Document/Exhibit Description Pages Size
1: 10-K 1996 Form 10-K 26 141K
2: EX-10 Exhibit 10A 5 21K
3: EX-10 Exhibit 10B 3 13K
4: EX-10 Exhibit 10C 3 12K
5: EX-10 Exhibit 10D 3 13K
6: EX-10 Exhibit 10E 3 14K
7: EX-10 Exhibit 10F 2 12K
8: EX-10 Exhibit 10G 1 10K
9: EX-10 Exhibit 10H 3 18K
10: EX-10 Exhibit 10I 1 10K
11: EX-10 Exhibit 10J 2± 10K
12: EX-11 Statement re: Computation of Earnings Per Share 1 8K
13: EX-12 Statement re: Computation of Ratios 2± 10K
14: EX-13 1996 Annual Report 48 218K
15: EX-21 Subsidiaries of the Registrant 1 7K
16: EX-23 Exhibit 23.1 1 10K
17: EX-23 Exhibit 23.2 1 11K
19: EX-27 Financial Data Schedule 2± 13K
18: EX-99 Miscellaneous Exhibit 1 10K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For The Fiscal Year Ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 1-6152
THE BANK OF NEW YORK COMPANY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-2614959
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 495-1784
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -----------------------
Common Stock, $7.50 par value NEW YORK STOCK EXCHANGE
8.60% Cumulative Preferred Stock NEW YORK STOCK EXCHANGE
Preferred Stock Purchase Rights NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
Warrants to Purchase Common Stock
Class A, 7.75% Cumulative Convertible Preferred Stock
7.97% Capital Securities, Series B
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant at February 28, 1997 consisted of:
Common Stock ($7.50 par value) $14,950,812,315
(based on closing price
on New York Stock Exchange)
The number of shares outstanding of the registrant's common Stock $7.50 par
value was 387,076,047 shares on February 28, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1996 Annual Report to Shareholders are incorporated by
reference into Parts I, II, and IV. Portions of the definitive Proxy
Statement pursuant to Regulation 14A for the 1997 Annual Meeting of
Shareholders are incorporated by reference into Part III.
PART I
------
ITEM 1. BUSINESS
-----------------
INTRODUCTION
The business of The Bank of New York Company, Inc. (the "Company") and
its subsidiaries is described in the "Business Review" section of the
Company's 1996 Annual Report to Shareholders which description is included in
Exhibit 13 to this report and incorporated herein by reference. Also, the
"Management's Discussion and Analysis" section included in Exhibit 13 contains
financial and statistical information on the operations of the Company. Such
information is herein incorporated by reference.
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, the Company is subject to the regulation and
supervision of the Federal Reserve Board under the Bank Holding Company Act
("BHC Act"). The Company is also subject to regulation by the New York State
Department of Banking. Under the BHC Act, bank holding companies may not
directly or indirectly acquire the ownership or control of more than 5% of
the voting shares or substantially all of the assets of any company,
including a bank, without the prior approval of the Federal Reserve Board.
In addition, bank holding companies are generally prohibited under the BHC
Act from engaging in nonbanking activities, subject to certain exceptions.
The Company's subsidiary banks are subject to supervision and
examination by applicable federal and state banking agencies. In the fourth
quarter of 1996, The Bank of New York (NJ) and The Putnam Trust Company were
combined into The Bank of New York ("BNY"), a New York chartered banking
corporation. BNY is a member of the Federal Reserve System and consequently
is subject to regulation and supervision by the Federal Reserve Board. As a
bank insured by the FDIC, BNY is also subject to examination by that agency.
The Bank of New York (Delaware) ("BNY Del."), chartered in Delaware, is an
FDIC-insured non-member bank and is therefore subject to regulation and
supervision by the FDIC. BNY and BNY (Del.)are also subject to supervision
and examination by their respective state regulators, the New York Banking
Department and the Office of State Bank Commissioner of the State of
Delaware.
Both federal and state laws extensively regulate various aspects of the
banking business, such as permissible types and amounts of loans and
investments, permissible activities, and reserve requirements. These
regulations are intended primarily for the protection of depositors rather
than the Company's stockholders.
Capital Adequacy
Bank regulators have adopted risk-based capital guidelines for bank
holding companies and banks. The minimum ratio of qualifying total capital
to risk-weighted assets and certain off-balance sheet items ("Total Capital
Ratio") is 8%. At least half of the total capital is to be comprised of
common stock, retained earnings, noncumulative perpetual preferred stock,
minority interests (and, for bank holding companies, a limited amount of
qualifying cumulative perpetual preferred stock), less most intangibles
including goodwill ("Tier 1 capital"). The remainder ("Tier 2 capital") may
consist of other preferred stock, certain other instruments, and limited
amounts of subordinated debt and allowance for loan losses.
In addition, the Federal Reserve Board has established minimum Leverage
Ratio (Tier 1 capital to average total assets) guidelines for bank holding
companies and banks, and the FDIC has established substantially identical
minimum leverage requirements for state chartered FDIC-insured, nonmember
banks. The Federal Reserve Board's guidelines provide for a minimum Leverage
Ratio of 3% for bank holding companies and banks that meet certain specified
criteria, including those having the highest regulatory rating. All other
banking organizations will be required to maintain a Leverage Ratio of at
least 3% plus an
additional cushion of 100 to 200 basis points. The
guidelines also provide that banking organizations experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets. Furthermore, the guidelines
indicate that the Federal Reserve Board will continue to consider a "Tangible
Tier 1 Leverage Ratio" in evaluating proposals for expansion or new
activities. The Tangible Tier 1 Leverage Ratio is the ratio of Tier 1
capital, less intangibles not deducted from Tier 1 capital, to average total
assets. The Federal Reserve Board has not advised the Company of any
specific minimum Leverage Ratio applicable to it. See "FDICIA" below.
Federal banking agencies have issued regulations, which become effective
in 1998, that modify existing rules related to capital ratios with respect to
various areas of risk including interest rate exposure and other market risk.
The Company does not believe that the aggregate impact of these
modifications would have a significant impact on its capital position.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), substantially revised the depository institution regulatory and
funding provisions of the Federal Deposit Insurance Act ("FDIA") and made
revisions to several other federal banking statutes.
Among other things, FDICIA requires the federal banking regulators to
take prompt corrective action in respect of FDIC-insured depository
institutions that do not meet minimum capital requirements. FDICIA
establishes five capital tiers: "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." Under applicable regulations, an FDIC-insured bank is
defined to be well capitalized if it maintains a Leverage Ratio of at least
5%, a Tier 1 Capital Ratio (Tier 1 Capital to risk-weighted assets and
certain off-balance sheet items) of at least 6% and a Total Capital Ratio of
at least 10% and is not otherwise in a "troubled condition" as specified by
its appropriate federal regulatory agency. A bank is generally considered to
be adequately capitalized if it is not defined to be well capitalized but
meets all of its minimum capital requirements, i.e., if it has a Total
Capital Ratio of 8% or greater, a Tier 1 Capital Ratio of 4% or greater and a
Leverage Ratio of 4% or greater. A bank will be considered undercapitalized
if it fails to meet any minimum required measure, significantly
undercapitalized if it is significantly below any such measure and critically
undercapitalized if it maintains a level of tangible equity capital equal to
or less than 2% of total assets. A bank may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
FDICIA generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of dividends) or paying
any management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. For an
undercapitalized depository institution's capital restoration plan to be
acceptable, its holding company must guarantee the capital plan up to an
amount equal to the lesser of 5% of the depository institution's assets at
the time it becomes undercapitalized or the amount of the capital deficiency
when the institution fails to comply with the plan. In the event of the
parent holding company's bankruptcy, such guarantee would take priority over
the parent's general unsecured creditors. The federal banking agencies may
not accept a capital plan without determining, among other things, that the
plan is based on realistic assumptions and is likely to succeed in restoring
the depository institution's capital. If a depository institution fails to
submit an acceptable plan, it is treated as if it is significantly
undercapitalized.
