<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) January 21, 1999
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 January 21, 1999, Bankers Trust Corporation (the
"Registrant") released financial information with respect to the
quarter ended December 31, 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 January 21, 1999, 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 December 31,
1998, and September 30, 1998 and the audited consolidated
financial position at December 31, 1997 and its unaudited
condensed consolidated results of operations for each of the
three-month and twelve-month periods ended December 31, 1998, and
December 31, 1997 and the three-month period ended September 30,
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 December 31,
1998, September 30, 1998, and December 31, 1997 and its condensed
consolidated results of operations for the three-month and twelve-
month periods ended December 31, 1998 and December 31, 1997 and
the three-month period ended September 30, 1998 have been made.
All such adjustments were of a normal recurring nature. The
results of operations for the three-month period ended December
31, 1998 and for the three-month period ended September 30, 1998
are not necessarily indicative of operations for the full year or
any other interim period.
B) The following schedule was distributed to analysts in
conjunction with an Analyst/Investor conference call on January
21, 1999:
- Preliminary Emerging Markets Cross Border Exposures
at December 31, 1998 is contained in Exhibit 99.2
C) 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 certain 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>
Item 7. Financial Statements and Exhibits
(c) Exhibits
(99.1) Earnings Press Release of the Registrant
dated January 21, 1999.
(99.2) Preliminary Emerging Markets Cross Border
Exposures at December 31, 1998
<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/ DAVID C. FISHER
DAVID C. FISHER
Controller and Principal
Accounting Officer
January 22, 1999
<PAGE>
BANKERS TRUST CORPORATION
FORM 8-K DATED JANUARY 21, 1999
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
(99.1) Earnings Press Release of the Registrant dated
January 21, 1999.
(99.2) Preliminary Emerging Markets Cross Border
Exposures at December 31, 1998
THURSDAY, JANUARY 21, 1999
BANKERS TRUST REPORTS FOURTH QUARTER RESULTS
New York, January 21, 1999 -- Bankers Trust Corporation (BT)
today reported that diluted earnings per share in the fourth
quarter of 1998 were $0.89, compared to $1.82 in the same period
last year. Net income in the fourth quarter of 1998 was $96
million, compared with $207 million in the 1997 fourth quarter
and a loss of $488 million in the third quarter of 1998. BT's
loss for the full year was $6 million, or $0.38 loss per share.
In 1997, the Corporation earned $866 million, or $7.66 diluted
earnings per share.
Frank Newman, chairman of the board and chief executive officer,
said: "Bankers Trust's fourth quarter revenue approached the
strong levels of 1998's first half, showing renewed momentum as
we prepare to join with Deutsche Bank in creating the world's
largest bank. Our merger remains on track for completion in the
second quarter, and our integration teams are making excellent
progress toward forming what promises to be a global financial
powerhouse.
He added: "Bankers Trust's investment banking and client-focused
trading & sales activities returned to strong profitability in
the fourth quarter and are well positioned to take advantage of
the tremendous opportunities afforded by the merger. The
combination also holds exciting potential to expand our
investment management, trust, global custody, cash management and
private client businesses. We look forward to our ability to
offer clients access to an unparalleled range of global
capabilities."
For the current quarter, total revenue of $1.437 billion was up
$966 million from the third quarter of 1998 and down $82 million
from the fourth quarter of 1997. Total noninterest expenses of
$1.274 billion for the fourth quarter of 1998 were up $96 million
and $41 million from the third quarter of 1998 and fourth quarter
of 1997, respectively.
During the quarter, the Corporation recorded approximately $36
million of expense in connection with its previously announced
cost-reduction program. These costs were primarily severance-
related, due to a reduction of over 400 employees. Additionally,
the Corporation closed offices, primarily in Latin America.
For the full year, total revenue of $5.089 billion was down
$1.131 billion from 1997 revenue of $6.220 billion. The decline
was mainly attributable to lower trading revenue, including a
$255 million increase in the provision for credit losses for
trading assets. The increase in the provision was primarily due
to uncertainties in Asian emerging markets.
Total noninterest expenses for 1998 increased $116 million from
1997. Salaries and commissions expense increased resulting from
a rise in the average number of employees and higher annual
salaries. Agency and other professional service fees also
increased due to integration and continuing costs associated with
the acquisition of NatWest Markets' European equities business.
