-----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, Ct7fM65tSYlsLkfZGktoleuTf28jYZ9t242HJ/K/Doyf26LHnZmPBLgqzhCjLq4G 881X5aa7Uf7VT2zj+LsJbQ== 0000891554-01-506345.txt : 20020410 0000891554-01-506345.hdr.sgml : 20020410 ACCESSION NUMBER: 0000891554-01-506345 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05920 FILM NUMBER: 1789686 BUSINESS ADDRESS: STREET 1: 130 LIBERTY ST 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 10-Q 1 d27355_10q.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 or [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-5920 BANKERS TRUST CORPORATION (Exact name of registrant as specified in its charter) New York 13-6180473 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) 130 Liberty Street New York, New York 10006 (Address of principal executive offices) (Zip code) (212) 250-2500 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] The registrant meets the conditions set forth in General Instruction H (1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format. The registrant is a wholly-owned subsidiary of Deutsche Bank AG. As of the date hereof, 1 share of the registrant's Common Stock par value $1 per share, was issued and outstanding. 1 BANKERS TRUST CORPORATION September 30, 2001 FORM 10-Q TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page ---- Item 1. Financial Statements Consolidated Statement of Income Three Months Ended September 30, 2001 and 2000 2 Nine Months Ended September 30, 2001 and 2000 3 Consolidated Statement of Comprehensive Income Three Months and Nine Months Ended September 30, 2001 and 2000 4 Consolidated Balance Sheet At September 30, 2001 and December 31, 2000 5 Consolidated Statement of Changes in Stockholder's Equity Nine Months Ended September 30, 2001 and 2000 6 Consolidated Statement of Cash Flows Nine Months Ended September 30, 2001 and 2000 7 Consolidated Schedule of Net Interest Revenue Three Months and Nine Months Ended September 30, 2001 and 2000 8 In the opinion of management, all material adjustments necessary for a fair presentation of the financial position and results of operations for the interim periods presented have been made. All such adjustments were of a normal recurring nature. The results of operations for the three months and nine months ended September 30, 2001 are not necessarily indicative of the results of operations for the full year or any other interim period. The financial statements included in this Form 10-Q should be read with reference to the Bankers Trust Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2000 as supplemented by the first and second quarter 2001 Form 10-Q. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 27 SIGNATURE 28
2 PART I. FINANCIAL INFORMATION BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (in millions) (unaudited) Increase THREE MONTHS ENDED SEPTEMBER 30, 2001 2000 (Decrease) -------------------------------------------------------------------------- NET INTEREST REVENUE Interest revenue $ 579 $ 954 $(375) Interest expense 444 822 (378) ------------------------------------------------------------------------- Net interest revenue 135 132 3 Provision for credit losses-loans 29 (4) 33 ------------------------------------------------------------------------- Net interest revenue after provision for credit losses-loans 106 136 (30) ------------------------------------------------------------------------- NONINTEREST REVENUE Trading (4) 33 (37) Fiduciary and funds management 163 182 (19) Corporate finance fees 27 25 2 Other fees and commissions 63 73 (10) Securities available for sale gains -- 9 (9) Other 163 546 (383) -------------------------------------------------------------------------- Total noninterest revenue 412 868 (456) ------------------------------------------------------------------------- NONINTEREST EXPENSES Salaries and commissions 106 117 (11) Incentive compensation and employee benefits 69 103 (34) Agency and other professional service fees 38 58 (20) Communication and data services 15 19 (4) Occupancy, net 29 26 3 Furniture and equipment 30 30 -- Travel and entertainment 7 10 (3) Other 114 59 55 ------------------------------------------------------------------------- Total noninterest expenses 408 422 (14) ------------------------------------------------------------------------- Income before income taxes 110 582 (472) Income taxes 62 291 (229) ------------------------------------------------------------------------- NET INCOME $ 48 $ 291 $(243) ========================================================================= 3 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (in millions) (unaudited) Increase NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 (Decrease) - -------------------------------------------------------------------------------- NET INTEREST REVENUE Interest revenue $2,066 $ 2,659 $(593) Interest expense 1,566 2,271 (705) - -------------------------------------------------------------------------------- Net interest revenue 500 388 112 Provision for credit losses-loans 133 (44) 177 - -------------------------------------------------------------------------------- Net interest revenue after provision for credit losses-loans 367 432 (65) - -------------------------------------------------------------------------------- NONINTEREST REVENUE Trading 66 127 (61) Fiduciary and funds management 510 595 (85) Corporate finance fees 77 107 (30) Other fees and commissions 194 235 (41) Securities available for sale gains -- 40 (40) Other 350 697 (347) - -------------------------------------------------------------------------------- Total noninterest revenue 1,197 1,801 (604) - -------------------------------------------------------------------------------- NONINTEREST EXPENSES Salaries and commissions 325 361 (36) Incentive compensation and employee benefits 242 321 (79) Agency and other professional service fees 147 155 (8) Communication and data services 42 65 (23) Occupancy, net 80 77 3 Furniture and equipment 96 91 5 Travel and entertainment 26 31 (5) Other 311 469 (158) Restructuring charge -- (46) 46 - -------------------------------------------------------------------------------- Total noninterest expenses 1,269 1,524 (255) - -------------------------------------------------------------------------------- Income before income taxes 295 709 (414) Income taxes 90 410 (320) - -------------------------------------------------------------------------------- NET INCOME $ 205 $ 299 $ (94) ================================================================================ 4 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in millions) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------- 2001 2000 2001 2000 - ----------------------------------------------------------------------------------------------------- NET INCOME $ 48 $ 291 $ 205 $ 299 - ----------------------------------------------------------------------------------------------------- Other comprehensive income (loss), net of tax: Foreign currency translation adjustments: Unrealized foreign currency translation gains (losses) arising during period (a) (7) (38) (53) (91) Reclassification adjustment for realized foreign currency translation (gains) losses (b) -- 4 10 8 Unrealized gains (losses) on securities available for sale: Unrealized holding gains (losses) arising during period (c) -- (78) 4 5 Reclassification adjustment for realized (gains) losses (d) -- (5) -- (23) - ----------------------------------------------------------------------------------------------------- Total other comprehensive income (loss) (7) (117) (39) (101) - ----------------------------------------------------------------------------------------------------- COMPREHENSIVE INCOME $ 41 $ 174 $ 166 $ 198 =====================================================================================================
