-----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, LLtdzXpirRtHsCIBwnhTdWT9Htt08o3VegLttxEUHWlHQIkI1mgRmaT/lk8CGXTF 4qxvUg9IxgatyMZuIQDcAQ== 0000009749-98-000090.txt : 19980727 0000009749-98-000090.hdr.sgml : 19980727 ACCESSION NUMBER: 0000009749-98-000090 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980723 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980724 SROS: AMEX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKERS TRUST 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: 98670738 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: BANKERS TRUST NEW YORK CORP DATE OF NAME CHANGE: 19920703 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) July 23, 1998 BANKERS TRUST CORPORATION (Exact name of registrant as specified in its charter) NEW YORK (State or other jurisdiction of incorporation) 1-5920 13-6180473 (Commission file number) (IRS employer identification no.) 130 LIBERTY STREET, NEW YORK, NEW YORK 10006 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (212) 250-2500 Item 5. Other Events A) On July 23, 1998, Bankers Trust Corporation (the "Registrant") released financial information with respect to the quarter ended June 30, 1998. This Current Report on Form 8-K files the Press Release which contains certain financial information to be incorporated into currently effective registration statements filed by the Registrant with the Securities and Exchange Commission under the Securities Act of 1933, as amended. Such financial information contained in the Registrant's Press Release dated July 23, 1998, is described below and is incorporated herein by reference. 1. Review of certain financial information. 2. The unaudited consolidated financial position of Bankers Trust Corporation and its subsidiaries at June 30, 1998, March 31, 1998 and June 30, 1997, the audited consolidated financial position at December 31, 1997 and its unaudited condensed consolidated results of operations for each of the three-month and six-month periods ended June 30, 1998, and June 30, 1997 and the three-month period ended March 31, 1998. In the opinion of the Registrant's management, all material adjustments necessary for a fair presentation of the Corporation's consolidated financial position at June 30, 1998, March 31, 1998, December 31, 1997 and June 30, 1997 and its condensed consolidated results of operations for the three-month and six-month periods ended June 30, 1998 and June 30, 1997 and the three-month period ended March 31, 1998 have been made. All such adjustments were of a normal recurring nature. The results of operations for the three-month and six-month periods ended June 30, 1998 and for the three-month period ended March 31, 1998 are not necessarily indicative of operations for the full year or any other interim period. B) The following schedules were distributed at the analysts meeting held by the Corporation on July 23, 1998: - Preliminary Selected Asian Cross Border Exposures at June 30, 1998 is contained in Exhibit 99.2 - Adjusted ROCE by Organizational Unit is contained in Exhibit 99.2 Item 7. Financial Statements and Exhibits (c) Exhibits (99.1) Earnings Press Release of the Registrant dated July 23, 1998. (99.2) Preliminary Selected Asian Cross Border Exposures at June 30, 1998 (99.2) Adjusted ROCE by Organizational Unit SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. BANKERS TRUST CORPORATION By /s/ RONALD HASSEN RONALD HASSEN Senior Vice President July 24, 1998 BANKERS TRUST CORPORATION FORM 8-K DATED JULY 23, 1998 EXHIBIT INDEX Exhibit Number Description of Exhibit (99.1) Earnings Press Release of the Registrant dated July 23, 1998. (99.2) Preliminary Selected Asian Cross Border Exposures at June 30, 1998 (99.2) Adjusted ROCE by Organizational Unit EX-99.1 2 THURSDAY, JULY 23, 1998 BANKERS TRUST EARNS $2.06 PER SHARE IN THE SECOND QUARTER OF 1998 BEFORE CHARGES TO REPOSITION EUROPEAN EQUITY BUSINESSES, UP 9% FROM THE SECOND QUARTER OF 1997 New York, July 23, 1998 -- Bankers Trust Corporation (BT) today reported diluted earnings per share for the second