-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WuE8Q9+zqI8nqj620fXdngTeVmwcCqTDHdXTJCXHEgNltDsOlt69J48oaJ5k5Ouw NP7d1QI6UtCJwNPgw9bY1A== 0000950123-99-007187.txt : 19990806 0000950123-99-007187.hdr.sgml : 19990806 ACCESSION NUMBER: 0000950123-99-007187 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990805 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REPUBLIC NEW YORK CORP CENTRAL INDEX KEY: 0000083246 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 132764867 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07436 FILM NUMBER: 99678736 BUSINESS ADDRESS: STREET 1: 452 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10018 BUSINESS PHONE: 2125256100 8-K 1 REPUBLIC NEW YORK CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: August 5, 1999 REPUBLIC NEW YORK CORPORATION (Exact name of registrant as specified in its charter) Maryland 1-7436 13-2764867 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) 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 2 ITEM 5. OTHER EVENTS Republic New York Corporation is hereby filing the document listed under Item 7 below. Such document is hereby incorporated herein by reference in this Current Report on Form 8-K and a copy of the same is attached hereto as an exhibit. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. c. Exhibits 99 Press Release dated July 21, 1999, with attached financial statements, Announcing Results for the Second Quarter and Six Month Periods Ended June 30, 1999. 3 SIGNATURE Pursuant to the requirement 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. REPUBLIC NEW YORK CORPORATION By: /s/ William F. Rosenblum, Jr. ------------------------------ William F. Rosenblum, Jr. Senior Vice President Date: August 5, 1999 EX-99 2 PRESS RELEASE DATED JULY 22, 1999 1 Exhibit 99 [LOGO] REPUBLIC NEW YORK CORPORATION News Release FOR IMMEDIATE RELEASE PRESS CONTACT: MELISSA M. KRANTZ (212) 525-3800 NYSE SYMBOL: RNB INVESTOR CONTACT: MICHAEL G. LEVINE (212) 525-8870 TO REQUEST RELEASE BY E-MAIL: maria.alba@rnb.com PRESS RELEASES: http://www.rnb.com REPUBLIC NEW YORK CORPORATION REPORTS STRONG SECOND QUARTER NEW YORK - JULY 21, 1999: Republic New York Corporation today reported net income for the second quarter of 1999 of $143.1 million, or earnings per common share of $1.33 basic and $1.31 diluted. This compares to net income of $118.8 million in the second quarter of 1998, or earnings per common share of $1.06 basic and $1.05 diluted and $114.1 million in the first quarter of 1999, or earnings per common share of $1.04 basic and $1.03 diluted, before $67.6 million of after-tax restructuring and one-time special charges. Net income in the first quarter of 1999, including the restructuring and one-time special charges, was $46.5 million, or 38 cents per common share, for both basic and diluted earnings per share. The return on average common equity for the second quarter of 1999 was 19.7 percent annualized, compared to 14.8 percent in the second quarter of last year. For the six months ended June 30, 1999, net income was $189.6 million, including $67.6 million of after-tax restructuring and one-time special charges, compared to $236.3 million in 1998. Diluted earnings per common share were $1.69 for the six-month period in 1999, compared to $2.08 in 1998. Dov C. Schlein, chairman and chief executive officer, said, "The second quarter's strong performance further demonstrates the validity of our business strategy to grow our core private banking and special niche businesses. While we grow these businesses, at the same time, we anticipate achieving additional savings from our control of operational overhead expenses. Our people remained focused during the quarter, while working on merger activities and integration plans for the proposed acquisition of Republic by HSBC Holdings plc," Mr. Schlein continued. As previously announced on May 10, 1999 the corporation entered into a definitive agreement providing for the acquisition of the corporation by HSBC Holdings plc. HSBC is one of the largest banking and financial service organizations in the world, with a network of more than 5,000 offices in 79 countries and territories. Pursuant to the agreement, each share of the corporation's common stock would be converted to $72 in cash. The transaction, which is subject to shareholder and regulatory approvals, is expected to close in the fourth quarter of 1999. In addition, HSBC has offered $72 per share for the outstanding shares of common stock of Safra Republic Holdings S.A. (SRH), owned by shareholders other than Republic. 