-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pCnsVHYmH0dR1Vdya9PsTe7pb/vL0fsSI2HZKv0rfWPC2fEVpxp964P4/FixodFE xwhcFkvX06J50nQSkaumqA== 0000083246-94-000015.txt : 19940516 0000083246-94-000015.hdr.sgml : 19940516 ACCESSION NUMBER: 0000083246-94-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REPUBLIC NEW YORK CORP CENTRAL INDEX KEY: 0000083246 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 132764867 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07436 FILM NUMBER: 94528364 BUSINESS ADDRESS: STREET 1: 452 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2125256100 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 1994 Commission File No. 1-7436 REPUBLIC NEW YORK CORPORATION (Exact name of registrant specified in its charter) Maryland 13-2764867 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 452 Fifth Avenue, New York, New York 10018 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 525-6100 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.... Number of shares outstanding of the issuer's common stock, as of April 30, 1994: 52,463,963 shares. REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION Page No. Item 1. Financial Statements: Consolidated Statements of Condition - Unaudited March 31, 1994 and December 31, 1993 2 Consolidated Statements of Income - Unaudited Three-Months Ended March 31, 1994 and 1993 3 Consolidated Statements of Cash Flows - Unaudited Three-Months Ended March 31, 1994 and 1993 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis 6-11 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 The information contained in the financial statements furnished in this report is unaudited. However, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of operations for the interim periods presented, have been included. -1- ITEM 1. FINANCIAL STATEMENTS
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION UNAUDITED (Dollars in thousands) March 31, December 31, 1994 1993 Assets Cash and due from banks $ 602,263 $ 636,633 Interest-bearing deposits with banks 5,505,088 5,346,647 Precious metals 1,521,937 1,117,610 Securities held to maturity (approximate market value of $1,986,239 in 1994 and $2,088,805 in 1993) 1,984,730 1,992,847 Securities available for sale (at approximate market value) 12,601,033 12,956,946 Total investment securities 14,585,763 14,949,793 Trading account assets (note 1) 2,954,056 1,194,629 Federal funds sold and securities purchased under resale agreements 2,159,596 2,322,465 Loans (net of unearned income of $92,137 in 1994 and $94,825 in 1993) 10,051,994 9,508,558 Allowance for possible loan losses (313,416) (311,855) Loans (net) 9,738,578 9,196,703 Customers' liability on acceptances 1,314,756 1,134,294 Accounts receivable and accrued interest 2,095,877 2,117,879 Investment in affiliate 581,395 625,333 Premises and equipment 398,632 399,626 Other assets 404,675 451,860 Total assets $41,862,616 $39,493,472 Liabilities and Stockholders' Equity Noninterest-bearing deposits: In domestic offices $ 1,311,338 $ 1,427,518 In foreign offices 142,574 135,251 Interest-bearing deposits: In domestic offices 8,648,135 8,724,797 In foreign offices 12,037,254 12,513,684 Total deposits 22,139,301 22,801,250 Trading account liabilities (note 1) 2,484,177 177,475 Short-term borrowings (note 2) 5,879,697 4,164,419 Acceptances outstanding 1,315,706 1,137,636 Accounts payable and accrued expenses 2,040,936 2,873,903 Due to factored clients 558,558 614,549 Other liabilities 95,769 122,203 Long-term debt 2,628,242 2,582,875 Subordinated long-term debt and perpetual capital notes 2,205,674 2,271,940 Stockholders' equity: Cumulative preferred stock, no par value 8,131,000 shares outstanding 556,425 556,425 Common stock, $5 par value 150,000,000 shares authorized; 52,475,051 shares outstanding in 1994 and 52,703,271 in 1993 262,375 263,516 Surplus 452,427 459,713 Retained earnings 1,265,093 1,204,818 Net unrealized gain (loss) on securities available for sale, net of taxes (21,764) 262,750 Total stockholders' equity 2,514,556 2,747,222 Total liabilities and stockholders' equity $41,862,616 $39,493,472 See accompanying notes to consolidated financial statements.
