas of Emerging Europe during the
second quarter of 1998.
4
Asia - The second quarter of 1998 and the prior quarter
reflected both the impact of a $60 million provision for trading-
related credit losses as well as valuation adjustments to trading
assets, for widening counterparty credit spreads principally
associated with Indonesian trading assets. As compared to the
first quarter of 1998, the current quarter reflected improved
trading revenue and lower valuation adjustments for counterparty
credit spreads.
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 $27 million in the second quarter of 1998, compared
with a net loss of $32 million in the first quarter of 1998 and a
net loss of $34 million in the second quarter of 1997.
QUARTERLY FINANCIAL COMPARISONS
Second Quarter 1998 Versus Second Quarter 1997
Net income for the second quarter of 1998 was $164 million, which
includes the aforementioned after-tax charges of $64 million, as
compared to $213 million earned in the second quarter of 1997.
Second quarter 1998 combined trading revenue and trading-related
net interest revenue before the provision for trading-related
credit losses was $242 million, a decrease of $221 million from
the second quarter of 1997. The decline is primarily
attributable to valuation adjustments related to Bankers Trust's
European equity business and Indonesian trading assets. Page 10
shows combined trading results by organizational unit.
Fiduciary and funds management revenue was $285 million in the
second quarter of 1998, up $22 million from the prior year
period. The current quarter included higher global private
banking commissions and improved funds management revenue. At
June 30, 1998, assets under management were $365 billion compared
to $284 billion at June 30, 1997.
Corporate finance fees of $392 million increased 46% from the
$269 million earned in the second quarter of 1997, primarily due
to higher underwriting fees, merger and acquisition fees and
financial advisory fees.
Other fees and commissions of $206 million increased $60 million
from the prior year quarter primarily resulting from higher fees
for brokerage services.
Securities available for sale gains totaled $50 million compared
to $68 million in the prior year period. The current quarter
included lower gains on the sale of equity securities as compared
to the prior year period.
As compared to the second quarter of 1997, salaries and
commissions expense increased $57 million, or 19%, partly due to
an increase in the number of employees resulting from the NatWest
acquisition.
Agency and other professional service fees increased $45 million,
or 44%, from the prior year period primarily due to costs
associated with the integration of NatWest.
5
Second Quarter 1998 versus First Quarter 1998
Net income for the second quarter of 1998 was $164 million, which
includes the aforementioned after-tax charges of $64 million, as
compared to $222 million earned in the first quarter of 1998.
Second quarter 1998 combined trading revenue and trading-related
net interest revenue before the provision for trading-related
credit losses was $242 million. This was a decrease of $208
million from the first quarter of 1998. The decline is primarily
attributable to valuation adjustments related to Bankers Trust's
European equity business. Page 10 shows combined trading results
by organizational unit.
Fiduciary and funds management revenue was $285 million in the
second quarter of 1998, up $24 million from the first quarter of
1998. The increase was primarily due to higher global private
banking commissions, higher client processing fees and improved
funds management revenue. At June 30, 1998, assets under
management were approximately $365 billion compared to $334
billion at March 31, 1998.
Corporate finance fees totaled $392 million in the current
quarter, compared to $331 million in the first quarter of 1998.
Higher underwriting fees, merger and acquisition fees, and
financial advisory fees contributed to this increase.
Other fees and commissions of $206 million increased 29% from the
$160 million earned in the previous quarter, primarily due to
higher fees for brokerage services.
Net revenue from equity investments decreased $58 million from
the previous quarter. The current quarter reflected lower gains
on direct equity investments.
Securities available for sale gains totaled $50 million as
compared to securities available for sale losses of $6 million in
the previous quarter.
Insurance premium revenue decreased $10 million, or 14%, mainly
due to the negative effect of higher local interest rates on the
Chilean annuities market.
Other noninterest revenue totaled $80 million in the current
quarter, compared to $94 million in the prior quarter. The
prior quarter included higher revenue from mark-to-market
adjustments on venture capital equity securities.
Incentive compensation and employee benefits, the largest
component of noninterest expenses, decreased $80 million due to
the decline in financial performance.