At December 31, 1998, total cash basis loans were $392 million,
up from $257 million at September 30, 1998 and up from $240
million at December 31, 1997. The increase was primarily due to
emerging markets credits, principally in Asia. Other
nonperforming assets (primarily trading) at December 31, 1998
were $250 million, down from $375 million at September 30, 1998
and up from $38 million at December 31, 1997. The decrease in
the current quarter was primarily due to charge-offs. At
December 31, 1998, the Corporation's Emerging Markets cross-
border exposures to Asia, Latin America and Russia were $5.4
billion, down 18% from $6.6 billion at September 30, 1998 and
down 54% from $11.8 billion at December 31, 1997.
As of December 31, 1998, the Corporation estimates that its
ratios of Tier 1 Capital and Total Capital to risk-weighted
assets were 7.6% and 13.8%, respectively. In addition, the
Leverage ratio is estimated to be 3.5%. All of these ratios are
above the regulatory standards for well-capitalized banking
organizations of 6%, 10%, and 3%, respectively.
2
BUSINESS SEGMENTS
At December 31, 1998, the Corporation adopted Statement of
Financial Accounting Standards ("SFAS") 131, "Disclosures About
Segments of an Enterprise and Related Information". Prior period
amounts have been reclassified to conform with the requirements
of SFAS 131. Management reports the results of operations of the
Corporation principally through six broad business segments.
Four business segments are organized around specific products and
services: Investment Banking, Trading & Sales, Private Client
Services Group and Global Institutional Services. Two additional
business segments, Australia/New Zealand/International Funds
Management and Emerging Markets Group, are organized to deliver
these same types of financial products and services with the
unique local expertise necessary to operate successfully in these
markets. Corporate/Other includes the income and expenses of
smaller businesses that are not included in the main business
segments and revenue and expenses that have not been allocated to
business segments.
Total Non- Pretax Net
Fourth Quarter 1998 Total Interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
Investment Banking $ 659 $ 427 $232 $ 137
Trading & Sales 300 147 153 90
Emerging Markets Group:
Latin America 42 119 (77) (45)
Emerging Europe, Mid East
& Africa 10 20 (10) (6)
Asia (213) 47 (260) (154)
Private Client Services Group 167 150 17 10
Global Institutional Services 303 249 54 32
Australia/New Zealand/Int'l
Funds Mgmt 162 94 68 40
Corporate/Other 7 21 (14) (8)
Total $1,437 $1,274 $ 163 $ 96
Total Non- Pretax Net
Third Quarter 1998 Total Interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
Investment Banking $ 155 $ 354 $(199) $(138)
Trading & Sales 1 147 (146) (101)
Emerging Markets Group:
Latin America 47 130 (83) (57)
Emerging Europe, Mid East
& Africa (193) 16 (209) (145)
Asia (154) 29 (183) (126)
Private Client Services Group 166 136 30 20
Global Institutional Services 256 216 40 28
Australia/New Zealand/Int'l
Funds Mgmt 163 109 54 38
Corporate/Other 30 41 (11) (7)
Total $ 471 $1,178 $(707) $(488)
3
Total Non- Pretax Net
Fourth Quarter 1997 Total Interest Income/ Income/
(in millions) Revenue Expenses (Loss) (Loss)
Investment Banking $ 540 $ 315 $225 $162
Trading & Sales 166 146 20 14
Emerging Markets Group:
Latin America 135 132 3 2
Emerging Europe, Mid East
& Africa 9 14 (5) (3)
Asia (46) 40 (86) (61)
Private Client Services Group 183 159 24 18
Global Institutional Services 336 245 91 65
Australia/New Zealand/Int'l
Funds Mgmt 145 108 37 27
Corporate/Other 51 74 (23) (17)
Total $1,519 $1,233 $286 $207
Business Segment Results
The Investment Banking business recorded net income of $137
million in the fourth quarter of 1998 compared to net income of
$162 million in the prior year quarter and a net loss of $138
million in the third quarter of 1998. A recovery of the U.S.
equity and high-yield markets in the fourth quarter of 1998 led
to an increase in underwriting revenue. Furthermore, this
segment realized gains on the sale of certain investments in its
private equity portfolio during the current quarter.
Trading & Sales recorded net income of $90 million in the fourth
quarter of 1998, compared to net income of $14 million in the
1997 fourth quarter and a net loss of $101 million in the
previous quarter. The current quarter reflected higher revenue
from client-related activities as compared to the prior periods.
