-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NtWh+i5aYo7YtdtsEVOXl07jpM8pOS/bX/59uYhZCJJVFXrHOcrzM51J1ManBN1O 4pIJskNc+R3rDiijzr/m3g== 0000950130-94-001234.txt : 19940817 0000950130-94-001234.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950130-94-001234 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKERS TRUST NEW YORK CORP CENTRAL INDEX KEY: 0000009749 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 136180473 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 033-50395 FILM NUMBER: 94544611 BUSINESS ADDRESS: STREET 1: 280 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122502500 MAIL ADDRESS: STREET 1: 280 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: BT NEW YORK CORP DATE OF NAME CHANGE: 19671107 424B2 1 PROSPECTUS SUPPLEMENT Rule No. 424(b)2 File No. 33-50395 PROSPECTUS SUPPLEMENT (To Prospectus dated October 15, 1993) 6,000,000 Depositary Shares LOGO Bankers Trust New York Corporation Each Representing a One-Hundredth Interest in a Share of Adjustable Rate Cumulative Preferred Stock, Series R ($2,500 Liquidation Preference) --------------- Each of the depositary shares offered hereby (the "Depositary Shares") represents a one-hundredth interest in a share of the Corporation's Adjustable Rate Cumulative Preferred Stock, Series R ($2,500 Liquidation Preference) (the "Series R Preferred Stock") deposited with Harris Trust Company of New York, as depositary (the "Depositary"), and, through the Depositary, will entitle the holder thereof to all proportional rights and preferences of the Series R Preferred Stock (including dividend, voting, redemption and liquidation rights). The proportionate liquidation preference of each Depositary Share will be $25.00. See "Certain Terms of the Depositary Shares" in this Prospectus Supplement and "Depositary Shares" in the Prospectus accompanying this Prospectus Supplement. --------------- Dividends on the Series R Preferred Stock will be cumulative from the date of original issuance and will be payable quarterly on March 1, June 1, September 1 and December 1 of each year. All dividends payable on shares of the Series R Preferred Stock to the Depositary, as record holder of the Series R Preferred Stock, will be distributed to the record holders of the Depositary Shares representing such Series R Preferred Stock in accordance with the Deposit Agreement. See "Depositary Shares--Dividends and Other Distributions" in the Prospectus accompanying this Prospectus Supplement. --------------- The dividend rate for the dividend period ending on November 30, 1994 will be 6.42% per annum, which is equivalent to $.4458 per Depositary Share. Thereafter, the dividend rate on the Series R Preferred Stock will be equal to 84.5% of the Effective Rate (as defined below) in effect from time to time, but in no event less than 4 1/2% or more than 10 1/2% per annum. The "Effective Rate" for each quarterly dividend period will be the highest of the "Treasury Bill Rate," the "Ten Year Constant Maturity Rate" and the "Thirty Year Constant Maturity Rate" determined in advance of such dividend period. See "Certain Terms of the Series R Preferred Stock--Dividend Rights." --------------- The Series R Preferred Stock will be redeemable, in whole or in part, at the option of the Corporation on or after September 1, 1999 at $2,500 per share (which is equivalent to $25 per Depositary Share) plus accrued and unpaid dividends to the redemption date. See "Certain Terms of the Series R Preferred Stock--Redemption." --------------- Application will be made to list the Depositary Shares on the New York Stock Exchange. See "Underwriting." --------------- THE DEPOSITARY SHARES AND SERIES R PREFERRED STOCK ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY. --------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------- PRICE $25 A DEPOSITARY SHARE ---------------
UNDERWRITING PRICE TO DISCOUNT AND PROCEEDS TO PUBLIC(1) COMMISSIONS(2)(3) CORPORATION(1)(3)(4) --------- ----------------- -------------------- Per Depositary Share....... $25.00 $.7875 $24.2125 Total...................... $150,000,000 $4,725,000 $145,275,000
- ------- (1) Plus accrued dividends, if any, from the date of original issuance. (2) The Corporation has agreed to indemnify the Underwriters against certain liabilities, including certain liabilities under the Securities Act of 1933. See "Underwriting." (3) The underwriting discount will be $.50 per Depositary Share with respect to any Depositary Shares sold to certain institutions. Therefore, to the extent of any such sales to such institutions, the actual total underwriting discount will be less than, and the actual total proceeds to the Corporation will be greater than, the amounts shown in the table above. (4) Before deduction of expenses payable by the Corporation estimated at $100,000. --------------- The Depositary Shares are offered, subject to prior sale, when, as and if accepted by the Underwriters named herein, and subject to approval of certain matters by Sullivan & Cromwell, counsel for the Underwriters. It is expected that delivery of the Depositary Shares will be made on or about August 22, 1994, at the offices of Morgan Stanley & Co. Incorporated, New York, New York, against payment therefor in New York Clearing House funds. --------------- MORGAN STANLEY & CO. Incorporated BEAR, STEARNS & CO. INC. LEHMAN BROTHERS SALOMON BROTHERS INC SMITH BARNEY INC. GOLDMAN, SACHS & CO. BT SECURITIES CORPORATION KIDDER, PEABODY & CO. Incorporated August 12, 1994 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ---------------- BANKERS TRUST NEW YORK CORPORATION GENERAL Bankers Trust New York Corporation is a bank holding company, incorporated under the laws of the State of New York in 1965. At June 30, 1994, the Corporation had consolidated total assets of $103.6 billion. The Corporation's principal banking subsidiary is Bankers Trust Company ("Bankers"). Bankers, founded in 1903, is among the largest commercial banks in New York City and the United States, based on consolidated total assets. The Corporation concentrates its financial and managerial resources on selected markets and services its clients by meeting their needs for financing, advisory, processing and sophisticated risk management solutions. The core organizational units of the Corporation are the Global Investment Bank, Global Markets Proprietary, Global Investment Management, Global Emerging Markets and Global Assets. Other business activities include real estate finance and principal investing. The Corporation also conducts its own proprietary operations. Among the institutional market segments served are corporations, banks, other financial institutions, governments and agencies, retirement plans, not-for-profit organizations, wealthy individuals, foundations, private companies and individual investors. Bankers originates loans and other forms of credit, accepts deposits, arranges financings and provides numerous other commercial banking and financial services. Bankers provides a broad range of financial advisory services to its clients. It also engages in the proprietary trading of currencies, securities, derivatives and commodities. The Corporation is a legal entity separate and distinct from its subsidiaries, including Bankers. There are various legal limitations governing the extent to which the Corporation's banking subsidiaries may extend credit, pay dividends or otherwise supply funds to, or engage in transactions with, the Corporation or certain of its other subsidiaries. The rights of the Corporation to participate in any distribution of assets of any subsidiary upon its dissolution, winding-up, liquidation or reorganization or otherwise are subject to the prior claims of creditors of that subsidiary, except to the extent that the Corporation may itself be a creditor of that subsidiary and its claims are recognized. Claims on the Corporation's subsidiaries by creditors other than the Corporation include long-term debt and substantial obligations with respect to deposit liabilities, securities sold, not yet purchased, federal funds purchased, securities sold under repurchase agreements and commercial paper, as well as various other liabilities. The Corporation's principal executive offices are located at 280 Park Avenue, New York, New York 10017, and its telephone number is (212) 250-2500. CONSOLIDATED RATIOS OF EARNINGS TO COMBINED FIXEDCHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
YEAR ENDED DECEMBER 31, SIX MONTHS ------------------------ ENDED 1989 1990 1991 1992 1993 JUNE 30, 1994 ---- ---- ---- ---- ---- ------------- Excluding Interest on Deposits........... 0.67 1.28 1.37 1.41 1.69 1.32 Including Interest on Deposits........... 0.82 1.15 1.21 1.26 1.47 1.25
For purposes of computing these consolidated ratios, earnings represent income (loss) before income taxes, cumulative effects of accounting changes and equity in undistributed income of unconsolidated subsidiaries and affiliates, plus fixed charges excluding capitalized interest. Fixed charges represent all interest expense (ratios are presented both excluding and including interest on deposits), the portion of net rental expense that is deemed representative of the interest factor, the amortization of debt issuance expense and capitalized interest. Fixed charges are then combined with preferred stock dividend requirements, adjusted to a pretax basis, on the outstanding preferred stock. For the year ended December 31, 1989, earnings, as defined, did not cover combined fixed charges and preferred stock dividend requirements, excluding and including interest on deposits, by $843 million as a result of the 1989 special provision for refinancing country credit losses of $1.6 billion. S-2 SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION The following selected consolidated financial data at and for each of the three years in the period ended December 31, 1993 has been derived from and is qualified in its entirety by the detailed financial information and consolidated financial statements of the Corporation included in its Annual Report on Form 10-K for the year ended December 31, 1993 ("Form 10-K"), which is incorporated herein by reference. The consolidated financial data at and for each of the six-month periods ended June 30, 1993 and 1994 is unaudited but, in the opinion of management, all material adjustments necessary for a fair presentation of its financial position at such dates and its results of operations for such periods have been made. All such adjustments were of a normal recurring nature, except for the cumulative effects of accounting changes. The results for the six months ended June 30, 1994 are not necessarily indicative of the results for the full year or any other interim period.