(a) Amounts are net of income tax benefits of $4 million and $22 million for the three months ended September 30, 2001 and September 30, 2000, respectively, and $35 million and $52 million for the nine months ended September 30, 2001 and September 30, 2000, respectively. (b) Amounts are net of income tax benefits of $3 million for the three months ended September 30, 2000 and $19 million and $1 million for the nine months ended September 30, 2001 and September 30, 2000, respectively. (c) Amounts are net of income tax expense (benefit) of $(55) million for the three months ended September 30, 2000 and $2 million and $(42) million for the nine months ended September 30, 2001 and September 30, 2000, respectively. (d) Amounts are net of income tax expense of $4 million for the three months ended September 30, 2000 and $17 million for the nine months ended September 30, 2000. 5 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ($ in millions, except par value)
September 30, December 31, 2001* 2000 - --------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 1,346 $ 1,921 Interest-bearing deposits with banks 8,005 8,905 Securities purchased under resale agreements 8,598 8,310 Trading assets: Government securities 108 135 Corporate debt securities 418 556 Equity securities 10,352 9,255 Swaps, options and other derivatives 2,691 1,995 Other trading assets 1,025 1,449 - --------------------------------------------------------------------------------------------- Total trading assets 14,594 13,390 Securities available for sale 281 252 Loans, net 20,548 22,016 Customer receivables 191 308 Due from customers on acceptances 127 254 Accounts receivable and accrued interest 1,410 2,954 Other assets 7,576 4,453 - --------------------------------------------------------------------------------------------- Total $62,676 $62,763 ============================================================================================= LIABILITIES Noninterest-bearing deposits Domestic offices $ 3,432 $ 3,263 Foreign offices 1,088 968 Interest-bearing deposits Domestic offices 14,235 8,649 Foreign offices 2,850 2,874 - --------------------------------------------------------------------------------------------- Total deposits 21,605 15,754 Trading liabilities: Securities sold, not yet purchased Government securities 65 56 Swaps, options and other derivatives 1,271 1,892 Other trading liabilities 1,133 1,133 - --------------------------------------------------------------------------------------------- Total trading liabilities 2,469 3,081 Securities loaned and securities sold under repurchase agreements 1 109 Other short-term borrowings 16,897 18,498 Acceptances outstanding 127 254 Accounts payable and accrued expenses 1,270 2,603 Other liabilities 3,679 5,432 Long-term debt not included in risk-based capital 9,195 9,270 Long-term debt included in risk-based capital 1,597 2,073 Mandatorily redeemable capital securities of subsidiary trusts holding solely junior subordinated deferrable interest debentures included in risk-based capital 1,288 1,307 - --------------------------------------------------------------------------------------------- Total liabilities 58,128 58,381 ============================================================================================= STOCKHOLDER'S EQUITY Common stock, $1 par value Authorized: 200 shares; Issued: 1 share -- -- Capital surplus 2,319 2,319 Retained earnings 2,384 2,179 Accumulated other comprehensive income: Net unrealized gains on securities available for sale, net of taxes 4 -- Foreign currency translation, net of taxes (159) (116) - --------------------------------------------------------------------------------------------- Total stockholder's equity 4,548 4,382 - --------------------------------------------------------------------------------------------- Total $62,676 $ 62,763 =============================================================================================
* Unaudited. 6 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY (in millions, except par value) (unaudited) NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 - -------------------------------------------------------------------------------- PREFERRED STOCK Balance, January 1 $ -- $ 376 Preferred stock repurchased -- (12) Preferred stock redeemed -- (364) - -------------------------------------------------------------------------------- Balance, September 30 -- -- - -------------------------------------------------------------------------------- COMMON STOCK Balance, January 1 and September 30 -* -* - -------------------------------------------------------------------------------- CAPITAL SURPLUS Balance, January 1 2,319 2,318 Preferred stock repurchased -- 1 - -------------------------------------------------------------------------------- Balance, September 30 2,319 2,319 - -------------------------------------------------------------------------------- RETAINED EARNINGS Balance, January 1 2,179 1,686 Net income 205 299 Preferred stock cash dividends declared -- (19) - -------------------------------------------------------------------------------- Balance, September 30 2,384 1,966 - -------------------------------------------------------------------------------- CUMULATIVE TRANSLATION ADJUSTMENTS Balance, January 1 (116) (46) Translation adjustments/entity transfers and sales (59) (134) Income taxes 16 51 - -------------------------------------------------------------------------------- Balance, September 30 (159) (129) - -------------------------------------------------------------------------------- SECURITIES VALUATION ALLOWANCE Balance, January 1 -- 16 Change in unrealized net gains (losses), after applicable income taxes 4 (18) - -------------------------------------------------------------------------------- Balance, September 30 4 (2) - -------------------------------------------------------------------------------- TOTAL STOCKHOLDER'S EQUITY, SEPTEMBER 30 $ 4,548 $ 4,154 ================================================================================ * 1 share, $1 par value. 7 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (in millions) (unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 - --------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 205 $ 299 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Provision for credit losses - loans 133 (44) Provision for credit losses - other (11) (12) Restructuring charge (release) -- (46) Deferred income taxes, net 253 36 Depreciation and other amortization and accretion 40 28 Other, net (225) (18) Gain on transfer of BTH -- (561) - --------------------------------------------------------------------------------------------- Earnings adjusted for noncash charges and credits 395 (318) Net change in: Trading assets (1,489) (4,491) Trading liabilities (611) (457) Receivables and payables from securities transactions (493) (43) Customer receivables 117 18 Other operating assets and liabilities, net (3,470) (1,420) Securities available for sale (gains) losses -- (40) - --------------------------------------------------------------------------------------------- Net cash used in operating activities (5,551) (6,751) - --------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Net change in: Interest-bearing deposits with banks 896 106 Federal funds sold (2) 2,464 Securities purchased under resale agreements (289) 5,149 Loans 1,260 593 Securities available for sale: Purchases (28) (260) Maturities and other redemptions 30 2,241 Sales 12 576 Acquisitions of premises and equipment (74) (130) Other, net -- 6 Proceeds from transfer of legal entities -- 71 - --------------------------------------------------------------------------------------------- Net cash provided by investing activities 1,805 10,816 - --------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in: Deposits 5,853 (6,845) Securities loaned and securities sold under repurchase agreements (513) 32 Other short-term borrowings (1,602) 1,267 Issuances of long-term debt 386 2,374 Repayments of long-term debt (953) (2,069) Redemptions and repurchases of preferred stock -- (375) Cash dividends paid -- (19) Other, net (3) (29) - --------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 3,168 (5,664) - --------------------------------------------------------------------------------------------- Net effect of exchange rate changes on cash 3 (17) - --------------------------------------------------------------------------------------------- Net decrease in cash and due from banks (575) (1,616) Cash and due from banks, beginning of period 1,921 3,212 - --------------------------------------------------------------------------------------------- Cash and due from banks, end of period $ 1,346 $ 1,596 ============================================================================================= Interest paid $ 2,115 $ 3,387 ============================================================================================= Income taxes paid, net $ 10 $ 6 ============================================================================================= Noncash investing activities: Transfer of legal entity in exchange for shares in affiliate $ -- $ 1,122 Other 13 27 - --------------------------------------------------------------------------------------------- Total noncash investing activities $ 13 $ 1,149 =============================================================================================
