-----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, KwsrnRqa+ewJJ/HonhOahG3/r5Aj/Q1ypmNHJcNxa1IJacJy4lMeWkwH0uQWeiK3 DJAgb3z5L5Pg8DNPJj3yWA== 0000009749-98-000009.txt : 19980123 0000009749-98-000009.hdr.sgml : 19980123 ACCESSION NUMBER: 0000009749-98-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980122 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980122 SROS: AMEX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKERS TRUST NEW YORK CORP CENTRAL INDEX KEY: 0000009749 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 136180473 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-05920 FILM NUMBER: 98510973 BUSINESS ADDRESS: STREET 1: 130 LIBERTY STREET CITY: NEW YORK STATE: NY ZIP: 10006 BUSINESS PHONE: 2122502500 MAIL ADDRESS: STREET 1: 130 LIBERTY STREET CITY: NEW YORK STATE: NY ZIP: 10006 FORMER COMPANY: FORMER CONFORMED NAME: BT NEW YORK CORP DATE OF NAME CHANGE: 19671107 8-K 1 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 22, 1998 BANKERS TRUST NEW YORK 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 Item 5. Other Events A) On January 22, 1998, Bankers Trust New York Corporation (the "Registrant") released financial information with respect to the quarter ended December 31, 1997. 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 22, 1998, is described below and is incorporated herein by reference. 1. Review of certain financial information. 2. The unaudited consolidated financial position of Bankers Trust New York Corporation and its subsidiaries at December 31, 1997 and September 30, 1997 and the audited consolidated financial position at December 31, 1996 and its unaudited consolidated results of operations for each of the three-month and twelve-month periods ended December 31, 1997, and December 31, 1996, and the three-month period ended September 30, 1997. 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, 1997, September 30, 1997 and December 31, 1996 and its consolidated results of operations for the three-month and twelve- month periods ended December 31, 1997 and December 31, 1996 and the three-month period ended September 30, 1997 have been made. B) The following schedules were distributed at the analysts meeting held by the Corporation on January 22, 1998: - Preliminary Cross Border Outstandings by Region at December 31, 1997 is contained in Exhibit 99.2 - Preliminary Cross Border Outstandings by Country at December 31, 1997 is contained in Exhibit 99.2 - Preliminary Risk-Adjusted Credit Capital & Credit Exposure at December 31, 1997 is contained in Exhibit 99.2 Item 7. Financial Statements and Exhibits (c) Exhibits (99.1) Earnings Press Release of the Registrant dated January 22, 1998. (99.2) Preliminary Cross Border Outstandings by Region at December 31, 1997 (99.2) Preliminary Cross Border Outstandings by Country at December 31, 1997 (99.2) Preliminary Risk-Adjusted Credit Capital and Credit Exposure at December 31, 1997 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 NEW YORK CORPORATION By /s/ RONALD HASSEN RONALD HASSEN Senior Vice President (Principal Accounting Officer) January 22, 1998 BANKERS TRUST NEW YORK CORPORATION FORM 8-K DATED JANUARY 22, 1998 EXHIBIT INDEX Exhibit Number Description of Exhibit (99.1) Earnings Press Release of the Registrant dated January 22, 1998. (99.2) Preliminary Cross Border Outstandings by Region at December 31, 1997 (99.2) Preliminary Cross Border Outstandings by Country at December 31, 1997 (99.2) Preliminary Risk-Adjusted Credit Capital and Credit Exposure at December 31, 1997 EX-99.1 2 THURSDAY, JANUARY 22, 1998 BANKERS TRUST EARNS $7.66 PER SHARE IN 1997, UP 13% FROM 1996 FOURTH QUARTER EARNINGS PER SHARE OF $1.82 INCREASE 14% New York, January 22, 1998 -- Bankers Trust New York Corporation (BT) today reported that diluted earnings per share for the full year were $7.66, up 13% from the $6.76 earned during 1996. Net income for 1997 was $866 million, compared with $766 million of earnings in 1996. Return on common equity for the year was 15.6%. BT's diluted earnings per share in the fourth quarter of 1997 were $1.82, 14% above the $1.59 per share earned in the same period last year. Net income in the fourth quarter of 1997 was $207 million, compared with $184 million in the 1996 fourth quarter and $246 million in the third quarter