quarter of $2.06, before charges to reposition the Corporation's European equity businesses. After these charges, which also include costs associated with the integration of NatWest Markets' European equities business, net income per share was $1.46, compared to net income per share in the second quarter of 1997 of $1.89. Net income for the second quarter of 1998 was $228 million, before the after-tax effect from these charges of $64 million. Net income in the second quarter of 1997 was $213 million. As previously reported, the acquisition of the NatWest Markets' European equities business was completed on April 27. Frank Newman, chairman of the board and chief executive officer, said: "Strong results across our corporate finance and advisory activities and our institutional and private client service businesses as well as in Australia/NZ more than offset the effect of continuing difficult conditions in emerging markets. Corporate finance fees increased 46% from a year ago, reflecting substantial momentum in securities underwriting activities and our merger and acquisition services." He added: "The acquisition of NatWest's European equities business is off to a strong start and was accretive to operating earnings in the second quarter. This acquisition is an excellent and important addition to our global investment banking capabilities. We look forward to building on our expanded base to pursue growing opportunities in Europe." For the current quarter, total revenue before the provision for trading-related credit losses was up $74 million from second quarter 1997. Higher corporate finance fees, higher other fees & commissions and improved revenue from equity investments were partially offset by lower trading revenue. Total noninterest expenses of $1.320 billion for the second quarter of 1998 increased $95 million from the second quarter of 1997. This increase was primarily attributable to the integration and ongoing operating costs associated with the NatWest acquisition. Total noninterest expenses for the second quarter of 1998 were down $5 million from the previous quarter. In response to the continuing economic developments in Asia, the Corporation recorded a $60 million provision for trading-related credit losses. During the second quarter of 1998, the Corporation's net charge-offs were $55 million, which included $38 million related to swaps with Asian counterparties. At June 30, 1998, the total allowance for credit losses was $1.011 billion as compared to $1.006 billion at March 31, 1998 and $973 million at June 30, 1997. At June 30, 1998, total cash basis loans were $257 million, up from $247 million at March 31, 1998 and down from $305 million at June 30, 1997. Other nonperforming assets (primarily trading) at June 30, 1998 were $447 million, up from $334 million at March 31, 1998 and $8 million at June 30, 1997. The increase in the current quarter primarily resulted from swaps with Indonesian counterparties. At June 30, 1998, the Corporation's cross-border exposures in Korea, Indonesia, and Thailand were $2.5 billion, down 28% from $3.5 billion at December 31, 1997 and down 10% from $2.8 billion at March 31, 1998. 2 ORGANIZATIONAL HIGHLIGHTS* Total Non- Pretax Net Second Quarter 1998 Total Interest Income/ Income/ (in millions) Revenue Expenses (Loss) (Loss) Investment Banking $ 560 $ 433 $ 127 $ 91** Trading & Sales 244 144 100 72 Global Institutional Services 262 233 29 21 Private Client Services Group 193 157 36 26 Australia/New Zealand 162 115 47 34 Emerging Markets Group: Latin America 84 127 (43) (30) Emerging Europe, Mid East & Africa 29 26 3 2 Asia 8 42 (34) (25) Corporate/Other 6 43 (37) (27) Total $1,548 $1,320 $ 228 $164 Total Non- Pretax Net First Quarter 1998 Total Interest Income/ Income/ (in millions) Revenue Expenses (Loss) (Loss) Investment Banking $ 670 $ 424 $ 246 $177 Trading & Sales 215 128 87 63 Global Institutional Services 254 228 26 19 Private Client Services Group 171 147 24 17 Australia/New Zealand 145 107 38 27 Emerging Markets Group: Latin America 167 145 22 16 Emerging Europe, Mid