2 "As Republic and HSBC proceed to review our businesses and operations together, I am confident about the success of the integration of Republic and HSBC. The combination of our companies and our businesses throughout the world will surely result in one of the premier international financial services organizations," Mr. Schlein concluded. Highlights of the quarter include: Net interest rate differential increased to 2.60 percent in the second quarter of 1999, compared to 2.30 percent in the second quarter of 1998 and 2.52 percent in the first quarter of 1999. Net interest income for the second quarter of 1999 was $271.2 million, compared to $268.4 million in the second quarter of 1998 and $257.3 million in the first quarter of 1999. The corporation realized a gain in the second quarter of 1999 of $69.8 million, pre-tax, relating to Republic's investment in the Canary Wharf Group and the completion of the Canary Wharf initial public offering. The board of directors declared dividends of 26 cents per common share, 30.5775 cents per depositary share on the adjustable rate cumulative preferred stock, 45.3125 cents per share on the $1.8125 cumulative preferred stock and 71.4375 cents per share on the $2.8575 cumulative preferred stock. All dividends are payable October 1, 1999 to stockholders of record on September 15, 1999. Equity in the earnings of SRH was $41.9 million in the second quarter of 1999, compared to $36.8 million in the second quarter of 1998 and $30.5 million in the first quarter of 1999. The total of the corporation's and SRH's private client account assets, both on- and off-balance-sheet, were $59.2 billion at June 30, 1999, compared to $56.5 billion at March 31, 1999 and $55.6 billion at December 31, 1998. Republic successfully introduced WebloanSM, a innovative new internet-based system that allows its mortgage brokers, sales executives and retail outlets to prequalify quickly a prospect for a mortgage loan from the point of sale, significantly reducing loan origination time. NET INTEREST INCOME The net interest rate differential rose to 2.60 percent in the second quarter of 1999, compared to 2.30 percent in the second quarter of 1998 and 2.52 percent in first quarter of 1999. The increase in the net interest rate differential in the second quarter from the year ago period reflected reductions of higher cost short-term liabilities and a corresponding decline in interest-bearing deposits with banks, investment securities, and federal funds. Average interest-earning assets were $42.7 billion in the second quarter of 1999, compared to $48.0 billion in the second quarter of 1998 and $42.5 billion in the first quarter of 1999. -2- 3 Net interest income on a fully taxable equivalent basis was $277.3 million in the second quarter of 1999, compared to $275.1 million in the second quarter of 1998 and $263.6 million in the first quarter of 1999. In the second quarter of 1999, $3.0 million of past-due interest was received on previously written down Russian obligations and $5.2 million of mortgage prepayment penalty income was recorded. The second quarter of 1998 reflected $8.9 million of additional earnings on the repayment of an international loan. The first quarter of 1999 reflected the receipt of $3.1 million of past-due interest on previously written down Russian obligations. Premium amortization attributable to prepayments on mortgage-backed securities was $17.2 million in the second quarter of 1999, compared to $25.7 million in the second quarter of 1998 and $22.6 million in the first quarter of 1999. The net interest rate differential rose to 2.56 percent for the first six months of 1999, compared to 2.33 percent for the corresponding period of 1998. Net interest income on a fully taxable equivalent basis was $541.0 million for the first six months of 1999, compared to $543.3 million in the corresponding period of 1998. Average interest-earning assets declined to $42.6 billion for the first six months of 1999, compared to $47.0 billion for the corresponding period of 1998, due to a reduction in higher cost short-term liabilities which had been invested in interest-bearing deposits with banks, investment securities, and federal funds. PROVISION FOR TRADING AND CREDIT LOSSES The corporation's aggregate allowance for credit losses, which is presented in the table below, is available to absorb all credit losses:
1999 1998 ----------------------- -------- 2ND QTR 1ST QTR 2ND QTR (In thousands) Provision for trading and credit losses $ 4,000 $ 8,000 $ 4,000 ======== ======== ======== Net charge-offs $ 4,615 $ 4,076 $ 3,940 ======== ======== ======== Aggregate allowance for credit losses: Credit losses $290,669 $292,125 $326,776 Trading accounts 17,485 17,516 14,857 Off balance-sheet credit commitments 7,216 6,718 10,000 -------- -------- -------- $315,370 $316,359 $351,633 ======== ======== ========
The aggregate provisions in the second quarters of 1999 and 1998 were related to credit losses. The first quarter's 1999 aggregate provision consisted of $4.0 million related to credit losses and $4.0 million related to trading credit losses. The following table presents non-accrual loans and other non-performing assets at periods ended:
1999 1998 --------------------- ------- JUNE 30 MARCH 31 JUNE 30 (In thousands) Non-accrual loans $57,994 $86,589 $80,705 Other assets and real estate owned 10,785 7,374 9,000 ------- ------- ------- Total non-performing assets $68,779 $93,963 $89,705 ======= ======= =======
-3- 4 The corporation's Latin American exposure consists primarily of sovereign securities. The mark-to-market value of these securities is fully reflected, after tax benefit, as an adjustment to stockholders' equity through accumulated other comprehensive income. The following table presents information on the corporation's estimated cross-border exposure to Latin American countries at June 30, 1999:
NET FASB 115 NET OUTSTANDINGS CROSS-BORDER PRE-TAX MARKET LESS FASB 115 ($ millions) OUTSTANDINGS* VALUE ADJUSTMENTS ADJUSTMENTS ------------- ----------------- --------------- Brazil** $445 ($66) $379 Mexico 264 ( 7) 257 Argentina 233 (22) 211 Venezuela 93 (13) 80 Chile 67 1 68
* Net cross-border outstandings include foreign office local country claims on local residents less local country liabilities. ** Net outstandings exclude $636 million of sovereign risk assets, before the FASB 115 appreciation adjustment of $3 million, funded with U.S. dollars where the providers of funds agree that, in the event their claims cannot be repaid in the designated currency due to sovereign default or currency exchange restrictions in a given country, they will wait to receive the non-local currency until such time as such default is cured or the currency restrictions removed or such currency becomes available in the local market; under limited circumstances, the providers may receive either local currency or local market debt instruments. Also excluded is net exposure of approximately $150 million, which represented the corporation's share of SRH's net exposure. OTHER OPERATING INCOME Total other operating income in the second quarter of 1999 was $205.3 million including a gain on a real estate investment of $69.8 million discussed below, compared to $144.3 million in the second quarter of 1998 and $154.5 million in the first quarter of 1999. Total trading revenue, including associated net interest income which is reported as net interest income, was $56.5 million in the second quarter of 1999, compared to $63.7 million in the second quarter of 1998 and $90.0 million in the first quarter of 1999. The second quarter to second quarter change reflected increased trading account profits and commissions offset by declines in precious metals and foreign exchange trading income. For the six-month period of 1999, such revenue amounted to $146.5 million, compared to $129.6 million for the six-month period of 1998. -4- 5 The items of net interest income (expense) in the following table represent the net interest earned or paid on instruments held for trading, as well as an allocation by management to reflect the funding benefit or cost associated with the trading positions.
2ND QTR 6 MONTHS -------------------------- -------------------------- 1999 1998 1999 1998 (In thousands) Income from precious metals: Trading revenue (loss) $ (2,239) $ 254 $ 2,054 $ 3,620 Net interest income 15,096 16,516 30,552 35,438 --------- --------- --------- --------- Total 12,857 16,770 32,606 39,058 --------- --------- --------- --------- Foreign exchange trading income: Trading revenue 28,586 41,979 91,268 72,222 Net interest expense (1,268) (2,213) (2,507) (2,831) --------- --------- --------- --------- Total 27,318 39,766 88,761 69,391 --------- --------- --------- --------- Trading account profits and commissions: Trading revenue 11,078 1,230 20,406 7,759 Net interest income 5,282 5,903 8,767 13,422 --------- --------- --------- --------- Total 16,360 7,133 29,173 21,181 --------- --------- --------- --------- Provision for trading credit losses -- -- 4,000 -- --------- --------- --------- --------- Total: Trading revenue 37,425 43,463 109,728 83,601 Net interest income 19,110 20,206 36,812 46,029 --------- --------- --------- --------- Total $ 56,535 $ 63,669 $ 146,540 $ 129,630 ========= ========= ========= =========
Net investment securities gains were $11.0 million in the second quarter of 1999, compared to net gains of $12.4 million in the second quarter of 1998 and $6.3 million in the first quarter of 1999. The net gains in the second quarter of 1999 were realized from the repayment and sales of Russian securities. The gains in the first quarter of 1999 were primarily from sales of Brazilian securities and restructured Russian securities. Commission income consists primarily of securities brokerage commissions, fees for the issuance of bankers acceptances and letters of credit and retail services. Such income was $24.6 million in the second quarter of 1999, compared to $24.2 million in the second quarter of 1998 and $25.8 million in the first quarter of 1999. Equity in the earnings of SRH was $41.9 million in the second quarter of 1999, compared to $36.8 million in the second quarter of 1998 and $30.5 million in the first quarter of 1999. The