of 1997. Return on common equity in the quarter was 14.8%. "Bankers Trust recorded solid gains in revenue growth and profitability in 1997," said Frank Newman, chairman of the board of directors and chief executive officer of Bankers Trust. "Revenues for the year were at the Corporation"s highest level in history. The advances in 1997 were achieved despite volatile market conditions in the fourth quarter, particularly in emerging markets. While our fourth quarter results trailed those of the strong third quarter of 1997, they exceeded year-earlier levels." Mr. Newman added: " The increase in corporate finance fees to a record $324 million in the fourth quarter underscored the continued strong momentum of our merger with Alex. Brown and our ability to provide clients with the full range of financing alternatives. This performance provides a strong platform for the extension of Bankers Trust's global business with the recently announced agreement to acquire the European cash equities activities of NatWest Markets, the leading U.K. and European research house." For the current quarter, total revenues of $1.519 billion were up $164 million from fourth quarter 1996 revenues of $1.355 billion. Total noninterest expenses of $1.233 billion for the fourth quarter of 1997 increased $150 million from the fourth quarter of 1996. The current quarter included an after-tax gain of $41 million on the sale of the Corporation's defined contribution recordkeeping and participant services business. Also included in the fourth quarter of 1997 were $27 million in after-tax charges primarily related to expenses associated with relocation of certain Asian operations and to legal claims. For the full year, total revenues of $6.220 billion were up $1.051 billion, or 20%, from 1996 revenues of $5.169 billion. Revenues increased in most of the Firm's business units. Total noninterest expenses for 1997 increased $943 million, or 23%, from 1996. This increase was primarily due to higher incentive compensation and employee benefits related to the improved financial performance. Also included in noninterest expenses for 1997 were restructuring charges of $57 million associated with the merger with Alex. Brown, such as severance, lease terminations and direct costs of completing the merger, and other integration costs of $42 million. At December 31, 1997, total cash basis loans were $240 million, down from $298 million at September 30, 1997 and $452 million at December 31, 1996. Other nonperforming assets at December 31, 1997 were $38 million, up from $5 million at September 30, 1997 and $10 million at December 31, 1996. The increase in the current quarter primarily resulted from swaps in Asia. 2 At December 31, 1997, the total allowance for credit losses was $997 million as compared to $972 million at September 30, 1997. During the fourth quarter of 1997, the Corporation recognized charge-offs of $41 million and recoveries of $46 million. Included in the fourth quarter of 1997 charge-offs were $21 million related to Asian counterparties. Also, the Corporation recorded a $20 million provision for credit losses compared to $10 million in the third quarter of 1997 and none in the fourth quarter of 1996. 3 ORGANIZATIONAL HIGHLIGHTS* Total Non- Pretax Net Fourth Quarter 1997 Total Interest Income/ Income/ (in millions) Revenue Expenses (Loss) (Loss) Investment Banking $ 508 $ 302 $206 $147 Risk Management Services 19 76 (57) (41) Trading & Sales 152 67 85 61 Private Client Services Group 184 157 27 19 Global Institutional Services 336 240 96 69 Australia/New Zealand 141 104 37 26 Asia (16) 23 (39) (27) Latin America 132 124 8 4 Corporate/Other 63 140 (77) (51) Total $1,519 $1,233 $286 $207 Total Non- Pretax Net Third Quarter 1997 Total Interest Income/ Income/ (in millions) Revenue Expenses (Loss) (Loss) Investment Banking $ 625 $335 $290 $204 Risk Management Services 117 101 16 11 Trading & Sales 128 86 42 30 Private Client Services Group 174 145 29 20 Global Institutional Services 241 211 30 21 Australia/New Zealand 136 113 23 17 Asia 8 34 (26) (19) Latin America 203 144 59 42 Corporate/Other 138 250 (112) (80) Total $1,770 $1,419 $351 $246 Total Non- Pretax Net Fourth Quarter 1996 Total Interest Income/ Income/ (in millions) Revenue Expenses (Loss) (Loss) Investment Banking $ 