In addition, a rebound in global equity markets in the current
quarter produced improved trading results from arbitrage
activities.
Emerging Markets Group net loss was $205 million in the current
quarter, compared to a net loss of $62 million in the prior year
period and a net loss of $328 million in the third quarter of
1998.
Latin America - Trading losses and losses on securities
available for sale negatively impacted the current quarter and
the third quarter of 1998.
Emerging Europe, Middle East & Africa - During the current
quarter, this segment produced positive revenue as compared to
the third quarter of 1998 which included charges to reduce the
carrying amount of exposure to Russian Federation securities.
Asia - The current quarter's results reflect continuing weak
economic conditions in the region resulting in trading losses and
losses on securities available for sale.
The Corporation's Private Client Services Group business recorded
net income of $10 million for the current quarter, down $8
million from the prior year period and down $10 million from the
previous quarter. The current quarter included higher incentive
costs as compared to the previous quarter. Lower U.S. private
client commissions contributed to the decline from the fourth
quarter of 1997.
4
Global Institutional Services contributed $32 million of net
income in the fourth quarter of 1998, down $33 million from the
1997 fourth quarter and up $4 million from the previous quarter.
The prior year quarter included a $41 million after-tax gain on
the sale of the Corporation's defined contribution recordkeeping
and participant services business. The fourth quarter of 1998
included a benefit from a contingency payment related to the 1997
sale of the Corporation's defined contribution recordkeeping and
participant services business. Higher client processing fees
contributed to the increase in net income as compared to the
third quarter of 1998. The current quarter also reflected higher
performance-based fees as compared to the prior periods.
Net income of the Australia/New Zealand/International Funds
Management business was $40 million in the fourth quarter of
1998, up $13 million from the fourth quarter of 1997 and up $2
million from the previous quarter. Higher corporate finance fees
contributed to the increase from the third quarter of 1998.
QUARTERLY FINANCIAL COMPARISONS
Fourth Quarter 1998 versus Third Quarter 1998
Net income for the fourth quarter of 1998 was $96 million as
compared to a $488 million net loss in the third quarter of 1998.
Fourth quarter 1998 combined trading revenue and trading-related
net interest revenue before the provision for trading-related
credit losses was $278 million. This was an increase of $562
million from the third quarter of 1998 reflecting a rebound in
markets from the poor market environment in the previous quarter.
Page 10 shows combined trading results by business segment.
Fiduciary and funds management revenue was $289 million in the
fourth quarter of 1998, up $16 million from the third quarter of
1998. The increase was primarily due to higher client processing
fees and improved funds management revenue. At December 31,
1998, assets under management were approximately $370 billion
compared to $338 billion at September 30, 1998.
Corporate finance fees rose by $48 million from the third quarter
of 1998 led primarily by higher revenue from merger and
acquisition, loan syndication and financial advisory activities.
Net revenue from equity investments increased $100 million from
the previous quarter due to an improved market environment.
Securities available for sale gains totaled $25 million as
compared to losses of $125 million in the previous quarter. The
prior quarter included losses on Russian securities.
Insurance premiums revenue decreased $20 million, or 27%, mainly
due to a general decline in the Chilean annuities market.
Other noninterest revenue was $120 million in the current
quarter, compared to negative revenue of $35 million in the prior
quarter. The current quarter included improved results from mark-
to-market adjustments on venture capital equity securities. The
current quarter also included a benefit from a contingency
payment related to the 1997 sale of the Corporation's defined
contribution recordkeeping and participant services business.
5
Incentive compensation and employee benefits increased $44
million primarily due to severance-related expense taken in
connection with the previously announced cost-reduction program.
Fourth Quarter 1998 Versus Fourth Quarter 1997
Net income for the fourth quarter of 1998 was $96 million as
compared to $207 million of net income earned in the fourth
quarter of 1997.
Fourth quarter 1998 combined trading revenue and trading-related
net interest revenue before the provision for trading-related
credit losses was $278 million, an increase of $60 million from
the fourth quarter of 1997. Page 10 shows combined trading
results by business segment.
Fiduciary and funds management revenue was $289 million in the
fourth quarter of 1998, up $5 million from the prior year period.
The current quarter reflected higher performance-based fees as
compared to the prior year quarter. At December 31, 1998, assets
under management were $370 billion compared to $318 billion at
December 31, 1997.
