-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GBESPXzCKgvPHAYOPGfkZgBx37BkmtQvFc/TyYVLu1dOLq6gPMJhtiDt/N/EAswM uyIQHyTPoZ7jFaSsebx6qw== 0000009626-01-500015.txt : 20010515 0000009626-01-500015.hdr.sgml : 20010515 ACCESSION NUMBER: 0000009626-01-500015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANK OF NEW YORK CO INC CENTRAL INDEX KEY: 0000009626 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 132614959 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06152 FILM NUMBER: 1633426 BUSINESS ADDRESS: STREET 1: ONE WALL ST 10TH FL CITY: NEW YORK STATE: NY ZIP: 10286 BUSINESS PHONE: 212-495-1784 MAIL ADDRESS: STREET 1: ONE WALL STREET 31ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10286 10-Q 1 r10q1q01.txt 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 number) One Wall Street, New York, New York 10286 (Address of principal executive offices) (Zip code) (212) 495-1784 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of the issuer's Common Stock, $7.50 par value, was 735,541,974 shares as of April 30, 2001. 2 THE BANK OF NEW YORK COMPANY, INC. FORM 10-Q TABLE OF CONTENTS PART 1. FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements Consolidated Balance Sheets March 31, 2001 and December 31, 2000 3 Consolidated Statements of Income For the Three Months Ended March 31, 2001 and 2000 4 Consolidated Statement of Changes In Shareholders' Equity For the Three Months Ended March 31, 2001 5 Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2001 and 2000 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk. (See "Trading Activities") 13 PART 2. OTHER INFORMATION - -------------------------- Item 1. Legal Proceedings 22 Item 6. Exhibits and Reports on Form 8-K 23 SIGNATURE 24 3 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements - ----------------------------- THE BANK OF NEW YORK COMPANY, INC. Consolidated Balance Sheets (Dollars in millions, except per share amounts) (Unaudited)
March 31, December 31, 2001 2000 ---- ---- Assets - ------ Cash and Due from Banks $ 2,847 $ 3,125 Interest-Bearing Deposits in Banks 3,568 5,337 Securities: Held-to-Maturity (fair value of $133 in 2001 and $719 in 2000) 147 752 Available-for-Sale 6,668 6,649 ------- ------- Total Securities 6,815 7,401 Trading Assets at Fair Value 11,986 12,051 Federal Funds Sold and Securities Purchased Under Resale Agreements 3,469 5,790 Loans (less allowance for credit losses of $616 in 2001 and $616 in 2000) 36,508 35,645 Premises and Equipment 928 924 Due from Customers on Acceptances 622 447 Accrued Interest Receivable 297 354 Other Assets 6,033 6,040 ------- ------- Total Assets $73,073 $77,114 ======= ======= Liabilities and Shareholders' Equity - ------------------------------------ Deposits Noninterest-Bearing (principally domestic offices) $11,061 $13,255 Interest-Bearing Domestic Offices 15,480 15,774 Foreign Offices 24,373 27,347 ------- ------- Total Deposits 50,914 56,376 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 1,080 1,108 Trading Liabilities 2,442 2,070 Other Borrowed Funds 1,961 1,687 Acceptances Outstanding 623 450 Accrued Taxes and Other Expenses 3,289 3,283 Accrued Interest Payable 122 127 Other Liabilities 2,079 1,325 Long-Term Debt 3,008 3,036 ------- ------- Total Liabilities 65,518 69,462 ------- ------- Company-Obligated Mandatory Redeemable Preferred Trust Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures 1,500 1,500 ------- ------- Shareholders' Equity Class A Preferred Stock - par value $2.00 per share, authorized 5,000,000 shares, outstanding 16,320 shares in 2001 and 2000 1 1 Common Stock-par value $7.50 per share, authorized 1,600,000,000 shares, issued 988,042,412 shares in 2001 and 985,528,475 shares in 2000 7,410 7,391 Additional Capital 586 521 Retained Earnings 3,819 3,566 Accumulated Other Comprehensive Income 130 207 ------- ------- 11,946 11,686 Less: Treasury Stock (250,318,423 shares in 2001 and 244,460,032 shares in 2000), at cost 5,883 5,526 Loan to ESOP (1,142,939 shares in 2001 and 2000), at cost 8 8 ------- ------- Total Shareholders' Equity 6,055 6,152 ------- ------- Total Liabilities and Shareholders' Equity $73,073 $77,114 ======= ======= - ---------------------------------------------------------------------------------------- Note: The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date. See accompanying Notes to Consolidated Financial Statements.