374 $251 $123 $ 83 Risk Management Services 108 103 5 3 Trading & Sales 132 76 56 38 Private Client Services Group 156 137 19 13 Global Institutional Services 220 200 20 14 Australia/New Zealand 140 91 49 33 Asia 35 28 7 5 Latin America 102 90 12 8 Corporate/Other 88 107 (19) (13) Total $1,355 $1,083 $272 $184 * Organizational Unit business results are determined based on the Corporation's internal management accounting process, which allocates revenue and expenses among the organizational units. Because the Corporation's business is diverse in nature and its operations are integrated, it is impractical to segregate respective contributions of the organizational units with precision. As a result, estimates and judgments have been made to apportion revenue and expense items. In addition, certain revenue and expenses have been segregated and reported in Corporate/Other because, in the opinion of management, they could not be reasonably allocated or because their contributions to a particular organizational unit would be distortive. In order to provide comparability from one period to the next, the Corporation will generally restate this analysis to conform with material changes in the allocation process and/or significant changes in organizational structure. 4 Organizational Unit Results The Investment Banking business contributed net income of $147 million in the fourth quarter of 1997, up $64 million from a year ago and down $57 million from the previous quarter. The increase from the prior year period reflected higher corporate finance fees and higher revenues from private equity investments. The decline from the prior quarter was mainly due to mark-to-market losses on fixed income securities. Risk Management Services incurred a net loss of $41 million in the fourth quarter of 1997 compared to net income of $3 million in the fourth quarter of 1996 and net income of $11 million in the previous quarter. The loss resulted primarily from less favorable trading results, including losses from equity derivatives and Asian activities as compared to the prior year period and previous quarter. Trading & Sales contributed $61 million of net income in the fourth quarter of 1997, up $23 million from the 1996 fourth quarter and up $31 million from the previous quarter. The current quarter reflected higher revenue from foreign exchange activities. The Corporation's Private Client Services Group business reported net income of $19 million for the current quarter, up $6 million from the 1996 comparable period and down $1 million from the prior quarter. The current quarter included improved revenues from fiduciary and funds management and higher fees for brokerage services as compared to the prior year period. Global Institutional Services contributed $69 million of net income in the fourth quarter of 1997, up $55 million from the 1996 fourth quarter and up $48 million from the previous quarter. The current quarter included the $41 million after-tax gain on the sale of the Corporation's defined contribution recordkeeping and participant services business. The current quarter also reflected improved results from investment management and securities lending activities as compared to the fourth quarter of 1996. Net income of the Australia/NZ business was $26 million in the fourth quarter of 1997, down $7 million from the fourth quarter of 1996 and up $9 million from the previous quarter. The decline in net income from the prior year period was mainly attributable to an increase in personnel-related costs as a result of higher staff levels offset partly by higher revenues from corporate finance activities. The current quarter reflected improved results from corporate finance activities as compared to the third quarter of 1997. At December 31, 1997, assets under management in Australia/NZ's investment management business were approximately $41 billion, compared to $45 billion and $37 billion at September 30, 1997 and December 31, 1996 respectively. The decrease in assets under management as compared to the prior quarter was due to a decline in foreign currency rates. Asia net loss was $27 million in the fourth quarter of 1997, compared to net income of $5 million in the fourth quarter of 1996 and a net loss of $19 million in the third quarter of 1997. The current