East & Africa 34 25 9 7 Asia (51) 49 (100) (72) Corporate/Other 28 72 (44) (32) Total $1,633 $1,325 $ 308 $222 Total Non- Pretax Net Second Quarter 1997 Total Interest Income/ Income/ (in millions) Revenue Expenses (Loss) (Loss) Investment Banking $ 543 $ 353 $ 190 $130 Trading & Sales 198 130 68 47 Global Institutional Services 228 212 16 11 Private Client Services Group 154 134 20 13 Australia/New Zealand 146 107 39 27 Emerging Markets Group: Latin America 174 134 40 28 Emerging Europe, Mid East & Africa 40 26 14 10 Asia 24 52 (28) (19) Corporate/Other 27 77 (50) (34) Total $1,534 $1,225 $309 $213 * Organizational Unit business results are determined based on the Corporation's internal management accounting process, which allocates revenue and expenses among the organizational units. Because the Corporation's business is diverse in nature and its operations are integrated, it is impractical to segregate respective contributions of the organizational units with precision. As a result, estimates and judgments have been made to apportion revenue and expense items. In addition, certain revenue and expenses have been segregated and reported in Corporate/Other because, in the opinion of management, they could not be reasonably allocated or because their contributions to a particular organizational unit would be distortive. In order to provide comparability from one period to the next, the Corporation will generally restate this analysis to conform with material changes in the allocation process and/or significant changes in organizational structure. ** Includes after-tax charges of $64 million related to repositioning of European equity businesses, consisting of valuation adjustments to Bankers Trust's trading assets and NatWest integration costs. 3 Acquisition of NatWest Markets The businesses associated with the acquisition of NatWest are classified in Investment Banking. Organizational Unit Results The Investment Banking business contributed net income of $91 million in the second quarter of 1998. The decline in net income from the prior periods was primarily due to charges related to repositioning of European equity businesses, consisting of valuation adjustments to Bankers Trust's trading assets and NatWest integration costs. Excluding these charges, net income for this unit was $155 million compared to $130 million in the second quarter of 1997 and $177 million in the first quarter of 1998. The increase from the second quarter of 1997 was primarily attributable to higher corporate finance fees. The decrease from the prior quarter reflected trading losses and lower revenue from private equity investments in the current quarter. Trading & Sales contributed $72 million of net income in the second quarter of 1998, up $25 million from the 1997 second quarter and up $9 million from the previous quarter. The current quarter reflected higher revenue from client-related activities as compared to the prior periods. Global Institutional Services contributed $21 million of net income in the second quarter of 1998, up $10 million from the 1997 second quarter and up $2 million from the previous quarter. As compared to the prior periods, the second quarter of 1998 included improved revenue from investment management and securities lending. The Corporation's Private Client Services Group business reported net income of $26 million for the current quarter, up $13 million from the prior year period and $9 million from the previous quarter. Higher global private banking commissions and improved funds management revenue contributed to these increases. Net income of the Australia/NZ business was $34 million in the second quarter of 1998, up $7 million from the prior periods despite a decline in Australian dollar/US dollar exchange rates. The current quarter benefited from higher corporate finance fees as compared to the prior periods. In addition, the current quarter benefited from improved revenue from funds management activities as compared to the second quarter of 1997. Emerging Markets Group net loss was $53 million in the current quarter, compared to net income of $19 million in the prior year period and a net loss of $49 million in the first quarter of 1998. Latin America - Trading losses negatively impacted the second quarter of 1998. The prior year's quarter included an after-tax gain of $15 million resulting from the completion of the first stage on the sale of 50% of the Corporation's stake in Consorcio. Emerging Europe, Middle East & Africa - Trading revenue and trading-related net interest revenue declined as a result of the market turmoil in certain areas of Emerging Europe during the second quarter of 1998. 