Agency and other professional service fees increased $42 million,
or 40%, from the previous quarter primarily due to costs
associated with the integration of NatWest.
6
CAPITAL
The Corporation adopted the new market risk amendment to the risk-
based capital guidelines issued by the Federal Reserve Board and
the Bank for International Settlements (BIS) in March 1997. The
Corporation estimates that its ratios of Tier 1 Capital and Total
Capital to risk-weighted assets were approximately 8.0% and
14.0%, respectively, as of June 30, 1998.
The remainder of this release contains the following tables:
Page
1. BTC Condensed Consolidated Quarterly Statement
of Income 8
2. BTC Condensed Consolidated Year-To-Date Statement
of Income 9
3. Combined Trading Revenue and Trading-Related Net
Interest Revenue 10
4. Net Interest Revenue 10
5. BTC Consolidated Balance Sheet 11
6. Stock and Capital Data 12
7. Nonperforming Assets and Allowance for Credit Losses 13
For additional information, contact William McBride, 212-250-7961.
Bankers Trust news releases, including quarterly results, are
available on the Internet (http://www.bankerstrust.com/earnings).
7
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
Second First Second
Quarter Quarter Quarter
1997 1998 1998
REVENUE
Net interest revenue $ 340 $ 402 $ 366
Trading revenue* 315 251 97
Credit loss provision - - -
Credit loss provision-trading - (60) (60)
Fiduciary & funds management 263 261 285
Corporate finance fees 269 331 392
Other fees & commissions 146 160 206
Net revenue from equity investments 9 131 73
Securities available for sale
gains (losses) 68 (6) 50
Insurance premiums 64 69 59
Other 60 94 80
Total revenue 1,534 1,633 1,548
EXPENSES
Salaries and commissions 304 336 361
Incentive compensation &
employee benefits 442 497 417
Agency & other professional
service fees 102 105 147
Communication & data services 57 54 61
Occupancy, net 44 46 54
Furniture & equipment 55 54 56
Travel & entertainment 36 37 42
Provision for policyholder benefits 73 85 74
Other 112 111 108
Total expenses 1,225 1,325 1,320
Income before income taxes 309 308 228
Income taxes 96 86 64
NET INCOME $ 213 $ 222 $ 164
NET INCOME APPLICABLE TO COMMON STOCK** $ 201 $ 211 $ 155
Cash dividends declared per common share $1.00 $1.00 $1.00
EARNINGS PER COMMON SHARE:
BASIC $2.00 $2.08 $1.54
DILUTED $1.89 $2.01 $1.46
* The Corporation accounts for revenues from a wide range of
business activities as "trading". See table on page 10.
** Amounts shown are used to calculate basic earnings per common
share.
Certain prior period amounts have been reclassified to conform
to the current presentation.
8
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED YEAR-TO-DATE STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
SIX MONTHS ENDED JUNE 30, 1997 1998
REVENUE
Net interest revenue $ 671 $ 768
Trading revenue* 626 348
Credit loss provision - -
Credit loss provision-trading - (120)
Fiduciary & funds management 498 546
Corporate finance fees 484 723
Other fees & commissions 281 366
Net revenue from equity investments 56 204
Securities available for sale gains 82 44
Insurance premiums 127 128
Other 106 174
Total revenue 2,931 3,181
EXPENSES
Salaries and commissions 608 697
Incentive compensation & employee benefits 819 914
Agency & other professional service fees 191 252
Communication & data services 115 115
Occupancy, net 87 100
Furniture & equipment 108 110
Travel & entertainment 65 79
Provision for policyholder benefits 141 159
Other 195 219
Total expenses 2,329 2,645
Income before income taxes 602 536
Income taxes 189 150
NET INCOME $ 413 $ 386
NET INCOME APPLICABLE TO COMMON STOCK** $ 387 $ 366
Cash dividends declared per common share $2.00 $2.00
EARNINGS PER COMMON SHARE:
BASIC $3.87 $3.62
DILUTED $3.65 $3.46
* The Corporation accounts for revenues from a wide range of
business activities as "trading". See table on page 10.