AT OR FOR THE AT OR FOR THE SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------- ----------------- 1991 1992 1993 1993 1994 ------- ------- ------- ------- -------- ($ IN MILLIONS, EXCEPT PER SHARE DATA) CONDENSED CONSOLIDATED STATEMENT OF INCOME: Interest revenue................ $4,322 $4,219 $4,436 $2,088 $2,466 Interest expense................ 3,585 3,072 3,122 1,489 1,787 ------- ------- ------- ------- -------- Net interest revenue............ 737 1,147 1,314 599 679 Provision for credit losses..... 238 225 93 53 -- ------- ------- ------- ------- -------- Net interest revenue after pro- vision for credit losses....... 499 922 1,221 546 679 Noninterest revenue............. 2,522 2,331 3,364 1,566 1,142 Noninterest expenses............ 2,187 2,347 3,035 1,430 1,329 ------- ------- ------- ------- -------- Income before income taxes and cumulative effects of account- ing changes.................... 834 906 1,550 682 492 Income taxes.................... 167 267 480 201 147 ------- ------- ------- ------- -------- Income before cumulative effects of accounting changes.......... 667 639 1,070 481 345 Cumulative effects of accounting changes (1).................... -- 446 (75) (75) -- ------- ------- ------- ------- -------- Net income...................... $ 667 $1,085 $ 995 $ 406 $ 345 ======= ======= ======= ======= ======== Net income applicable to common stock.......................... $ 633 $1,055 $ 972 $ 394 $ 331 ======= ======= ======= ======= ======== PER COMMON SHARE DATA: Primary earnings per share Income before cumulative effects of accounting changes.......... $7.65 $7.23 $12.40 $5.54 $3.99 Net income...................... $7.65 $12.53 $11.51 $4.65 $3.99 Fully diluted earnings per share Income before cumulative effects of accounting changes.......... $7.65 $7.22 $12.29 $5.53 $3.99 Net income...................... $7.65 $12.51 $11.41 $4.64 $3.99 Cash dividends declared......... $2.605 $2.88 $3.24 $1.56 $1.80 --as a percentage of net income (2)............................ 34% 40% 26% 28% 45% Book value (3).................. $34.93 $43.23 $51.90 $45.66 $53.37 PROFITABILITY RATIOS: Return on average common stock- holders' equity (2)............ 23.10% 19.52% 26.33% 24.93% 15.36% Return on average total assets (2)............................ 1.09% .86% 1.25% 1.17% .66% CONSOLIDATED BALANCES, END OF PE- RIOD: Trading assets.................. $23,580 $29,908 $48,276 $39,972 $54,669 Loans........................... $17,047 $17,318 $15,200 $16,101 $13,223 Total assets.................... $63,959 $72,886 $92,082 $83,987 $103,639 Deposits........................ $22,834 $25,071 $22,776 $24,519 $20,462 Securities sold under repurchase agreements..................... $12,343 $17,451 $23,834 $25,017 $21,509 Other short-term borrowings..... $13,052 $11,779 $18,992 $12,008 $19,188 Long-term debt.................. $3,081 $3,992 $5,597 $4,463 $5,582 Common stockholders' equity..... $2,912 $3,621 $4,284 $3,836 $4,343 Total stockholders' equity...... $3,412 $4,121 $4,534 $4,086 $4,793 CONSOLIDATED CAPITAL RATIOS, END OF PERIOD: Common stockholders' equity to total assets................... 4.55% 4.97% 4.65% 4.57% 4.19% Total stockholders' equity to total assets................... 5.33% 5.65% 4.92% 4.87% 4.62% Risk-based capital ratios (1992 year-end guidelines) (4) Tier 1 Capital.................. 6.11% 7.75% 8.50% 8.12% 8.41% Total Capital................... 10.86% 13.64% 14.46% 14.10% 13.82% Leverage Ratio.................. 5.15% 6.05% 6.28% 5.84% 5.97% EMPLOYEES........................ 12,088 12,917 13,571 13,406 13,990
- -------- (1) The Corporation adopted the accounting standards for postretirement benefits other than pensions (SFAS 106) and postemployment benefits (SFAS 112) effective January 1, 1993, and for income taxes (SFAS 109) effective January 1, 1992. (2) These figures exclude the cumulative effects of accounting changes recorded in 1992 and 1993. (3) This calculation includes the effect of common shares issuable under deferred stock awards. (4) The 1992 ratios were not restated in connection with the retroactive adoption of SFAS 109. At both June 30, 1994 and December 31, 1993, all three regulatory capital ratios excluded any benefit from the adoption of SFAS 115. S-3 CONSOLIDATED RESULTS OF OPERATIONS The Corporation earned $345 million, or $3.99 primary earnings per share, for the first six months of 1994. For the six months ended June 30, 1993, income before cumulative effects of accounting changes was $481 million, or $5.54 primary earnings per share. Effects of Accounting Changes On January 1, 1994, the Corporation adopted FASB Interpretation No. 39, "Offsetting of Amounts Related to Certain Contracts." The Interpretation requires that unrealized gains and losses on swaps, forwards, options and similar contracts be recognized as assets and liabilities, except where such gains and losses arise from contracts covered by qualifying master netting agreements. It was the Corporation's former policy to record such unrealized gains and losses on a net basis on the balance sheet. As the result of this adoption, at June 30, 1994 the Corporation's consolidated total assets and total liabilities each increased by approximately $14 billion. Effective January 1, 1993, the Corporation adopted Statements of Financial Accounting Standards ("SFAS") for postretirement benefits other than pensions (SFAS 106) and postemployment benefits (SFAS 112). In adopting SFAS 106 and SFAS 112 the Corporation recorded charges to earnings of $100 million and $7 million, respectively (or $70 million and $5 million, respectively, net of income taxes), in the first quarter of 1993 for the cumulative effects of these changes in accounting principles. Business Functions Analysis Because the Corporation's business is complex in nature and its operations are highly integrated, it is impractical to segregate the respective contributions of the business functions with precision. For example, the Client Advisory function is difficult to split from the Client Finance function, since most complex financings include both an element of advice and the arrangement of credit for the client. Further, transactions undertaken for purposes of Client Financial Risk Management may contain an element of Client Finance or Trading and Positioning. Finally, the Trading and Positioning function serves as an element of support for client-based activities. As a result, estimates and subjective judgments have been made to apportion revenue and expenses among the business functions. In addition, certain revenue and expenses have been excluded from the business functions because, in the opinion of management, they could not be reasonably allocated or because their attribution to a particular function would be distortive. The following table breaks down earnings on the basis of the Corporation's five business functions, which represent its core business activities and are an important tool for analyzing the results of operations. Detailed definitions of these categories, as well as a discussion of the methodology used to calculate their results, appear in the 1993 Annual Report on Form 10-K. Business Functions Profitability (Income Before Cumulative Effects of Accounting Changes--in millions)