4 Asia - The second quarter of 1998 and the prior quarter reflected both the impact of a $60 million provision for trading- related credit losses as well as valuation adjustments to trading assets, for widening counterparty credit spreads principally associated with Indonesian trading assets. As compared to the first quarter of 1998, the current quarter reflected improved trading revenue and lower valuation adjustments for counterparty credit spreads. Corporate/Other includes the income and expenses of smaller businesses that are not included in the main organizational units as well as some activities not associated with specific business lines. It also includes the funding benefit attributed to the Corporation's capital related to these areas. Corporate/Other net loss was $27 million in the second quarter of 1998, compared with a net loss of $32 million in the first quarter of 1998 and a net loss of $34 million in the second quarter of 1997. QUARTERLY FINANCIAL COMPARISONS Second Quarter 1998 Versus Second Quarter 1997 Net income for the second quarter of 1998 was $164 million, which includes the aforementioned after-tax charges of $64 million, as compared to $213 million earned in the second quarter of 1997. Second quarter 1998 combined trading revenue and trading-related net interest revenue before the provision for trading-related credit losses was $242 million, a decrease of $221 million from the second quarter of 1997. The decline is primarily attributable to valuation adjustments related to Bankers Trust's European equity business and Indonesian trading assets. Page 10 shows combined trading results by organizational unit. Fiduciary and funds management revenue was $285 million in the second quarter of 1998, up $22 million from the prior year period. The current quarter included higher global private banking commissions and improved funds management revenue. At June 30, 1998, assets under management were $365 billion compared to $284 billion at June 30, 1997. Corporate finance fees of $392 million increased 46% from the $269 million earned in the second quarter of 1997, primarily due to higher underwriting fees, merger and acquisition fees and financial advisory fees. Other fees and commissions of $206 million increased $60 million from the prior year quarter primarily resulting from higher fees for brokerage services. Securities available for sale gains totaled $50 million compared to $68 million in the prior year period. The current quarter included lower gains on the sale of equity securities as compared to the prior year period. As compared to the second quarter of 1997, salaries and commissions expense increased $57 million, or 19%, partly due to an increase in the number of employees resulting from the NatWest acquisition. Agency and other professional service fees increased $45 million, or 44%, from the prior year period primarily due to costs associated with the integration of NatWest. 