quarter included mark-to-market losses on fixed income securities and swaps with Asian counterparties resulting from the market turmoil and widening credit spreads in Asia. Latin America net income was $4 million in the fourth quarter of 1997, down $4 million from the fourth quarter of 1996 and down $38 million from the third quarter of 1997. The current quarter included lower trading revenues. The 5 prior quarter included an after-tax gain of $20 million resulting from the completion of the final stage in the sale of 50% of the Corporation's stake in a Chilean insurance company. Corporate/Other net loss was $51 million in the fourth quarter of 1997, compared with a net loss of $13 million in the fourth quarter of 1996 and a net loss of $80 million in the third quarter of 1997. The current quarter included charges primarily related to expenses associated with relocation of certain Asian operations and to legal claims. The current quarter also included a $20 million provision for credit losses compared to $10 million in the third quarter of 1997 and none in the fourth quarter of 1996. During the third quarter, the Corporation recognized $57 million in pre-tax restructuring charges and $42 million in other integration costs, offset partly by the pre-tax gain of $73 million on the sale of 280 Park Avenue, a midtown Manhattan office building. The prior year period included reserves related to the transaction processing business. QUARTERLY FINANCIAL COMPARISONS Fourth Quarter 1997 Versus Fourth Quarter 1996 Net income of $207 million for the fourth quarter of 1997 was up 13% from the $184 million earned in the fourth quarter of 1996. Fourth quarter 1997 combined trading revenue and trading-related net interest revenue of $218 million decreased $135 million as compared to the fourth quarter of 1996. Page 11 shows combined trading results by organizational unit. All other noninterest revenue of $1.094 billion was up $294 million from the prior year period. Fiduciary and funds management revenue was $284 million in the fourth quarter of 1997, up $51 million from the prior year period. Client processing services, funds management and global private banking commissions contributed to this increase. Corporate finance fees of $324 million increased 20% from the $271 million earned in the fourth quarter of 1996, primarily due to higher merger and acquisition fees, higher fees for arranging bond and equity financings and higher financial advisory fees. Other fees and commissions of $167 million increased $30 million from the prior year quarter primarily resulting from increased fees for brokerage services. Other noninterest revenue totaled $82 million in the current quarter, compared to $34 million in the fourth quarter of 1996. The current quarter included a gain on the sale of the Corporation's defined contribution recordkeeping and participant services business. Salaries and commissions expense increased $19 million, or 6%, principally due to a 5% increase in the average number of employees and annual pay increases. Incentive compensation and employee benefits, the largest component of noninterest expenses, increased $46 million due to higher profitability and the increase in the average number of employees. 6 Fourth Quarter 1997 versus Third Quarter 1997 Net income of $207 million for the fourth quarter of 1997 was down 16% from the $246 million earned in the third quarter of 1997. The decrease in net income was primarily due to a $315 million decline in trading revenue offset partly by a $41 million increase in trading-related net interest revenue and a $186 million decrease in total noninterest expenses. Fourth quarter 1997 combined trading revenue and trading-related net interest revenue of $218 million decreased $274 million from the third quarter of 1997. Corporate finance fees of $324 million increased $19 million from the prior quarter. The increase was primarily due to higher financial advisory fees, higher merger and acquisition fees and higher fees for arranging bond and equity financings, offset partly by a decrease in loan syndication fees. Other noninterest revenue totaled $82 million in the current quarter, compared to $171 million in the prior quarter. The current quarter included a gain on the sale of the Corporation's defined contribution