Significantly undercapitalized depository institutions may be subject to
a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and cessation of receipt of deposits from correspondent
banks. Critically undercapitalized depository institutions
are subject to appointment of a receiver or conservator.
A discussion of the Company's capital position and capital adequacy is
incorporated by reference from "Capital Resources" in the "Management's
Discussion and Analysis" Section and Note 10 to the Consolidated Financial
Statements of Exhibit 13.
As of December 31, 1996 and 1995, capital ratios for the Company, the
Bank, and BNYDEL were categorized as well capitalized as set forth in the
table below.
December 31, 1996 December 31, 1995
---------------------- ------------------------ Well
BNY BNY Capitalized
Company Bank DEL Company Bank DEL Guidelines
------- ---- ---- ------- ---- ---- ----------
Tier I 8.34% 7.03% 9.35% 8.42% 7.84% 7.87% 6%
Total Capital 12.78 10.26 14.47 13.08 11.61 11.55 10
Leverage 8.87 6.89 9.28 8.46 7.63 8.48 5
Tangible Common
Equity 6.99 6.68 8.87 8.00 7.71 7.78
At December 31, 1996, the amounts of capital by which the Company and
its major banking subsidiaries exceed the well capitalized guidelines are as
follows:
BNY
Company BNY Del.
(in millions) ------- --- ----
Tier 1 $1,293 $503 $181
Total Capital 1,541 129 242
Leverage 2,012 946 233
The following table presents the components of the Company's risk-based
capital at December 31, 1996 and 1995:
(in millions) 1996 1995
---- ----
Common Stock $5,015 $5,119
Preferred Stock 112 113
Minority Interest 600 -
Adjustments: Intangibles (1,003) (672)
Securities Valuation Allowance (82) (58)
50% Investment in Section 20
Subsidiary (29) -
------ ------
Tier 1 Capital 4,613 4,502
Qualifying Long-term Debt 1,796 1,827
Qualifying Allowance for Loan Losses 695 670
Adjustment: 50% Investment in Section 20
Subsidiary (29) -
------ ------
Tier 2 Capital 2,462 2,497
------ ------
Total Risk-based Capital $7,075 $6,999
====== ======
The following table presents the components of the Company's risk
adjusted assets at December 31, 1996 and 1995:
1996 1995
------------------- -------------------
Balance Balance
(in millions) sheet/ Risk sheet/ Risk
notional adjusted notional adjusted
Assets amount balance amount balance
------ -------- -------- -------- --------
Cash, Due From Banks and Interest-
Bearing Deposits in Banks $ 7,419 $ 758 $ 5,693 $ 731
Securities 5,053 904 4,870 819
Trading Assets 1,547 67 816 60
Fed Funds Sold and Securities
Purchased Under Resale Agreements 562 65 936 17
Loans 37,006 33,518 37,687 34,826
Allowance for Loan Losses (901) - (756) -
Other Assets 5,079 3,600 4,474 3,441
------- ------- -------- -------
Total Assets $55,765 38,912 $ 53,720 39,894
======= ------- ======== -------
Off-Balance Sheet Exposures
---------------------------
Commitments to Extend Credit $ 47,111 11,612 $ 54,274 9,220
Securities Lending Indemnifications 23,881 - 15,068 -
Standby Letters of Credit and
Other Guarantees 6,447 4,610 6,081 4,228
Interest Rate Contracts 29,518 69 27,800 96
Foreign Exchange Contracts 101,527 401 28,005 140
-------- ------- -------- -------
Total Off-Balance Sheet Exposures $208,484 16,692 $131,228 13,684
======== ------- ======== -------
Gross Risk Adjusted Assets 55,604 53,578
Less: Allowance for Loan Losses not
Qualifying as Risk Based Capital 206 86
Investment in Section 20
Subsidiary 58 -
------- -------
Risk Adjusted Assets $55,340 $53,492
======= =======
FDIC Insurance Assessments
BNY and BNY Del. are subject to FDIC deposit insurance assessments. As
required by FDICIA, the FDIC adopted a risk-based premium schedule to
determine the assessment rates for most FDIC-insured depository institutions.
Effective January 1, 1996, under the schedule, the premiums range from zero
to $.27 for every $100 of deposits. Each financial institution is assigned
to one of nine categories based on the institutions capital ratios and
supervisory evaluations, and the premium paid by the institution is based on
the category. Under the present schedule institutions in the highest of the
three capital categories and the highest of three supervisory categories pay
no premium and institutions in the lowest of these categories pay $.27 per
$100 of deposits. In addition, the Deposit Insurance Funds Act provides
for assessments at all insured depository institutions to pay for the cost
of the Financing Corporation (a governmental agency) funding. The
assessment will be based on deposit levels and will be approximately .325
basis points.
The FDIC is authorized to raise insurance premiums in certain
circumstances. Any increase in premiums would have an adverse effect on the
Company's earnings.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon
a finding that the institution has engaged in unsafe and unsound practices,
is in an unsafe or unsound condition to continue operations or has violated
any applicable law, regulation, rule, order, or condition imposed by a bank's
federal regulatory agency.
Depositor Preference
The Omnibus Budget Reconciliation Act of 1993 provides for a national
depositor preference on amounts realized from the liquidation or other
resolution of any depository institution insured by the FDIC.
Acquisitions
The BHC Act generally limits acquisitions by the Company to commercial
banks and companies engaged in activities that the Federal Reserve Board has
determined to be so closely related to banking as to be a proper incident
thereto. The Company's direct activities are generally limited to furnishing
services to its subsidiaries and activities that qualify under the "closely
related" and "proper incident" tests. Prior Federal Reserve Board approval
is required under the BHC Act for new activities and acquisitions of most
nonbanking companies.
The BHC Act, the Federal Bank Merger Act, and the New York Banking Law
regulate the acquisition of commercial banks. The BHC Act requires the prior
approval of the Federal Reserve Board for the direct or indirect acquisition
of more than 5% of the voting shares of a commercial bank.