4 THE BANK OF NEW YORK COMPANY, INC. Consolidated Statements of Income (In millions, except per share amounts) (Unaudited)
For the three months ended March 31, 2001 2000 ---- ---- Interest Income - --------------- Loans $ 676 $ 716 Securities Taxable 78 80 Exempt from Federal Income Taxes 17 15 ------ ------ 95 95 Deposits in Banks 70 71 Federal Funds Sold and Securities Purchased Under Resale Agreements 51 49 Trading Assets 141 102 ------ ------ Total Interest Income 1,033 1,033 ------ ------ Interest Expense - ---------------- Deposits 463 472 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 32 36 Other Borrowed Funds 31 29 Long-Term Debt 52 49 ------ ------ Total Interest Expense 578 586 ------ ------ Net Interest Income 455 447 - ------------------- Provision for Credit Losses 30 20 ------ ------ Net Interest Income After Provision for Credit Losses 425 427 ------ ------ Noninterest Income - ------------------ Servicing Fees Securities 458 372 Cash 69 66 ------ ------ 527 438 Private Client Services and Asset Management Fees 79 70 Service Charges and Fees 90 90 Securities Gains 45 40 Other 117 99 ------ ------ Total Noninterest Income 858 737 ------ ------ Noninterest Expense - ------------------- Salaries and Employee Benefits 394 359 Net Occupancy 50 45 Furniture and Equipment 30 26 Other 179 172 ------ ------ Total Noninterest Expense 653 602 ------ ------ Income Before Income Taxes 630 562 Income Taxes 218 196 Distribution on Preferred Trust Securities 28 28 ------ ------ Net Income $ 384 $ 338 - ---------- ====== ====== Net Income Available to Common Shareholders $ 384 $ 338 - ------------------------------------------- ====== ====== Per Common Share Data: - ---------------------- Basic Earnings $0.53 $0.46 Diluted Earnings 0.52 0.46 Cash Dividends Paid 0.18 0.16 Diluted Shares Outstanding 743 741 - ---------------------------------------------------------------------------------- See accompanying Notes to Consolidated Financial Statements
5
THE BANK OF NEW YORK COMPANY, INC. Consolidated Statement of Changes in Shareholders' Equity For the three months ended March 31, 2001 (In millions) (Unaudited) Preferred Stock Balance, January 1 $ 1 ------- Balance, March 31 1 ------- Common Stock Balance, January 1 7,391 Issuances in Connection with Employee Benefit Plans 19 ------- Balance, March 31 7,410 ------- Additional Capital Balance, January 1 521 Issuances in Connection with Employee Benefit Plans 65 ------- Balance, March 31 586 ------- Retained Earnings Balance, January 1 3,566 Net Income $384 384 Cash Dividends on Common Stock (131) ------- Balance, March 31 3,819 ------- Accumulated Other Comprehensive Income Securities Valuation Allowance Balance, January 1 244 Change in Fair Value of Securities Available-for-Sale, Net of Taxes of $(29) Million (60) (60) Reclassification Adjustment, Net of Taxes of $(14) Million (27) (27) ------- Balance, March 31 157 ------- Foreign Currency Items Balance, January 1 (37) Foreign Currency Translation Adjustment, Net of Taxes of $(3) Million (4) (4) ------- Balance, March 31 (41) ------- Unrealized Derivative Gains Balance, January 1 - Cumulative Effect of Change in Accounting Principle, Net of Taxes of $7 Million 10 10 Net Unrealized Derivative Gains on Cash Flow Hedges, Net of Taxes of $2 Million 3 3 Reclassification to Earnings, Net of Taxes of $0.5 Million 1 1 ---- ------- Balance, March 31 14 ------- Total Comprehensive Income $307 ==== Less Treasury Stock Balance, January 1 5,526 Issued (33) Acquired 390 ------- Balance, March 31 5,883 ------- Less Loan to ESOP Balance, January 1 8 ------- Balance, March 31 8 ------- Total Shareholders' Equity, March 31 $ 6,055 ======= - ------------------------------------------------------------------------------------ Comprehensive Income for the three months ended March 31, 2001 and 2000 was $307 million and $339 million. See accompanying Notes to Consolidated Financial Statements.