SIX MONTHS ---------- SECOND FIRST QTR. QTR. INCREASE INCREASE 1994 1994 (DECREASE) 1994 1993 (DECREASE) ------ ----- ---------- ---- ---- ---------- Client Finance.................. $ 36 $ 43 $ (7) $ 79 $ 30 $ 49 Client Advisory................. 23 30 (7) 53 37 16 Client Financial Risk Manage- ment........................... 50 114 (64) 164 161 3 Client Transaction Processing... 26 32 (6) 58 37 21 Trading and Positioning......... 52 (49) 101 3 226 (223) Unallocated..................... (6) (6) -- (12) (10) (2) ---- ---- ---- ---- ---- ----- Total......................... $181 $164 $ 17 $345 $481 $(136) ==== ==== ==== ==== ==== =====
S-4 Client Finance--Client Finance income in the second quarter of 1994 was $36 million, a $7 million decrease from the strong first quarter results of $43 million. Income for the first half of 1994 rose to $79 million, more than double the result from the comparable half-year period in 1993. The first half growth was principally attributable to strong performance in loan syndications and high yield bond underwritings, accompanied by a decrease in the credit cost related to the loan portfolio. Client Advisory--Client Advisory income declined $7 million in the second quarter of 1994, to $23 million. Income rose over 40 percent in the first half of 1994, to $53 million, versus the comparable half-year period in 1993 as the majority of products earned higher revenue, led by funds management products in Australia. Additionally, both the private banking and core investment management areas also experienced improved revenue performance, offset by increased staffing costs. Performance-based funds management fees were down during the second quarter relative to both the first quarter and comparable 1993 periods. This function also produced improved results at the Corporation's Chilean insurance subsidiary, Consorcio Nacional de Seguros S.A., compared to the prior year's results. Client Financial Risk Management--Client Financial Risk Management income during the second quarter of 1994 slowed by 56 percent to $50 million, compared to the record results achieved in the first quarter, reflecting the generally adverse conditions and uncertain outlook prevailing in the United States and European markets, which tended to curtail client demand in those markets. Income during the first half of 1994 was $164 million, just above the results achieved in the comparable half-year period in 1993. Results by product were all generally comparable with 1993 levels. The demand for risk management products during this period increased substantially over 1993 levels in the emerging markets of Southeast Asia and Latin America. Client Transaction Processing--Client Transaction Processing income declined to $26 million during the second quarter of 1994, from $32 million in the first quarter. Transaction processing volumes generally remained at levels consistent with the first quarter of 1994 and above the comparable 1993 periods. Although revenues declined slightly in the second quarter of 1994, profit margins in core cash management and securities custody and clearance activities remained generally improved relative to the comparable 1993 periods, as expenses were held relatively flat. The period also benefited from slightly higher earnings on balances generated in the business. As a result, Client Transaction Processing income increased 57 percent over the reported 1993 half-year levels, to $58 million. Trading and Positioning--Although the extremely difficult market conditions which prevailed early in the year have abated, the trading environment has continued to remain generally unfavorable in the second quarter of 1994. In this difficult environment, the Corporation posted Trading and Positioning income of $52 million in the second quarter of 1994 including the significant positive impact of the Brazilian Brady bonds and Past-Due Interest bonds sales, versus the first quarter loss of $49 million. As a result, the Corporation posted year-to-date Trading and Positioning income of $3 million. S-5 Revenue The table below shows 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.
SIX MONTHS ENDED JUNE 30, ------------------ 1994 1993 -------- -------- Net Interest Revenue (in millions) Book basis............................................... $ 679 $ 599 Tax equivalent adjustment................................ 42 35 -------- -------- Fully taxable basis...................................... $ 721 $ 634 ======== ======== Average Balances (in millions) Interest-earning assets.................................. $ 77,553 $ 75,317 Interest-bearing liabilities............................. 74,547 68,024 -------- -------- Earning assets financed by noninterest-bearing funds..... $ 3,006 $ 7,293 ======== ======== Average Rates (fully taxable basis) Yield on interest-earning assets......................... 6.52% 5.68% Cost of interest-bearing liabilities..................... 4.83 4.41 -------- -------- Interest rate spread .................................... 1.69 1.27 Contribution of noninterest-bearing funds................ .18 .43 -------- -------- Net interest margin...................................... 1.87% 1.70% ======== ========
Net interest revenue was $679 million for the first six months of 1994, up $80 million, or 13 percent, from the first half of 1993. This increase was primarily attributable to an improved interest rate spread, partially offset by an increase in average interest-bearing liabilities. The Corporation views trading revenue and trading-related net interest revenue in combination, as quantified below (in millions):
SIX MONTHS ENDED JUNE 30, ----------------- 1994 1993 -------- -------- Trading Revenue......................................... $138 $751 Trading-Related Net Interest Revenue.................... 298 239 -------- -------- Total................................................. $436 $990 ======== ========
For the six months ended June 30, 1994, the combined trading revenue and trading-related net interest revenue decreased $554 million. This decline was primarily attributable to lower revenue from proprietary trading and positioning activities, as generally rising interest rates and related volatility in the United States and European markets made positioning activities difficult during the first half of 1994. The main areas of reduced revenue were sovereign bond trading, foreign exchange trading, and the trading of emerging markets debt and equity issues. Also impacting trading revenue and net interest revenue for the six months ended June 30, 1994, as mentioned above, was the sale of Brazilian Brady bonds and Past-Due Interest bonds. S-6 Shown below is a comparison of the components of noninterest revenue (in millions).