** Amounts shown are used to calculate basic earnings per common
share.
Certain prior period amounts have been reclassified to conform
to the current presentation.
9
COMBINED TRADING REVENUE AND TRADING-RELATED NET INTEREST REVENUE
The Corporation views trading revenue and trading-related net
interest revenue (NIR) together, as presented in the table below.
Second First Second
Quarter Quarter Quarter
(in millions) 1997 1998 1998
Trading Revenue* $315 $251 $97
Trading-Related Net Interest
Revenue (Estimate) 148 199 145
Total Trading Revenue &
Trading-Related NIR $463 $450 $242
By Organizational Unit (in millions)
Investment Banking $138 $102 $(84)
Trading & Sales 121 185 206
Global Institutional Services 1 2 2
Private Client Services Group 3 5 4
Australia/New Zealand 54 39 41
Emerging Markets Group:
Latin America 48 59 (17)
Emerging Europe, Middle East & Africa 39 44 36
Asia 56 9 52
Corporate/Other 3 5 2
Total Trading Revenue &
Trading-Related NIR $463 $450 $242
* Before provision for trading-related credit losses.
Note: The Corporation accounts for revenues from a wide range of
business activities as "trading". Investment Banking produces
trading revenue in secondary market activities with clients,
primarily in sectors where the Firm also serves as underwriter.
A small portion of trading revenue arises from private equity
investments that are accounted for on a mark-to-market basis.
Trading & Sales produces trading revenue through proprietary
position-taking, including arbitrage, new derivative transactions
with clients, as well as market making and other client
activities. Australia/New Zealand and Emerging Markets Group
produce trading revenue from all the above business activities.
Corporate/Other includes various transactions which, for
management accounting purposes, are not recorded in
Organizational Units.
NET INTEREST REVENUE
Second First Second
Quarter Quarter Quarter
($ in millions) 1997 1998 1998
Nontrading-related net interest
revenue (Estimate) $192 $203 $221
Trading-related net interest
revenue (Estimate) 148 199 145
Net interest revenue $340 $402 $366
Average rates (fully taxable basis)
Yield on interest-earning assets 6.82% 7.17% 6.95%
Cost of interest-bearing liabilities 5.65% 5.84% 5.99%
Interest rate spread 1.17% 1.33% .96%
Net interest margin 1.36% 1.47% 1.12%
Average balances (billions)
Loans $18.3 $21.4 $22.5
Total interest-earning assets $102.2 $113.0 $133.4
Total assets $132.2 $150.5 $173.9
Total interest-bearing liabilities $98.7 $110.3 $129.9
10
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
June 30 December 31 March 31 June 30
1997* 1997 1998* 1998*
ASSETS
Cash and due from banks $ 1,756 $ 2,188 $ 1,504 $ 2,221
Interest-bearing
deposits in banks 2,334 4,272 2,068 1,645
Federal funds sold 1,305 1,382 1,630 3,445
Sec. purch. under
resale agreements 25,758 19,163 22,843 27,327
Securities borrowed 13,285 16,751 22,832 25,634
Trading assets:
Government securities 12,337 11,397 13,517 11,342
Corporate debt securities 9,644 8,128 9,495 10,375
Equity securities 8,066 7,914 8,963 11,190
Swaps, options & other
derivatives*** 10,628 17,673 14,797 16,167
Other trading assets 8,330 11,460 13,591 14,375
Total trading assets 49,005 56,572 60,363 63,449
Securities available
for sale 7,478 8,081 12,893 12,105
Loans*** 19,000 19,106 21,178 22,233
Customer receivables 1,630 1,547 1,572 1,701
Accounts receivable &
accrued interest 3,448 4,785 4,729 6,351
Other assets 6,368 6,255 5,925 6,200