recordkeeping and participant services business. The third quarter included a gain on the sale of 280 Park Avenue and the remaining gain on the sale of 50% of the Corporation's stake in a Chilean insurance company. Total noninterest expenses of $1.233 billion decreased by $186 million, or 13%, from the third quarter of 1997. Incentive compensation and employee benefits, the largest component of noninterest expenses, decreased $179 million due to lower revenues. Total noninterest expenses in the third quarter of 1997 included restructuring charges associated with the merger of Alex. Brown, such as severance, lease terminations and direct costs of completing the merger, and other integration costs. 7 CAPITAL In March 1997, the Corporation became the first banking institution to adopt the new Market Risk Amendment to the risk- based capital guidelines issued by the Federal Reserve and the Bank for International Settlements (BIS). The amendment changed the calculation of the risk-weighted assets for trading accounts by incorporating the use of internal models to measure market risks. In addition, the amendment required that the capital and risk-adjusted assets of the Corporation's Section 20 subsidiary, BT Alex. Brown Incorporated, no longer be excluded when calculating the risk-based capital ratios at the holding company level. All banking institutions with significant trading activity must adopt this Amendment by January 1, 1998. During 1997, early adoption was permissible with prior approval from the institution's primary federal regulator. As calculated under these new rules, the Corporation estimates that its ratios of Tier 1 Capital and Total Capital to risk- weighted assets were approximately 8.3% and 14.2%, respectively, as of December 31, 1997. The remainder of this release contains the following tables: Page 1. BTNY Consolidated Quarterly Statement of Income 9 2. BTNY Consolidated Statement of Income 10 3. Combined Trading Revenue and Trading-Related Net Interest Revenue 11 4. Net Interest Revenue 11 5. BTNY Consolidated Balance Sheet 12 6. Stock and Capital Data 13 7. Nonperforming Assets and Allowance for Credit Losses 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). 8 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED QUARTERLY STATEMENT OF INCOME (in millions, except per share data) (unaudited) Fourth Third Fourth Quarter Quarter Quarter 1996 1997 1997 NET INTEREST REVENUE Interest revenue $1,686 $1,789 $2,085 Interest expense 1,399 1,474 1,712 Net interest revenue 287 315 373 Provision for credit losses - 10 20 Net interest revenue after provision for credit losses 287 305 353 NONINTEREST REVENUE Trading* 268 387 72 Fiduciary & funds management 233 277 284 Corporate finance fees 271 305 324 Other fees & commissions 137 158 167 Net revenue from equity investment transactions 48 73 95 Securities available for sale gains 24 18 58 Insurance premiums 53 76 84 Other 34 171 82 Total noninterest revenue 1,068 1,465 1,166 Total revenue 1,355 1,770 1,519 NONINTEREST EXPENSES Salaries and commissions 313 333 332 Incentive compensation & employee benefits 318 543 364 Agency & other professional service fees 85 105 95 Communication & data services 60 58 58 Occupancy, net 46 45 49 Furniture & equipment 51 55 61 Travel & entertainment 36 36 41 Provision for policyholder benefits 64 90 102 Other 110 97 131 Restructuring charges - 57 - Total noninterest expenses 1,083 1,419 1,233 Income before income taxes 272 351 286 Income taxes 88 105 79 NET INCOME $ 184 $ 246 $ 207 NET INCOME APPLICABLE TO COMMON STOCK** $ 170 $ 235 $ 195 Cash dividends declared per common share $1.00 $1.00 $1.00 EARNINGS PER COMMON SHARE: BASIC $1.69 $2.33 $1.95 DILUTED $1.59 $2.19 $1.82 * The Corporation accounts for revenues from a wide range of business activities as "trading". See table on page 11. ** Amounts shown are used to calculate basic earnings per common share. Certain prior period amounts have been reclassified to conform to the current presentation. 