Effective September 29, 1995, The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 ("IBBEA") permits bank holding companies,
with Federal Reserve Board approval, to acquire banks located in states other
than the bank holding company's home state without regard to whether the
transaction is permitted under state law. In addition, IBBEA provides that,
commencing June 1, 1997, national banks and state banks with different home
states will be permitted to merge across state lines, with the approval of
the appropriate federal banking agency, unless the home state of a
participating bank passes legislation between the date of enactment of IBBEA
and May 31, 1997 expressly prohibiting interstate mergers. IBBEA further
provides that states may enact laws permitting interstate bank merger
transactions prior to June 1, 1997 (opt-in statutes). New York, New Jersey
and Connecticut have enacted opt-in statutes. A bank may also establish and
operate a de novo branch in a state in which the bank does not maintain a
branch if that state expressly permits de novo branching. Once a bank has
established branches in a state through an interstate merger transaction, the
bank may establish and acquire additional branches at any location in the
state where any bank involved in the interstate merger transaction could have
established or acquired branches under applicable federal or state law. A
bank that has established a branch in a state through de novo branching may
establish and acquire additional branches in such state in the same manner
and to the same extent as a bank having a branch in such state as a result of
an interstate merger.
The merger of BNY with another bank would require the approval of the
Federal Reserve Board or other federal bank regulatory authority and, if the
surviving bank is a New York state bank, the New York Superintendent of
Banks.
In reviewing bank acquisition and merger applications, the bank
regulatory authorities will consider, among other things, the competitive
effect of the transaction, financial and managerial issues including the
capital position of the combined organization, and convenience and needs
factors, including the applicant's record under the Community Reinvestment
Act.
Under Federal Reserve Board policy, the Company is expected to act as a
source of financial strength to its banks and to commit resources to support
such banks in circumstances where it might not do so absent such policy. In
addition, any loans by the Company to its banks would be subordinate in right
of payment to depositors and to certain other indebtedness of its banks.
Restrictions on Transfer of Funds
Restrictions on the transfer of funds to the Company and subsidiary bank
dividend limitations are discussed in Note 10 to the Consolidated Financial
Statements included in Exhibit 13. Such discussion is incorporated herein by
reference.
Cross Guarantees
Under FDIA, a financial institution insured by the FDIC that is under
common control with a failed or failing FDIC-insured institution can be
required to indemnify the FDIC for losses resulting from the insolvency of
the failed institution, even if this causes the affiliated institution also
to become insolvent. Any obligation or liability owed by a subsidiary
depository institution to its parent company is subordinate to the
subsidiary's cross-guarantee liability with respect to commonly controlled
insured depository institutions and to the rights of depositors.
ADDITIONAL FINANCIAL INFORMATION
------------------------------------------------------------------------------
Average Balances and Rates on a Taxable Equivalent Basis (dollars in millions)
1996 1995 1994
================================================================================
Aver- Aver- Aver-
Average Int- age Average Int- age Average Int- age
Balance erest Rate Balance erest Rate Balance erest Rate
-----------------------------------------------------------------
Assets
------
Interest-
Bearing
Deposits
in Banks
(Primarily
Foreign) $ 1,585 $ 91 5.71% $ 1,682 $ 106 6.28% $ 1,266 $ 68 5.33%
Federal Funds
Sold and
Securities
Purchased
Under Resale
Agreements 2,356 126 5.35 3,280 193 5.89 3,653 161 4.39
Loans
Domestic
Offices
Credit Card 6,905 886 12.83 7,637 989 12.96 5,830 646 11.08
Other
Consumer 3,567 362 10.16 3,514 392 11.14 3,719 369 9.91
Commercial 13,945 1,023 7.34 13,215 1,047 7.92 12,340 833 6.76
Foreign
Offices 12,281 810 6.59 11,055 805 7.28 10,140 564 5.56
------- ------ ------- ------ ------- ------
Total Loans 36,698 3,081* 8.40 35,421 3,233* 9.13 32,029 2,412* 7.53
------- ------ ------- ------ ------- ------
Securities
U.S.
Government
Obligations 3,365 197 5.84 3,301 191 5.78 3,516 197 5.61
Obligations
of States
and Political
Subdivisions 656 58 8.91 650 68 10.50 893 89 10.02
Other
Securities,
including
Trading
Securities
Domestic
Offices 811 37 4.56 1,076 65 6.10 1,341 70 5.25
Foreign
Offices 511 31 6.11 233 14 6.31 191 11 5.64
------- ------ ------- ------ ------- ------
Total Other
Securities 1,322 68 5.16 1,309 79 6.13 1,532 81 5.30
------- ------ ------- ------ ------- ------
Total
Securities 5,343 323 6.05 5,260 338 6.45 5,941 367 6.19
------- ------ ------- ------ ------- ------
Total Inter-
est Earning
Assets 45,982 $3,621 7.88% 45,643 $3,870 8.48% 42,889 $3,008 7.01%
====== ====== ======
Allowance for
Loan Losses (837) (739) (906)
Cash and Due
from Banks 2,805 2,971 2,827
Other Assets 5,699 5,178 5,470
------- ------- -------
Total Assets $53,649 $53,053 $50,280
======= ======= =======
Assets
Attributable
to Foreign
Offices 28.50% 25.73% 24.30%
===== ===== =====
*Includes fees of $139 million in 1996, $134 million in 1995, and $118 million
in 1994. Nonaccrual loans are included in the average loan balance; the
associated income, recognized on the cash basis, is included in interest.
Taxable equivalent adjustments were $38 million in 1996, $39 million in 1995,
and $46 million in 1994, and are based on the federal statutory tax rate (35%)
and applicable state and local taxes.
Continued on page 9
Average Balances and Rates on a Taxable Equivalent Basis (dollars in millions)
1996 1995 1994
================================================================================
Aver- Aver- Aver-
Average Int- age Average Int- age Average Int- age
Balance erest Rate Balance erest Rate Balance erest Rate
--------------------------------------------------------------
Liabilities and
Shareholders'
Equity
---------------
Interest-Bearing
Deposits
Domestic
Offices
Money Market
Rate Accounts $ 3,855 $ 166 4.30% $ 3,451 $ 153 4.44% $ 3,593 $ 108 3.01%
Savings 8,188 223 2.72 7,909 243 3.07 8,166 190 2.32
Certificates
of Deposit
of $100,000
or More 895 48 5.32 1,673 95 5.68 1,041 42 4.03
Other Time
Deposits 2,547 121 4.75 2,560 143 5.60 2,296 97 4.24
------- ------ ------- ------ ------- ------
Total Domestic