Total $131,367 $140,102 $157,537 $172,311
LIABILITIES
Noninterest-bearing deposits
Domestic offices $ 3,046 $ 2,776 $ 2,969 $ 3,314
Foreign offices 1,439 1,952 1,624 1,717
Interest-bearing deposits
Domestic offices 15,618 22,353 24,180 24,180
Foreign offices 18,327 15,749 17,568 17,332
Total deposits 38,430 42,830 46,341 46,543
Trading liabilities:
Securities sold,
not yet purchased
Government securities 4,958 4,389 8,821 10,265
Equity securities 5,002 5,273 5,235 8,650
Other trading liabilities 401 519 789 581
Swaps, options &
other derivatives 11,064 17,065 14,273 15,271
Total trading liabilities 21,425 27,246 29,118 34,767
Securities loaned and
securities sold under
repurchase agreements 22,973 17,896 21,881 26,057
Other short-term borrowings 19,527 19,577 24,868 27,049
Accounts payable and
accrued expenses 6,169 6,536 5,875 5,866
Other liabilities*** 4,000 4,250 5,819 6,250
Long-term debt not
included in risk-based
capital 8,468 11,275 12,740 15,091
Long-term debt included in
risk-based capital 2,939 3,312 3,306 3,351
Trust preferred capital
securities** 1,470 1,472 1,473 1,474
Total liabilities 125,401 134,394 151,421 166,448
PREFERRED STOCK OF SUBSIDIARY - - 304 304
STOCKHOLDERS' EQUITY
Preferred stock 703 658 658 493
Common stock 105 105 105 105
Capital surplus 1,491 1,563 1,592 1,607
Retained earnings 4,168 4,202 4,225 4,240
Common stock in treasury,
at cost (513) (889) (803) (985)
Other stockholders' equity 341 463 458 545
Accumulated other
comprehensive income:
Net unrealized gains
(losses) on securities
available for sale, net
of taxes 32 (32) (52) (66)
Foreign currency
translation, net
of taxes (361) (362) (371) (380)
Total stockholders' equity 5,966 5,708 5,812 5,559
Total $131,367 $140,102 $157,537 $172,311
* Unaudited
** Mandatorily redeemable capital securities of subsidiary
trusts holding solely junior subordinated deferrable interest debentures
included in risk-based capital
*** See table on page 13 for allocation of the allowance for
credit losses.
Certain prior period amounts have been reclassified to conform to
the current presentation.
11
STOCK AND CAPITAL DATA
Second First Second
Quarter Quarter Quarter
1997 1998 1998
FOR THE QUARTER
Return on Average Common
Stockholders' Equity 15.6% 16.7% 12.1%
Return on Average Total Assets .65% .60% .38%
PER COMMON SHARE
Earnings:
Basic $2.00 $2.08 $1.54
Diluted $1.89 $2.01 $1.46
Cash Dividends Declared $1.00 $1.00 $1.00
Market Price, End of Period $87.13 $120.31 $116.06
Book Value, End of Period $50.81 $49.82 $49.27
COMMON SHARES (shares in thousands except par value)
Common stock $1 par value:
Authorized, at period end 300,000 300,000 300,000
Issued, at period end 104,790 105,379 105,380
Common stock in treasury,
at period end 6,012 7,522 8,903
Average Common and Common Equivalent
Shares Outstanding
Basic 99,947 101,357 100,949
Diluted 106,197 105,123 106,645
CAPITAL RATIOS, END OF PERIOD
Common Stockholders'
Equity to Total Assets 4.0% 3.3% 2.9%
Total Stockholders' Equity to
Total Assets 4.5% 3.7% 3.2%
Bankers Trust Corporation:
Risk-Based Capital Ratios (1)
Tier 1 Capital 9.2% 8.2% 8.0%
Total Capital 14.8% 14.2% 14.0%
Leverage Ratio (1) 5.0% 4.5% 3.7%
Bankers Trust Company:
Risk-Based Capital Ratios (1)
Tier 1 Capital 9.0% 8.6% 9.2%
Total Capital 12.4% 12.3% 13.1%
Leverage Ratio (1) 5.3% 5.4% 5.3%
(1) Regulatory capital ratios at June 30, 1998 are preliminary.
All of these ratios have been calculated under the new market risk
amendment to the risk-based capital guidelines.