SIX MONTHS ENDED JUNE 30, ----------------- INCREASE 1994 1993 (DECREASE) -------- -------- ---------- Trading........................................ $ 138 $ 751 $(613) Fiduciary and funds management................. 375 335 40 Fees and commissions Corporate finance fees....................... 223 180 43 Service charges on deposit accounts.......... 44 47 (3) Acceptance and letters of credit commissions. 21 25 (4) Other........................................ 89 68 21 -------- -------- ----- Total fees and commissions................. 377 320 57 -------- -------- ----- Securities available for sale gains............ 23 -- 23 Investment securities gains ................... -- 12 (12) Other noninterest revenue Insurance premiums........................... 96 65 31 Net revenue from equity investment transac- tions, including write-offs................. 55 58 (3) Other........................................ 78 25 53 -------- -------- ----- Total other noninterest revenue............ 229 148 81 -------- -------- ----- Total noninterest revenue.................. $1,142 $1,566 $(424) ======== ======== =====
Fiduciary and funds management revenue of $375 million increased $40 million, or 12 percent, from the first six months of 1993. Continued growth in private banking assets under management contributed significantly to this increase. Increases were also recorded by most other business activities within this revenue category, except for performance-based fees from foreign exchange funds managed, which declined during this period. Fees and commissions increased $57 million, or 18 percent, from the first half of 1993. The $43 million, or 24 percent, increase in corporate finance fees was due mostly to higher fees from loan syndication, private placement and financial advisory activities, offset in part by lower leasing syndication fees. Other noninterest revenue totaled $229 million, up $81 million from the first half of 1993. This increase was due to several factors including higher insurance premium revenue from operations in Chile, the impact of an insurance settlement related to the January 1993 fire at the Corporation's headquarters at 280 Park Avenue, a lower level of losses from the revaluation of non-trading foreign currency investments and an increase in equity in income of unconsolidated subsidiaries. Expenses Total noninterest expenses of $1.329 billion for the first six months of 1994 decreased by $101 million from the first half of 1993. Incentive compensation and employee benefits expense decreased $220 million, or 38 percent, almost entirely due to lower bonus expense reflecting the reduced earnings. Salaries expense increased $34 million, or 10 percent, from the first half of 1993. The average number of employees increased by 5 percent versus the same period, to 13,740. All other expenses for the first six months of 1994 totaled $599 million, up $85 million, or 17 percent, from the first half of 1993. Increases in the provision for policyholder benefits, service bureaus, agency personnel fees and minority interest accounted for most of this increase. S-7 Income Taxes Income tax expense for the first six months of 1994 was $147 million, compared with $201 million for the first six months of 1993. The effective tax rate was 30 percent for the six months ended June 30, 1994, compared with 29 percent for the six months ended June 30, 1993. The six month figure for 1993 excludes the income taxes included in the reported cumulative effects of accounting changes for SFAS 106 and SFAS 112. Provision and Allowance for Credit Losses For the six months ended June 30, 1994, the Corporation recorded $16 million of net recoveries and no provision for credit losses, compared with $172 million of net charge-offs and a $53 million provision for credit losses for the same period last year. Nonrefinancing country net charge-offs were $14 million in the first half of 1994, compared with $168 million for the first six months of 1993. The 1993 amount included a charge-off of $66 million which resulted from the sale of Mexican government Par Bonds, as well as $51 million of real estate loans and $17 million of loans to highly leveraged borrowers. The allowance for credit losses, at $1.340 billion at June 30, 1994, was up $16 million from December 31, 1993. The allowance was equal to 180 percent and 136 percent of total cash basis loans at June 30, 1994 and December 31, 1993, respectively. The Corporation believes that its allowance must be viewed in its entirety and therefore is available for potential credit losses in its entire portfolio, including loans, credit-related commitments, derivatives and other financial instruments. In the opinion of management, the allowance, when taken as a whole, is adequate to absorb reasonably estimated credit losses inherent in the Corporation's portfolio. DESCRIPTION OF THE CORPORATION'S CAPITAL STOCK The following information supplements the information set forth under "Description of the Corporation's Capital Stock--Preferred Stock--Series Preferred Stock" in the accompanying Prospectus. The Corporation has notified the holders of the Fixed/Adjustable Rate Cumulative Preferred Stock, Series D (the "Series D Preferred Stock") that all of the 4,105,550 outstanding shares of Series D Preferred Stock will be called for redemption on September 1, 1994, at a price of $50 per share plus accrued and unpaid dividends. Also, on March 28, 1994, the Corporation issued 80,000 shares of its Adjustable Rate Cumulative Preferred Stock, Series Q ($2,500 liquidation preference) (the "Series Q Preferred Stock"). The dividend rate on the Series Q Preferred Stock is equal to 85% of the Effective Rate (as defined below) in effect from time to time, but in no event less than 4 1/2% or more than 10 1/2% per annum. The "Effective Rate" for the Series Q Preferred Stock for each quarterly dividend period is the highest of the "Treasury Bill Rate," the "Ten Year Constant Maturity Rate" and the "Thirty Year Constant Maturity Rate" determined in advance of such dividend period. If dividends payable on the Series Q Preferred Stock are in arrears in an amount equivalent to dividends for six full dividend periods, the number of directors of the Corporation will be increased by two and the holders of the outstanding Series Q Preferred Stock, voting together as a single class with holders of shares of any other series of series preferred stock then outstanding upon which like voting rights have been conferred and are then exercisable, will be entitled to elect two additional directors until all dividends in arrears on the Series Q Preferred Stock have been declared and paid or set apart for payment in full. In the event of any liquidation, dissolution or winding up of the Corporation, the holders of the Series Q Preferred Stock will be entitled to receive a distribution of $2,500 per share plus, in each case, an amount equal to accrued and unpaid dividends to the date of final distribution. The Series Q Preferred Stock is redeemable at the option of the Corporation, in whole or in part, at any time or from time to time on or after March 1, 1999 on not more than 60 and not fewer than 30 days' notice. The redemption price payable by the Corporation in respect of any such redemption will be $2,500 per share plus accrued and unpaid dividends to the redemption date. S-8 USE OF PROCEEDS The net proceeds from the sale of the Depositary Shares will be used in the redemption of the outstanding shares of the Corporation's Fixed/Adjustable Rate Cumulative Preferred Stock, Series D. The balance of the funds to be used for the redemption, approximately $60 million, will come from funds from operations of the Corporation. CERTAIN TERMS OF THE DEPOSITARY SHARES The Corporation has provided for the issuance by the Depositary of the Depositary Receipts evidencing Depositary Shares, each of which represents a one-hundredth interest in a share of the Series R Preferred Stock as described below. The shares of Series R Preferred Stock represented by the Depositary Shares will be deposited under the Deposit Agreement, dated as of August 15, 1994 (the "Deposit Agreement"), between the Corporation, Harris Trust Company of New York, as Depositary (the "Depositary"), and the holders from time to time of Depositary Receipts issued by the Depositary thereunder. Depositary Receipts will be issuable only in definitive registered form. Each Depositary Share will represent a one-hundredth interest in a share of the Series R Preferred Stock. Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will be entitled, through the Depositary and in proportion to the one-hundredth interest in a share of the Series R Preferred Stock represented by such Depositary Share, to all rights and preferences of a share of the Series R Preferred Stock (including dividend, voting, redemption and liquidation rights). See "Certain Terms of the Series R Preferred Stock" below and "Description of Series Preferred Stock" and "Depositary Shares" in the Prospectus accompanying this Prospectus Supplement. Harris Trust Company of New York will act as Depositary and as transfer agent, dividend disbursing agent and registrar for the Series R Preferred Stock and acts as transfer agent, dividend disbursing agent and registrar for the Corporation's Common Stock and certain series of the Corporation's series preferred stock. In addition, the Corporation and Bankers have other relationships arising in the ordinary course of business with Harris Trust Company of New York and its affiliates. The information contained herein concerning the Depositary Shares does not purport to be complete and is subject to and qualified in its entirety by reference to the provisions of the Deposit Agreement, including the definitions therein of certain terms, and should be read in conjunction with the statements under "Depositary Shares" in the Prospectus accompanying this Prospectus Supplement. CERTAIN TERMS OF THE SERIES R PREFERRED STOCK The following description of certain terms of the Series R Preferred Stock supplements, and to the extent inconsistent therewith supersedes, the description of the general terms and provisions of the series preferred stock set forth under the heading "Description of Series Preferred Stock" in the Prospectus accompanying this Prospectus Supplement, to which reference is