Offices 15,485 558 3.60 15,593 634 4.07 15,096 437 2.90
------- ------ ------- ------ ------- ------
Foreign Offices
Banks in
Foreign
Countries 4,645 225 4.85 3,968 218 5.48 2,917 125 4.30
Government and
Official
Institutions 1,236 62 5.05 1,394 81 5.78 1,384 60 4.37
Other Time and
Savings 6,351 307 4.85 6,041 332 5.52 5,689 220 3.84
------- ------ ------- ------ ------- ------
Total Foreign
Offices 12,232 594 4.87 11,403 631 5.54 9,990 405 4.05
------- ------ ------- ------ ------- ------
Total Interest-
Bearing
Deposits 27,717 1,152 4.16 26,996 1,265 4.69 25,086 842 3.35
------- ------ ------- ------ ------- ------
Federal Funds
Purchased and
Securities Sold
Under Repurchase
Agreements 2,957 155 5.23 2,804 161 5.75 2,843 106 3.73
Other Borrowed
Funds 3,406 186 5.47 3,962 246 6.22 4,135 191 4.63
Long-Term Debt 1,870 129 6.90 1,773 130 7.30 1,530 106 6.93
------- ------ ------- ------ ------- ------
Total Interest-
Bearing
Liabilities 35,950 $1,622 4.51% 35,535 $1,802 5.07% 33,594 $1,245 3.71%
====== ====== ======
Noninterest-
Bearing Deposits
Domestic Offices 8,838 9,012 8,897
Foreign Offices 44 53 58
------- ------- -------
Total
Noninterest-
Bearing
Deposits 8,882 9,065 8,955
------- ------- -------
Other Liabilities 3,621 3,685 3,594
Minority Interest
- Preferred
Securities 26 - -
Preferred Stock 113 115 157
Common
Shareholders'
Equity 5,055 4,653 3,980
------- ------- -------
Total Liabilities
and Share-
holders' Equity $53,647 $53,053 $50,280
======= ======= =======
Net Interest
Earnings and
Interest
Rate Spread $1,999 3.37% $2,068 3.41% $1,763 3.30%
====== ====== ======
Net Yield on
Interest-Earning
Assets 4.35% 4.53% 4.11%
==== ==== ====
Liabilities
Attributable
to Foreign
Offices 26.69% 24.94% 22.79%
===== ===== =====
Rate/Volume Analysis on a Taxable Equivalent Basis (in millions)
----------------------------------------------------------------
1996 vs. 1995 1995 vs. 1994
------------------------------------------------------
Increase (Decrease) Increase (Decrease)
due to change in: due to change in:
------------------ Total ------------------ Total
Average Average Increase Average Average Increase
Balance Rate (Decrease) Balance Rate (Decrease)
------- ------- ---------- ------- ------- ---------
Interest Income
---------------
Interest-Bearing
Deposits in Banks $ (6) $ (9) $ (15) $ 25 $ 13 $ 38
Federal Funds Sold
and Securities
Purchased Under
Resale Agreements (51) (16) (67) (18) 50 32
Loans
Domestic Offices
Credit Card (94) (9) (103) 222 121 343
Other Consumer 6 (36) (30) (21) 44 23
Commercial 56 (80) (24) 62 152 214
Foreign Offices 85 (80) 5 54 187 241
----- ----- ----- ----- ----- ------
Total Loans 53 (205) (152) 317 504 821
Securities
U.S. Government
Obligations 4 2 6 (12) 6 (6)
Obligations of
States and
Political
Subdivisions 1 (11) (10) (25) 4 (21)
Other Securities,
including Trading
Assets
Domestic Offices (14) (14) (28) (15) 10 (5)
Foreign Offices 17 - 17 2 1 3
----- ----- ----- ----- ----- ------
Total Other
Securities 3 (14) (11) (13) 11 (2)
----- ----- ----- ----- ----- ------
Total Securities 8 (23) (15) (50) 21 (29)
----- ----- ----- ----- ----- ------
Total Interest
Income 4 (253) (249) 274 588 862
----- ----- ----- ----- ----- ------
Interest Expense
----------------
Interest-Bearing
Deposits
Domestic Offices
Money Market Rate
Accounts 17 (4) 13 (4) 49 45
Savings 8 (28) (20) (6) 59 53
Certificate of
Deposits of
$100,000 or More (42) (5) (47) 32 21 53
Other Time Deposits (1) (21) (22) 12 34 46
----- ----- ----- ----- ----- -----
Total Domestic
Offices (18) (58) (76) 34 163 197
----- ----- ----- ----- ----- -----
Foreign Offices
Banks in Foreign
Countries 35 (28) 7 52 41 93
Government and
Official Institutions (9) (10) (19) - 21 21
Other Time and
Savings 17 (42) (25) 14 98 112
----- ----- ----- ----- ----- -----
Total Foreign
Offices 43 (80) (37) 66 160 226
----- ----- ----- ----- ----- -----
Total Interest-
Bearing
Deposits 25 (138) (113) 100 323 423
Federal Funds Purchased
and Securities
Sold Under
Repurchase
Agreements 9 (15) (6) (1) 56 55
Other Borrowed Funds (32) (28) (60) (8) 63 55
Long-Term Debt 7 (8) (1) 18 6 24
----- ----- ----- ----- ----- -----
Total Interest
Expense 9 (189) (180) 109 448 557
----- ----- ----- ----- ----- -----
Change in Net
Interest Income $ (5) $ (64) $ (69) $ 165 $ 140 $ 305
===== ===== ===== ===== ===== =====
Changes which are not solely due to balance changes or rate changes are
allocated to such categories on the basis of the respective percentage
changes in average balances and average rates.
Market Risk Management
----------------------
Market risk is the risk of loss due to adverse changes in the financial
markets. Market risk arises from derivative financial instruments, such as
futures, forwards, swaps and options, and other financial instruments, such
as loans, securities, deposits and other borrowings. These instruments
expose the Company primarily to interest rate and foreign exchange risk, but
they also involve credit risk. Market risk associated with the Company's
trading activities and asset/liability management activities is managed and
controlled as discussed under "Trading Activities" and, "Asset/Liability
Management" in the Management's Discussion and Analysis section of Exhibit
13. Such discussion is incorporated herein by reference.
Interest-Rate Sensitivity
-------------------------
A discussion of the Company's interest rate sensitivity management
activities is incorporated by reference from "Asset/Liability Management" in
the Management's Discussion and Analysis section of Exhibit 13.
The following table reflects the year-end position of the Company's
interest-earning assets and interest-bearing liabilities that either reprice
or mature within the designated time periods. The interest sensitivity
indicated by this table is not necessarily indicative of the Company's
interest sensitivity models (discussed under "Asset/Liability Management" in
the Managements' Discussion and Analysis section of Exhibit 13) because
within each time period, assets and liabilities reprice on different dates
and at different levels, and interest sensitivity gaps change daily. A
positive interest sensitivity gap, for a particular time period, is one in
which more assets reprice or mature than liabilities. A negative interest
sensitivity gap results from a greater amount of liabilities repricing or
maturing. A positive gap implies that there are more rate sensitive assets
than liabilities which suggests that as interest rates rise, the return on
assets will rise faster than the funding costs. Conversely, a negative gap
indicates more rate sensitive liabilities than assets. In such case, if
interest rates rise, then funding costs will rise at a faster rate than the
return on assets. The cumulative gap is the sum of the dollar gap for
sequential time periods.