second quarter to second quarter increase reflects a $34.8 million pre-tax gain related to SRH's investment in the Canary Wharf Group and the completion of its initial public offering in April 1999. The effect of the gain was partially offset by $4.0 million of merger related expenses and $4.5 million for professional fees and employee benefits. Client account assets at SRH, both on- and off-balance sheet, were $33.9 billion at June 30, 1999 compared to $32.1 billion at June 30, 1998 and $32.7 billion at March 31, 1999. -5- 6 Other income was $90.1 million in the second quarter of 1999, which includes the $69.8 million gain relating to an investment in the Canary Wharf Group and the completion of its initial public offering. Other income was $27.6 million in the second quarter of 1998 and $19.8 million in the first quarter of 1999. The consumer financial services group and the private banking group generate fee income through service charges to clients for deposit accounts and trust and securities activities. Other income included revenues of $17.0 million from these activities in the second quarter of 1999, compared to $16.4 million in the second quarter of 1998 and $16.4 million in the first quarter of 1999. Other income in the second quarter of 1998 included a gain of $4.4 million related to sales of real estate. OTHER OPERATING EXPENSES Total operating expenses were $251.4 million in the second quarter of 1999, excluding merger related executive pension and incentive accruals and certain other merger related expenses of $20.3 million further discussed below. Total operating expenses in the second quarter of 1998 were $243.4 million and $248.8 million in the first quarter of 1999, excluding restructuring and one-time special charges of $104.0 million. Included in total operating expenses were Year 2000 expenses of $3.5 million in the second quarter of 1999, $8.6 million in the second quarter of 1998 and $4.7 million in the first quarter of 1999. Salaries and employee benefits were $141.1 million in the second quarter of 1999, excluding the charge of $16.5 million related to the implementation of a Supplemental Executive Retirement Plan to retain the services of certain executive officers. Salaries and employee benefits were $133.8 million in the second quarter of 1998 and $139.7 million in the first quarter of 1999 excluding $5.8 million related to the one-time charge. The second quarter to second quarter increase was due to higher levels of incentive compensation accruals. Occupancy expense was $17.8 million in the second quarter of 1999, compared to $18.1 million in the second quarter of 1998 and $18.9 million in the first quarter of 1999 that included $0.6 million related to the one-time charge. The restructuring and one-time special charges of $104 million in the first quarter of 1999 consisted of a previously announced $97 million pre-tax restructuring charge, resulting from the corporation's lines-of-business review and its plan to grow its core private banking and special niche businesses, and a $7 million one-time charge primarily related to the termination of selected employee benefits programs. The $97 million restructuring charge is related to workforce reductions, branch consolidations, outsourcing certain data processing functions and related network and communication operations and the decision to exit certain activities. All employees affected by the restructuring have been notified. The migration of the corporation's data centers has been delayed at the recommendation of the outsourcer due to telecommunication constraints and will not occur until 2000. To date, approximately $43 million of the $97 million restructuring charge has been expended. -6- 7 All other expenses were $92.5 million in the second quarter of 1999, excluding $3.8 million of merger related professional fees, $91.5 million in the second quarter of 1998 and $90.9 million in the first quarter of 1999, excluding $0.6 million related to the one-time charge. Excluding Year 2000 expenses and the special items noted above, all other expenses were $89.0 million in the second quarter of 1999, $83.9 million in the second quarter of 1998 and $86.2 million in the first quarter of 1999. The corporation is on target for the timely completion of all of its Year 2000 Project efforts. Amortization of goodwill and other intangible assets was $6.8 million in the second and first quarters of 1999 and $6.7 million in the second quarter of 1998. INCOME TAXES Income taxes were $57.7 million in the second quarter of 1999, compared to $46.4 million in the second quarter of 1998 and $8.4 million in the first quarter of 1999. The effective book income tax rate was 28.7 percent in the second quarter of 1999, compared to 28.1 percent in the second quarter of 1998 and 15.3 percent in the first quarter of 1999. CAPITAL The following table presents return on average common stockholders' equity (ROAE) and return on average total assets (ROAA), based on net income applicable to common stock - diluted:
2ND QTR 6 MONTHS ----------------- ------------------ 1999 1998 1999 1998 ROAE 19.67% 14.77% 13.30% 14.96% ROAA 1.15% 0.80% 0.75% 0.80%
The book value of the corporation's common stock was $26.87 per share at June 30, 1999. At June 30, 1999, the corporation's total intangibles were $312 million, of which $212 million was goodwill. The following table presents capital ratios at periods ending:
1999 ---------------------- JUNE 30 MARCH 31 Common stockholders' equity/assets 5.41% 5.35% Leverage 6.70% * 6.56% Tier 1 "core" 13.35% * 13.55% Total capital 21.70% * 22.26%
*Estimated 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 SRH on a consolidated basis in accordance with the requirements of the Federal Reserve Board (the "FRB") specifically applied to the corporation. These ratios do not reflect the effect on stockholders' equity related to the FASB 115 valuation of the corporation's portfolio of securities available for sale which is included in accumulated other comprehensive loss, net of taxes. ### -7- 8 In connection with the information relating to the Year 2000 and the anticipated savings from the line-of-business review, this press release contains statements that constitute forward-looking statements and are subject to certain risks and uncertainties that could cause the actual facts to differ materially from those contained in this press release. With respect to the Year 2000, uncertainties could include unanticipated events relating to work on the developments or modifications to computer systems and to software, including work performed by suppliers or vendors to the corporation, and the satisfactory resolution of such events may be beyond the corporation's control in responding to such events. With respect to the contemplated savings in operating expenses, the actual results may differ due to, among other things, the fact that the expected cost savings may not be fully realized or realized within the expected time frame, competitive pressures among depository or other financial institutions may increase significantly, regulatory changes not presently proposed may be enacted and technological changes may be more difficult to accomplish or expensive than anticipated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only to the date of this report. -8- 9 REPUBLIC NEW YORK CORPORATION CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands)
June 30, -------------------------------- 1999 1998 ------------ ------------ ASSETS Cash and due from banks $ 901,766 $ 1,066,843 Interest-bearing deposits with banks 5,654,600 8,626,903 Precious metals 785,048 782,266 Securities held to maturity 5,589,260 7,979,192 Securities available for sale 16,546,090 16,788,744 ------------ ------------ Total investment securities 22,135,350 24,767,936 Trading account assets 2,966,059 4,242,167 Federal funds sold and securities purchased under resale agreements 1,495,985 2,218,397 Loans, net of unearned income 14,193,813 13,816,426 Allowance for credit losses (290,669) (326,776) Customers' liability on acceptances 44,128 72,187 Accounts receivable and accrued interest 998,684 2,538,509 Investment in affiliate 821,093 838,274 Premises and equipment 430,170 467,964 Other assets 1,043,626 807,986 ------------ ------------ Total assets $ 51,179,653 $ 59,919,082 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Noninterest-bearing deposits: In domestic offices $ 2,971,844 $ 2,668,278 In foreign offices 223,130 231,632 Interest-bearing deposits: In domestic offices 10,613,420 11,573,799 In foreign offices 18,621,045 19,746,916 ------------ ------------ Total deposits 32,429,439 34,220,625 Trading account liabilities 2,741,941 3,982,668 Short-term borrowings 6,525,422 10,214,634 Acceptances outstanding 45,391 72,794 Accounts payable and accrued expenses 919,772 2,206,174 Due to factored clients 669,222 639,165 Other liabilities 156,222 213,307 Long-term debt 1,449,337 1,883,884 Subordinated long-term debt and perpetual capital notes 2,624,700 2,650,000 Company-obligated mandatorily redeemable Preferred securities of subsidiary trusts holding solely junior subordinated debt securities 350,000 350,000 Stockholders' equity: Cumulative preferred stock, no par value 7,501,250 shares outstanding in 1999 and 1998 500,000 500,000 Common stock, $5 par value 150,000,000 shares authorized; 104,798,914 shares issued in 1999 and 108,087,878 in 1998 523,995 540,439 Surplus 118,037 122,083 Retained earnings 2,496,221 2,428,203 Accumulated other comprehensive loss, net of taxes (282,977) (101,318) Common stock in treasury, at cost 1,788,706 shares in 1999 and 54,970 in 1998 (87,069) (3,576) ------------ ------------ Total stockholders' equity 3,268,207 3,485,831 ------------ ------------ Total liabilities and stockholders' equity $ 51,179,653 $ 59,919,082 ============ ============