9 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (in millions, except per share data) (unaudited) YEAR ENDED DECEMBER 31, 1996 1997 NET INTEREST REVENUE Interest revenue $6,508 $7,285 Interest expense 5,451 5,926 Net interest revenue 1,057 1,359 Provision for credit losses 5 30 Net interest revenue after provision for credit losses 1,052 1,329 NONINTEREST REVENUE Trading* 1,014 1,085 Fiduciary & funds management 876 1,059 Corporate finance fees 922 1,113 Other fees & commissions 534 606 Net revenue from equity investment transactions 230 224 Securities available for sale gains 75 158 Insurance premiums 230 287 Other 236 359 Total noninterest revenue 4,117 4,891 Total revenue 5,169 6,220 NONINTEREST EXPENSES Salaries and commissions 1,154 1,273 Incentive compensation & employee benefits 1,216 1,726 Agency & other professional service fees 321 391 Communication & data services 237 231 Occupancy, net 174 181 Furniture & equipment 186 224 Travel & entertainment 113 142 Provision for policyholder benefits 280 333 Other 357 423 Restructuring charges - 57 Total noninterest expenses 4,038 4,981 Income before income taxes 1,131 1,239 Income taxes 365 373 NET INCOME $ 766 $ 866 NET INCOME APPLICABLE TO COMMON STOCK** $ 715 $ 817 Cash dividends declared per common share $4.00 $4.00 EARNINGS PER COMMON SHARE: BASIC $7.12 $8.15 DILUTED $6.76 $7.66 * The Corporation accounts for revenues from a wide range of business activities as "trading". See quarterly information on page 11. ** Amounts shown are used to calculate basic earnings per common share. Certain prior period amounts have been reclassified to conform to the current presentation. 10 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) 1996 1997 1997 Trading Revenue $268 $387 $ 72 Trading-Related Net Interest Revenue (Estimate) 85 105 146 Total Trading Revenue & Trading-Related NIR $353 $492 $218 By Organizational Unit (in millions) Investment Banking $ 56 $137 $ 28 Risk Management Services 114 112 7 Trading & Sales 114 103 122 Private Client Services Group 1 6 7 Global Institutional Services 2 1 4 Australia/New Zealand 34 30 33 Asia 15 54 (13) Latin America 24 25 13 Corporate/Other (7) 24 17 Total Trading Revenue & Trading-Related NIR $353 $492 $218 Note: The Corporation accounts for revenues from a wide range of business activities as "trading". Investment Banking produces trading revenues in secondary market activities with clients, primarily in sectors where the Firm also serves as underwriter. A small portion of trading revenues arise from private equity investments that are accounted for on a mark-to-market basis. Risk Management Services generates trading revenues primarily from new derivative transactions with clients and in managing the risks the Corporation assumes on such transactions. Trading & Sales produces trading revenues through proprietary position- taking, including arbitrage, as well as market making and other client activities. Australia/New Zealand, Asia and Latin America produce trading revenues from all the above business activities. Corporate/Other includes various transactions which, for management accounting purposes, are not recorded in Organizational Units. NET INTEREST REVENUE Fourth Third Fourth Quarter Quarter Quarter ($ in millions) 1996 1997 1997 Nontrading-related net interest revenue(Estimate) $202 $210 $227 Trading-related net interest revenue (Estimate) 85 105 146 Net interest revenue $287 $315 $373 Average rates (fully taxable basis) Yield on interest-earning assets 6.72% 6.74% 7.45% Cost of interest-bearing liabilities 5.93% 5.72% 6.33% Interest rate spread .79% 1.02% 1.12% Net interest margin 1.16% 1.21% 1.35% Average balances (billions) Loans $15.3 $19.0 $20.4 Total interest-earning assets $100.0 $105.7 $111.4 Total assets $126.8 $139.8 $147.9 Total interest-bearing liabilities $93.9 $102.2 $107.2 11 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in millions) December 31 September 30 December 31 1996 1997* 1997* ASSETS Cash and due from banks $ 1,568 $ 1,625 $ 2,188 Interest-bearing deposits in banks 2,210 2,522 4,272 Federal funds sold 1,684 2,241 1,382 Sec. purch. under resale agreements 18,002 24,902 19,163 Securities borrowed 17,005 16,138 16,751 Trading assets: Government securities 16,849 11,650 11,397 Corporate debt securities 8,033 9,362 8,128 Equity securities 6,089 8,010 7,914 Swaps, options & other derivatives*** 11,220 13,520 17,673 Other trading assets 6,748 9,833 11,460 Total trading assets 48,939 52,375 56,572 Securities available for sale 7,920 7,577 8,081 Loans, net*** 15,107 20,544 19,106 Customer receivables 1,529 1,711 1,547 