December 31, 1996
-----------------------------------------------------
Within Within Within Within Greater
2-3 4-6 7-12 Than
1 Mo. Mos. Mos. Mos. 12 Mos. Total
------ ------ ------ ------ ------- -------
(in millions)
Interest-Earning Assets
-----------------------
Foreign Offices $ 8,284 $ 4,781 $ 2,182 $ 331 $ 122 $15,700
Domestic Offices
Loans 16,353 793 414 571 5,304 23,435
Securities 127 184 134 503 2,981 3,929
Trading Assets 1,238 - - - - 1,238
Federal Funds Sold and
Securities Purchased
Under Resale Agreement 562 - - - - 562
------- ------- ------- ------ ------- -------
Total 26,564 5,758 2,730 1,405 8,407 $44,864
------- ------- ------- ------ ------- =======
Interest-Bearing
Liabilities
----------------
Foreign Offices 11,536 950 209 53 - 12,748
Domestic Offices
Interest-Bearing
Deposits
Money Market Rate
Accounts 4,167 - - - - 4,167
Savings 6,953 - - 13 1,221 8,187
Certificates of
Deposit of $100,000
or More 416 252 175 99 526 1,468
Other Time Deposits 325 244 331 263 284 1,447
------- ------- ------- ------ ------- -------
23,397 1,446 715 428 2,031 28,017
------- ------- ------- ------ ------- -------
Federal Funds Purchased
and Other Borrowed
Funds 3,817 980 505 41 53 5,396
Long-Term Debt - 9 54 - 1,753 1,816
Trust Preferred
Securities - - - - 600 600
------- ------- ------- ------ ------- -------
Noninterest-Bearing
Sources of Funds 3,722 146 219 438 4,510 9,035
------------------- ------- ------- ------- ------ ------- -------
Total 30,936 2,581 1,493 907 8,947 $44,864
=======
Effect of Financial
Futures and Swaps 385 (459) (164) 24 214
------------------- ------- ------- ------- ------ -------
Interest-Sensitive Gap $(3,987) $ 2,718 $ 1,073 $ 522 $ (326)
---------------------- ======= ======= ======= ====== =======
Cumulative Interest-
Sensitivity Gap $(3,987) $(1,269) $ (196) $ 326 $ -
-------------------- ======= ======= ======= ====== =======
CREDIT RISK MANAGEMENT
----------------------
Credit risk represents the possibility that the Company would suffer a
loss if a borrower or other counterparty were to default on its obligations
to the Company. Credit risk exposure arises primarily from lending
activities, as well as from interest rate, foreign exchange, and securities
processing products. For derivative financial instruments, total credit
exposure consists of current and potential exposure. Current credit exposure
represents the replacement cost of the transaction. Potential credit
exposure is a statistically based estimate of the future replacement cost of
the transaction. The Company has established policies and procedures to
manage the level and composition of its credit risk on both a transaction and
a portfolio basis. In managing the aggregate credit extension to individual
customers, the Company measures the amount at risk on derivative financial
instruments as the total of current and potential credit exposure.
The Credit Policy Committee is responsible for developing and
maintaining credit risk policies, as well as for overseeing and reviewing
credit guidelines. Through the use of a credit approval process and
established credit limits, the Company evaluates the credit quality of
counterparties, industries, products, and countries. The Company seeks to
reduce both on and off-balance-sheet credit risk through portfolio
diversification, loan participations, syndications, asset sales, credit
enhancements, risk reduction arrangements, and netting agreements.
LOANS AND PROVISION AND ALLOWANCE FOR LOAN LOSSES
-------------------------------------------------
The provision for loan losses was $600 million in 1996, compared with
$330 million in 1995 and $162 million in 1994. The increase in the provision
compared with 1995 was principally related to the credit card portfolio. In
1996, the Company continued to experience improvement in the asset quality of
business loans as nonperforming loans dropped.
At December 31, 1996, the domestic commercial real estate portfolio had
approximately 80% of its loans in New York and New Jersey, 3% in
Pennsylvania, and 2% in both California and Connecticut; no other state
accounts for more than 1% of the portfolio. This portfolio consists of the
following types of properties:
Business loans secured by real estate 37%
Offices 28
Retail 11
Mixed-Used 3
Hotels 6
Condominiums and cooperatives 5
Industrial/Warehouse 2
Land 1
Other 7
----
100%
====
At December 31, 1996 and 1995, the Company's nonperforming real estate
loans and real estate acquired in satisfaction of loans aggregated $61
million and $114 million, respectively. Net charge-offs of real estate loans
were $11 million in 1996 and $16 million in 1995. In addition, other real
estate charges were $1 million and $5 million in 1996 and 1995.
At December 31, 1996 the Company's LDC exposures consisted of $55
million in medium-term loans (and no material commitments), $721 million in
short-term loans, $8 million in accrued interest, and $148 million in equity
investments. In addition, the Company has $314 million of debt securities to
emerging market countries, including $267 million (book value) of bonds whose
principal payments are collateralized by U.S. Treasury zero coupon
obligations and whose interest payments are partially collateralized.
The Company's consumer loan portfolio is comprised principally of credit
card, other installment, and residential loans. Residential and auto loans
are collateralized, thereby reducing the risk. Credit card delinquencies and
charge-offs increased compared to last year. A further discussion of the
Company's credit card portfolio is incorporated by reference from "Provision
and Allowance for Loan Losses" and "Sector Profitability" in the Management's
Discussion and Analysis Section of Exhibit 13.
The Company's loans to the energy industry primarily consist of credits
with investor-owned electric and gas utilities, and oil, gas and mining
companies. There were no nonperforming loans to borrowers in this industry
at year-end 1996. Nonperforming loans to borrowers in the energy industry
amounted to $11 million at year-end 1995. Charge-offs in this industry were
$1 million in 1996 and zero in 1995.
The Company's loans to the communications, entertainment, and publishing
industries primarily consist of credits with cable television operators,
broadcasters, magazine and newspaper publishers, motion picture theaters and
regional telephone companies. At December 31, 1996 nonperforming loans in
these industries amounted to $23 million and represented loans to a single
borrower in the entertainment industry. There were no nonperforming loans in
these industries at December 31, 1995, and no charge-offs in 1996 and 1995.
The Company's portfolio of loans for purchasing or carrying securities
is comprised largely of overnight loans which are fully collateralized, with
appropriate margins, by marketable securities. Throughout its many years of
experience in this area, the Company has rarely experienced a loss.
The Company makes short-term, collateralized loans to mortgage bankers
to fund mortgages sold to investors. There were no nonperforming loans at
December 31, 1996 and 1995, and no charge-offs in 1996 and 1995.
Based on an evaluation of individual credits, historical loan losses,
and global economic factors, the Company has allocated its allowance for loan
losses as follows:
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Real Estate Loans 5% 7% 9% 8% 9%
Domestic Commercial and
Industrial Loans 40 36 40 40 40
Consumer Loans 1 2 - - 1
Credit Card Loans 29 23 16 10 8
Foreign Loans 4 11 19 18 18
Unallocated 21 21 16 24 24
---- ---- ---- ---- ----
100% 100% 100% 100% 100%
==== ==== ==== ==== ====
Such an allocation is inherently judgmental, and the entire allowance
for loan losses is available to absorb loan losses regardless of the nature
of the loan.
The following table details changes in the Company's allowance for loan
losses for the last five years.