6 THE BANK OF NEW YORK COMPANY, INC. Consolidated Statements of Cash Flows (In millions) (Unaudited)
For the three months Ended March 31, 2001 2000 ---- ---- Operating Activities Net Income $ 384 $ 338 Adjustments to Determine Net Cash attributable to Operating Activities: Provision for Losses on Loans and Other Real Estate 32 21 Depreciation and Amortization 64 61 Deferred Income Taxes 128 122 Securities Gains (45) (40) Change in Trading Activities 190 (533) Change in Accruals and Other, Net 652 (290) ------ ------ Net Cash Provided (Used) by Operating Activities 1,405 (321) ------ ------ Investing Activities Change in Interest-Bearing Deposits in Banks 1,654 413 Purchases of Securities Held-to-Maturity - (69) Maturities of Securities Held-to-Maturity - 57 Purchases of Securities Available-for-Sale (903) (820) Sales of Securities Available-for-Sale 836 521 Maturities of Securities Available-for-Sale 381 213 Net Principal Received (Disbursed) on Loans to Customers (814) (3,299) Sales of Loans and Other Real Estate 187 117 Change in Federal Funds Sold and Securities Purchased Under Resale Agreements 2,328 2,754 Purchases of Premises and Equipment (29) (19) Acquisitions, Net of Cash Acquired (240) (93) Proceeds from the Sale of Premises and Equipment 2 - Other, Net (72) (91) ------ ------ Net Cash Provided (Used) by Investing Activities 3,330 (316) ------ ------ Financing Activities Change in Deposits (4,987) (72) Change in Federal Funds Purchased and Securities Sold Under Repurchase Agreements (28) 122 Change in Other Borrowed Funds 305 1,347 Proceeds from the Issuance of Long-Term Debt - 15 Repayments of Long-Term Debt (60) - Issuance of Common Stock 117 105 Treasury Stock Acquired (390) (246) Cash Dividends Paid (131) (117) ------ ------ Net Cash (Used) Provided by Financing Activities (5,174) 1,154 ------ ------ Effect of Exchange Rate Changes on Cash 161 80 ------ ------ Change in Cash and Due From Banks (278) 597 Cash and Due from Banks at Beginning of Period 3,125 3,276 ------ ------ Cash and Due from Banks at End of Period $2,847 $3,873 ====== ====== - ---------------------------------------------------------------------------- Supplemental Disclosure of Cash Flow Information Cash Paid During the Period for: Interest $ 582 $ 578 Income Taxes 11 15 - ---------------------------------------------------------------------------- See accompanying Notes to Consolidated Financial Statements.