Accounts receivable & accrued interest 3,032 3,977 4,785 Other assets 5,547 6,275 6,255 Total $122,543 $139,887 $140,102 LIABILITIES Noninterest-bearing deposits Domestic offices $ 2,600 $ 2,134 $ 2,776 Foreign offices 1,013 1,294 1,952 Interest-bearing deposits Domestic offices 9,928 20,490 22,353 Foreign offices 16,774 22,161 15,749 Total deposits 30,315 46,079 42,830 Trading liabilities: Securities sold, not yet purchased Government securities 7,668 6,724 4,389 Equity securities 4,174 5,445 5,273 Other trading liabilities 334 407 519 Swaps, options & other derivatives 11,585 13,517 17,065 Total trading liabilities 23,761 26,093 27,246 Securities loaned and securities sold under repurchase agreements 23,454 20,158 17,896 Other short-term borrowings 19,409 19,329 19,683 Accounts payable and accrued expenses 4,792 6,255 6,536 Other liabilities*** 2,646 3,798 4,250 Long-term debt not included in risk-based capital 8,732 7,655 11,169 Long-term debt included in risk-based capital 2,576 2,918 3,312 Trust preferred capital securities** 730 1,471 1,472 Total liabilities 116,415 133,756 134,394 PREFERRED STOCK OF SUBSIDIARY 250 - - STOCKHOLDERS' EQUITY Preferred stock 810 703 658 Common stock 104 105 105 Capital surplus 1,437 1,541 1,563 Retained earnings 3,988 4,176 4,202 Common stock in treasury, at cost (372) (545) (889) Other stockholders' equity (89) 151 69 Total stockholders' equity 5,878 6,131 5,708 Total $122,543 $139,887 $140,102 * Unaudited ** Mandatorily redeemable capital securities of subsidiary trusts holding solely junior subordinated deferrable interest debentures included in risk- based capital *** See table on page 14 for allocation of the allowance for credit losses. Certain prior period amounts have been reclassified to conform to the current presentation. 12 STOCK AND CAPITAL DATA Fourth Third Fourth Quarter Quarter Quarter 1996 1997 1997 FOR THE QUARTER Return on Average Common Stockholders' Equity 13.2% 17.4% 14.8% Return on Average Total Assets .58% .70% .56% PER COMMON SHARE Earnings: Basic $1.69 $2.33 $1.95 Diluted $1.59 $2.19 $1.82 Cash Dividends Declared $1.00 $1.00 $1.00 Market Price, End of Period $86.25 $122.375 $112.4375 Book Value, End of Period $49.21 $51.65 $49.06 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 103,625 105,362 105,379 Common stock in treasury, at period end 4,435 5,757 8,422 Average Common and Common Equivalent Shares Outstanding Basic 100,751 100,773 99,884 Diluted 107,425 107,449 107,285 CAPITAL RATIOS, END OF PERIOD Common Stockholders' Equity to Total Assets 4.1% 3.9% 3.6% Total Stockholders' Equity to Total Assets 4.8% 4.4% 4.1% Bankers Trust New York Corporation: Risk-Based Capital Ratios (1) Tier 1 Capital 9.3% 8.4% 8.3% Total Capital 13.8% 13.6% 14.2% Leverage Ratio (1) 5.9% 4.9% 4.4% Bankers Trust Company: Risk-Based Capital Ratios (1) Tier 1 Capital 9.3% 8.7% 8.8% Total Capital 12.9% 12.1% 12.1% Leverage Ratio (1) 5.3% 5.3% 5.3% (1) Regulatory capital ratios at December 31, 1997 are preliminary. Regulatory capital ratios at September 30, 1997 and December 31, 1997 reflect the adoption of the Market Risk Amendment to the risk-based capital guidelines. This Amendment changes the calculation of risk-weighted assets for trading accounts. In addition, it requires that the capital and risk-adjusted assets of the Corporation's Section 20 subsidiary, BT Alex. Brown Incorporated, be included when calculating the risk-based capital ratios for Bankers Trust New York Corporation. As a result of this adoption, the Corporation's leverage ratios also reflect the capital and average assets of BT Alex. Brown Incorporated. Previously, such assets and capital were excluded. Regulatory capital ratios at December 31, 1996 have not been restated for the adoption of this Amendment. 