(dollars in millions) 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Loans Outstanding, December 31, $37,006 $37,687 $33,083 $30,570 $29,497
Average Loans Outstanding 36,698 35,421 32,029 30,427 30,345
Allowance for Loan Losses
-------------------------
Balance, January 1
Domestic $ 515 $ 509 $ 558 $ 624 $ 766
Foreign 82 155 176 194 195
Unallocated 159 128 236 254 123
----- ----- ----- ------ ------
Total, January 1 756 792 970 1,072 1,084
----- ----- ----- ------ ------
Acquisitions and Securitizations - 11 14 1 56
Charge-Offs
Domestic
Commercial and Industrial (46) (56) (158) (142) (311)
Real Estate & Construction (11) (19) (6) (71) (103)
Credit Card (503) (294) (169) (136) (131)
Other Consumer (16) (15) (22) (37) (50)
Foreign (4) (48) (56) (63) (33)
----- ----- ----- ------ ------
Total (580) (432) (411) (449) (628)
----- ----- ----- ------ ------
Recoveries
Domestic
Commercial and Industrial 15 14 14 28 66
Real Estate & Construction - 3 - 2 13
Credit Card 62 27 21 15 13
Other Consumer 7 10 14 14 13
Foreign 41 1 8 3 12
----- ----- ----- ------ ------
Total 125 55 57 62 117
Net Charge-Offs (455) (377) (354) (387) (511)
----- ----- ----- ------ ------
Provision
Domestic 600 356 135 242 423
Foreign - (26) 27 42 20
----- ----- ----- ------ ------
Total 600 330 162 284 443
----- ----- ----- ------ ------
Balance, December 31,
Domestic 670 515 509 558 624
Foreign 38 82 155 176 194
Unallocated 193 159 128 236 254
----- ----- ----- ------ ------
Total, December 31, $ 901 $ 756 $ 792 $ 970 $1,072
===== ===== ===== ====== ======
Ratios
------
Net Charge-Offs to Average Loans
Outstandings 1.24% 1.06% 1.11% 1.27% 1.68%
===== ===== ===== ===== =====
Net Charge-Offs to Total
Allowance 50.50% 49.87% 44.70% 39.90% 47.67%
===== ===== ===== ===== =====
Total Allowance to Year-End
Loans Outstanding 2.43% 2.01% 2.40% 3.17% 3.63%
===== ===== ===== ===== =====
Nonperforming Assets
--------------------
A summary of nonperforming assets is presented in the following table.
(in millions) December 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Nonaccrual
----------
Domestic $175 $184 $220 $408 $ 581
Foreign 38 41 77 130 198
---- ---- ---- ---- ------
213 225 297 538 779
Reduced Rate (Domestic) - - - 2 9
------------ ---- ---- ---- ---- ------
213 225 297 540 788
Real Estate Acquired in
Satisfaction of Loans 41 72 56 99 268
--------------------- ---- ---- ---- ---- ------
$254 $297 $353 $639 $1,056
==== ==== ==== ==== ======
Past Due 90 Days or More
and Still Accruing Interest
---------------------------
Domestic
Credit Card $215 $214 $ 97 $ 65 $ 56
Other Consumer 2 5 2 3 9
Commercial 30 51 64 88 153
---- ---- ---- ---- ------
$247 $270 $163 $156 $ 218
==== ==== ==== ==== ======
Securities
----------
The following table shows the maturity distribution by carrying amount and
yield (not on a taxable equivalent basis) of the Company's securities
portfolio at December 31, 1996.
States and
U.S. Government Political
U.S. Government Agency Subdivisions
--------------- --------------- ------------
Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ -----
(dollars in millions)
Securities Held-
----------------
to-Maturity
-----------
One Year or Less $ 9 5.06% $ 18 5.57% $ 187 4.01%
Over 1 through 5 Years 2 5.64 157 5.59 59 5.66
Over 5 through 10 Years - - 2 7.24 46 6.35
Over 10 years - - - - 85 6.65
Mortgage-Backed Securities - - - - - -
------ ----- ------
$ 11 5.18% $ 177 5.60% $ 377 5.15%
====== ===== ======
Securities Available-
--------------------
for-Sale
----------
One Year or Less $ 569 5.58% $ 50 5.21% $ 3 5.22%
Over 1 through 5 Years 1,288 5.36 3 6.01 39 6.57
Over 5 through 10 Years 920 5.96 - - 54 6.05
Over 10 years 7 8.05 - - 184 5.91
Equity Securities - - - - - -
------ ----- -----
$2,784 5.61% $ 53 5.26% $ 280 6.02%
====== ===== =====
Other Bonds, Mortgage-Backed
Notes and and Equity
Debentures Securities
--------------- ---------------
Amount Yield Amount Yield Total
------ ----- ------ ----- -----
(dollars in millions)
Securities Held-
----------------
to-Maturity
-----------
One Year or Less $ 20 4.22% $ - -% $ 234
Over 1 through 5 Years 53 6.35 - - 271
Over 5 through 10 Years 57 3.94 - - 105
Over 10 years 273 5.77 - - 358
Mortgage-Backed Securities - - 202 7.32 202
---- ---- ------
$403 5.98% $202 7.32% $1,170
==== ==== ======
Securities Available-
--------------------
for-Sale
----------
One Year or Less $ 35 4.92% $ - -% $ 657
Over 1 through 5 Years 2 6.23 - - 1,332
Over 5 through 10 Years 46 5.24 - - 1,020
Over 10 years 5 5.40 - - 196
Equity Securities - - 678 2.64 678
----- ---- ------
$ 88 5.15% $678 2.64% $3,883
===== ==== ======
Loans
-----
The following table shows the maturity structure of the Company's commercial
loan portfolio at December 31, 1996.
Over 1 Year
1 Year Through Over
or Less 5 Years 5 Years Total
------- ----------- ------- -----
(in millions)
Domestic
--------
Real Estate, Excluding Loans
Collateralized by 1-4 Family
Residential Properties $ 483 $1,386 $ 915 $ 2,784
Commercial and Industrial Loans 4,927 5,282 2,635 12,844
Other, Excluding Loans to
Individuals and those
Collateralized by 1-4 Family
Residential Properties 4,671 800 123 5,594
------- ------ ------ -------
10,081 7,468 3,673 21,222
Foreign 2,716 1,024 2,324 6,064
------- ------- ------ ------ -------
Total $12,797 $8,492 $5,997 $27,286
======= ====== ====== =======
Loans with:
Predetermined Interest Rates $ 990 $1,156 $2,276 $ 4,422
Floating Interest Rates 11,807 7,336 3,721 22,864
------- ------ ------ -------
Total $12,797 $8,492 $5,997 $27,286
======= ====== ====== =======
Deposits
--------
The aggregate amount of deposits by foreign customers in domestic
offices was $4.5 billion, $4.0 billion, and $3.2 billion at December 31,
1996, 1995, and 1994.
The following table shows the maturity breakdown of domestic time
deposits of $100,000 or more at December 31, 1996.
Time
(in millions) Certificates Deposits-
of Deposits Other Total
------------------------------------------------
3 Months or Less $ 598 $1,757 $2,355
Over 3 Through 6 Months 160 8 168
Over 6 Through 12 Months 102 8 110
Over 12 Months 567 19 586
------ ------ ------
Total $1,427 $1,792 $3,219
====== ====== ======
The majority of deposits in foreign offices are time deposits in
denominations of $100,000 or more.
Other Borrowed Funds
---------------------
Information related to other borrowed funds in 1996, 1995, and 1994 is
presented in the table below.
1996 1995 1994
--------------- --------------- ---------------
(dollars in millions)
Average Average Average
Amount Rate Amount Rate Amount Rate
------ ------- ------ ------- ------ -------
Federal Funds Purchased
and Securities Sold Under
Repurchase Agreements
--------------------------
At December 31 $1,737 5.31% $3,933 4.61% $1,502 4.91%
Average During Year 2,957 5.23 2,804 5.75 2,843 3.73
Maximum Month-End Balance
During Year 4,460 4.85 3,991 5.96 6,415 3.36
Other*
-----
At December 31 $2,707 5.34% $3,106 5.73% $4,176 5.79%
Average During Year 3,406 5.47 3,962 6.22 4,135 4.63
Maximum Month-End Balance
During Year 4,341 5.40 5,025 5.74 5,639 4.57
*Other borrowings consist primarily of commercial paper, bank notes, extended
federal funds purchased, and amounts owed to the U.S. Treasury.