5 Second Quarter 1998 versus First Quarter 1998 Net income for the second quarter of 1998 was $164 million, which includes the aforementioned after-tax charges of $64 million, as compared to $222 million earned in the first quarter of 1998. Second quarter 1998 combined trading revenue and trading-related net interest revenue before the provision for trading-related credit losses was $242 million. This was a decrease of $208 million from the first quarter of 1998. The decline is primarily attributable to valuation adjustments related to Bankers Trust's European equity business. Page 10 shows combined trading results by organizational unit. Fiduciary and funds management revenue was $285 million in the second quarter of 1998, up $24 million from the first quarter of 1998. The increase was primarily due to higher global private banking commissions, higher client processing fees and improved funds management revenue. At June 30, 1998, assets under management were approximately $365 billion compared to $334 billion at March 31, 1998. Corporate finance fees totaled $392 million in the current quarter, compared to $331 million in the first quarter of 1998. Higher underwriting fees, merger and acquisition fees, and financial advisory fees contributed to this increase. Other fees and commissions of $206 million increased 29% from the $160 million earned in the previous quarter, primarily due to higher fees for brokerage services. Net revenue from equity investments decreased $58 million from the previous quarter. The current quarter reflected lower gains on direct equity investments. Securities available for sale gains totaled $50 million as compared to securities available for sale losses of $6 million in the previous quarter. Insurance premium revenue decreased $10 million, or 14%, mainly due to the negative effect of higher local interest rates on the Chilean annuities market. Other noninterest revenue totaled $80 million in the current quarter, compared to $94 million in the prior quarter. The prior quarter included higher revenue from mark-to-market adjustments on venture capital equity securities. Incentive compensation and employee benefits, the largest component of noninterest expenses, decreased $80 million due to the decline in financial performance. Agency and other professional service fees increased $42 million, or 40%, from the previous quarter primarily due to costs associated with the integration of NatWest. 6 CAPITAL The Corporation adopted the new market risk amendment to the risk- based capital guidelines issued by the Federal Reserve Board and the Bank for International Settlements (BIS) in March 1997. The Corporation estimates that its ratios of Tier 1 Capital and Total Capital to risk-weighted assets were approximately 8.0% and 14.0%, respectively, as of June 30, 1998. The remainder of this release contains the following tables: Page 1. BTC Condensed Consolidated Quarterly Statement of Income 8 2. BTC Condensed Consolidated Year-To-Date Statement of Income 9 3. Combined Trading Revenue and Trading-Related Net Interest Revenue 10 4. Net Interest Revenue 10 5. BTC Consolidated Balance Sheet 11 6. Stock and Capital Data 12 7. Nonperforming Assets and Allowance for Credit Losses 13 For additional information, contact William McBride, 212-250-7961. Bankers Trust news releases, including quarterly results, are available on the Internet (http://www.bankerstrust.com/earnings). 7 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED QUARTERLY STATEMENT OF INCOME (in millions, except per share data) (unaudited) Second First Second Quarter Quarter Quarter 1997 1998 1998 REVENUE Net interest revenue $ 340 $ 402 $ 366 Trading revenue* 315 251 97 Credit loss provision - - - Credit loss provision-trading - (60) (60) Fiduciary & funds management 263 261 285 Corporate finance fees 269 331 392 Other fees & commissions 146 160 206 Net revenue from equity investments 9 131 73 Securities available for sale gains (losses) 68 (6) 50 Insurance premiums 64 69 59 Other 60 94 80 Total revenue 1,534 1,633 1,548 EXPENSES Salaries and commissions 304 336 361 Incentive compensation & employee benefits 442 497 417 Agency & other professional service fees 102 105 147 Communication & data services 57 54 61 Occupancy, net 44 46 54 Furniture & equipment 55 54 56 Travel & entertainment 36 37 42 Provision for policyholder benefits 73 85 74 Other 112 111 108 Total expenses 1,225 1,325 1,320 Income before income taxes 309 308 228 Income taxes 96 86 64 NET INCOME $ 213 $ 222 $ 164 NET INCOME APPLICABLE TO COMMON STOCK** $ 201 $ 211 $ 155 Cash dividends declared per common share $1.00 $1.00 $1.00 EARNINGS PER COMMON SHARE: BASIC $2.00 $2.08 $1.54 DILUTED $1.89 $2.01 $1.46 * The Corporation accounts for revenues from a wide range of business activities as "trading". See table on page 10. ** Amounts shown are used to calculate basic earnings per common share. Certain prior period amounts have been reclassified to conform to the current presentation. 