10 REPUBLIC NEW YORK CORPORATION CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE DATA)
Three Months Ended ------------------------------------------ June 30, March 31, June 30, 1999 1999 1998 --------- --------- --------- INTEREST INCOME: Interest and fees on loans $ 261,695 $ 248,193 $ 289,354 Interest on deposits with banks 32,663 42,268 77,785 Interest and dividends on investment securities: Taxable 343,185 345,990 386,210 Exempt from federal income taxes 17,994 18,515 20,030 Interest on trading account assets 18,250 16,923 25,380 Interest on federal funds sold and securities purchased under resale agreements 24,959 21,872 52,380 --------- --------- --------- Total interest income 698,746 693,761 851,139 --------- --------- --------- INTEREST EXPENSE: Interest on deposits 286,304 295,186 368,459 Interest on short-term borrowings 76,014 74,799 137,618 Interest on long-term debt 65,208 66,477 76,708 --------- --------- --------- Total interest expense 427,526 436,462 582,785 --------- --------- --------- NET INTEREST INCOME 271,220 257,299 268,354 Provision for credit losses 4,000 4,000 4,000 --------- --------- --------- Net interest income after provision for credit losses 267,220 253,299 264,354 --------- --------- --------- OTHER OPERATING INCOME: Trading revenue 37,425 72,303 43,463 Investment securities transactions, net 11,038 6,283 12,430 Revenue from loans sold or held for sale 239 (157) (161) Commission income 24,647 25,785 24,210 Equity in earnings of affiliate 41,887 30,516 36,780 Other income 90,062 19,751 27,594 --------- --------- --------- Total other operating income 205,298 154,481 144,316 --------- --------- --------- OTHER OPERATING EXPENSES: Salaries and employee benefits 157,554 145,545 133,818 Occupancy, net 17,810 18,850 18,115 Restructuring charge -- 97,000 -- Other expenses 96,309 91,454 91,453 --------- --------- --------- Total other operating expenses 271,673 352,849 243,386 --------- --------- --------- INCOME BEFORE INCOME TAXES 200,845 54,931 165,284 Income taxes 57,719 8,429 46,447 --------- --------- --------- NET INCOME $ 143,126 $ 46,502 $ 118,837 ========= ========= ========= NET INCOME APPLICABLE TO COMMON STOCK - DILUTED $ 136,669 $ 40,111 $ 111,852 ========= ========= ========= Net income per common share: Basic $ 1.33 $ 0.38 $ 1.06 Diluted 1.31 0.38 1.05 Average common shares outstanding: Basic 102,541 103,335 104,691 Diluted 104,086 105,041 106,652
11 REPUBLIC NEW YORK CORPORATION CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE DATA)
Six Months Ended June 30, --------------------------- 1999 1998 ---------- ---------- INTEREST INCOME: Interest and fees on loans $ 509,888 $ 548,894 Interest on deposits with banks 74,931 146,310 Interest and dividends on investment securities: Taxable 689,175 785,322 Exempt from federal income taxes 36,509 42,816 Interest on trading account assets 35,173 44,147 Interest on federal funds sold and securities purchased under resale agreements 46,831 91,697 ---------- ---------- Total interest income 1,392,507 1,659,186 ---------- ---------- INTEREST EXPENSE: Interest on deposits 581,490 749,258 Interest on short-term borrowings 150,813 228,740 Interest on long-term debt 131,685 152,552 ---------- ---------- Total interest expense 863,988 1,130,550 ---------- ---------- NET INTEREST INCOME 528,519 528,636 Provision for credit losses 8,000 8,000 ---------- ---------- Net interest income after provision for credit losses 520,519 520,636 ---------- ---------- OTHER OPERATING INCOME: Trading revenue 109,728 83,601 Investment securities transactions, net 17,321 3,949 Revenue from loans sold or held for sale 82 3,504 Commission income 50,432 48,168 Equity in earnings of affiliate 72,403 72,726 Other income 109,813 54,964 ---------- ---------- Total other operating income 359,779 266,912 ---------- ---------- OTHER OPERATING EXPENSES: Salaries and employee benefits 303,099 266,649 Occupancy, net 36,660 37,007 Restructuring charge 97,000 -- Other expenses 187,763 191,472 ---------- ---------- Total other operating expenses 624,522 495,128 ---------- ---------- INCOME BEFORE INCOME TAXES 255,776 292,420 Income taxes 66,148 56,109 ---------- ---------- NET INCOME $ 189,628 $ 236,311 ========== ========== NET INCOME APPLICABLE TO COMMON STOCK - DILUTED $ 176,780 $ 222,272 ========== ========== Net income per common share: Basic $ 1.71 $ 2.11 Diluted 1.69 2.08 Average common shares outstanding: Basic 102,929 104,795 Diluted 104,564 106,694
12 REPUBLIC NATIONAL BANK OF NEW YORK CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands)