Corporate finance fees of $290 million, decreased 10% from the
$324 million earned in the fourth quarter of 1997. The decline
is primarily attributable to lower underwriting fees partially
offset by higher merger and acquisition fees.
Other fees and commissions of $233 million increased $66 million
from the prior year quarter. Increased customer trading activity
primarily due to the acquisition of NatWest Markets' European
equities business resulted in higher fees for brokerage services.
Insurance premium revenue decreased $30 million, or 36%, mainly
due to a general decline in the Chilean annuities market.
Other noninterest revenue was $120 million compared to $82
million in the prior year period. The fourth quarter of 1998
included a benefit from a contingency payment related to the 1997
sale of the Corporation's defined contribution recordkeeping and
participant services business. The current quarter also
reflected higher revenue from mark-to-market adjustments on
venture capital equity securities. Included in the fourth
quarter of 1997 was a gain on the sale of the Corporation's
defined contribution recordkeeping and participant services
business.
As compared to the fourth quarter of 1997, salaries and
commissions expense increased $26 million, or 8%, primarily due
to an increase in the average number of employees and higher
annual salaries.
6
Incentive compensation and employee benefits decreased $34
million, or 9%, from the prior year quarter due to the decline in
financial performance partially offset by severance-related
costs.
The remainder of this release contains the following tables:
Page
1. BTC Condensed Consolidated Quarterly Statement
of Income 8
2. BTC Condensed Consolidated 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
8. Emerging Markets Cross-Border Exposures 14
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)
Fourth Third Fourth
Quarter Quarter Quarter
1997 1998 1998
NET INTEREST REVENUE
Interest revenue $2,085 $2,281 $1,716
Interest expense 1,712 1,945 1,448
Net interest revenue 373 336 268
Credit loss provision-loans - (20) (20)
Net interest revenue after credit loss
provision-loans 373 316 248
NONINTEREST REVENUE
Trading revenue* 52 (491) 79
Fiduciary & funds management 284 273 289
Corporate finance fees 324 242 290
Other fees & commissions 167 218 233
Net revenue from equity investments 95 (1) 99
Securities available for sale gains
(losses) 58 (125) 25
Insurance premiums 84 74 54
Other 82 (35) 120
Total noninterest revenue 1,146 155 1,189
NONINTEREST EXPENSES
Salaries and commissions 332 366 358
Incentive compensation & employee
benefits 364 286 330
Agency & other professional service fees 95 122 127
Communication & data services 58 65 72
Occupancy, net 49 56 62
Furniture & equipment 61 65 77
Travel & entertainment 41 44 48
Provision for policyholder benefits 102 92 71
Other** 131 82 129
Total noninterest expenses 1,233 1,178 1,274
Income (loss) before income taxes 286 (707) 163
Income taxes (benefit) 79 (219) 67
NET INCOME (LOSS) $ 207 $ (488) $ 96
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK $ 195 $ (494) $ 90
Cash dividends declared per common share $1.00 $1.00 $1.00
EARNINGS (LOSS) PER COMMON SHARE:
BASIC $1.95 $(4.98) $0.92
DILUTED $1.82 $(4.98) $0.89
* Trading revenue includes a credit loss provision of $20 million,
$90 million, and $75 million for the fourth quarter of 1997, third
quarter of 1998 and fourth quarter of 1998, respectively. The
Corporation accounts for revenue from a wide range of business
activities as "trading". See table on page 10.
** Other includes a credit loss provision of $5 million for the
fourth quarter of 1998.
Certain prior period amounts have been reclassified to conform
to the current presentation.
8
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
YEAR ENDED DECEMBER 31, 1997 1998
NET INTEREST REVENUE
Interest revenue $7,285 $8,291
Interest expense 5,926 6,919
Net interest revenue 1,359 1,372
Credit loss provision-loans - (40)
Net interest revenue after credit
loss provision-loans 1,359 1,332
NONINTEREST REVENUE
Trading revenue* 1,055 (184)
Fiduciary & funds management 1,059 1,108
Corporate finance fees 1,113 1,255
Other fees & commissions 606 817
Net revenue from equity investments 224 302
Securities available for sale gains (losses) 158 (56)
Insurance premiums 287 256
Other 359 259
Total noninterest revenue 4,861 3,757
NONINTEREST EXPENSES
Salaries and commissions 1,273 1,421
Incentive compensation & employee benefits 1,726 1,530
Agency & other professional service fees 391 501
Communication & data services 231 252
Occupancy, net 181 218
Furniture & equipment 224 252
Travel & entertainment 142 171
Provision for policyholder benefits 333 322
Other** 423 430
Restructuring charges 57 -
Total noninterest expenses 4,981 5,097
Income (loss) before income taxes 1,239 (8)
Income taxes (benefit) 373 (2)
NET INCOME (LOSS) $ 866 $ (6)
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ 817 $ (38)
Cash dividends declared per common share $4.00 $4.00
EARNINGS (LOSS) PER COMMON SHARE:
BASIC $8.15 $(0.38)
DILUTED $7.66 $(0.38)
* Trading revenue includes a credit loss provision of $30 million and
$285 million for the years ended December 31, 1997 and 1998, respectively.