7 THE BANK OF NEW YORK COMPANY, INC. Notes to Consolidated Financial Statements 1. General ------- The accounting and reporting policies of The Bank of New York Company, Inc. (the Company), a financial holding company, and its subsidiaries conform with generally accepted accounting principles and general practice within the banking industry. Such policies are consistent with those applied in the preparation of the Company's annual financial statements. The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods have been made. Such adjustments are of a normal recurring nature. 2. Acquisitions and Dispositions ----------------------------- In January 2001, the Company acquired the correspondent clearing business of Schroder & Co, Inc, from Salomon Smith Barney Inc. This transaction provides the Company with the opportunity to establish new client relationships and add broader product capabilities to its equity clearing business. In March 2001, the Company acquired the corporate trust business of Summit Bancorp, headquartered in Princeton, New Jersey. The acquisition involves the transfer of nearly 800 bond trustee and agency relationships, representing approximately $15.7 billion in outstanding securities for state and local government issuers, colleges, universities and health care institutions, as well as for a number of corporate clients. In April 2001, the Company signed a definitive agreement to acquire the corporate trust business of U.S. Trust Corporation, a subsidiary of The Charles Schwab Corporation, headquartered in San Francisco, California. The acquisition involves the transfer of more than 5,000 bond trust and agency appointments representing more than $330 billion in outstanding debt securities. The U.S. Trust business is a diversified portfolio with significant market position in several specialty products and services, including the structured finance and municipal finance market segments. In May 2001, the Company signed a definitive agreement to acquire the institutional custody and administration business of NatWest Bank, a unit of the Royal Bank of Scotland. The acquisition continues the Company's strategic commitment to expanding its European-based investor services capabilities. 8 3. Allowance for Credit Losses --------------------------- Transactions in the allowance for credit losses are summarized as follows: Three months ended March 31, (In millions) 2001 2000 ---- ---- Balance, Beginning of Period $616 $595 Charge-Offs (32) (22) Recoveries 2 7 ---- ---- Net Charge-Offs (30) (15) Provision 30 20 ---- ---- Balance, End of Period $616 $600 ==== ==== 4. Capital Transactions -------------------- As of April 30, 2001, the Company has approximately 5 million common shares remaining to repurchase under its 14 million share buyback programs. 5. Derivatives and Hedging ----------------------- Effective January 1, 2001, the Company adopted a new accounting standard related to derivatives and hedging activities. The new standard requires all derivatives to be included as assets or liabilities in the balance sheet and that such instruments be carried at fair value through adjustments to either other comprehensive income or current earnings, or both, as appropriate. The adoption of the new standard as of January 1, 2001 resulted in zero impact on 2001 net income and a credit of $10 million to accumulated other comprehensive income. In connection with the adoption of the new standard, the Company transferred investment securities with a carrying value of $0.6 billion and an unrealized loss of $5 million from its held-to-maturity to its available-for-sale and trading portfolios. The Company enters into various derivative financial instruments such as interest rate swaps, foreign currency swaps, futures contracts and forward rate agreements for non-trading purposes, which are designated and qualify as fair value and cash flow hedges of certain assets and liabilities in accordance with the new standard. The Company utilizes interest rate swap agreements to manage its exposure to interest rate fluctuations. Interest rate swaps are used to convert fixed rate loans, deposits and long-term debt to floating rates, and to hedge interest rate resets of variable rate cash flows. Basis swaps are used to convert various variable rate borrowings to LIBOR which better matches the assets funded by the borrowings. Cross-currency swaps are used to hedge exposure to exchange rate fluctuations on principal and interest payments for borrowings denominated in foreign currencies. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair-value hedges to specific assets or liabilities on the balance sheet. The Company also formally assesses (both at the hedge's inception and on an ongoing basis) whether the derivatives that are used in hedging transactions have been highly effective in offsetting changes in the fair value of hedged items and whether those derivatives may be expected to remain highly effective in future periods. The Company will discontinue hedge accounting prospectively when it determines 9 that the derivative is no longer an effective hedge, the derivative expires or is sold, or management discontinues the derivative's hedge designation. During the first quarter of 2001, the Company recorded ineffectiveness of $1 million related to fair value and cash flow hedges in other income. Also during the quarter, the Company recorded a credit of $3 million to other comprehensive income arising from the change in value of cash flow hedges. In addition, it reclassified a deferred loss on expired interest rate futures contracts of $1 million from accumulated other comprehensive income to a charge to interest expense. The Company also utilizes foreign exchange forward contracts to manage currency exposure relating to its net investments in non-U.S. dollar functional currency operations. A loss of less than $1 million from revaluing these contracts was deferred and reported within cumulative translation adjustments in shareholders' equity, net of tax effects. Interest elements (forward points) on these foreign exchange forward contracts of less than $1 million were recorded as a credit in other comprehensive income, net of tax effects. In the first quarter, all the Company's derivative financial instruments not designated as hedges were recorded in the Company's trading account at fair value. The amounts recognized as other comprehensive income for cash flow hedges are reclassified to net interest income as interest is realized on the hedging derivative. Assuming interest rates remain stable, a minimal amount is expected to be reclassified to income over the next twelve months. 6. Earnings Per Share ------------------ The following table illustrates the computations of basic and diluted earnings per share for the three months ended March 31, 2001 and 2000: Three Months Ended March 31, (In millions, except per share amounts) 2001 2000 ---- ---- Net Income (1) $384 $338 ==== ==== Basic Weighted Average Shares Outstanding 732 732 Shares Issuable on Exercise of Employee Stock Options 11 9 ---- ---- Diluted Weighted Average Shares Outstanding 743 741 ==== ==== Basic Earnings Per Share: $0.53 $0.46 Diluted Earnings Per Share: 0.52 0.46 (1) For purpose of calculating earnings per share, diluted net income and net income available to common shareholders equal net income for all periods presented. 7. Commitments and Contingent Liabilities -------------------------------------- In the ordinary course of business, there are various legal claims pending against the Company and its subsidiaries. In the opinion of management, liabilities arising from such claims, if any, would not have a material effect upon the Company's consolidated financial statements. 10 Item 2. Management's Discussion and Analysis of Financial Condition and - ------------------------------------------------------------------------ Results of Operations - --------------------- The Company's actual results of future operations may differ from those set forth in certain forward looking statements contained herein. Refer to further discussion under the heading "Forward Looking Statements". The Company reported record first quarter diluted earnings per share of 52 cents, up 13% from the 46 cents earned in the first quarter of 2000. Net income for the first quarter was a record $384 million, up 14% from the $338 million earned in the same period last year. The first quarter results reflect the strength of the Company's strategy in an uncertain business climate. Despite declining equity values in the past quarter, the Company's business model continues to perform well given the diversity of markets, products and client bases the Company serves throughout the world. In securities servicing, fee revenues increased to a record $458 million, up 23% for the quarter. Private client services and asset management fees grew 14% in the quarter. Foreign exchange and other trading revenues were $83 million, up 9% from last year's first quarter. The Company's continued focus on fee-based businesses resulted in noninterest income growing to 65% of total revenue in the first quarter, up from 62% a year ago. Return on average common equity for the first quarter of 2001 was 25.92% compared with 24.82% and 27.07% in the fourth and first quarters of 2000, respectively. Return on average assets for the first quarter of 2001 was 2.03% compared with 1.92% and 1.78% in the fourth and first quarters of 2000, respectively. Fees from the Company's securities servicing businesses reached $458 million for the first quarter compared with $372 million in the prior year. Fee