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REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME UNAUDITED (In thousands except per share data) Three Months Ended March 31, 1994 1993 INTEREST INCOME: Interest and fees on loans $165,306 $149,155 Interest on deposits with banks 53,322 94,035 Interest and dividends on investment securities: Taxable 218,443 216,685 Exempt from federal income taxes 17,499 15,837 Interest on trading account assets 18,447 8,718 Interest on federal funds sold and securities purchased under resale agreements 11,312 7,049 Total interest income 484,329 491,479 INTEREST EXPENSE: Interest on deposits 168,027 175,647 Interest on short-term borrowings 53,214 55,483 Interest on long-term debt 64,902 68,864 Total interest expense 286,143 299,994 NET INTEREST INCOME 198,186 191,485 Provision for loan losses 10,000 25,000 Net interest income after provision for loan losses 188,186 166,485 OTHER OPERATING INCOME: Income from precious metals 13,181 5,484 Foreign exchange trading income 22,332 24,979 Trading account profits and commissions 13,243 8,764 Investment securities gains (losses), net 3,088 (86) Net loss on loans sold or held for sale (500) (675) Commission income 17,500 9,429 Equity in earnings of affiliate 21,110 13,302 Other income 14,591 19,779 Total other operating income 104,545 80,976 OTHER OPERATING EXPENSES: Salaries 56,791 48,237 Employee benefits 38,812 31,737 Occupancy, net 13,986 11,767 Other expenses 66,339 55,124 Total other operating expenses 175,928 146,865 INCOME BEFORE INCOME TAXES 116,803 100,596 Income taxes 37,024 31,851 NET INCOME $ 79,779 $ 68,745 NET INCOME APPLICABLE TO COMMON STOCK $ 72,695 $ 61,580 Net income per common share: Primary $ 1.38 $ 1.18 Fully diluted $ 1.34 $ 1.15 Average common shares outstanding: Primary 52,557 52,196 Fully diluted 56,396 56,052 See accompanying notes to consolidated financial statements.
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REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (In thousands) Three Months Ended March 31, 1994 1993 Cash Flows From Operating Activities: Net income $ 79,779 $ 68,745 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization, net 16,361 9,890 Provision for loan losses 10,000 25,000 (Gains) losses on sales of investment securities, net (3,088) 86 Net loss on loans sold or held for sale 500 675 Equity in earnings of affiliate (21,110) (13,302) Net (increase) decrease in trading accounts 142,948 (108,916) Net increase in accounts receivable and accrued interest 30,060 14,132 Net decrease in accounts payable and accrued expenses (480,812) (14,740) Other, net 66,028 (204,470) Net cash used by operating activities (159,334) (222,900) Cash Flows From Investing Activities: Net (increase) decrease in interest-bearing deposits with banks (158,441) 3,291,462 Net (increase) decrease in federal funds sold and securities purchased under resale agreements 162,869 (263,926) Net decrease in short-term investments 57,259 16,838 Purchases of securities available for sale (1,535,092) - Proceeds from sales of securities available for sale 184,906 - Proceeds from maturities of securities available for sale 1,099,173 - Purchases of securities held to maturity (22,870) (973,775) Proceeds from sales of securities held to maturity - 6,201 Proceeds from maturities of securities held to maturity 15,592 442,169 Net increase in loans (624,814) (51,379) Net cash provided (used) by investing activities (821,418) 2,467,590 Cash Flows From Financing Activities: Net decrease in deposits (661,815) (387,938) Net increase (decrease) in short-term borrowings 1,715,278 (1,490,734) Net decrease in due to factored clients (55,991) (60,533) Proceeds from issuance of long-term debt 145,586 - Repayment of long-term debt (100,000) (323,887) Repayment of subordinated long-term debt (66,000) - Cash dividends paid (21,294) (20,213) Other, net (6,637) 1,914 Net cash provided (used) by financing activities 949,127 (2,281,391) Effect of exchange rate changes on cash and due from banks (2,745) (7,076) Net decrease in cash and due from banks (34,370) (43,777) Cash and due from banks at beginning of period 636,633 490,711 Cash and due from banks at end of period $ 602,263 $ 446,934 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 259,525 $ 314,734 Income taxes 16,297 15,145 See accompanying notes to consolidated financial statements.