8 BANKERS TRUST CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF NET INTEREST REVENUE (in millions) (unaudited)
Three months ended Nine months ended September 30, September 30, -------------------------------------- 2001 2000 2001 2000 - ---------------------------------------------------------------------------------------------------------- INTEREST REVENUE Interest-bearing deposits with banks $ 111 $ 196 $ 437 $ 434 Federal funds sold 42 18 78 70 Securities purchased under resale agreements 13 24 33 108 Trading assets 112 260 440 705 Securities available for sale 7 13 18 61 Loans 291 437 1,051 1,260 Customer receivables 3 6 9 21 - ---------------------------------------------------------------------------------------------------------- Total interest revenue 579 954 2,066 2,659 - ---------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Interest-bearing deposits Domestic offices 108 134 327 419 Foreign offices 115 108 202 374 Trading liabilities 1 -- 4 -- Securities loaned and securities sold under repurchase agreements -- 13 -- 15 Other short-term borrowings 171 263 642 657 Long-term debt 30 275 317 720 Trust preferred capital securities 19 29 74 86 - ---------------------------------------------------------------------------------------------------------- Total interest expense 444 822 1,566 2,271 - ---------------------------------------------------------------------------------------------------------- NET INTEREST REVENUE $ 135 $ 132 $ 500 $ 388 ==========================================================================================================
9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS CHANGES On June 4 1999, Deutsche Bank AG ("Deutsche Bank"), through its U.S. holding corporation, Taunus Corporation ("Taunus"), acquired all of the outstanding shares of common stock of Bankers Trust Corporation ("Bankers Trust") from its shareholders (the "Acquisition"). For further discussion of the Acquisition and related disposition of assets, see pages 3 and 29 of Bankers Trust Corporation's Annual Report on Form 10--K for the year ended December 31, 2000. In connection with the Acquisition, and in addition to the foregoing transactions, Bankers Trust Corporation together with its subsidiaries (the "Corporation" or the "Firm") has transferred and will continue to transfer certain entities/businesses and financial assets and liabilities to other Deutsche Bank related entities. The consideration received and to be received for such transactions was and will be fair market value of the financial assets and liabilities at and on the date of transfer. The Corporation anticipates further curtailment of certain of its activities as a result of its ongoing reorganization and integration into Deutsche Bank. TERRORIST ATTACKS On September 11, 2001, the U.S. experienced terrorist attacks targeted against New York and Washington, D.C. The attacks in New York resulted in damage to the Corporation's office buildings located at 130 Liberty Street and 4 Albany Street. The Corporation's employees located at these office buildings, in addition to employees located in leased properties in 4 World Trade Center and 14-16 Wall Street, were displaced. The Corporation implemented its disaster recovery plans and key business activities and necessary support functions were quickly relocated to the Corporation's back-up facilities in Piscataway, New Jersey and to various other locations leased or owned by Deutsche Bank. The Corporation is currently evaluating the future plans for the building located at 130 Liberty Street, which was severely damaged from the collapse of the South Tower of the World Trade Center. The Corporation's building at 4 Albany Street, which was less severely damaged than 130 Liberty Street, will be repaired, although no timetable for occupation has been established. Employees located at 14-16 Wall Street have returned to their offices. The Corporation currently anticipates accelerating its occupation of Deutsche Bank's 47-story building located at 60 Wall Street beginning in the fourth quarter of 2001. 10 The Corporation is in the process of evaluating the costs that it will incur as a result of the terrorist attacks. Such costs will include writeoffs of fixed assets, costs to repair the buildings, expenses incurred to replace fixed assets which were damaged, relocation expenses, etc. The Corporation expects to recover these costs, including those related to business disruption, through insurance policies. Securities market and other business closures resulting from these and related events have impacted the Corporation's business. In addition, the terrorist attacks, the allied military response and any additional acts of terrorism may impact the global economy. All of these factors may adversely affect the Corporation's future results of operations. RESULTS OF OPERATIONS The Corporation reported net income of $48 million for the three months ended September 30, 2001 and net income of $205 million for the first nine months of 2001. The Corporation reported net income of $291 million for the three months ended September 30, 2000 and net income of $299 million for the first nine months of 2000. During the third quarter of 2001, the Corporation recognized an after-tax loss of approximately $11 million on the liquidation of its partially owned subsidiary, BT (Far East) Limited. The Corporation's historical financial statements are not fully comparable for all periods presented due to the transfer of certain assets to Deutsche Bank entities, including the transfer of the Corporation's wholly-owned subsidiary, BT Holdings (New York), Inc. ("BTH") to DB U.S. Financial Markets Holding Corporation ("DBUSH") on September 29, 2000. The Corporation recognized a pre-tax gain of approximately $561 million in the third quarter of 2000 upon such transfer of BTH. 11 BUSINESS SEGMENT RESULTS Business segment results, which are presented in accordance with accounting principles generally accepted in the United States of America, are derived from internal management reports. The Corporation realigned its businesses into two client-focused groups: the Corporate and Investment Bank Group and the Private Clients and Asset Management Group to correspond to the reorganization implemented by Deutsche Bank during the first quarter of 2001. Corporate and Investment Bank Group includes the business segments Corporate Banking and Securities and Transaction Banking. Corporate Banking and Securities includes sales, trading and corporate finance activities. Transaction Banking consists of trade services, cash management, custody and corporate trust and agency services. Private Clients and Asset Management Group includes the business segments Private Banking and Asset Management. Private Banking consists of banking services to private clients, self-employed individuals as well as to smaller business clients, and offers a wide variety of banking products to these clients including financial planning services and market research and investment strategies for high net worth individuals. Asset Management consists of the institutional asset management and retail investment management businesses. The reorganization by Deutsche Bank also involved the transfer of its principal investing business to an ancillary business unit, Corporate Investments. Corporate Investments includes venture capital and private equity investments prior to the transfer of BTH at the end of the third quarter of 2000 and the corresponding cessation of most principal investment activities by the Corporation. Prior period results have been restated for the changes in management structure discussed above. 12 BUSINESS SEGMENT RESULTS (continued) The following tables present results by Business Segment:
Nine months ended September 30, 2001 ------------------------------------ Total Total Net Noninterest Pretax (in millions) Revenue* Expenses Income(Loss) - ------------------------------------------------------------------------------------ Corporate and Investment Bank Corporate Banking and Securities $ 445 $ 143 $ 302 Transaction Banking 576 611 (35) - ------------------------------------------------------------------------------------ Total Corporate and Investment Bank 1,021 754 267 Private Clients and Asset Management Private Banking 129 125 4 Asset Management 208 266 (58) - ------------------------------------------------------------------------------------ Total Private Clients and Asset Management 337 391 (54) Corporate Investments (1) 12 (13) - ------------------------------------------------------------------------------------ Total Business Segments 1,357 1,157 200 - ------------------------------------------------------------------------------------ Other 207 112 95 - ------------------------------------------------------------------------------------ Total $ 1,564 $ 1,269 $ 295 ====================================================================================
* There were no material intersegment revenues among the business segments.
Nine months ended September 30, 2000 ------------------------------------ Total Total Net Noninterest Pretax (in millions) Revenue* Expenses Income(Loss) - ------------------------------------------------------------------------------------ Corporate and Investment Bank Corporate Banking and Securities $ 563 $ 543 $ 20 Transaction Banking 696 712 (16) - ------------------------------------------------------------------------------------ Total Corporate and Investment Bank 1,259 1,255 4 Private Clients and Asset Management Private Banking 124 117 7 Asset Management 235 193 42 - ------------------------------------------------------------------------------------ Total Private Clients and Asset Management 359 310 49 Corporate Investments 38 65 (27) - ------------------------------------------------------------------------------------ Total Business Segments 1,656 1,630 26 - ------------------------------------------------------------------------------------ Other 577 (106) 683 - ------------------------------------------------------------------------------------ Total $ 2,233 $ 1,524 $ 709 ====================================================================================
* There were no material intersegment revenues among the business segments. 13 BUSINESS SEGMENT RESULTS (continued) The Corporate and Investment Bank Group ("CIB") recorded pretax income of $267 million for the first nine months of 2001, as compared to pretax income of $4 million in the prior year period. Corporate Banking and Securities recorded pretax income of $302 million for the first nine months of 2001, as compared to pretax income of $20 million in the prior year period. The decrease in total net revenue from the prior year period is mainly due to lower net interest revenue, lower results from trading activities and higher provisions for credit losses. The decrease in total noninterest expenses is mainly due to lower accruals for performance-based pay in the current year period due to reduced market activity. Transaction Banking recorded a pretax loss of $35 million for the first nine months of 2001, as compared to a pretax loss of $16 million in the prior year period. The current year period included lower revenue from fiduciary and funds management activities, as well as lower net interest revenue. The decrease in expenses is partly due to lower personnel-related expenses, as well as a decline in operational related costs. The Private Clients and Asset Management Group ("PCAM") recorded a pretax loss of $54 million for the first nine months of 2001 as compared to pretax income of $49 million in the prior year period. Private Banking recorded pretax income of $4 million for the first nine months of 2001, as compared to pretax income of $7 million in the prior year period. The decrease in pretax income from the prior year period is mainly due to higher personnel-related costs. Asset Management recorded a pretax loss of $58 million for the first nine months of 2001, as compared to pretax income of $42 million in the prior year period. The decrease in pretax income from the prior year period is partly due to lower performance and management fees due to the recent market weakness, as well as higher personnel-related costs. Corporate Investments recorded a pretax loss of $13 million for the first nine months of 2001 as compared to pretax loss of $27 million in the prior year-to-date period. The decrease in total net revenue is due to the transfer of BTH at the end of the third quarter 2000. Other generally includes revenue and expenses that have not been allocated to business segments and the results of smaller businesses that are not included in the main business segments. The following table reconciles total pretax income for business segments to consolidated pretax income (in millions): 14 BUSINESS SEGMENT RESULTS (continued) NINE MONTHS ENDED SEPTEMBER 30, 2001 2000 - -------------------------------------------------------------------------------- Total pretax income reported for business segments $ 200 $ 26 Earnings associated with unassigned capital 162 215 SFAS 133 transition adjustment 13 -- Gain on transfer of BTH* -- 561 Liquidation of BT (Far East) Limited (16) -- Restructuring releases -- 46 Other unallocated amounts (64) (139) - -------------------------------------------------------------------------------- Consolidated pretax income $ 295 $ 709 ================================================================================ * Gain is net of foreign currency translation losses realized on the transfer of BTH. REVENUE Net Interest Revenue The table below presents net interest revenue, average balances and average rates. The tax equivalent adjustment is made to present the revenue and yields on certain assets, primarily tax-exempt securities and loans, as if such revenue were taxable. Nine Months Ended September 30, ------------------- 2001 2000 - --------------------------------------------------------------------------- NET INTEREST REVENUE (in millions) Book basis $ 500 $ 388 Tax equivalent adjustment 1 3 - --------------------------------------------------------------------------- Fully taxable basis 501 $ 391 =========================================================================== AVERAGE BALANCES (in millions) Interest-earning assets $46,291 $50,198 Interest-bearing liabilities 42,349 47,143 - --------------------------------------------------------------------------- Earning assets financed by noninterest-bearing funds $ 3,942 $ 3,055 =========================================================================== AVERAGE RATES (fully taxable basis) Yield on interest-earning assets 5.97% 7.08% Cost of interest-bearing liabilities 4.94 6.43 - --------------------------------------------------------------------------- Interest rate spread 1.03 0.65 Contribution of noninterest-bearing funds 0.42 0.39 - --------------------------------------------------------------------------- Net interest margin 1.45% 1.04% =========================================================================== Net interest revenue for the first nine months of 2001 totaled $500 million, up $112 million or 29 percent, from