Foreign Assets
--------------
At December 31, 1996, the Company had assets in excess of 1% of year
end total assets in the United Kingdom, totaling $1,100 million; and
consisting of $529 million attributable to banks and other financial
institutions, and $571 million attributable to commercial, industrial and
other companies. At December 31, 1996, the Company had assets in excess of
.75% of year end total assets in Greece, South Korea and Brazil aggregating
$1,515 million. At December 31, 1995, the Company had assets in excess of
.75% of year end total assets in Greece and South Korea, aggregating $1,007
million.
ITEM 2. PROPERTIES
-------------------
In New York City, the Company owns the thirty story building housing its
executive headquarters at 48 Wall Street, a forty-nine story office building
at One Wall Street, and an operations center at 101 Barclay Street. In
addition, the Company owns and/or leases administrative and operations
facilities in New York City; various locations in New Jersey and Connecticut;
Harrison, New York; Newark, Delaware; Brussels, Belgium; London, England; and
Utica, New York. Other real properties owned or leased by the Company, when
considered in the aggregate, are not material to its operations.
ITEM 3. LEGAL PROCEEDINGS
--------------------------
There are no material legal proceedings pending against the Company or
its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
There were no matters submitted to a vote of security holders of the
registrant during the fourth quarter of 1996.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------------------------------------------------------------------------------
Information with respect to the market for the Company's common equity
and related stockholder matters is incorporated herein by reference from the
"Quarterly Data" section included in Exhibit 13. The Company's securities
that are listed on the New York Stock Exchange (NYSE), are indicated as such
on the front cover of this report. The NYSE symbol for the Company's Common
Stock is BK. The Warrants (to purchase the Company's Common Stock) are
traded over the counter. All of the Company's other securities are not
currently listed. The Company had 24,014 common shareholders of record at
February 28, 1997.
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------
Selected financial data are incorporated herein by reference from the
"Financial Highlights" section included in Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Management's discussion and analysis of financial condition and results
of operations is incorporated herein by reference from the corresponding
section of Exhibit 13.
CAUTIONARY STATEMENT
The Company or its executive officers and directors on behalf of the
Company, may from time to time make forward looking statements. To the
extent that any forward looking statements are made, the Company is
necessarily unable to predict future changes in interest rates, economic
activity, consumer behavior, government monetary policy, legislation and
regulation, competition, and loan demand. In addition, the Company's future
results of operations and other forward looking statements contained in
Management's Discussion and Analysis and elsewhere in this Form 10-K involve
a number of risks and uncertainties. As a result of variations in such
factors, actual results may differ materially from any forward looking
statements. Some of these factors are described below. The Company
disclaims any obligation to update forward looking statements.
Government Monetary Policies
The Federal Reserve Board has the primary responsibility for monetary
policy; accordingly, its actions have an important influence on the demand
for credit and
investments and the level of interest rates and thus on the
earnings of the Company.
Legislation and Regulation
Proposals to change the laws and regulations governing the banking
industry are frequently introduced in Congress, in the state legislatures and
before the various bank regulatory agencies. Regulatory changes could
increase the Company's overhead costs, restrict access to profitable markets
or force participation in unprofitable markets. The likelihood and timing of
any such changes and the impact such changes might have on the Company and
its subsidiaries, however, cannot be determined at this time.
Competition
The businesses in which the Company operates are very competitive.
Competition is provided by both unregulated and regulated financial services
organizations, whose products and services span the local, national, and
global markets in which the Company conducts operations.
Savings banks, savings and loan associations, and credit unions actively
compete for deposits, and money market funds and brokerage houses offer
deposit-like services. These institutions, as well as consumer and
commercial finance companies, national retail chains, factors, insurance
companies and pension trusts, are important competitors for various types of
loans. Issuers of commercial paper compete actively for funds and reduce
demand for bank loans. For personal and corporate trust services and
investment counseling services, insurance companies, investment counseling
firms, and other business firms and individuals offer active competition. A
wide variety of domestic and foreign companies compete for processing
services.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
Consolidated financial statements and notes and the independent
auditors' reports are incorporated herein by reference from Exhibits 13
and 99 to this Report.
Supplementary financial information is incorporated herein by reference
from the "Quarterly Data" section included in Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
On March 12, 1996, the Company's Board of Directors, acting upon the
recommendation of the Audit Committee of the Company's Board of Directors
dismissed Deloitte & Touche LLP as the Company's independent public
accountants and appointed Ernst & Young LLP to serve as the Company's
independent public accountants for the year 1996.
Deloitte & Touche LLP's report on the Company's financial statements
for the fiscal year ended December 31, 1995 did not contain an adverse
opinion or a disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope, or accounting principles. During the fiscal year
ended December 31, 1995 and during the period from December 31, 1995 through
March 12, 1996, there were no disagreements between the Company and Deloitte
& Touche LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements
would have caused Deloitte & Touche LLP to make reference to the subject
matter of such disagreements in connection with its reports.
There have been no other events which require disclosure under Item 304
of Regulation S-K.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------
The directors of the registrant are identified on pages 24 and 25 of
this report. Additional material responsive to this item is contained in the
Company's definitive Proxy Statement for its 1997 Annual Meeting of
Shareholders, which information is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT AND BUSINESS EXPERIENCE DURING THE PAST
-----------------------------------------------------------------------------
FIVE YEARS
----------
Company
Officer
Name Office and Experience Age Since
---- --------------------- --- -----
J. Carter Bacot 1995-1997 Chairman and Chief Executive 64 1975
Officer of the Company, Chairman
of the Bank
1992-1995 Chairman and Chief Executive
Officer of the Company and
the Bank
Thomas A. Renyi 1995-1997 President of the Company and 51 1992
President and Chief Executive
Officer of the Bank
1994-1995 President of the Company and
President and Chief Operating
Officer of the Bank
1992-1994 President of the Company and
Vice Chairman of the Bank
1992 Senior Executive Vice President
and Chief Credit Officer of
the Bank
Alan R. Griffith 1994-1997 Vice Chairman of the Company 55 1990
and the Bank
1992-1994 Senior Executive Vice President
of the Company, and President
and Chief Operating Officer of
the Bank
Deno D. Papageorge 1992-1997 Senior Executive Vice President 58 1980
of the Company, Senior Executive
Vice President and Chief
Financial Officer of the Bank
Richard D. Field 1992-1997 Executive Vice President of the 56 1987
Company, Senior Executive Vice
President of the Bank
Robert E. Keilman 1992-1997 Comptroller of the Company and 51 1984
the Bank, Senior Vice President
of the Bank
Phebe C. Miller 1995-1997 Secretary and Chief Legal 47 1995
Officer of the Company, Senior
Vice President and Chief Legal
Officer of the Bank
1994-1995 Senior Vice President of the Bank
1992-1994 Managing Director, General
Counsel and Secretary, Discount
Corporation of New York
Robert J. Goebert 1992-1997 Auditor of the Company, Senior 55 1982
Vice President of the Bank
Officers of BNY who perform major policy making functions:
Bank
Executive
Officer
Name Office and Experience Age Since
---- --------------------- --- ------
Gerald L. Hassell 1994-1997 Senior Executive Vice President 45 1990
and Chief Commercial Banking
Officer
1992-1994 Executive Vice President - Special
Industries Banking
Robert J. Mueller 1992-1997 Senior Executive Vice President - 55 1989
Chief Credit Policy Officer
1992 Executive Vice President - Mortgage
& Construction Lending
Newton P.S. Merrill 1994-1997 Senior Executive Vice President - 57 1994
Trust, Investment Management and
Private Banking
1992-1993 Senior Executive Vice President -
The Bank of Boston
Donald R. Monks 1996-1997 Senior Executive Vice President - 48 1996
Operations and Technology
1996 Executive Vice President -
Product Management, Bank
Operations, Banking Technology
1995-1996 Executive Vice President - Product
Management, Banking Technology
1993-1995 Executive Vice President - Product
Management, Stock Transfer
Business Unit
1992-1993 Executive Vice President - Product
Management
Richard A. Pace 1992-1997 Executive Vice President and Chief 51 1989
Technologist
There are no family relationships between the executive officers of the
Company. The terms of office of the executive officers of the Company extend
until the annual organizational meeting of the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
The material responsive to such item in the Company's definitive Proxy
Statement for its 1997 Annual Meeting of Shareholders is incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The material responsive to such item in the Company's definitive Proxy
Statement for its 1997 Annual Meeting of Shareholders is incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
The material responsive to such item in the Company's definitive Proxy
Statement for its 1997 Annual Meeting of Shareholders is incorporated by
reference.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------
(a) 1 Financial Statements:
See Item 8.