8 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED YEAR-TO-DATE STATEMENT OF INCOME (in millions, except per share data) (unaudited) SIX MONTHS ENDED JUNE 30, 1997 1998 REVENUE Net interest revenue $ 671 $ 768 Trading revenue* 626 348 Credit loss provision - - Credit loss provision-trading - (120) Fiduciary & funds management 498 546 Corporate finance fees 484 723 Other fees & commissions 281 366 Net revenue from equity investments 56 204 Securities available for sale gains 82 44 Insurance premiums 127 128 Other 106 174 Total revenue 2,931 3,181 EXPENSES Salaries and commissions 608 697 Incentive compensation & employee benefits 819 914 Agency & other professional service fees 191 252 Communication & data services 115 115 Occupancy, net 87 100 Furniture & equipment 108 110 Travel & entertainment 65 79 Provision for policyholder benefits 141 159 Other 195 219 Total expenses 2,329 2,645 Income before income taxes 602 536 Income taxes 189 150 NET INCOME $ 413 $ 386 NET INCOME APPLICABLE TO COMMON STOCK** $ 387 $ 366 Cash dividends declared per common share $2.00 $2.00 EARNINGS PER COMMON SHARE: BASIC $3.87 $3.62 DILUTED $3.65 $3.46 * The Corporation accounts for revenues from a wide range of business activities as "trading". See table on page 10. ** Amounts shown are used to calculate basic earnings per common share. Certain prior period amounts have been reclassified to conform to the current presentation. 9 COMBINED TRADING REVENUE AND TRADING-RELATED NET INTEREST REVENUE The Corporation views trading revenue and trading-related net interest revenue (NIR) together, as presented in the table below. Second First Second Quarter Quarter Quarter (in millions) 1997 1998 1998 Trading Revenue* $315 $251 $97 Trading-Related Net Interest Revenue (Estimate) 148 199 145 Total Trading Revenue & Trading-Related NIR $463 $450 $242 By Organizational Unit (in millions) Investment Banking $138 $102 $(84) Trading & Sales 121 185 206 Global Institutional Services 1 2 2 Private Client Services Group 3 5 4 Australia/New Zealand 54 39 41 Emerging Markets Group: Latin America 48 59 (17) Emerging Europe, Middle East & Africa 39 44 36 Asia 56 9 52 Corporate/Other 3 5 2 Total Trading Revenue & Trading-Related NIR $463 $450 $242 * Before provision for trading-related credit losses. Note: The Corporation accounts for revenues from a wide range of business activities as "trading". Investment Banking produces trading revenue in secondary market activities with clients, primarily in sectors where the Firm also serves as underwriter. A small portion of trading revenue arises from private equity investments that are accounted for on a mark-to-market basis. Trading & Sales produces trading revenue through proprietary position-taking, including arbitrage, new derivative transactions with clients, as well as market making and other client activities. Australia/New Zealand and Emerging Markets Group produce trading revenue from all the above business activities. Corporate/Other includes various transactions which, for management accounting purposes, are not recorded in Organizational Units. NET INTEREST REVENUE Second First Second Quarter Quarter Quarter ($ in millions) 1997 1998 1998 Nontrading-related net interest revenue (Estimate) $192 $203 $221 Trading-related net interest revenue (Estimate) 148 199 145 Net interest revenue $340 $402 $366 Average rates (fully taxable basis) Yield on interest-earning assets 6.82% 7.17% 6.95% Cost of interest-bearing liabilities 5.65% 5.84% 5.99% Interest rate spread 1.17% 1.33% .96% Net interest margin 1.36% 1.47% 1.12% Average balances (billions) Loans $18.3 $21.4 $22.5 Total interest-earning assets $102.2 $113.0 $133.4 