the first nine months of 2000. In the first nine months of 2001, the interest rate spread was 1.03 percent compared to 0.65 percent in the prior period. Net interest margin increased from 1.04 percent to 1.45 percent. The yield on interest-earning assets decreased by 111 basis points and the cost of interest-bearing liabilities decreased by 149 basis points. Average interest-earning assets totaled $46.3 billion for the first nine months of 2001, down $3.9 billion from the same period in 2000. The decrease was primarily attributable to a decline in average interest-earning trading assets. Average interest-bearing liabilities totaled $42.3 billion for the first nine months of 2001, down $4.8 billion from the same period in 2000. The decrease was primarily attributable to a decline in interest-bearing deposits and long-term debt. 15 Noninterest Revenue Trading revenue for the first nine months of 2001 was down $61 million from the first nine months of 2000. The decrease is primarily attributable to the transfer of BTH in the third quarter of 2000. Fiduciary and funds management revenue for the first nine months of 2001 was down $85 million, or 14 percent, from the $595 million earned in the first nine months of 2000. The decrease is due primarily to lower revenues from custodian fees, employee benefit plan fees and incentive performance fees due principally to declining asset prices and reduced levels of market activity. Corporate finance fees of $77 million for the first nine months of 2001 decreased $30 million from the $107 million earned in the first nine months of 2000. The decline is primarily attributable to lower revenues for syndication and commitment fees, reflecting lower levels of market activity. Other fees and commissions of $194 million for the first nine months of 2001 decreased $41 million from the prior year period primarily due to lower revenues from fees in lieu of compensating balances, brokers commissions and deposit account service charges. Other noninterest revenue totaled $350 million for the first nine months of 2001 compared to $697 million in the prior year period. The prior year period includes the gain on the transfer of BTH. The decrease in the first nine months of 2001 is also due to lower revenue from both realized and unrealized equity securities due to the transfer of BTH in the third quarter of 2000 and the implementation of SFAS 133. Prior to May 2001, the Corporation accounted for servicing agreements with its affiliates on a net basis and included the net amount in other noninterest expenses in the consolidated statement of income. Beginning in May 2001, revenue from services provided to affiliates are included in other noninterest revenue while expenses incurred from services provided by affiliates are included in other noninterest expenses. Business segment results, as discussed on pages 11 to 14, will continue to reflect charges for servicing agreements on a net basis. As a result, the aforementioned decreases were partially offset by increased revenue from these servicing agreements. 16 Provisions and allowances for credit losses The allowances for credit losses represent management's estimate of probable losses that have occurred as of the date of the financial statements. The allowance for credit losses-loans is reported as a reduction of loans and the allowance for credit losses for other credit-related items is reported in other liabilities. For the first nine months of 2001, the Corporation recorded a provision for credit losses - loans of $133 million. Due to the current economic conditions, the Corporation has seen a decline in the credit quality of its portfolio and anticipates this trend to continue into the fourth quarter of 2001. The provisions for credit losses and the other changes in the allowances for credit losses are shown below (in millions). Nine Months Ended September 30, ----------------- Total allowances for credit losses 2001 2000 - -------------------------------------------------------------------------------- LOANS Balance, beginning of period $ 424 $ 491 Provision for credit losses 133 (44) Allowance related to entities sold/transferred (a) (23) (6) Net charge-offs Charge-offs 160 48 Recoveries (1) 12 - -------------------------------------------------------------------------------- Total net charge-offs 159 36 - -------------------------------------------------------------------------------- Balance, end of period (b) $ 375 $ 405 ================================================================================ OTHER LIABILITIES Balance, beginning of period $ 22 $ 24 Provision for credit losses (11) (12) - -------------------------------------------------------------------------------- Balance, end of period $ 11 $ 12 ================================================================================ (a) Reflects the allowance for credit losses - loans of legal entities transferred to Deutsche Bank on the date of transfer and of legal entities sold on the date of sale. (b) Comprised of the following components: Specific allowance $286 $315 Inherent loss* 89 90 ---- ---- $375 $405 ==== ==== *Includes country risk. 17 NONPERFORMING ASSETS The components of cash basis loans and other real estate are shown below ($ in millions). September 30, December 31, 2001 2000 - -------------------------------------------------------------------------------- CASH BASIS LOANS Domestic Commercial and industrial $750 $766 Secured by real estate 13 28 Financial institutions 19 20 - -------------------------------------------------------------------------------- Total domestic 782 814 - -------------------------------------------------------------------------------- International Commercial and industrial 126 10 Secured by real estate -- 1 Other -- 15 - -------------------------------------------------------------------------------- Total international 126 26 - -------------------------------------------------------------------------------- Total cash basis loans $908 $840 ================================================================================ Ratio of cash basis loans to total gross loans 4.3% 3.7% ================================================================================ Ratio of allowance for credit losses-loans to cash basis loans 41% 50% ================================================================================ OTHER REAL ESTATE $117 $109 ================================================================================ There were no loans 90 days or more past due and still accruing interest at September 30, 2001 and December 31, 2000. An analysis of the changes in the Corporation's total cash basis loans during the first nine months of 2001 follows (in millions): Balance, December 31, 2000 $ 840 Net transfers to cash basis loans 427 Net transfers to other real estate (11) Net paydowns (65) Charge-offs (160) Other (57) Loan sales (28) Transfers out of Bankers Trust Corporation* (38) - --------------------------------------------------------------------------- Balance, September 30, 2001 $ 908 =========================================================================== * Reflects the cash basis loans of certain legal entities transferred to Deutsche Bank or sold. The Corporation's total cash basis loans amounted to $908 million at September 30, 2001, up $68 million, or 8 percent, from December 31, 2000. Impaired loans under SFAS 114, were $1,041 million and $858 million at September 30, 2001 and December 31, 2000, respectively. Included in these amounts were $852 million and $725 million of loans that required a specific allowance of $286 million and $344 million at those same dates, respectively. 18 NONPERFORMING ASSETS (continued) The following table sets forth the approximate effect on interest revenue of cash basis loans. This disclosure reflects the interest on loans that were carried on the balance sheet and classified as cash basis at September 30 of each year. The rates used in determining the gross amount of interest that would have been recorded at the original rate were not necessarily representative of current market rates.