13 NONPERFORMING ASSETS AND ALLOWANCE FOR CREDIT LOSSES December 31 September 30 December 31 1996 1997 1997 Nonperforming assets (in millions) Cash basis loans Secured by real estate $272 $140 $117 Real estate related 25 25 15 Highly leveraged 117 56 41 Other 38 77 67 Total cash basis loans $452 $298 $240 Other nonperforming assets $10 $5 $38 Renegotiated loans Secured by real estate $37 $37 $25 Total renegotiated loans $37 $37 $25 Other real estate $213 $190 $194 Total allowance for credit losses (in millions) Balance, beginning of period $967 $973 $972 Net charge-offs (recoveries) Charge-offs 21 30 41 Recoveries 27 19 46 Total net charge-offs (recoveries)* (6) 11 (5) Provision for credit losses - 10 20 Balance, end of period (a) $973 $972 $997 (a) Allocation**: Loans $773 $759 $699 Trading assets 190 200 285 Other liabilities 10 13 13 Balance, end of period $973 $972 $997 * Components of Net Charge-offs (Recoveries): Secured by real estate $14 $(1) $ 5 Real estate related - - (2) Highly leveraged (7) 7 (11) Other (13) 5 3 Total $(6) $11 $(5) ** The Corporation believes that the total allowance for credit losses is available for credit losses in its entire portfolio, which is comprised of loans, credit-related commitments, derivatives and other financial instruments. Due to a multitude of complex and changing factors that are collectively weighed in determining the adequacy of the allowance for credit losses, management expects that the allocation of the total allowance for credit losses may be adjusted as risk factors change. 14 BANKERS TRUST NEW YORK CORPORATION 130 LIBERTY STREET NEW YORK, NEW YORK 10006 Ronald Hassen Senior Vice President (Principal Accounting Officer) January 22, 1998 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: Accompanying this letter is Bankers Trust New York Corporation's report on Form 8-K dated January 22, 1998 (the "Form 8-K"). The Form 8-K is being filed electronically through the EDGAR System. If there are any questions or comments in connection with the enclosed filing, please contact the undersigned at 212-250- 4881. Very truly yours, BANKERS TRUST NEW YORK CORPORATION By: RONALD HASSEN RONALD HASSEN Senior Vice President (Principal Accounting Officer) EX-99.2 3 Cross Border Outstandings by Region 1 December 31, 1997 ($ billions) Preliminary
FX/ Total % of Off B/S Deriva- Trading Outstand- Total Commit- Region Loans tives Assets Other2 ings Assets ments3 Total West. Europe $1.8 $6.3 $5.7 $6.4 $20.2 14.4% $0.7 $20.9 Japan 0.0 2.8 1.5 2.6 7.0 5.0 0.0 7.0 Latin America 1.3 0.1 3.8 0.9 6.2 4.4 0.3 6.5 Asia (ex. Japan) 0.6 2.6 1.2 1.3 5.7 4.0 0.2 5.8 Australia/NZ 0.1 2.3 0.5 0.4 3.3 2.3 0.0 3.3 Canada 0.3 0.7 0.7 0.4 2.2 1.5 0.1 2.2 Emerging Europe 0.4 0.2 1.1 0.1 1.7 1.2 0.3 2.0 Other 0.1 0.2 0.5 0.1 0.8 0.6 0.1 1.0 Total Cross Border $4.7 $15.2 $15.0 $12.2 $47.0 33.5% $1.7 $48.7 1 Based on FFIEC instructions. Shown by country of ultimate risk. Excludes local country claims on local residents. 2 Other includes acceptances, resales, money market instruments and securities available for sale. 3 Commitments include L/C's and guarantees.
Risk-adjusted Credit Capital & Credit Exposure December 31, 1997 (Regions as % of Total) Preliminary
Risk-adjusted Region Credit Exposure Credit Capital US 36.1% 54.0% West. Europe 30.9 16.8 Latin America 5.8 12.0 Asia (ex. Japan) 7.2 7.9 Australia/NZ 7.8 3.3 Canada 2.9 2.5 Emerging Europe 2.1 1.9 Japan 6.3 1.0 Other 0.9 0.5 Total 100.0% 100.0%
Cross Border Outstandings by Country 1 December 31, 1997 ($ billions) Preliminary
FX/ Total % of Off B/S Deriva- Trading Outstand- Total Commit- Country Loans tives Assets Other2 ings Assets ments3 Total Japan $0.0 $2.8 $1.5 $2.6 $7.0 4.98% $0.0 $7.0 France 0.4 1.0 0.9 1.9 4.1 2.96 0.2 4.3 Spain 0.2 0.2 0.7 2.4 3.5 2.53 0.0 3.5 Australia 0.1 2.1 0.3 0.4 2.9 2.05 0.0 2.9 Germany 0.1 0.9 1.0 0.7 2.7 1.94 0.1 2.9 Brazil 0.4 0.0 1.8 0.2 2.4 1.70 0.0 2.4 United Kingdom 0.1 1.8 0.3 0.1 2.3 1.67 0.1 2.4 Canada 0.3 0.7 0.7 0.4 2.2 1.54 0.1 2.2 Switzerland 0.1 0.6 0.9 0.4 1.9 1.36 0.0 2.0 Korea, Republic Of 0.1 0.7 0.2 0.7 1.6 1.14 0.1 1.7 Netherlands 0.1 0.5 0.3 0.4 1.4 0.98 0.1 1.4 Indonesia 0.2 0.7 0.1 0.1 1.2 0.86 0.0 1.2 Italy 0.2 0.3 0.5 0.1 1.1 0.79 0.0 1.1 Russian Federation 0.2 0.0 0.8 0.0 1.0 0.73 0.1 1.1 Mexico 0.2 0.0 0.7 0.1 0.9 0.67 0.1 1.0 Hong Kong 0.1 0.4 0.3 0.1 0.9 0.67 0.0 1.0 Cayman Islands 0.0 0.0 0.6 0.1 0.8 0.58 0.0 0.8 Argentina 0.2 0.0 0.4 0.1 0.7 0.52 0.1 0.8 Denmark 0.0 0.1 0.4 0.1 0.7 0.52 0.0 0.7 Thailand 0.0 0.5 0.0 0.1 0.6 0.40 0.0 0.6 1 Based on FFIEC instructions. Shown by country of ultimate risk. Excludes local country claims on local residents. 2 Other includes acceptances, resales, money market instruments and securities available for sale. 3 Commitments include L/C's and guarantees.
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