revenue was particularly strong in depositary receipts ("DRs"), unit investment trust, global liquidity services, corporate trust and global execution services. The Company continues to be the world's leading custodian with assets of $6.8 trillion, including $2 trillion of cross-border custody assets. With respect to global liquidity services, average funds invested off-balance-sheet were $34 billion in the first quarter of 2001, up 39% compared with last year's first quarter. Private client services and asset management fees were $79 million for the quarter, up 14% from $70 million last year, led by the Company's build out in the equity-value management and alternative investment product lines. Within global payment services, cash management and funds transfer fees were up 10% for the first quarter of 2001. This growth continues to be driven by new business wins in the domestic financial service industry as well as increased cash management revenue associated with CA$H-Register PlusR, the Company's internet-based electronic banking service. Foreign exchange and other trading revenues for the quarter were $83 million, up from $56 million in the fourth quarter of 2000 and $76 million in the first quarter of 2000 principally due to strong foreign exchange transaction flows from the Company's securities servicing client franchise as well as strength in the Company's fixed income businesses. The increased penetration of the European and Asian securities servicing client base continues to provide growth opportunities. Net interest income on a taxable equivalent basis for the first quarter increased to $469 million from $460 million in the first quarter of 2000. Tangible diluted earnings per share (earnings before the amortization of goodwill and intangibles) were 54 cents per share in the first quarter of 11 2001, compared with 48 cents per share in the first quarter of 2000. On the same basis, tangible return on average common equity was 39.28% in the first quarter of 2001 compared with 43.03% in 2000; and tangible return on average assets was 2.19% in the first quarter of 2001 compared with 1.93% in 2000. Amortization of intangibles for the first quarter of 2001 was $29 million compared with $28 million in the first quarter of 2000. CAPITAL The Company's estimated Tier 1 capital and Total capital ratios were 8.42% and 12.54% at March 31, 2001, compared with 8.60% and 12.92% at December 31, 2000, and 7.39% and 11.49% at March 31, 2000. The leverage ratio was 7.41% at March 31, 2001, compared with 7.49% at December 31, 2000, and 6.66% one year ago. The Company's tangible common equity as a percent of total assets was 5.87% at March 31, 2001, compared with 5.78% at December 31, 2000, and 4.74% at March 31, 2000. In the first quarter of 2001, the Company repurchased 7 million shares under its common stock repurchase programs. LIQUIDITY The Company maintains its liquidity through the management of its assets and liabilities, utilizing worldwide financial markets. The diversification of liabilities reflects the flexibility of the Company's funding sources under changing market conditions. Stable core deposits, including demand, retail time, and trust deposits from processing businesses, are generated through the Company's diversified business operations and managed with the use of trend studies and deposit pricing. The use of derivative products such as interest rate swaps and financial futures is designed to enhance liquidity through the issue of long-term liabilities with limited exposure to interest rate risk. Liquidity also results from the maintenance of a portfolio of assets, which can be easily reduced, and the monitoring of unfunded loan commitments, thereby reducing unanticipated funding requirements. NONINTEREST INCOME
1st 4th 1st Quarter Quarter Quarter ------- ------- ------- (In millions) 2001 2000 2000 ---- ---- ---- Servicing Fees Securities $458 $448 $372 Global Payment Services 69 65 66 ---- ---- ---- 527 513 438 Private Client Services and Asset Management Fees 79 77 70 Service Charges and Fees 90 85 90 Foreign Exchange and Other Trading Activities 83 56 76 Securities Gains 45 44 40 Other 34 30 23 ---- ---- ---- Total Noninterest Income $858 $805 $737 ==== ==== ====
Total noninterest income reached $858 million, up 16% from $737 million in last year's first quarter. Securities servicing fees grew 23% reaching $458 million compared with $372 million from a year ago. Fees from global payment services for the quarter were $69 million, up 5%, reflecting higher cash management and funds transfer fees, which grew 10% over last year's first 12 quarter, partially offset by lower trade finance fees. Fees from private client services and asset management were $79 million, up 14% from the first quarter of 2000. Securities gains were $45 million, which compares to $44 million in the fourth quarter of 2000 and $40 million a year ago. NET INTEREST INCOME