hereby made. The Series R Preferred Stock is a series of the series preferred stock of the Corporation, which series preferred stock may be issued from time to time in one or more series with such rights, preferences and limitations as are determined by the Corporation's Board of Directors or a duly authorized committee thereof. The description of certain provisions of the Series R Preferred Stock set forth below does not purport to be complete and is subject to and qualified in its entirety by reference to the Restated Certificate of Incorporation, as amended, of the Corporation, which has been filed with the Commission as an exhibit to the Registration Statement of which the Prospectus accompanying this Prospectus Supplement is a part, and the Certificate of Amendment of the Restated Certificate of Incorporation, as amended, relating to the Series R Preferred Stock adopted by the Board of Directors of the Corporation, to be filed by the Secretary of State of the State of New York on or prior to the date of original S-9 issuance of the Series R Preferred Stock. The Certificate of Amendment will be filed with the Commission on or about the date of original issuance of the Depositary Shares. DIVIDEND RIGHTS Holders of shares of Series R Preferred Stock will be entitled to receive cumulative cash dividends when, as and if declared by the Board of Directors of the Corporation, out of funds legally available therefor, from the date of original issuance of such shares to and including November 30, 1994 (the "Initial Dividend Period"), and for each dividend period commencing on each March 1, June 1, September 1 and December 1 thereafter, and ending on and including the day next preceding the first day of the next dividend period (such Initial Dividend Period and each of such other periods being hereinafter referred to as a "Dividend Period") at a rate per annum equal to the Applicable Rate (as defined below) in respect of such Dividend Period. The amount of dividends per share payable for the Initial Dividend Period and for any portion of any other Dividend Period less than a full Dividend Period shall be computed on the basis of a 360-day year and the actual number of days elapsed in the Dividend Period for which the dividends are payable, and by multiplying the Applicable Rate by $2,500. Dividends will accrue from the date of original issuance and will be payable when, as and if declared by the Board of Directors of the Corporation, out of funds legally available therefor, quarterly on each March 1, June 1, September 1 and December 1 in each year, commencing December 1, 1994 (each, a "Dividend Payment Date"), to the holders of record on such respective dates, not exceeding 30 days preceding the related Dividend Payment Date, as may be determined by the Board of Directors of the Corporation, or a duly authorized committee of the Board of Directors, in advance of such Dividend Payment Date. To the extent not declared and paid for any past Dividend Periods, dividends may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date, not exceeding 30 days preceding the payment date therefor, as may be fixed by the Board of Directors of the Corporation, or a duly authorized committee of the Board of Directors. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend that is not paid when it accrues. No dividend will be declared and paid or set apart for payment on any share of Series R Preferred Stock or any share of any other series of series preferred stock or any share of any class of stock, or series thereof, ranking on a parity with the Series R Preferred Stock as to dividends, for any Dividend Period unless at the same time a like proportionate dividend for the same Dividend Period, ratably in proportion to the respective dividends applicable thereto (adjusted in the case of the Initial Dividend Period to reflect the length of such period), shall be declared and paid or set apart for payment on all shares of Series R Preferred Stock and all shares of all other series of series preferred stock and all shares of any class, or series thereof, ranking on a parity with Series R Preferred Stock as to dividends, then issued and outstanding and entitled to receive dividends. Except as herein provided, holders of shares of Series R Preferred Stock will not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided, on the Series R Preferred Stock. So long as any shares of Series R Preferred Stock are outstanding, unless the full cumulative dividends on all outstanding shares of Series R Preferred Stock have been declared and paid or set apart for payment for all past Dividend Periods and except as provided in the immediately preceding paragraph, (i) no dividend (other than a dividend in Common Stock or in any other stock of the Corporation ranking junior to the Series R Preferred Stock as to dividends and distribution of assets upon liquidation, dissolution or winding up) may be declared and paid or set aside for payment, or other distribution declared or made, on the Common Stock or on any other stock ranking junior to or on a parity with the Series R Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, and (ii) no shares of Common Stock or shares of any other stock of the Corporation ranking junior to or on a parity with the Series R Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up will be redeemed, purchased or otherwise acquired for any consideration by the Corporation or any subsidiary of the Corporation (nor may any moneys be paid to or made available for a sinking or other fund for the redemption, S-10 purchase or other acquisition of any shares of any such stock), other than by conversion into or exchange for Common Stock or any other stock of the Corporation ranking junior to the Series R Preferred Stock as to dividends and distribution of assets upon liquidation, dissolution or winding up. The cutting-off of dividends on the Common Stock and other stock junior to the Series R Preferred Stock and the limitations on redemptions and other acquisitions of such stock until the arrearages have been paid or provided for, as outlined above, and the right to vote for the election of directors described below under "Voting Rights" shall be the only consequences of the failure to declare or pay dividends on the Series R Preferred Stock. After payment in full of all dividend arrearages on the Series R Preferred Stock, dividends on the Common Stock and such other junior stock may be declared and paid out of funds legally available for that purpose as the Board of Directors may determine. APPLICABLE RATE The dividend rate per annum referred to above for any Dividend Period (the "Applicable Rate") will be equal to (i) in the case of the Initial Dividend Period, 6.42% per annum (which is equivalent to $.4458 per Depositary Share) and (ii) in the case of any subsequent Dividend Period, 84.5% of the Effective Rate (as defined below), but not less than 4 1/2% per annum, or more than 10 1/2% per annum. The "Effective Rate" for any Dividend Period will be equal to the highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate (each as defined below under "Three-way Pricing Index") for the Dividend Period. In the event that the Corporation determines in good faith that for any reason: (i) any one of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate cannot be determined for any Dividend Period, then the Effective Rate for such Dividend Period will be equal to the higher of whichever two such rates can be so determined; (ii) only one of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate can be determined for any Dividend Period, then the Effective Rate for such Dividend Period will be equal to whichever such rate can be so determined; or (iii) none of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate can be determined for any Dividend Period, then the Effective Rate for the preceding Dividend Period will be continued for such Dividend Period. THREE-WAY PRICING INDEX. Except as described below in this paragraph, the "Treasury Bill Rate" for each Dividend Period will be the arithmetic average of the two most recent weekly per annum market discount rates (or the one weekly per annum market discount rate, if only one such rate is published during the relevant Calendar Period (as defined below)) for three-month U.S. Treasury bills, as published weekly by the Federal Reserve Board (as defined below) during the Calendar Period immediately preceding the last ten calendar days preceding the Dividend Period for which the dividend rate on the Series R Preferred Stock is being determined. In the event that the Federal Reserve Board does not publish such a weekly per annum market discount rate during any such Calendar Period, then the Treasury Bill Rate for such Dividend Period will be the arithmetic average of the two most recent weekly per annum market discount rates (or the one weekly per annum market discount rate, if only one such rate is published during the relevant Calendar Period) for three-month U.S. Treasury bills, as published weekly during such Calendar Period by any Federal Reserve Bank or by any U.S. Government department or agency selected by the Corporation. In the event that a per annum market discount rate for three- month U.S. Treasury bills is not published by the Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government department or agency during such Calendar Period, then the Treasury Bill Rate for such Dividend Period will be the arithmetic average of the two most recent weekly per annum market discount rates (or the one weekly per annum market discount rate, if only one such rate is published during the relevant Calendar Period) for all of the U.S. Treasury bills then having remaining maturities of not less than 80 nor more than 100 days, as published during such Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board does not publish such rates, by any Federal Reserve Bank or by any U.S. Government department or agency selected by the Corporation. S-11 In the event that the Corporation determines in good faith that for any reason no such U.S. Treasury bill rates are published as provided above during such Calendar Period, then the Treasury Bill Rate for such Dividend Period will be the arithmetic average of the per annum market discount rates based upon the closing bids during such Calendar Period