Nine Months Ended September 30, ----------------- (in millions) 2001 2000 - ------------------------------------------------------------------------------------------- Domestic Loans Gross amount of interest that would have been recorded at original rate $65 $51 Less, interest, net of reversals, recognized in interest revenue 14 34 - ------------------------------------------------------------------------------------------- Reduction of interest revenue 51 17 - ------------------------------------------------------------------------------------------- International Loans Gross amount of interest that would have been recorded at original rate 6 3 Less, interest, net of reversals, recognized in interest revenue 3 -- - ------------------------------------------------------------------------------------------- Reduction of interest revenue 3 3 - ------------------------------------------------------------------------------------------- Total reduction of interest revenue $54 $20 ===========================================================================================
19 EXPENSES As compared to the first nine months of 2000, salaries and commissions expense decreased $36 million, or 10 percent. The decrease is primarily due to a decrease in the average number of employees due to staff reductions throughout 2000. Incentive compensation and employee benefits decreased $79 million, or 25 percent from the prior year-to-date period. The decrease is a result of the previously mentioned decrease in the average number of employees. In addition, there was a decrease in outplacement and counseling expense resulting from termination of employees. Other noninterest expense decreased $158 million from the prior year-to-date period. The prior year-to-date period included charges payable to Deutsche Bank affiliated companies relating to compensation arrangements. Prior to May 2001, the Corporation accounted for servicing agreements with its affiliates on a net basis and included the net amount in other noninterest expenses in the consolidated statement of income. Beginning in May 2001, revenue from services provided to affiliates are included in other noninterest revenue while expenses incurred from services provided by affiliates are included in other noninterest expenses. Business segment results, as discussed on pages 11 to 14, will continue to reflect charges for servicing agreements on a net basis. INCOME TAXES Income tax expense for the first nine months of 2001 amounted to $90 million, compared to income tax expense of $410 million for the first nine months of 2000. The effective tax rate was 31 percent for the nine months ended September 30, 2001, and 58 percent for the nine months ended September 30, 2000. The tax expense and the effective tax rate for the nine months ended September 30, 2000 is not comparable to the current year period due to the tax expense incurred on the gain on the transfer of BTH. 20 TRADING DERIVATIVES The Corporation manages trading positions in a variety of derivative contracts. All positions are reported at fair value and changes in fair values are reflected in trading revenue as they occur. The following table reflects the gross fair values and balance sheet amounts of trading derivative financial instruments:
September 30, 2001 December 31, 2000 ---------------------------------------------- (in millions) Assets (Liabilities) Assets (Liabilities) - -------------------------------------------------------------------------------------- OTC FINANCIAL INSTRUMENTS Interest Rate and Currency Swap contracts $ 933 $ (907) $ 999 $ (949) Interest Rate Contracts Options purchased 73 104 Options written (63) (82) Foreign Exchange Rate Contracts Spot and forwards 1,270 (146) 95 (3) Options purchased 5 Options written (5) Equity-related contracts 759 (499) 901 (933) Commodity-related and other contracts 803 (803) 1,885 (1,914) - -------------------------------------------------------------------------------------- Total Gross Fair Values 3,838 (2,418) 3,989 (3,886) Impact of Netting Agreements (1,147) 1,147 (1,994) 1,994 - -------------------------------------------------------------------------------------- TOTAL FAIR VALUE (a) $ 2,691 $(1,271) $ 1,995 $(1,892) ==============================================
(a) As reflected on the balance sheet in "Trading Assets" and "Trading Liabilities." 21 DERIVATIVES USED FOR HEDGING PURPOSES On January 1, 2001, the Corporation adopted SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133, as further amended by SFAS 138, established accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires companies to recognize all derivatives on the balance sheet as assets or liabilities measured at fair value. The transition adjustment related to SFAS 133 on January 1, 2001 resulted in an increase in net income of $8 million (net of tax of $5 million). This amount was due to the adjustment required to bring certain hedging derivatives to fair value at January 1, 2001, offset by the adjustment required to bring the related hedged items to fair value, pursuant to the SFAS 133 transition provisions for past hedging relationships characterized as fair value type hedges. The Corporation uses derivatives for hedging purposes to manage exposures to interest rate risk associated with certain liabilities, primarily long-term debt. For example, the majority of the Corporation's derivatives used for hedging purposes involve interest rate swaps used to transform fixed-rate-paying liabilities into variable-rate-paying liabilities. These hedging relationships are designated as fair value hedges under SFAS 133 and accordingly, the changes in the fair value of the derivatives used as hedges are generally offset by the changes in the fair value of the hedged liabilities. Any hedge ineffectiveness, that is, the difference between the change in fair value of the derivative and the change in fair value of the hedged liabilities, is recognized primarily in other noninterest revenue in the consolidated statement of income. The ineffective portion of the fair value hedges was immaterial for the three months and nine months ended September 30, 2001. 22 REGULATORY CAPITAL The Corporation's banking subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. The Federal Reserve Board's ("FRB") risk-based capital guidelines address the capital adequacy for a bank. These guidelines include a definition of capital, a framework for calculating risk-weighted assets, and minimum risk-based capital ratios to be maintained by a bank. A bank's risk-based capital ratios are calculated by dividing its qualifying capital by its risk-weighted assets. The FRB also has a minimum Leverage ratio that is used as a supplement to the risk-based capital ratios in evaluating the capital adequacy of a bank. The Leverage ratio is calculated by dividing Tier 1 Capital by adjusted quarterly average assets. Based on its respective capital ratios at September 30, 2001, the Corporation's principal banking subsidiary, Bankers Trust Company ("BTCo") is well capitalized, as defined in the applicable regulations. BTCo's ratios are presented in the table below.