Total assets $132.2 $150.5 $173.9 Total interest-bearing liabilities $98.7 $110.3 $129.9 10 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in millions) June 30 December 31 March 31 June 30 1997* 1997 1998* 1998* ASSETS Cash and due from banks $ 1,756 $ 2,188 $ 1,504 $ 2,221 Interest-bearing deposits in banks 2,334 4,272 2,068 1,645 Federal funds sold 1,305 1,382 1,630 3,445 Sec. purch. under resale agreements 25,758 19,163 22,843 27,327 Securities borrowed 13,285 16,751 22,832 25,634 Trading assets: Government securities 12,337 11,397 13,517 11,342 Corporate debt securities 9,644 8,128 9,495 10,375 Equity securities 8,066 7,914 8,963 11,190 Swaps, options & other derivatives*** 10,628 17,673 14,797 16,167 Other trading assets 8,330 11,460 13,591 14,375 Total trading assets 49,005 56,572 60,363 63,449 Securities available for sale 7,478 8,081 12,893 12,105 Loans*** 19,000 19,106 21,178 22,233 Customer receivables 1,630 1,547 1,572 1,701 Accounts receivable & accrued interest 3,448 4,785 4,729 6,351 Other assets 6,368 6,255 5,925 6,200 Total $131,367 $140,102 $157,537 $172,311 LIABILITIES Noninterest-bearing deposits Domestic offices $ 3,046 $ 2,776 $ 2,969 $ 3,314 Foreign offices 1,439 1,952 1,624 1,717 Interest-bearing deposits Domestic offices 15,618 22,353 24,180 24,180 Foreign offices 18,327 15,749 17,568 17,332 Total deposits 38,430 42,830 46,341 46,543 Trading liabilities: Securities sold, not yet purchased Government securities 4,958 4,389 8,821 10,265 Equity securities 5,002 5,273 5,235 8,650 Other trading liabilities 401 519 789 581 Swaps, options & other derivatives 11,064 17,065 14,273 15,271 Total trading liabilities 21,425 27,246 29,118 34,767 Securities loaned and securities sold under repurchase agreements 22,973 17,896 21,881 26,057 Other short-term borrowings 19,527 19,577 24,868 27,049 Accounts payable and accrued expenses 6,169 6,536 5,875 5,866 Other liabilities*** 4,000 4,250 5,819 6,250 Long-term debt not included in risk-based capital 8,468 11,275 12,740 15,091 Long-term debt included in risk-based capital 2,939 3,312 3,306 3,351 Trust preferred capital securities** 1,470 1,472 1,473 1,474 Total liabilities 125,401 134,394 151,421 166,448 PREFERRED STOCK OF SUBSIDIARY - - 304 304 STOCKHOLDERS' EQUITY Preferred stock 703 658 658 493 Common stock 105 105 105 105 Capital surplus 1,491 1,563 1,592 1,607 Retained earnings 4,168 4,202 4,225 4,240 Common stock in treasury, at cost (513) (889) (803) (985) Other stockholders' equity 341 463 458 545 Accumulated other comprehensive income: Net unrealized gains (losses) on securities available for sale, net of taxes 32 (32) (52) (66) Foreign currency translation, net of taxes (361) (362) (371) (380) Total stockholders' equity 5,966 5,708 5,812 5,559 Total $131,367 $140,102 $157,537 $172,311 * Unaudited ** Mandatorily redeemable capital securities of subsidiary trusts holding solely junior subordinated deferrable interest debentures included in risk-based capital *** See table on page 13 for allocation of the allowance for credit losses. Certain prior period amounts have been reclassified to conform to the current presentation. 11 STOCK AND CAPITAL DATA Second First Second Quarter Quarter Quarter 1997 1998 1998 FOR THE QUARTER Return on Average Common Stockholders' Equity 15.6% 16.7% 12.1% Return on Average Total Assets .65% .60% .38% PER COMMON SHARE Earnings: Basic $2.00 $2.08 $1.54 Diluted $1.89 $2.01 $1.46 Cash Dividends Declared $1.00 $1.00 $1.00 Market Price, End of Period $87.13 $120.31 $116.06 Book Value, End of Period $50.81 $49.82 $49.27 COMMON SHARES (shares in thousands except par value) Common stock $1 par value: Authorized, at period end 300,000 300,000 300,000 Issued, at period end 104,790 105,379 105,380 Common stock in treasury, at period end 6,012 7,522 8,903 Average Common and Common Equivalent Shares Outstanding Basic 99,947 101,357 100,949 Diluted 106,197 105,123 106,645 CAPITAL RATIOS, END OF PERIOD Common Stockholders' Equity to Total Assets 4.0% 3.3% 2.9% Total Stockholders' Equity to Total Assets 4.5% 3.7% 3.2% Bankers Trust Corporation: Risk-Based Capital Ratios (1) Tier 1 Capital 9.2% 8.2% 8.0% Total Capital 14.8% 14.2% 14.0% Leverage Ratio (1) 5.0% 4.5% 3.7% Bankers Trust Company: Risk-Based Capital Ratios (1) Tier 1 Capital 9.0% 8.6% 9.2% Total Capital 12.4% 12.3% 13.1% Leverage Ratio (1) 5.3% 5.4% 5.3% (1) Regulatory capital ratios at June 30, 1998 are preliminary. All of these ratios have been calculated under the new market risk amendment to the risk-based capital guidelines. 