for each of the issues of marketable noninterest-bearing U.S. Treasury securities with a remaining maturity of not less than 80 nor more than 100 days from the date of each such quotation, as chosen and quoted daily for each business day in New York City (or less frequently if daily quotations are not generally available) to the Corporation by at least three recognized dealers in U.S. Government securities selected by the Corporation. In the event that the Corporation determines in good faith that for any reason the Corporation cannot determine the Treasury Bill Rate for any Dividend Period as provided above in this paragraph, the Treasury Bill Rate for such Dividend Period will be the arithmetic average of the per annum market discount rates based upon the closing bids during such Calendar Period for each of the issues of marketable interest-bearing U.S. Treasury securities with a remaining maturity of not less than 80 nor more than 100 days, as chosen and quoted daily for each business day in New York City (or less frequently if daily quotations are not generally available) to the Corporation by at least three recognized dealers in U.S. Government securities selected by the Corporation. Except as described below in this paragraph, the "Ten Year Constant Maturity Rate" for each Dividend Period will be the arithmetic average of the two most recent weekly per annum Ten Year Average Yields (as defined below) (or the one weekly per annum Ten Year Average Yield, if only one such yield is published during the relevant Calendar Period), as published weekly by the Federal Reserve Board during the Calendar Period immediately preceding the last ten calendar days preceding the Dividend Period for which the dividend rate on the Series R Preferred Stock is being determined. In the event that the Federal Reserve Board does not publish such a weekly per annum Ten Year Average Yield during such Calendar Period, then the Ten Year Constant Maturity Rate for such Dividend Period will be the arithmetic average of the two most recent weekly per annum Ten Year Average Yields (or the one weekly per annum Ten Year Average Yield, if only one such yield is published during the relevant Calendar Period), as published weekly during such Calendar Period by any Federal Reserve Bank or by any U.S. Government department or agency selected by the Corporation. In the event that a per annum Ten Year Average Yield is not published by the Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government department or agency during such Calendar Period, then the Ten Year Constant Maturity Rate for such Dividend Period will be the arithmetic average of the two most recent weekly per annum average yields to maturity (or the one weekly per annum average yield to maturity, if only one such yield is published during the relevant Calendar Period) for all of the actively traded marketable U.S. Treasury fixed interest rate securities (other than Special Securities (as defined below)) then having remaining maturities of not less than eight nor more than twelve years, as published during such Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board does not publish such yields, by any Federal Reserve Bank or by any U.S. Government department or agency selected by the Corporation. In the event that the Corporation determines in good faith that for any reason the Corporation cannot determine the Ten Year Constant Maturity Rate for any Dividend Period as provided above in this paragraph, then the Ten Year Constant Maturity Rate for such Dividend Period will be the arithmetic average of the per annum average yields to maturity based upon the closing bids during such Calendar Period for each of the issues of actively traded marketable U.S. Treasury fixed interest rate securities (other than Special Securities) with a final maturity date not less than eight nor more than twelve years from the date of each such quotation, as chosen and quoted daily for each business day in New York City (or less frequently if daily quotations are not generally available) to the Corporation by at least three recognized dealers in U.S. Government securities selected by the Corporation. Except as described below in this paragraph, the "Thirty Year Constant Maturity Rate" for each Dividend Period will be the arithmetic average of the two most recent weekly per annum Thirty Year Average Yields (as defined below) (or the one weekly per annum Thirty Year Average Yield, if only one such yield is published during the relevant Calendar Period), as published weekly by the Federal Reserve Board during the Calendar Period immediately preceding the last ten calendar days preceding the Dividend Period for which the dividend rate on the Series R Preferred Stock is being determined. In the event that the Federal S-12 Reserve Board does not publish such a weekly per annum Thirty Year Average Yield during such Calendar Period, then the Thirty Year Constant Maturity Rate for such Dividend Period will be the arithmetic average of the two most recent weekly per annum Thirty Year Average Yields (or the one weekly per annum Thirty Year Average Yield, if only one such yield is published during the relevant Calendar Period), as published weekly during such Calendar Period by any Federal Reserve Bank or by any U.S. Government department or agency selected by the Corporation. In the event that a per annum Thirty Year Average Yield is not published by the Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government department or agency during such Calendar Period, then the Thirty Year Constant Maturity Rate for such Dividend Period will be the arithmetic average of the two most recent weekly per annum average yields to maturity (or the one weekly per annum average yield to maturity, if only one such yield is published during the relevant Calendar Period) for all of the actively traded marketable U.S. Treasury fixed interest rate securities (other than Special Securities) then having remaining maturities of not less than twenty-eight nor more than thirty years, as published during such Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board does not publish such yields, by any Federal Reserve Bank or by any U.S. Government department or agency selected by the Corporation. In the event that the Corporation determines in good faith that for any reason the Corporation cannot determine the Thirty Year Constant Maturity Rate for any Dividend Period as provided above in this paragraph, then the Thirty Year Constant Maturity Rate for such Dividend Period will be the arithmetic average of the per annum average yields to maturity based upon the closing bids during such Calendar Period for each of the issues of actively traded marketable U.S. Treasury fixed interest rate securities (other than Special Securities) with a final maturity date not less than twenty-eight nor more than thirty years from the date of each such quotation, as chosen and quoted daily for each business day in New York City (or less frequently if daily quotations are not generally available) to the Corporation by at least three recognized dealers in U.S. Government securities selected by the Corporation. The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate will each be rounded to the nearest five hundredths of a percent. The Effective Rate with respect to each Dividend Period (other than the Initial Dividend Period) will be calculated as promptly as practicable by the Corporation according to the appropriate method described above. The Corporation will cause each Applicable Rate to be published in a newspaper of general circulation in New York City before the commencement of the Dividend Period to which it applies and will cause notice of such Applicable Rate to be enclosed with the dividend payment checks next mailed to the holders of Series R Preferred Stock. As used above, the term "Calendar Period" means a period of fourteen calendar days; the term "Federal Reserve Board" means the Board of Governors of the Federal Reserve System; the term "Special Securities" means securities which can, at the option of the holder, be surrendered at face value in payment of any Federal estate tax or which provide tax benefits to the holder and are priced to reflect such tax benefits or which were originally issued at a deep or substantial discount; the term "Ten Year Average Yield" means the average yield to maturity for actively traded marketable U.S. Treasury fixed interest rate securities (adjusted to constant maturities of ten years); and the term "Thirty Year Average Yield" means the average yield to maturity for actively traded marketable U.S. Treasury fixed interest rate securities (adjusted to constant maturities of thirty years). VOTING RIGHTS Whenever, at any time or times, dividends payable on shares of Series R Preferred Stock are in arrears in an amount equivalent to dividends for six full Dividend Periods, then, immediately upon the happening of such event, the number of directors of the Corporation will be increased by two and the holders of outstanding shares of Series R Preferred Stock will have the right, voting together as a single class with holders of shares of any other series of series preferred stock then outstanding and upon which like voting rights have been conferred and are then exercisable, to the exclusion of (a) the holders of the Common Stock, (b) the holders of any other series of series preferred stock upon which such voting rights have not been conferred or are not S-13 then exercisable, and (c) the holders of any other stock of the Corporation having general voting rights, to vote for the election of two members of the Board of Directors of the Corporation to fill such newly created directorships, until all dividends in arrears on the Series R Preferred Stock have been declared and paid or set apart for payment in full. The right of the holders of Series R Preferred Stock to elect members of the Board of Directors of the Corporation as aforesaid will continue until such time as all dividends in arrears on the Series R Preferred Stock have been declared and paid or set apart for payment in full, at which time such right will terminate, except as set forth in the Certificate of Amendment of the Corporation's Restated Certificate of Incorporation, as amended, or by law expressly provided, subject to revesting in the