The Corporation accounts for revenue from a wide range of business activities
as "trading". See table on page 10.
** Other includes a credit loss provision of $5 million for the
year ended December 31, 1998.
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.
Fourth Third Fourth
Quarter Quarter Quarter
(in millions) 1997 1998 1998
Trading Revenue* $ 72 $(401) $154
Trading-Related Net Interest
Revenue (Estimate) 146 117 124
Total Trading Revenue &
Trading-Related NIR $218 $(284) $278
By Business Segment (in millions)
Investment Banking $ 26 $(193) $ 26
Trading & Sales 126 (45) 237
Emerging Markets Group:
Latin America 14 (44) (24)
Emerging Europe, Middle East
& Africa 12 (74) 16
Asia (26) (9) (46)
Private Client Services Group 7 15 23
Global Institutional Services 4 1 2
Australia/New Zealand/Int'l Funds Mgmt 33 63 45
Corporate/Other 22 2 (1)
Total Trading Revenue &
Trading-Related NIR $218 $(284) $278
* Before provision for trading-related credit losses of $20 million,
$90 million, and $75 million for the fourth quarter of 1997, third quarter
of 1998 and fourth quarter of 1998, respectively.
Note: The Corporation accounts for revenue from a wide range of
business activities as "trading". Investment Banking produces
trading revenue in secondary market activities with clients,
primarily in sectors where the Firm also serves as underwriter.
A small portion of trading revenue arises from private equity
investments that are accounted for on a mark-to-market basis.
Trading & Sales produces trading revenue through proprietary
position-taking, including arbitrage, new derivative transactions
with clients, as well as market making and other client
activities. Australia/New Zealand/Int'l Funds Mgmt and Emerging
Markets Group produce trading revenue from all the above business
activities. Corporate/Other includes various transactions which,
for management accounting purposes, are not recorded in the
business segments.
NET INTEREST REVENUE
Fourth Third Fourth
Quarter Quarter Quarter
($ in millions) 1997 1998 1998
Nontrading-related net interest
revenue (Estimate) $227 $219 $144
Trading-related net interest
revenue (Estimate) 146 117 124
Net interest revenue $373 $336 $268
Average rates (fully taxable basis)
Yield on interest-earning assets 7.45% 6.91% 6.52%
Cost of interest-bearing liabilities 6.33% 5.99% 5.66%
Interest rate spread 1.12% .92% .86%
Net interest margin 1.35% 1.04% 1.04%
Average balances ($ in billions)
Loans $20.4 $23.2 $23.3
Total interest-earning assets $111.4 $131.3 $104.9
Total assets $147.9 $175.6 $148.4
Total interest-bearing liabilities $107.2 $128.9 $101.4
10
BANKERS TRUST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
December 31 September 30 December31
1997 1998* 1998*
ASSETS
Cash and due from banks $ 2,188 $ 2,405 $ 2,837
Interest-bearing deposits
in banks 4,272 2,208 2,382
Federal funds sold 1,382 4,662 2,484
Sec. purch. under resale agreements 19,163 21,752 17,053
Securities borrowed 16,751 19,692 14,709
Trading assets:
Government securities 11,397 9,398 5,731
Corporate debt securities 8,128 7,626 5,519
Equity securities 7,914 7,408 5,810
Swaps, options & other
derivatives*** 17,673 19,083 17,376
Other trading assets 11,460 14,867 11,668
Total trading assets 56,572 58,382 46,104
Securities available for sale 8,081 11,421 12,748