-4- REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS COVERING THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 1. On January 1, 1994, the Corporation adopted Financial Accounting Standards Board Interpretation No.39, "Offsetting of Amounts Related to Certain Contracts." This interpretation requires, among other things, that unrealized gains and losses on certain off-balance sheet financial instruments be reported on a gross basis except when a legally enforceable netting agreement with a counterparty exists. At March 31, 1994, the adoption of this interpretation resulted in an increase in the Corporation's trading account assets and liabilities of approximately $1.6 billion. The Corporation has elected not to restate prior periods under this interpretation. 2. On March 8, 1994, Republic National Bank of New York (the "Bank"), the principal banking subsidiary of the Corporation, received the net proceeds from the public sale, on March 1, 1994, of $1.0 billion principal amount of 4.30% Notes due March 8, 1995. The Notes are not redeemable prior to maturity and are unsecured and, except with respect to domestic deposits, are unsubordinated debt obligations of the Bank. The net proceeds of this short-term borrowing will be used for the general banking business of the Bank. 3. On January 1, 1994, the Corporation adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS No. 112"). SFAS No. 112 requires the recognition of an obligation for the estimated cost of postemployment benefits. Postemployment is defined as the period after employment but before retirement if certain conditions are met. Postemployment benefits include, but are not limited to, salary continuation, severance benefits, job training and counseling, health care and life insurance coverage. The effect of initially adopting this SFAS and the impact of the ongoing costs are not material to the results of operations. 4. Certain amounts from the prior year have been reclassified to conform with 1994 classifications. -5- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Management's discussion and analysis of the summary of operations should be read in conjunction with the consolidated financial statements (unaudited) and notes shown elsewhere in this Report. In the following discussion, the interest income earned on tax exempt obligations has been adjusted (increased) to a fully-taxable equivalent basis. The rate used for this adjustment was approximately 44% in 1994 and 42% in 1993. This tax equivalent adjustment permits all interest income and net interest income to be analyzed on a comparable basis. The following table presents a comparative summary of the increases (decreases) in income and expense for the first quarter of 1994 compared to the first quarter of 1993.
Increase (Decrease) 1st Qtr. 1994 vs. 1st Qtr. 1993 Amount Percent (Dollars in thousands) Interest income $( 6,441) ( 1.3) Interest expense (13,851) ( 4.6) Net interest income 7,410 3.7 Provision for loan losses (15,000) (60.0) Net interest income after provision for loan losses 22,410 12.9 Other operating income 23,569 29.1 Other operating expenses 29,063 19.8 Income before income taxes 16,916 15.6 Applicable income taxes 5,173 16.2 Tax equivalent adjustment 709 9.4 Total applicable income taxes 5,882 14.9 Net income $ 11,034 16.1 Net income applicable to common stock $ 11,115 18.0
Net Interest Income - on a fully-taxable equivalent basis, increased 3.7% to $206.4 million in the first quarter of 1994, compared to $199.0 million in the first quarter of 1993. As shown in the table on page 7, average interest-earning assets were $33.1 billion in the first quarter of 1994 compared to $33.5 billion in the first quarter of 1993. During the first quarter of 1994, interest-bearing deposits with banks declined significantly, while investment securities of U.S. Government agency mortgage-backed securities, federal funds sold and securities purchased under resale agreements and loans in both domestic and foreign offices each increased over the respective amounts from the first quarter of 1993. Increases in interest-bearing deposit liabilities, long-term debt and trading account liabilities were offset by a decline in short-term borrowings. The net interest rate differential was 2.53% in the first quarter of 1994, compared to 2.41% in the first quarter of last year. This increase is due primarily to a decrease in the cost of interest-bearing funds, primarily deposits and long-term debt. -6-