event of each and every subsequent arrearage in the amount above mentioned. Upon any termination of the right of such holders to elect directors as herein described, the term of office of all directors then in office elected thereby, and the vacancies created pursuant to the Certificate of Amendment of the Restated Certificate of Incorporation, as amended, and described above, will terminate immediately. Any director who has been so elected may be removed at any time, with or without cause, and any vacancy thereby created may be filled, only by the affirmative vote of the holders of Series R Preferred Stock voting together as a single class with the holders of shares of any other series of series preferred stock entitled to vote for such director. If the office of any director elected as described above becomes vacant for any reason other than removal from office, the remaining director may choose a successor who will hold office for the remainder of such unexpired term. So long as any shares of Series R Preferred Stock shall be outstanding, unless the vote or consent of the holders of a greater number of shares shall then be required by law, the affirmative vote or consent of the holders of (a) at least 66 2/3% of the shares of the Series R Preferred Stock and (b) the holders of at least a majority of the shares of the Series R Preferred Stock and of any other series of series preferred stock then outstanding upon which like voting rights have been conferred and are then exercisable, voting together as a single class, in each case given in person or by proxy either in writing or by resolution at any special or annual meeting called for the purpose, shall be necessary to authorize, permit, effect or validate any one or more of the following: (i) the authorization or any increase in the authorized amount of any class of stock, or the establishment or designation of any series of stock (unless the class of which such series is a part has been authorized previously pursuant to this paragraph), or the issuance or sale of any obligation, security or instrument convertible into, exchangeable for, or evidencing the right to purchase, acquire or subscribe for shares of a class or series of stock, if such class or series of stock ranks prior to the Series R Preferred Stock as to dividends or distribution of assets upon liquidation, dissolution or winding up (unless the class or series has been authorized previously pursuant to this paragraph), and (ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Restated Certificate of Incorporation, as amended, as amended by the Certificate of Amendment relating to the Series R Preferred Stock, which would materially and adversely affect any right, preference, privilege or voting rights of the series preferred stock then outstanding; provided, however, that in the event that any such amendment, alteration or repeal would materially and adversely affect the rights of only the Series R Preferred Stock, then such amendment, alteration or repeal may be effected only with the affirmative vote or consent of the holders of 66 2/3% of the shares of Series R Preferred Stock then outstanding; provided, further, that the authorization, establishment, designation, issuance or sale of other series preferred stock shall not have, or be deemed to have, such material adverse effect; and, provided, further, however, that an increase in the authorized amount of series preferred stock, or the authorization, establishment, designation, issuance or sale of any shares of stock that do not rank prior to the series preferred stock as to dividends or distribution of assets upon liquidation, dissolution or winding up, shall not have, or be deemed to have, such material adverse effect. In addition, unless the vote or consent of the holders of a greater number of shares shall then be required by law, the affirmative vote or consent of the holders of at least a majority of the shares of Series R Preferred Stock and any other series of series preferred stock then outstanding upon which like voting rights have been conferred and are then exercisable, voting together as a single class, given in person or by proxy either in writing or by resolution at any special or annual meeting called for the purpose, shall be necessary to authorize an increase in the authorized amount of the series or serial preferred stock or the creation of a class of stock that would rank pari passu with the series or serial preferred stock as to dividends or distribution of S-14 assets upon liquidation, dissolution or winding up, or to authorize, permit, effect or validate the voluntary liquidation, dissolution or winding up of the Corporation; provided, however, that a consolidation or merger of the Corporation with or into another corporation or corporations, or a sale, lease or conveyance, whether for cash, shares of stock, securities or properties, of all or substantially all or any part of the assets of the Corporation, shall not be deemed or construed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph. The foregoing voting provisions will not apply if, in connection with the matters specified, provision is made for the redemption or retirement of all outstanding Series R Preferred Stock. Holders of Series R Preferred Stock, and the holders of shares of any other series of series preferred stock of the Corporation upon which like voting rights have been conferred and are then exercisable (other than the Corporation's Series C Junior Participating Preferred Stock), shall be entitled to one vote for each share of such stock held on matters as to which holders shall be entitled to vote. Under regulations adopted by the Federal Reserve Board, if the holders of shares of Series R Preferred Stock become entitled to vote for the election of directors because dividends on such shares are in arrears, the Series R Preferred Stock may then be deemed a "class of voting securities" and a holder of 25% or more of the shares of such series (or a holder of 5% or more if it otherwise exercises a "controlling influence" over the Corporation) may then be subject to regulation as a bank holding company in accordance with the Bank Holding Company Act of 1956, as amended. In addition, at such time (i) any bank holding company may be required to obtain the approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended, to acquire or retain 5% or more of the Series R Preferred Stock and (ii) any person other than a bank holding company may be required to obtain the approval of the Federal Reserve Board under the Change in Bank Control Act to acquire 10% or more of the Series R Preferred Stock. LIQUIDATION RIGHTS In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series R Preferred Stock will be entitled to receive out of assets of the Corporation available for distribution to shareholders, before any payment or distribution is made on the Common Stock or on any other class or series of stock of the Corporation ranking junior to the Series R Preferred Stock, upon liquidation, dissolution or winding up, liquidating distributions in the amount of $2,500 per share (which is equivalent to $25 per Depositary Share) plus, in each case, an amount equal to accrued and unpaid dividends (whether or not declared) to the date of final distribution. After such payment, the holders of Series R Preferred Stock will be entitled to no other payments. If, in such case, the assets of the Corporation or proceeds thereof shall be insufficient to make the full liquidating payment on the Series R Preferred Stock and liquidating payments on any other outstanding series preferred stock (including accrued and unpaid dividends, if any), then such assets and proceeds shall be distributed among the holders of Series R Preferred Stock and any other outstanding series of series preferred stock, ratably in accordance with the respective amounts which would be payable on all series preferred stock (including accrued and unpaid dividends, if any) if all such liquidating amounts payable were paid in full. A consolidation or merger of the Corporation with or into another corporation or corporations or a sale, lease or conveyance, whether for cash, shares of stock, securities or properties, of all or substantially all or any part of the assets of the Corporation shall not be deemed or construed to be a liquidation, dissolution or winding up of the Corporation. REDEMPTION Shares of Series R Preferred Stock will not be redeemable prior to September 1, 1999. On or after such date, the shares of Series R Preferred Stock will be redeemable at the option of the Corporation, as a whole or in part, at any time or from time to time on not less than 30 nor more than 60 days' notice, at the redemption price of $2,500 per share (which is equivalent to $25 per Depositary Share) plus, in each case, an amount equal to accrued and unpaid dividends (whether or not declared) to the date fixed for redemption. S-15 Upon mailing of notice, dividends on the shares of Series R Preferred Stock called for redemption will cease to accrue from and after the date fixed for redemption (unless default shall be made by the Corporation in providing funds for the payment of the redemption price), and such shares will no longer be deemed to be outstanding. All rights of the holders of such shares as holders of Series R Preferred Stock (except the right to receive the redemption price, but without interest) shall cease. The Corporation's obligation to provide funds in accordance with the preceding sentence will be deemed fulfilled if, on or before 12:00 noon, New York City time on the date fixed for redemption, the Corporation deposits with a paying agent (which may be an affiliate of the Corporation) (a "Paying Agent"), which shall be a bank or trust company organized and in good standing under the laws of the United States or the State of New York, having an office or agency in the Borough of Manhattan, The City of New York, and having, together with its corporate parent, capital, surplus and undivided profits aggregating at least $50,000,000, funds necessary for such redemption, in trust, with irrevocable instructions and authorization that such funds be applied to the redemption of the shares of Series R Preferred Stock called for redemption upon surrender of certificates for such shares (properly endorsed or assigned