12
NONPERFORMING ASSETS AND ALLOWANCE FOR CREDIT LOSSES
(in millions)
June 30 March 31 June 30
1997 1998 1998
Nonperforming assets
Cash basis loans
Secured by real estate $156 $ 92 $104
Real estate related 25 15 14
Highly leveraged 76 25 23
Other 48 115 116
Total cash basis loans $305 $247 $257
Renegotiated loans $37 $25 $26
Other real estate $196 $190 $187
Other nonperforming assets
(primarily trading) $8 $334 $447
Total allowance for credit losses
Balance, beginning of quarter $958 $997 $1,006
Net charge-offs (recoveries)
Charge-offs
Loans 3 7 23
Trading assets - 47 38
Total charge-offs 3 54 61
Recoveries
Loans 1 3 6
Trading assets - - -
Total recoveries 1 3 6
Total net charge-offs (recoveries) 2 51 55
Allowance related to acquisition
of affiliate 17 - -
Credit loss provision - - -
Credit loss provision-trading - 60 60
Total credit loss provision - 60 60
Balance, end of quarter (a) $973 $1,006 $1,011
(a) Allocation of allowance for credit losses*:
Loans $767 $695 $ 678
Trading assets 196 298 320
Other liabilities 10 13 13
Balance, end of quarter $973 $1,006 $1,011
* The Corporation believes that the total allowance for credit
losses is available for credit losses in its entire portfolio,
which is comprised of loans, credit-related commitments,
derivatives and other financial instruments. Due to a
multitude of complex and changing factors that are collectively
weighed in determining the adequacy of the allowance for credit
losses, management expects that the allocation of the total
allowance for credit losses may be adjusted as risk factors change.
13
BANKERS TRUST CORPORATION
130 LIBERTY STREET
NEW YORK, NEW YORK 10006
Ronald Hassen
Senior Vice President
July 24, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
Accompanying this letter is Bankers Trust Corporation's
Report on Form 8-K dated July 23, 1998 (the "Form 8-K"). The
Form 8-K is being filed electronically through the EDGAR System.
If there are any questions or comments in connection with
the enclosed filing, please contact the undersigned at 212-250-4881.
Very truly yours,
BANKERS TRUST CORPORATION
By: /s/ RONALD HASSEN
RONALD HASSEN
Senior Vice President
<PAGE>
EXHIBIT 99.2
Selected Asian Cross Border Exposures
June 30, 1998*
($ billions) Preliminary
<TABLE>
<CAPTION>
-------- As of 6/30/98 -------
FX/ Off B/S
Total Total Total Deriva- Trading Commit-
Country 12/31/97 3/31/98 6/30/98 Loans tives Assets Other** ments***
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Asia $5.9 $5.1 $4.3 $0.4 $2.0 $0.8 $0.9 $0.2
(excl. Japan)
Rep. of Korea 1.6 1.4 1.3 0.1 0.6 0.2 0.4 0.1
Indonesia 1.3 1.0 0.8 0.1 0.6 0.1 0.0 0.0
Thailand 0.6 0.5 0.4 0.0 0.2 0.0 0.1 0.0
Total Selected
IMF Countries $3.5 $2.8 $2.5 $0.2 $1.4 $0.3 $0.5 $0.1
<FN>
* Preliminary 2Q98 numbers. Numbers may not total due to rounding
differences. Based on FFIEC instructions.
Excludes local country claims on local residents.
** Other includes acceptances, resales, money market instruments and
securities available for sale.
*** Commitments include L/C's and guarantees.
</TABLE>
<PAGE>
EXHIBIT 99.2
Adjusted ROCE by Organizational Unit
($ millions)
YTD 1998 Estimated
Adj. Net Common Estimated
Income Equity ROCE
Investment Banking $332 $2,158 30%
Trading & Sales 135 747 36
Global Institutional Services 40 303 26
Private Client Services 43 147 59
Australia/NZ 61 238 51
Emerging Markets Group:
Latin America (14) 615 N/M
Emg Europe, Mid East & Africa 9 170 10
Asia (97) 346 N/M
Corporate/Other (59) 414 N/M
Total $450 $5,138 17%
Excludes the following "special items" (after-tax):
Investment Banking - Impact of European equity
repositioning including NatWest acquisition $(64)