FRB To Be Well Actual as of Actual as of Minimum for Capitalized Under September 30, December 31, Capital Adequacy Regulatory 2001 2000 Purposes Guidelines - -------------------------------------------------------------------------------------------------- Risk-based capital ratios Tier 1 capital 25.2% 24.0% 4.0% 6.0% Total capital 27.5 26.5% 8.0% 10.0% Leverage ratio 13.9% 16.0% 3.0% 5.0%
The following are the essential components used in calculating BTCo's risk-based capital ratios: Actual as of Actual as of (in millions) September 30, 2001 December 31, 2000 - -------------------------------------------------------------------------------- Tier 1 Capital $ 6,345 $ 6,161 Tier 2 Capital 579 651 - -------------------------------------------------------------------------------- Total Capital $ 6,924 $ 6,812 ================================================================================ Total risk-weighted assets $25,145 $25,683 ================================================================================ As permitted by the FRB's Supervisory Letter SR 01-1, the Corporation is no longer required to comply with the FRB's capital adequacy guidelines since it is owned and controlled by a foreign bank that is a financial holding company which has been determined by the FRB to be well-capitalized and well-managed. Comparing September 30, 2001 to December 31, 2000, BTCo's Leverage ratio decreased 210 basis points primarily due to an increase of $7.1 billion in quarterly average assets. 23 LIQUIDITY Liquidity is the ability to have funds available at all times to meet the commitments of the Corporation. The Corporation's liquidity process has become an integral part of Deutsche Bank's global liquidity process. Management's policy is designed to maintain Deutsche Bank's ability to fund assets and meet any contractual financial obligations on a timely basis at a fair market cost under any market conditions. While Deutsche Bank and the Corporation manage their liquidity positions on a day-to-day basis to meet ongoing funding needs, the planning and management process also encompasses contingency planning to address even the most severe liquidity events. Short-term unsecured financing for the Corporation is available under an uncommitted credit line with its parent, Deutsche Bank. At September 30, 2001, this credit line totaled approximately $4.6 billion. Of this amount, approximately $3.0 billion was drawn. In addition, the Corporation has received unsecured financing from Deutsche Bank via its indirect subsidiaries in the amount of $3.6 billion. RELATED PARTY TRANSACTIONS In conjunction with the Acquisition and subsequent integration of the Corporation into Deutsche Bank's management structure, the Corporation has entered into various related party transactions with Deutsche Bank and its affiliated entities. For further discussion, see page 58 of the Corporation's 2000 Annual Report on Form 10-K. The Corporation also has related party balances with Deutsche Bank or affiliated companies. These balances generally include interest-bearing deposits with banks, securities purchased under resale agreements, securities loaned and securities sold under repurchase agreements, other short-term borrowings, and derivative contracts. These transactions are entered into in the ordinary course of business. Included in the Corporation's financial statements were the following balances with such affiliates. (in millions) September 30, 2001 December 31, 2000 - -------------------------------------------------------------------------------- Interest-earning assets $23,030 $22,230 Noninterest-earning assets 3,199 2,803 Interest-bearing liabilities 19,312 14,507 Noninterest-bearing liabilities 4,391 4,815 The Corporation's results from operations may not necessarily be indicative of results that would have existed had the Corporation operated as an unaffiliated entity. 24 ACCOUNTING DEVELOPMENTS In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or Disposal of Long-lived Assets." This statement is effective for fiscal years beginning after December 15, 2001. SFAS 144 includes a requirement that all long-lived assets to be disposed of and discontinued operations are to be measured at the lower of carrying amount or fair value less cost to sell. The Corporation is in the process of determining the impact, if any, of adopting SFAS 144. In July 2001, the FASB issued SFAS 141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets." SFAS 141 requires that all business combinations initiated after June 30, 2001 be accounted for by the purchase method and eliminates the use of the pooling-of-interests method. This requirement will have no impact on the Corporation since, as a subsidiary, it could not meet the requirements for the pooling-of-interests method. Other provisions of SFAS 141 and SFAS 142 require that, as of January 1, 2002, goodwill no longer be amortized, reclassifications between goodwill and other intangible assets be made based upon certain criteria, and that tests for impairment of goodwill be performed on an ongoing basis. The Corporation is in the process of evaluating the potential impact of the new standards on its consolidated financial statements as plans for implementation proceed. In September 2000, the FASB issued SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125" ("SFAS 140"). SFAS 140 carries forward most of the provisions of SFAS 125. It includes provisions for additional disclosure requirements, which were effective for fiscal years ending after December 15, 2000, as well as new criteria to be applied prospectively, effective for the quarter commencing April 1, 2001, for nonconsolidation of qualifying special purpose entities. The adoption of SFAS 140 for financial assets transferred after March 31, 2001 does not impact previously reported transactions and did not have a material impact on the Corporation's net income, stockholder's equity or total assets in subsequent reporting periods in 2001. 