(a) 2 Financial Statement Schedules:
Financial statement schedules are omitted since the required information
is either not applicable, not deemed material, or is shown in the respective
financial statements or in the notes thereto.
(a) 3 Listing of Exhibits:
A list of the exhibits filed or incorporated by reference appears
following page 25 of this Report, which information is incorporated by
reference.
(b) Reports on Form 8-K:
October 15, 1996: Unaudited interim financial information and
accompanying discussion for the third quarter of 1996.
December 10, 1996: Announcement of the approval by the Board of
Directors of a plan to buy back, through the end of 1997, up to
30 million common shares.
December 19, 1996: Pricing Agreement, a Certificate Representing
the Company's 7.97% Junior Subordinated Deferrable Interest
Debentures, Series B, and a Form of Certificate Representing BNY
Capital I's 7.97% Capital Securities, Series B; related to the
issuance by BNY Capital I of 300,000 of its 7.97% Capital
Securities, Series B.
January 16, 1997: Unaudited interim financial information and
accompanying discussion for the fourth quarter of 1996.
(c) Exhibits:
Submitted as a separate section of this report.
(d) Financial Statements Schedules:
None
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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 in New York, New
York, on the 11th day of March, 1997.
THE BANK OF NEW YORK COMPANY, INC.
By: \s\ Deno D. Papageorge
-------------------------------------
(Deno D. Papageorge,
Senior Executive Vice President)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf of
the registrant and in the capacities indicated on the 11th day of March,
1997.
Signature Title
--------- -----
\s\J. Carter Bacot Chairman and
----------------------------------- Chief Executive Officer
(J. Carter Bacot) (principal executive officer)
\s\ Deno D. Papageorge Senior Executive Vice President
----------------------------------- and Director
(Deno D. Papageorge) (principal financial officer)
\s\ Robert E. Keilman Comptroller
------------------------------------ (principal accounting officer)
(Robert E. Keilman)
\s\ Richard Barth Director
------------------------------------
(Richard Barth)
\s\ Frank J. Biondi, Jr. Director
------------------------------------
(Frank J. Biondi, Jr.)
\s\ William R. Chaney Director
------------------------------------
(William R. Chaney)
\s\ Ralph E. Gomory Director
------------------------------------
(Ralph E. Gomory)
\s\ Alan R. Griffith Vice Chairman
------------------------------------ and Director
(Alan R. Griffith)
\s\ Edward L. Hennessy, Jr. Director
------------------------------------
(Edward L. Hennessy, Jr.)
\s\ Richard J. Kogan Director
------------------------------------
(Richard J. Kogan)
\s\ John A. Luke, Jr. Director
------------------------------------
(John A. Luke, Jr.)
Director
------------------------------------
(John C. Malone)
\s\ Donald L. Miller Director
------------------------------------
(Donald L. Miller)
\s\ H. Barclay Morley Director
------------------------------------
(H. Barclay Morley)
\s\ Martha T. Muse Director
------------------------------------
(Martha T. Muse)
\s\ Catherine A. Rein Director
------------------------------------
(Catherine A. Rein)
\s\ Thomas A. Renyi President and
------------------------------------ Director
(Thomas A. Renyi)
\s\ Harold E. Sells Director
------------------------------------
(Harold E. Sells)
\s\ W. S. White, Jr. Director
------------------------------------
(W. S. White, Jr.)
INDEX TO EXHIBITS
Exhibit No.
------------
The Bank of New York Company, Inc.'s Restated Certificicate of Incorporation,
as amended, By-Laws, Instruments Defining the Rights of Securities Holders,
and certain other material contracts, including employee benefit plans and
indentures and constituent instruments, have been previously filed with the
Securities and Exchange Commission as exhibits to various registration
statements and periodic reports of the Company.
4 (a) None of the outstanding instruments defining the rights of holders
of long-term debt of the Company represent long-term debt in excess
of 10% of the total assets of the Company. The Company hereby
agrees to furnish to the Commission, upon request, a copy of any of
such instrument.
10 (a) Amendment to The Bank of New York Company, Inc. Supplemental
Executive Retirement Plan dated June 11, 1996.
(b) Amendment to The Bank of New York Company, Inc. Supplemental
Executive Retirement Plan dated November 12, 1996.
(c) Amendment dated January 31, 1997 to the Trust Agreement dated
April 19, 1988 related to executive compensation agreements.
(d) Amendment dated January 14, 1997 to the Trust Agreement dated
November 16, 1993 related to executive compensation agreements.
(e) Amendment dated January 31, 1997 to the Trust Agreement dated
November 16, 1993 related to executive compensation agreements.
(f) Amendment dated January 31, 1997 to the Trust Agreement dated
December 15, 1994 related to certain executive compensation plans
and agreements.
(g) Amendment to the 1993 Long-Term Incentive Plan of The Bank of New
York Company, Inc. dated December 10, 1996.
(h) Amendment to the 1993 Long-Term Incentive Plan of The Bank of New
York Company, Inc. dated January 14, 1997.
(i) Amendment to the 1993 Long-Term Incentive Plan of The Bank of New
York Company, Inc. dated March 11, 1997.
(j) Amendment to the Directors' Deferred Compensation Plan of The Bank
of New York Company, Inc. dated February 11, 1997.
11 Statement - Re: Computation of Per Common Share Earnings
12 Statement - Re: Computation of Earnings to Fixed Charges Ratios
13 Portions of the 1996 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
27 Financial Data Schedule
99 Opinion of Deloitte & Touche LLP
Dates Referenced Herein and Documents Incorporated by Reference
4 Subsequent Filings that Reference this Filing
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