Loans*** 19,106 21,723 22,633
Customer receivables 1,547 1,709 1,524
Accounts receivable & accrued
interest 4,785 5,542 3,815
Other assets 6,255 6,771 6,826
Total $140,102 $156,267 $133,115
LIABILITIES
Noninterest-bearing deposits
Domestic offices $ 2,776 $ 2,885 $ 2,784
Foreign offices 1,952 2,330 1,689
Interest-bearing deposits
Domestic offices 22,353 20,022 18,259
Foreign offices 15,749 16,054 14,602
Total deposits 42,830 41,291 37,334
Trading liabilities:
Securities sold, not yet purchased
Government securities 4,389 8,640 4,149
Equity securities 5,273 8,814 6,458
Other trading liabilities 519 969 789
Swaps, options & other derivatives 17,065 16,731 15,857
Total trading liabilities 27,246 35,154 27,253
Securities loaned and securities
sold under repurchase agreements 17,896 22,973 17,420
Other short-term borrowings 19,577 20,264 16,313
Accounts payable and accrued
expenses 6,536 5,289 5,141
Other liabilities*** 4,250 6,011 5,468
Long-term debt not included in
risk-based capital 11,275 15,631 14,833
Long-term debt included in
risk-based capital 3,312 3,221 3,170
Trust preferred capital securities** 1,472 1,419 1,420
Total liabilities 134,394 151,253 128,352
PREFERRED STOCK OF SUBSIDIARY - 304 -
STOCKHOLDERS' EQUITY
Preferred stock 658 394 394
Common stock 105 105 105
Capital surplus 1,563 1,610 1,613
Retained earnings 4,202 3,614 3,571
Common stock in treasury, at cost (889) (1,118) (1,056)
Other stockholders' equity 463 573 599
Accumulated other comprehensive income:
Net unrealized gains (losses) on
securities available for sale, net
of taxes (32) (87) (65)
Foreign currency translation, net
of taxes (362) (381) (398)
Total stockholders' equity 5,708 4,710 4,763
Total $140,102 $156,267 $133,115
* Unaudited
** Mandatorily redeemable capital securities of subsidiary
trusts holding solely junior subordinated deferrable interest
debentures included in risk-based capital
*** See tables on page 13 for analyses of allowance for credit
losses.
Certain prior period amounts have been reclassified to conform to
the current presentation.
11
STOCK AND CAPITAL DATA
Fourth Third Fourth
Quarter Quarter Quarter
1997 1998 1998
FOR THE QUARTER
Return on Average Common
Stockholders' Equity 14.8% N/M 8.2%
Return on Average Total Assets .56% N/M .26%
PER COMMON SHARE
Earnings (Loss):
Basic $1.95 $(4.98) $0.92
Diluted $1.82 $(4.98) $0.89
Cash Dividends Declared $1.00 $1.00 $1.00
Market Price, End of Period $112.44 $59.00 $85.44
Book Value, End of Period $49.06 $43.51 $43.33
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 105,379 105,380 105,380
Common stock in treasury,
at period end 8,422 10,177 9,666
Average Common and Common Equivalent
Shares Outstanding
Basic 99,884 99,299 99,029
Diluted 107,285 99,299(1) 101,691
CAPITAL RATIOS, END OF PERIOD
Common Stockholders' Equity
to Total Assets 3.6% 2.8% 3.3%
Total Stockholders' Equity
to Total Assets 4.1% 3.0% 3.6%
Bankers Trust Corporation:
Risk-Based Capital Ratios
Tier 1 Capital 8.3% 7.1% 7.6%
Total Capital 14.1% 13.3% 13.8%
Leverage Ratio 4.4% 2.9% 3.5%
Bankers Trust Company:
Risk-Based Capital Ratios
Tier 1 Capital 9.0% 10.4% 10.6%
Total Capital 12.3% 14.6% 13.5%
Leverage Ratio 5.4% 5.3% 5.8%
N/M Not Meaningful.
(1) Due to a loss for the period, no incremental shares are
included in the EPS calculation because the effect would be antidilutive.