June 30, -------------------------------- 1999 1998 ------------ ------------ ASSETS Cash and due from banks $ 841,534 $ 1,029,143 Interest-bearing deposits with banks 5,511,168 8,603,188 Precious metals 784,107 781,083 Securities held to maturity 5,277,866 7,604,532 Securities available for sale 15,234,866 14,968,911 ------------ ------------ Total investment securities 20,512,732 22,573,443 Trading account assets 2,678,291 3,971,014 Federal funds sold and securities purchased under resale agreements 1,495,985 2,222,481 Loans, net of unearned income 12,954,902 12,716,232 Allowance for credit losses (267,281) (299,159) Customers' liability on acceptances 43,194 71,386 Accounts receivable and accrued interest 920,912 1,192,608 Investment in affiliate 821,093 838,274 Premises and equipment 409,182 413,334 Other assets 797,468 636,172 ------------ ------------ Total assets $ 47,503,287 $ 54,749,199 ============ ============ LIABILITIES AND STOCKHOLDER'S EQUITY Noninterest-bearing deposits: In domestic offices $ 2,852,636 $ 2,574,534 In foreign offices 224,840 232,832 Interest-bearing deposits: In domestic offices 10,371,445 11,348,164 In foreign offices 18,891,053 20,108,507 ------------ ------------ Total deposits 32,339,974 34,264,037 Trading account liabilities 2,546,756 3,647,439 Short-term borrowings 6,072,717 9,270,099 Acceptances outstanding 43,274 71,888 Accounts payable and accrued expenses 857,993 1,234,573 Other liabilities 127,596 174,265 Long-term debt 1,349,120 1,773,639 Subordinated long-term debt with parent 950,000 950,000 Stockholder's equity: Common stock, $100 par value 4,800,000 shares authorized; 4,000,000 shares outstanding 400,000 400,000 Surplus 1,634,540 1,637,092 Retained earnings 1,416,553 1,414,482 Accumulated other comprehensive loss, net of taxes (235,236) (88,315) ------------ ------------ Total stockholder's equity 3,215,857 3,363,259 ------------ ------------ Total liabilities and stockholder's equity $ 47,503,287 $ 54,749,199 ============ ============
13 REPUBLIC NEW YORK CORPORATION AVERAGE BALANCES, NET INTEREST DIFFERENTIAL, AVERAGE RATES EARNED AND PAID (FULLY TAXABLE EQUIVALENT BASIS) (DOLLARS IN THOUSANDS)
QUARTER ENDED ------------------------------------------------------------------- JUNE 30, 1999 MARCH 31, 1999 ------------------------------------------------------------------- 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 $ 2,894,968 $ 32,663 4.53% $ 2,975,242 $ 42,268 5.76% Investment securities:(1) Taxable 20,996,437 343,185 6.56 21,515,126 345,990 6.52 Exempt from federal income taxes 1,330,929 24,105 7.26 1,333,174 24,837 7.56 ---------- ------- ---------- ------- Total investment securities 22,327,366 367,290 6.60 22,848,300 370,827 6.58 Trading account assets(2) 1,241,788 18,250 5.89 1,236,677 16,923 5.55 Federal funds sold and securities purchased under resale agreements 2,057,333 24,959 4.87 1,840,354 21,872 4.82 Loans, net of unearned income: Domestic offices 10,461,297 189,887 7.28 10,043,053 184,404 7.45 Foreign offices 3,755,721 71,808 7.67 3,548,183 63,789 7.29 ---------- ------- ---------- ------- Total loans, net of unearned income 14,217,018 261,695 7.38 13,591,236 248,193 7.41 ---------- ------- ---------- ------- Total interest-earning assets 42,738,473 $704,857 6.61% 42,491,809 $700,083 6.68% ======== ==== ======= ==== Cash and due from banks 918,170 945,447 Other assets 3,898,983 4,468,688 ----------- ----------- Total assets $47,555,626 $47,905,944 =========== =========== Interest-bearing funds: Consumer and other time deposits $ 9,982,356 $ 80,164 3.22% $10,100,760 $ 82,282 3.30% Certificates of deposit 654,344 6,564 4.02 768,005 8,297 4.38 Deposits in foreign offices 15,858,709 199,576 5.05 15,905,021 204,607 5.22 ---------- ------- ---------- ------- Total interest-bearing deposits 26,495,409 286,304 4.33 26,773,786 295,186 4.47 Trading account liabilities(2) 318,465 594 0.75 383,313 895 0.95 Short-term borrowings 6,596,960 75,420 4.59 6,405,131 73,904 4.68 Total long-term debt 4,345,990 65,208 6.02 4,463,837 66,477 6.04 ---------- ------- ---------- ------- Total interest-bearing funds 37,756,824 $427,526 4.54% 38,026,067 $436,462 4.65% ======== ==== ======== ==== Noninterest-bearing deposits: In domestic offices 2,918,842 2,843,470 In foreign offices 204,607 229,898 Other liabilities 3,388,111 3,732,909 Stockholders' equity: Preferred stock 500,000 500,000 Common stockholders' equity 2,787,242 2,573,600 ----------- ----------- Total stockholders' equity 3,287,242 3,073,600 ----------- ----------- Total liabilities and stockholders' equity $47,555,626 $47,905,944 =========== =========== Interest income/earning assets $704,857 6.61% $700,083 6.68% Interest expense/earning assets 427,526 4.01 436,462 4.16 -------- ---- -------- ---- Net interest differential $277,331 2.60% $263,621 2.52% ======== ==== ======== ====