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES AVERAGE BALANCES, NET INTEREST DIFFERENTIAL, AVERAGE RATES EARNED AND PAID UNAUDITED (Fully taxable equivalent basis) (Dollars in thousands) Quarter Ended March 31, 1994 1993 Average Average Interest Rates Interest Rates Average Income/ Earned/ Average Income/ Earned/ Balance Expense Paid Balance Expense Paid Interest-earning assets: Interest-bearing deposits with banks $ 4,878,003 $ 53,322 4.43% $ 9,646,318 $ 94,035 3.95% Investment securities(1): Taxable 14,244,415 218,443 6.22 13,020,158 216,685 6.75 Exempt from federal income taxes 1,116,525 25,763 9.36 922,423 23,307 10.25 Total investment securities 15,360,940 244,206 6.45 13,942,581 239,992 6.98 Trading account assets(2) 1,088,990 18,447 6.87 793,624 8,718 4.46 Federal funds sold and securities purchased under resale agreements 1,358,480 11,312 3.38 893,200 7,049 3.20 Loans, net of unearned income: Domestic offices 6,724,601 114,517 6.91 6,032,711 119,947 8.06 Foreign offices 3,670,611 50,789 5.61 2,171,673 29,293 5.47 Total loans, net of unearned income 10,395,212 165,306 6.45 8,204,384 149,240 7.38 Total interest-earning assets 33,081,625 $492,593 6.04% 33,480,107 $499,034 6.04% Cash and due from banks 754,030 499,732 Other assets 7,058,686 3,395,708 Total assets $40,894,341 $37,375,547 Interest-bearing funds: Consumer and other time deposits $ 8,071,084 $ 57,486 2.89% $ 8,288,450 $ 67,477 3.30% Certificates of deposit 607,275 5,133 3.43 804,235 6,511 3.28 Deposits in foreign offices 11,088,367 105,408 3.86 10,482,731 101,659 3.93 Total interest-bearing deposits 19,766,726 168,027 3.45 19,575,416 175,647 3.64 Trading account liabilities (2) 164,870 2,271 5.59 30,063 343 4.63 Short-term borrowings 5,957,837 50,943 3.47 6,623,923 55,140 3.38 Total long-term debt 4,916,743 64,902 5.35 4,472,588 68,864 6.24 Total interest-bearing funds 30,806,176 $286,143 3.77% 30,701,990 $299,994 3.96% Noninterest-bearing deposits: In domestic offices 1,294,187 1,072,741 In foreign offices 140,903 95,096 Other liabilities 5,901,990 3,222,227 Stockholders' equity: Preferred stock 556,425 556,425 Common stockholders' equity 2,194,660 1,727,068 Total stockholders' equity 2,751,085 2,283,493 Total liabilities and stockholders' equity $40,894,341 $37,375,547 Interest income/earning assets $492,593 6.04% $499,034 6.04% Interest expense/earning assets 286,143 3.51 299,994 3.63 Net interest differential $206,450 2.53% $199,040 2.41% (1) Based on amortized or historic cost with the mark-to-market adjustment included in other assets. (2) Excludes non-interest bearing balances, which are included in other assets or other liabilities, respectively.
-7- The Corporation manages its sensitivity to interest rates through transactions in the cash market and by entering into off-balance-sheet contracts, including interest rate and currency swaps and interest rate caps and floors. These contracts hedge specifically identified assets or liabilities with the corresponding revenues or expenses reflected in the yield of the related on-balance-sheet asset or liability. During the past year, the Corporation has taken steps to lengthen the maturity of its liabilities. At March 31, 1994, the gross notional amount of such contracts used in asset and liability management was approximately $8.3 billion. At March 31, 1994, the net effect of these contracts was to decrease the net interest rate differential by 17 basis points. If the trend of rising interest rates during the first quarter of 1994 continues and the Corporation continues its program of lengthening liabilities without increasing earning asset balances, then net interest income and the net interest rate differential could decline. Provision for Loan Losses - was $10.0 million in the first quarter of 1994 compared to $25.0 million in the first quarter of 1993. Net loan charge-offs, excluding restructuring country debt, were $14.1 million in the first quarter of 1994 and $14.9 million in the first quarter of 1993. Net recoveries of restructuring country debt in the first quarter of 1994 were $5.7 million, compared to recoveries of $1.2 million in the first quarter of last year. The allowance for possible loan losses at March 31, 1994 was $313.4 million compared to $311.9 million at December 31, 1993, while loans increased $543 million from the level at year end 1993. The allowance for possible loan losses as a percentage of loans outstanding, net of unearned income, was 3.12% at March 31, 1994 compared to 3.28% at December 31, 1993. At March 31, 1994, non-accrual loans were $90.3 million compared to $94.9 million at December 31, 1993 and $124.7 million at March 31, 1993. The decline from the first quarter of 1993 is primarily attributable to the decline in other foreign loans. See "Statement of Condition" below for a discussion of total non-performing assets. The following is a summary of total non-accrual loans at periods ending:
March 31, March 31, Dec. 31, (in thousands) 1994 1993 1993 Non-accrual loans: Domestic $46,510 $ 49,318 $48,084 Foreign-restructuring countries* 33,989 41,596 33,853 Foreign-other 9,776 33,792 12,956 Total non-accrual loans $90,275 $124,706 $94,893 *On April 15, 1994, as part of the Brazilian restructuring settlement, the Corporation received bonds in exchange for substantially all of its outstandings due from Brazil, including bonds for payment of past-due interest. The market value of the bonds received exceeded the carrying value of the non-accrual loans. Upon sale of the bonds, the Corporation will recognize any gain as a recovery to the allowance for loan losses. The effect of this receipt is to reduce non-accrual loans by $33.4 million.