12 NONPERFORMING ASSETS AND ALLOWANCE FOR CREDIT LOSSES (in millions) June 30 March 31 June 30 1997 1998 1998 Nonperforming assets Cash basis loans Secured by real estate $156 $ 92 $104 Real estate related 25 15 14 Highly leveraged 76 25 23 Other 48 115 116 Total cash basis loans $305 $247 $257 Renegotiated loans $37 $25 $26 Other real estate $196 $190 $187 Other nonperforming assets (primarily trading) $8 $334 $447 Total allowance for credit losses Balance, beginning of quarter $958 $997 $1,006 Net charge-offs (recoveries) Charge-offs Loans 3 7 23 Trading assets - 47 38 Total charge-offs 3 54 61 Recoveries Loans 1 3 6 Trading assets - - - Total recoveries 1 3 6 Total net charge-offs (recoveries) 2 51 55 Allowance related to acquisition of affiliate 17 - - Credit loss provision - - - Credit loss provision-trading - 60 60 Total credit loss provision - 60 60 Balance, end of quarter (a) $973 $1,006 $1,011 (a) Allocation of allowance for credit losses*: Loans $767 $695 $ 678 Trading assets 196 298 320 Other liabilities 10 13 13 Balance, end of quarter $973 $1,006 $1,011 * The Corporation believes that the total allowance for credit losses is available for credit losses in its entire portfolio, which is comprised of loans, credit-related commitments, derivatives and other financial instruments. Due to a multitude of complex and changing factors that are collectively weighed in determining the adequacy of the allowance for credit losses, management expects that the allocation of the total allowance for credit losses may be adjusted as risk factors change. 13 BANKERS TRUST CORPORATION 130 LIBERTY STREET NEW YORK, NEW YORK 10006 Ronald Hassen Senior Vice President July 24, 1998 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: Accompanying this letter is Bankers Trust Corporation's Report on Form 8-K dated July 23, 1998 (the "Form 8-K"). The Form 8-K is being filed electronically through the EDGAR System. If there are any questions or comments in connection with the enclosed filing, please contact the undersigned at 212-250-4881. Very truly yours, BANKERS TRUST CORPORATION By: /s/ RONALD HASSEN RONALD HASSEN Senior Vice President EX-99.2 3 EXHIBIT 99.2 Selected Asian Cross Border Exposures June 30, 1998* ($ billions) Preliminary
-------- As of 6/30/98 ------- FX/ Off B/S Total Total Total Deriva- Trading Commit- Country 12/31/97 3/31/98 6/30/98 Loans tives Assets Other** ments*** Total Asia $5.9 $5.1 $4.3 $0.4 $2.0 $0.8 $0.9 $0.2 (excl. Japan) Rep. of Korea 1.6 1.4 1.3 0.1 0.6 0.2 0.4 0.1 Indonesia 1.3 1.0 0.8 0.1 0.6 0.1 0.0 0.0 Thailand 0.6 0.5 0.4 0.0 0.2 0.0 0.1 0.0 Total Selected IMF Countries $3.5 $2.8 $2.5 $0.2 $1.4 $0.3 $0.5 $0.1 * Preliminary 2Q98 numbers. Numbers may not total due to rounding differences. Based on FFIEC instructions. Excludes local country claims on local residents. ** Other includes acceptances, resales, money market instruments and securities available for sale. *** Commitments include L/C's and guarantees.
EXHIBIT 99.2 Adjusted ROCE by Organizational Unit ($ millions) YTD 1998 Estimated Adj. Net Common Estimated Income Equity ROCE Investment Banking $332 $2,158 30% Trading & Sales 135 747 36 Global Institutional Services 40 303 26 Private Client Services 43 147 59 Australia/NZ 61 238 51 Emerging Markets Group: Latin America (14) 615 N/M Emg Europe, Mid East & Africa 9 170 10 Asia (97) 346 N/M Corporate/Other (59) 414 N/M Total $450 $5,138 17% Excludes the following "special items" (after-tax): Investment Banking - Impact of European equity repositioning including NatWest acquisition $(64) -----END PRIVACY-ENHANCED MESSAGE-----