25 LITIGATION On September 25, 2000, litigation was commenced in the District Court in Geneva, Switzerland (Torras Hostench London Limited and Grupo Torras S.A. v. Bonsai Investment S.A. (formerly Bankers Trust AG) and Bankers Trust Corporation), against the Corporation and one of its subsidiaries. The litigation alleges the Corporation and its subsidiary are liable to the plaintiffs for breach of contract, breach of fiduciary duty and fraud in connection with a number of financial transactions occurring during 1990 and 1991. The plaintiffs seek damages of approximately $1 billion. The Corporation believes it and its subsidiary have meritorious defenses and intends to vigorously defend this matter. Since January 2001, Bankers Trust Company has been named as one of numerous defendants in more than a dozen actions (certain of which are brought as class actions) filed in the Superior Court of the State of California, County of Los Angeles, all of which have been consolidated and assigned to a single judge. Pursuant to the Court's orders, plaintiffs have served two amended model complaints, one denominated as a class action and the other denominated as an individual action. The actions arise out of the default of Stanwich Financial Services Corporation in connection with certain structured settlement agreements entered into principally in the early 1980s. Stanwich is presently in reorganization proceedings under the United States Bankruptcy Code. Bankers Trust Company is alleged to have served as "trustee" under certain trust agreements in the mid 1990s. On July 17, 2001, the California Court sustained demurrers by Bankers Trust Company to the model class and individual complaints in these actions. Plaintiffs have filed second amended model complaints alleging claims of breach of contract, breach of trust, breach of fiduciary duty, tortious breach of the implied covenant of good faith and fair dealing, intentional interference with contract, negligence, bad faith denial of contract, constructive fraud, reformation, unfair business practices and declaratory relief, and seeking unspecified compensatory and punitive damages and certain other relief. Two other individual actions brought on behalf of other structured settlement payees are pending in Montana. The Corporation believes that Bankers Trust Company has meritorious defenses in these actions and intends to defend these matters vigorously. In addition to the matters described above, various legal actions and proceedings involving Bankers Trust and various of its subsidiaries are currently pending. Management, after discussions with counsel, does not anticipate that losses, if any, resulting from such actions and proceedings would be material. 26 FORWARD-LOOKING STATEMENTS Certain sections of this report contain forward-looking statements and can be identified by the use of such words and phrases as "anticipates," "expects," "may affect," and "estimates," and similar expressions. These statements are subject to certain risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the current statements. See also "Important Factors Relating to Forward-Looking Statements" contained in the Corporation's Annual Report. 27 Part II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (4) Instruments Defining the Rights of Security Holders, Including Indentures (v) - The Corporation hereby agrees to furnish to the Commission, upon request, a copy of any instruments defining the rights of security holders issued by Bankers Trust Corporation or its subsidiaries. (12) Statement re Computation of Ratios (b) Reports on Form 8-K - Bankers Trust Corporation did not file any reports on Form 8-K for the quarter ended September 30, 2001. 28 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, on November 14, 2001. Bankers Trust Corporation By: /s/ RONALD HASSEN ---------------------------------- RONALD HASSEN Senior Vice President, Controller and Principal Accounting Officer 29 BANKERS TRUST CORPORATION FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2001 EXHIBIT INDEX (4) Instruments Defining the Rights of Security Holders, Including Indentures (v) - Long-term Debt Indentures (a) (12) Statement re computation of ratios (a) - Computation of Consolidated Ratios of Earnings to Fixed Charges (a) The Corporation hereby agrees to furnish to the Commission, upon request, a copy of any instruments defining the rights of holders of long-term debt issued by Bankers Trust Corporation or its subsidiaries. EX-12 4 d27355_exh12.txt COMPUTATION OF CONSOLIDATED RATIOS EXHIBIT 12 BANKERS TRUST CORPORATION AND SUBSIDIARIES COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES (dollars in millions)
Nine Months Ended Year Ended December 31, Sept. 30, ------------------------------------------------------------ Earnings: 1996 1997 1998 1999 2000 2001 ------------------------------------------------------------ 1. Income (loss) before income taxes $ 1,131 $ 1,239 $ (77) $(1,415) $ 900 $ 295 2. Add: Fixed charges excluding capitalized interest (Line 10) 5,483 5,959 6,954 3,654 3,027 1,578 3. Less: Equity in undistri- buted income of unconsolidated subsidiaries and affiliates 30 (117) 15 75 42 115 ------------------------------------------------------------ 4. Earnings including interest on deposits 6,584 7,315 6,862 2,164 3,885 1,758 5. Less: Interest on deposits 1,355 2,076 2,195 1,424 998 529 ------------------------------------------------------------ 6. Earnings excluding interest on deposits $ 5,229 $ 5,239 $ 4,667 $ 740 $ 2,887 $ 1,229 ------------------------------------------------------------ Fixed Charges: 7. Interest Expense $ 5,451 $ 5,926 $ 6,919 $ 3,612 $ 2,988 $ 1,566 8. Estimated interest component of net rental expense 32 33 35 42 39 12 9. Amortization of debt issuance expense -- -- -- -- -- -- ------------------------------------------------------------ 10. Total fixed charges including interest on deposits and excluding capitalized interest 5,483 5,959 6,954 3,654 3,027 1,578 11. Add: Capitalized interest -- -- -- -- -- -- ------------------------------------------------------------ 12. Total fixed charges 5,483 5,959 6,954 3,654 3,027 1,578 13. Less: Interest on deposits (Line 5) 1,355 2,076 2,195 1,424 998 529 ------------------------------------------------------------ 14. Fixed charges excluding interest on deposits $ 4,128 $ 3,883 $ 4,759 $ 2,230 $ 2,029 $ 1,049 ============================================================ Consolidated Ratios of Earnings to Fixed Charges: Including interest on deposits (Line 4/Line 12) 1.20 1.23 .99 N/A 1.28 1.11 ============================================================ Excluding interest on deposits (Line 6/Line 14) 1.27 1.35 .98 N/A 1.42 1.17 ============================================================
For the years ended December 31, 1999 and 1998, earnings, as defined, did not cover fixed charges, including and excluding interest on deposits by $1,490 million and $92 million, respectively, as a result of a net loss recorded during the period. N/A - Not Applicable. -----END PRIVACY-ENHANCED MESSAGE-----