-8- Other Operating Income - total other operating income was $104.5 million in the first quarter of 1994, compared to $81.0 million in the first quarter of 1993. Income from trading activities rose to $48.8 million in the first quarter of 1994, from $39.2 million in the first quarter of last year. This increase was primarily due to higher levels of income from precious metals, a portion of which is attributable to the additional business generated by the acquisition on December 31, 1993 of Republic Mase Bank Limited. Trading account profits and commissions also rose in comparison to the first quarter of 1993, principally as a result of the derivative products group activities. This group contributed $10.0 million of revenue in the first quarter of 1994, compared to $3.9 million in the first quarter of last year when they commenced operations. These increases were partially offset by a decline in foreign exchange trading income. Investment securities gains were $3.1 million in the first quarter of 1994, resulting from sales of securities available for sale and redemptions prior to maturity of securities held to maturity, compared to investment securities losses of $0.1 million in the first quarter of 1993. A net loss on loans sold or held for sale of $0.5 million in the first quarter of 1994 compared to a net loss of $0.7 million in the first quarter of last year. Commission income amounted to $17.5 million in the first quarter of 1994, compared with $9.4 million in the corresponding period of 1993. The increase in the first quarter of 1994 was attributable to fees earned from the Corporation's full-service securities brokerage and investment management activities, as well as to growth in other institutional fee-based services. Equity in the earnings of Safra Republic Holdings S.A. ("Safra Republic"), a European international private banking group of which the Corporation owns approximately 49% of the outstanding shares, increased 58.7% to $21.1 million in the first quarter of 1994, from $13.3 million in the first quarter of 1993. Other income was $14.6 million in the first quarter of 1994. In the first quarter of 1993, other income was $19.8 million, which included a $5.1 million gain on the sale of certain data processing rights. Other Operating Expenses - were $175.9 million in the first quarter of 1994, compared to $146.9 million in the first quarter of 1993. Total operating expenses increased $29.1 million, or 19.8%, in the first quarter of 1994 from the first quarter of 1993. Of this increase, approximately $21.9 million is associated with investments in recently established business units, including Republic Mase Bank Limited, the derivative products group and retail banking expansion in California, New York and Toronto, increased domestic private banking and global trust activities and securities brokerage and investment management activities, as well as increased levels of incentive-based compensation. Salaries and employee benefits of $95.6 million in the first quarter of 1994 reflected an increase of 19.5% from $80.0 million in the first quarter of last year. This increase was attributable primarily to recently established business units mentioned above, which required increased staffing levels, as well as increased levels of incentive-based compensation. -9- Total Applicable Income Taxes - have been adjusted (increased) to reflect the inclusion of interest income on tax exempt obligations as if it was subject to federal, state and local income taxes, after giving effect to the deductibility of state and local taxes for federal income tax purposes. Total applicable income taxes increased $5.9 million, or 14.9%, between the first quarters of 1994 and 1993. This change was primarily due to the higher level of income subject to state and local and federal income taxes at an increased federal statutory tax rate. The effective tax rate, total applicable income taxes as a percentage of income before income taxes, for the first quarters of 1994 and 1993 was 36%, respectively. STATEMENT OF CONDITION Stockholders' Equity and Capital Ratios On December 31, 1993, the Corporation adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). SFAS No. 115 requires, among other things, that securities designated as available for sale be carried at market value with the unrealized gain or loss, net of tax effect, recorded as a component of stockholders' equity. At March 31, 1994, stockholders' equity included a deduction of $21.8 million, which represents the after-tax unrealized loss in the securities available for sale portfolio and approximately 49% of Safra Republic's unrealized loss in its securities available for sale portfolio. The Corporation's leverage ratio, Tier 1 capital to quarterly average assets, and its risk-based capital ratios, Tier 1 and total qualifying capital