QUARTER ENDED ---------------------------------- JUNE 30, 1998 ---------------------------------- AVERAGE INTEREST RATES AVERAGE INCOME/ EARNED/ BALANCE EXPENSE PAID ---------------------------------- Interest-earning assets: Interest-bearing deposits with banks $ 4,900,070 $ 77,785 6.37% Investment securities:(1) Taxable 23,061,629 386,210 6.72 Exempt from federal income taxes 1,359,317 26,791 7.91 ---------- ------- Total investment securities 24,420,946 413,001 6.78 Trading account assets(2) 1,256,439 25,380 8.10 Federal funds sold and securities purchased under resale agreements 3,789,488 52,380 5.54 Loans, net of unearned income: Domestic offices 9,683,560 200,490 8.30 Foreign offices 3,989,617 88,864 8.93 ---------- ------- Total loans, net of unearned income 13,673,177 289,354 8.49 ---------- ------- Total interest-earning assets 48,040,120 $857,900 7.16% ======== ==== Cash and due from banks 896,245 Other assets 7,493,606 ----------- Total assets $56,429,971 =========== Interest-bearing funds: Consumer and other time deposits $10,507,775 $ 99,927 3.81% Certificates of deposit 1,281,931 16,293 5.10 Deposits in foreign offices 17,211,301 252,239 5.88 ---------- ------- Total interest-bearing deposits 29,001,007 368,459 5.10 Trading account liabilities(2) 408,373 5,918 5.81 Short-term borrowings 10,114,149 131,700 5.22 Total long-term debt 4,764,732 76,708 6.46 ---------- ------- ---- Total interest-bearing funds 44,288,261 $582,785 5.28% ======== ==== Noninterest-bearing deposits: In domestic offices 2,613,450 In foreign offices 246,061 Other liabilities 5,745,263 Stockholders' equity: Preferred stock 500,000 Common stockholders' equity 3,036,936 -------------- Total stockholders' equity 3,536,936 -------------- Total liabilities and stockholders' equity $ 56,429,971 ============== Interest income/earning assets $857,900 7.16% Interest expense/earning assets 582,785 4.86 -------- ---- Net interest differential $275,115 2.30% ======== ====
(1) Based on amortized or historic cost with the mark-to-market adjustment on securities available for sale included in other assets. (2) Excludes noninterest-bearing balances, which are included in other assets or other liabilities, respectively. 14 REPUBLIC NEW YORK CORPORATION AVERAGE BALANCES, NET INTEREST DIFFERENTIAL, AVERAGE RATES EARNED AND PAID (FULLY TAXABLE EQUIVALENT BASIS) (DOLLARS IN THOUSANDS)
6 MONTHS ENDED JUNE 30, -------------------------------------------------------------------------------- 1999 1998 -------------------------------------- ------------------------------------ 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 $2,934,883 $74,931 5.15% $4,552,310 $146,310 6.48% Investment securities:(1) Taxable 21,254,349 689,175 6.54 23,217,833 785,322 6.82 Exempt from federal income taxes 1,332,045 48,942 7.41 1,457,550 57,522 7.96 ---------- --------- ----------- -------- Total investment securities 22,586,394 738,117 6.59 24,675,383 842,844 6.89 Trading account assets(2) 1,239,247 35,173 5.72 1,133,182 44,147 7.86 Federal funds sold and securities purchased under resale agreements 1,949,443 46,831 4.84 3,328,292 91,697 5.56 Loans, net of unearned income: Domestic offices 10,253,328 374,291 7.36 9,286,899 383,880 8.34 Foreign offices 3,652,525 135,597 7.49 3,975,497 165,014 8.37 ----------- --------- ----------- --------- Total loans, net of unearned income 13,905,853 509,888 7.39 13,262,396 548,894 8.35 ----------- --------- ----------- ---------- Total interest-earning assets 42,615,820 $1,404,940 6.65% 46,951,563 $1,673,892 7.19% ========== ==== ========== ==== Cash and due from banks 931,733 847,726 Other assets 4,182,264 7,883,968 ----------- ----------- Total assets $47,729,817 $55,683,257 =========== =========== Interest-bearing funds: Consumer and other time deposits $10,041,231 $162,446 3.26% $10,532,463 $203,623 3.90% Certificates of deposit 710,861 14,861 4.22 1,410,929 35,926 5.13 Deposits in foreign offices 15,881,737 404,183 5.13 17,546,361 509,709 5.86 ----------- -------- ----------- --------- Total interest-bearing deposits 26,633,829 581,490 4.40 29,489,753 749,258 5.12 Trading account liabilities(2) 350,710 1,489 0.86 394,711 8,850 4.52 Short-term borrowings 6,501,575 149,324 4.63 8,469,768 219,890 5.24 Total long-term debt 4,404,588 131,685 6.03 4,753,623 152,552 6.47 ----------- -------- ----------- ---------- Total interest-bearing funds 37,890,702 $863,988 4.60% 43,107,855 $1,130,550 5.29% ======== ==== ========== ==== Noninterest-bearing deposits: In domestic offices 2,881,364 2,602,652 In foreign offices 217,183 257,654 Other liabilities 3,559,557 6,219,883 Stockholders' equity: Preferred stock 500,000 500,000 Common stockholders' equity 2,681,011 2,995,213 ----------- ----------- Total stockholders' equity 3,181,011 3,495,213 ----------- ----------- Total liabilities and stockholders' equity $47,729,817 $55,683,257 ============ =========== Interest income/earning assets $1,404,940 6.65% $ 1,673,892 7.19% Interest expense/earning assets 863,988 4.09 1,130,550 4.86 ----------- ---- ----------- ---- Net interest differential $540,952 2.56% $ 543,342 2.33% =========== ==== =========== ====
(1) Based on amortized or historic cost with the mark-to-market adjustment on securities available for sale included in other assets. (2) Excludes noninterest-bearing balances, which are included in other assets or other liabilities, respectively. -----END PRIVACY-ENHANCED MESSAGE-----