for transfer). If fewer than all the outstanding shares of the Series R Preferred Stock are to be redeemed, the selection of the shares to be redeemed shall be determined by lot or pro rata as may be determined by the Board of Directors of the Corporation. Any interest accrued on funds deposited with a Paying Agent in connection with any redemption of shares of Series R Preferred Stock will be paid to the Corporation from time to time and the holders of any such shares to be redeemed with such money will have no claim to any such interest. Any funds deposited and unclaimed at the end of two years from any redemption date will be repaid or released to the Corporation, after which the holder or holders of shares of Series R Preferred Stock so called for redemption shall look only to the Corporation for payment of the redemption price, without any interest thereon. In no event will the Corporation redeem, purchase or otherwise acquire for consideration fewer than all the outstanding shares of Series R Preferred Stock unless full cumulative dividends have been declared and paid or set apart for payment on all outstanding shares of Series R Preferred Stock for all prior Dividend Periods; provided, however, that the foregoing will not prevent, if otherwise permitted, the purchase or acquisition of shares of Series R Preferred Stock pursuant to a tender or exchange offer made on the same terms to holders of all the outstanding shares of Series R Preferred Stock and mailed to the holders of record of all such outstanding shares at such holders' addresses as the same appear on the books of the Corporation; and provided further that if some, but fewer than all, of the shares of Series R Preferred Stock are to be purchased or otherwise acquired pursuant to such tender or exchange offer and the number of shares so tendered exceeds the number of shares so to be purchased or otherwise acquired by the Corporation, the shares of Series R Preferred Stock tendered will be purchased or otherwise acquired by the Corporation on a pro rata basis (with adjustments to eliminate fractions) according to the number of such shares tendered by each holder tendering shares of Series R Preferred Stock for such purchase or exchange. At the option of the Corporation, shares of Series R Preferred Stock redeemed or otherwise acquired may be restored to the status of authorized but unissued shares of series preferred stock. Any optional redemption by the Corporation will be with the approval of the Federal Reserve Board unless at the time the Federal Reserve Board determines that its approval is not required. MISCELLANEOUS Harris Trust Company of New York will serve as transfer agent, dividend disbursing agent and registrar for the Series R Preferred Stock. The holders of Series R Preferred Stock will not have any preemptive rights to purchase or subscribe for any shares of any class or other securities of any type of the Corporation. When issued, the Series R Preferred Stock will be fully paid and nonassessable. The Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of the Corporation setting forth the provisions of the Series R Preferred Stock will become effective after the date of this Prospectus Supplement but on or before issuance of the Series R Preferred Stock. S-16 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following brief description of certain Federal income tax considerations of the ownership of Depositary Shares representing the Series R Preferred Stock reflects the opinion of Sullivan & Cromwell, special tax counsel to the Corporation. Hereinafter, references in this section to Series R Preferred Stock will mean either the Series R Preferred Stock or Depositary Shares representing the Series R Preferred Stock, as the case may be. This description is a summary only, and each purchaser of Series R Preferred Stock offered by this Prospectus Supplement and the accompanying Prospectus should consult his own tax adviser as to the tax consequences to him of acquiring, holding and disposing of shares of Series R Preferred Stock in his particular circumstances, including the effect of the alternative minimum tax and the application of state, local and other tax laws. Owners of the Depositary Shares will be treated for Federal income tax purposes as if they were owners of the Series R Preferred Stock represented by such Depositary Shares and, accordingly, must take into account for Federal income tax purposes the income and deductions to which they would be entitled if they were holders of such Series R Preferred Stock. Dividends declared and paid by the Corporation with respect to the Series R Preferred Stock will be dividends for Federal income tax purposes to the extent of the current or accumulated earnings and profits of the Corporation as determined for Federal income tax purposes and will be eligible for the 70% dividends-received deduction allowed to corporate shareholders. Corporate holders of shares of Series R Preferred Stock should consider the effects of (i) Section 246(c) of the Internal Revenue Code of 1986, as amended (the "Code"), which, among other things, disallows the dividends-received deduction in respect of any dividend on a share of stock held for 45 days or less; (ii) Section 246A of the Code, which reduces the dividends-received deduction allowed to a corporate shareholder that has indebtedness "directly attributable" to an investment in portfolio stock; and (iii) Section 1059 of the Code, which, under certain circumstances, reduces the tax basis of stock, for the purposes of calculating gain or loss in a subsequent disposition, by the portion of any "extraordinary dividend" eligible for the dividends-received deduction. The alternative minimum tax treatment of the dividends-received deduction should also be considered. Dividends on the Series R Preferred Stock will not be increased if there is a reduction in or elimination of the 70% dividends-received deduction. EXPERTS The consolidated financial statements of the Corporation appearing in the Annual Report on Form 10-K for the year ended December 31, 1993, incorporated by reference in this Prospectus Supplement, the accompanying Prospectus and the Registration Statement, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in auditing and accounting. S-17 UNDERWRITING Under the terms of and subject to the conditions set forth in an underwriting agreement (the "Underwriting Agreement") dated the date hereof between the Corporation and the Underwriters named below (the "Underwriters"), the Underwriters have severally agreed to purchase, and the Corporation has agreed to sell to them severally, the respective number of Depositary Shares set forth below.
NUMBER OF UNDERWRITER DEPOSITARY SHARES ----------- ----------------- Morgan Stanley & Co. Incorporated.......................... 2,140,000 Bear, Stearns & Co. Inc. .................................. 600,000 Lehman Brothers Inc. ...................................... 600,000 Salomon Brothers Inc ...................................... 600,000 Smith Barney Inc. ......................................... 600,000 Goldman, Sachs & Co. ...................................... 400,000 BT Securities Corporation.................................. 200,000 Kidder, Peabody & Co. Incorporated......................... 200,000 Robert W. Baird & Co. Incorporated......................... 60,000 Commerzbank Capital Markets Corporation.................... 60,000 Dain Bosworth Incorporated................................. 60,000 Dillon, Read & Co. Inc. ................................... 60,000 A.G. Edwards & Sons, Inc. ................................. 60,000 First Albany Corporation................................... 60,000 Interstate/Johnson Lane Corporation........................ 60,000 Oppenheimer & Co., Inc. ................................... 60,000 Piper Jaffray Inc. ........................................ 60,000 Rauscher Pierce Refsnes, Inc. ............................. 60,000 Raymond James & Associates, Inc. .......................... 60,000 --------- Total Number of Depositary Shares...................... 6,000,000 =========
Under the terms and conditions of the Underwriting Agreement, the Underwriters are obligated to take and pay for all of the Depositary Shares offered hereby, if any are taken. The Underwriters have advised the Corporation that the Underwriters propose to offer the Depositary Shares to the public initially at the offering price set forth on the cover of this Prospectus Supplement and to certain dealers at such price less a selling concession of $.50 per Depositary Share. The Underwriters may allow, and each such dealer may reallow, to other dealers a concession not exceeding $.25 per Depositary Share. After the initial public offering, the public offering price and such concessions may be changed. The Depositary Shares are a new issue of securities with no established trading market. Application will be made to list the Depositary Shares on the New York Stock Exchange. There can be no assurance that the Depositary Shares will be so listed or will continue to be listed. Although the Corporation has been advised by the Underwriters that they may from time to time purchase Depositary Shares in the secondary market, they are not obligated to do so and may discontinue market-making at any time without notice. Consequently, there can be no assurance as to the liquidity of the trading market for the Depositary Shares. The Corporation has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. This Prospectus Supplement and the accompanying Prospectus may also be delivered in connection with sales of the Depositary Shares by affiliates of the Corporation that have acquired such Depositary Shares. Underwriters and certain of their associates and affiliates may be customers of (including borrowers from), engage in transactions with, and/or perform services for the Corporation and its subsidiaries (including Bankers) in the ordinary course of business. BT Securities Corporation is a wholly owned subsidiary of the Corporation. The underwriting arrangements for this offering comply with the requirements of Schedule E of the By-laws of the National Association of Securities Dealers, Inc. ("NASD") regarding an NASD member firm's underwriting securities of an affiliate. S-18 -----END PRIVACY-ENHANCED MESSAGE-----