12
NONPERFORMING ASSETS AND ALLOWANCE FOR CREDIT LOSSES
(in millions)
December 31 September 30 December 31
1997 1998 1998
Nonperforming assets
Cash basis loans
Secured by real estate $117 $ 96 $104
Real estate related 15 14 14
Highly leveraged 41 57 66
Other 67 90 208
Total cash basis loans $240 $257 $392
Renegotiated loans $25 $26 $26
Other real estate $194 $122 $87
Other nonperforming assets
(primarily trading) $38 $375 $250
Allowance for credit losses
Loans
Balance, beginning of quarter $759 $678 $667
Provision for credit losses - 20 20
Reclassification (57) - -
Net charge-offs
Charge-offs 28 37 40
Recoveries 25 6 5
Total net charge-offs 3 31 35
Balance, end of quarter $699 $667 $652
Trading assets
Balance, beginning of quarter $200 $320 $295
Provision for credit losses 20 90 75
Reclassification 57 - -
Net charge-offs
Charge-offs 13 115 109
Recoveries 21 - -
Total net charge-offs (recoveries) (8) 115 109
Balance, end of quarter $285 $295 $261
Other liabilities
Balance, beginning of quarter $13 $13 $13
Provision for credit losses - - 5
Balance, end of quarter $13 $13 $18
13
EMERGING MARKETS CROSS-BORDER EXPOSURES(1)
($ in billions)
December 31, September 30, December 31,
1997 1998 1998*
Korea, Republic of $1.6 $1.0 $0.8
Indonesia 1.3 0.6 0.4
Hong Kong 1.0 0.3 0.4
Thailand 0.6 0.3 0.2
Malaysia 0.3 0.1 0.1
Other(2) 1.1 1.0 0.8
Total Emerging Asia $5.9 $3.3 $2.7
Brazil $1.9 $0.9 $0.7
Mexico 1.0 0.8 0.6
Argentina 0.8 0.6 0.5
Venezuela 0.3 0.1 0.1
Other(3) 0.8 0.6 0.6
Total Latin America $4.8 $3.0 $2.5
Russian Federation $1.1 $0.3 $0.3
Total $11.8 $6.6 $5.4
As % of Total Assets 8.4% 4.2% 4.1%
(1) Based on FFIEC instructions. Shown by country of ultimate
risk. Excludes local country claims on local residents.
(2) Includes Peoples Republic of China, Republic of Taiwan,
India, Philippines, Singapore and Sri Lanka.
(3) Includes Chile, Colombia, Peru, Ecuador, Nicaragua, Panama
and Uruguay.
* Preliminary. Numbers may not total due to rounding differences.
14
<PAGE>
EXHIBIT 99.2
Emerging Markets Cross Border Exposures(1)
December 31, 1998
($ billions)
PRELIMINARY
<TABLE>
<CAPTION>
Total
Deriva- Cross
Trade Trading/ tives/ Commit- Border
Finance Other(2) FX Loans ments Exposure
<S> <C> <C> <C> <C> <C> <C>
Korea, Republic of $0.1 $0.3 $0.3 $ - $0.1 $0.8
Indonesia - - 0.3 0.1 - 0.4
Hong Kong - 0.1 0.2 0.1 - 0.4
Thailand - - 0.2 - - 0.2
Malaysia - - - - - 0.1
Other(3) 0.1 0.3 0.4 0.1 - 0.8
Total Emerging Asia $0.2 $0.7 $1.3 $0.3 $0.1 $2.7
Brazil $0.2 $0.2 $ - $0.1 $0.1 $0.7
Mexico 0.1 0.2 0.1 0.2 0.1 0.6
Argentina - 0.3 - 0.1 - 0.5
Venezuela - - - - - 0.1
Other(4) 0.2 0.2 - 0.1 0.1 0.6
Total Latin America $0.5 $1.0 $0.1 $0.6 $0.3 $2.5
Russian Federation $ - $0.1 $ - $0.2 $ - $0.3
Total $0.8 $1.8 $1.4 $1.0 $0.3 $5.4
<FN>
(1) Based on FFIEC instructions, shown by country of ultimate risk. First
five columns represent management's view of types of claims. Excludes local
country claims on local residents. Numbers may not total due to rounding
differences.
(2) Includes securities, deposits and other exposures.
(3) Includes Peoples Republic of China, Republic of Taiwan, India,
Philippines, Singapore & Sri Lanka.
(4) Includes Chile, Colombia, Peru, Ecuador, Nicaragua, Panama and Uruguay.
</TABLE>
BANKERS TRUST CORPORATION
130 LIBERTY STREET
NEW YORK, NEW YORK 10006
David C. Fisher
Controller and Principal
Accounting Officer
January 22, 1999
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 January 21, 1999 (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 212-250-3681.
Very truly yours,
BANKERS TRUST CORPORATION
By: DAVID C. FISHER
DAVID C. FISHER
Controller and Principal
Accounting Officer