to risk-weighted assets, include the assets and capital of Safra Republic on a consolidated basis in accordance with the requirements of the Federal Reserve Board specifically applied to the Corporation. Regulatory guidelines require the Corporation to exclude Republic New York Securities Corporation's assets and off-balance-sheet contracts from the Corporation's capital calculations. It also requires the Corporation to exclude one-half of its investment in this subsidiary from each of Tier 1 and Tier 2 capital. These regulations also require the Corporation to exclude the $21.8 million reduction of stockholders' equity related to the net unrealized losses on securities available for sale, net of income taxes as recorded in accordance with SFAS No. 115. At March 31, 1994, the Corporation's leverage ratio was 5.73% compared to 5.61% at year end 1993. At March 31, 1994, risk-based capital ratios were 16.59% for Tier 1, or "core", capital and 28.40% for total qualifying capital compared to 15.16% and 26.20%, respectively, at December 31, 1993. These ratios substantially exceeded the minimums in effect for bank holding companies. At March 31, 1994, the ratio of the Corporation's total common stockholders' equity to total assets was 4.68%, compared to 5.55% at December 31, 1993. The decline in this ratio was primarily attributable to the growth in total assets combined with the reduction in common equity related to the unrealized decline in the market value of the Corporation's portfolio of securities available for sale accounted for in accordance with SFAS No. 115. -10- Non-performing Assets At March 31, 1994, total non-performing assets of $118.2 million included $90.3 million of non-accrual loans and $27.9 million of other real estate owned. At December 31, 1993, total non-performing assets of $118.2 million included $94.9 million of non-accrual loans and $23.3 million of other real estate owned. The following is a summary of total non-accrual loans and other non-performing assets at periods ending:
March 31, March 31, Dec. 31, (in thousands) 1994 1993 1993 Total non-accrual loans $ 90,275 $124,706 $ 94,893 Other non-performing assets: Other real estate owned 27,882 55,029 23,338 Other non-accrual assets - 3,670 - Total other non-performing assets 27,882 58,699 23,338 Total non-accrual loans and non-performing assets $118,157 $183,405 $118,231
Financial Instruments At March 31, 1994, the net fair value appreciation of the Corporation's on balance sheet financial instruments, excluding those with maturities of under six months, was $105 million. This amount represents a decline in fair value appreciation of approximately $137 million from the $242 million net appreciation at December 31, 1993. This change in value reflects the effect of rising interest rates during the first quarter of 1994. Not included in the information above is the fair value of deposit liabilities with no stated maturity that are required to be reported at their carrying value. These deposits have an increased value to the Corporation during periods of rising interest rates. -11- PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11. Computation of Earnings Per Common Share (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended March 31, 1994. -12- 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 thereunto duly authorized. REPUBLIC NEW YORK CORPORATION Dated: May 13, 1994 By /s/Walter H. Weiner Walter H. Weiner Chairman of the Board Dated: May 13, 1994 By /s/John D. Kaberle, Jr. John D. Kaberle, Jr. Executive Vice President and Comptroller (Principal Accounting Officer) -13- FORM 10-Q QUARTERLY REPORT For the fiscal quarter ended March 31, 1994 REPUBLIC NEW YORK CORPORATION EXHIBIT INDEX No. Exhibit Description 11 Computation of Earnings Per Common Share EX-11 2 EXHIBIT 11 - COMP. OF EARNINGS PER COMMON SHARE EXHIBIT 11
REPUBLIC NEW YORK CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE UNAUDITED (In thousands except per share data) Three Months Ended March 31, 1994 1993 Primary: Earnings: Net income $79,779 $68,745 Less preferred stock dividends 7,084 7,165 Net income applicable to common stock $72,695 $61,580 Shares: Average number of common shares outstanding 52,557 52,196 Net income per common share $ 1.34 $ 1.18 Fully Diluted: Earnings: Net income applicable to common stock $72,695 $61,580 Add dividends applicable to convertible preferred stock 2,911 2,911 Net income applicable to common stock as adjusted $75,606 $64,491 Shares: Average number of common shares outstanding 52,557 52,196 Add shares assumed issued upon exercise of stock options 270 287 Add shares assumed issued upon conversion of preferred stock 3,569 3,569 Average number of common shares outstanding as adjusted 56,396 56,052 Net income per common share $ 1.34 $ 1.15
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