1st 4th 1st Quarter Quarter Quarter (Dollars in millions ------- ------- ------- on a tax equivalent basis) 2001 2000 2000 ---- ---- ---- Net Interest Income $469 $496 $460 Net Interest Rate Spread 1.88% 1.88% 1.96% Net Yield on Interest Earning Assets 2.93 3.01 2.89
Net interest income on a taxable equivalent basis was $469 million in the first quarter of 2001 compared with $496 million in the fourth quarter of 2000 and $460 million in the first quarter of 2000. The net interest rate spread was 1.88% in the first quarter of 2001, compared with 1.88% in the fourth quarter of 2000 and 1.96% one year ago. The net yield on interest earning assets was 2.93% compared with 3.01% in the fourth quarter of 2000 and 2.89% in last year's first quarter. The decline from the fourth quarter in net interest income and net yield is primarily due to a lower interest rate environment and reflects the Company's ongoing strategy of managing loan growth and culling its loan portfolio to reduce credit exposures that no longer meet risk/return criteria. Interest income would have been increased by $3 million for the first quarters of 2001 and 2000 if loans on nonaccrual status at March 31, 2001 and 2000 had been performing for the entire period. 13 TRADING ACTIVITIES The fair value and notional amounts of the Company's financial instruments held for trading purposes at March 31, 2001 are as follows: 1st Quarter 2001 March 31, 2001 Average ---------------------------- ------------------- (In millions) Fair Value Fair Value ------------------ ------------------- Notional Trading Account Amount Assets Liabilities Assets Liabilities - --------------- -------- ------ ----------- ------ ----------- Interest Rate Contracts: Futures and Forward Contracts $ 33,577 $ 50 $ 71 $ 250 $ 279 Swaps 113,280 1,024 512 861 457 Written Options 91,589 - 922 - 847 Purchased Options 38,534 105 - 191 - Foreign Exchange Contracts: Swaps 1,117 - - - - Written Options 12,820 - 150 - 138 Purchased Options 15,377 152 - 153 - Commitments to Purchase and Sell Foreign Exchange 107,183 725 711 755 745 Debt Securities - 9,923 73 10,152 42 Credit Derivatives 2,056 7 3 6 2 ------- ------ ------- ------ Total Trading Account $11,986 $2,442 $12,368 $2,510 ======= ====== ======= ====== The Company manages trading risk through a system of position limits, a value at risk (VAR) methodology, based on a Monte Carlo simulation, stop loss advisory triggers, and other market sensitivity measures. Risk is monitored and reported to senior management by an independent unit on a daily basis. The VAR methodology captures, based on certain assumptions, the potential overnight pre-tax dollar loss from adverse changes in fair values of all trading positions. The calculation assumes a one day holding period for most instruments, utilizes a 99% confidence level, and incorporates the non-linear characteristics of options. As the VAR methodology does not evaluate risk attributable to extraordinary financial, economic or other occurrences, the risk assessment process includes a number of stress scenarios based upon the risk factors in the portfolio and management's assessment of market conditions. Additional stress scenarios based upon historic market events are also tested. The following table indicates the calculated VAR amounts for the trading portfolio for the periods indicated. During these periods, the daily trading loss did not exceed the calculated VAR amounts on any given day.
(In millions) 1st Quarter 2001 ----------------------------------------- Average Minimum Maximum 3/31/01 -------- -------- -------- --------- Interest rate $4.3 $2.4 $5.5 $4.5 Foreign Exchange 1.2 0.6 2.7 1.9 Diversification (1.8) (1.0) (3.6) (2.8) Overall Portfolio 3.7 2.3 6.1 3.6 (In millions) 1st Quarter 2000 ----------------------------------------- Average Minimum Maximum 3/31/00 -------- -------- -------- --------- Interest rate $4.3 $2.7 $6.1 $5.2 Foreign Exchange 2.0 1.3 3.8 2.0 Overall Portfolio 6.3 4.4 8.8 7.2
14 NONINTEREST EXPENSE AND INCOME TAXES Noninterest expense for the first quarter of 2001 was $653 million, up from $644 million in the fourth quarter of 2000 and $602 million in the first quarter of 2000. The increase in expenses was primarily attributable to acquisitions, technology investments, and variable costs associated with increased trading volumes. The efficiency ratio for the first quarter of 2001 was 50.8% compared with 51.2% in the fourth quarter of 2000 and 52.1% in the first quarter of 2000. The effective tax rate for the first quarter of 2001 was 34.5% compared with 34.8% in the first quarter of 2000. NONPERFORMING ASSETS
Change 3/31/01 vs. (Dollars in millions) 3/31/01 12/31/00 12/31/00 -------- -------- -------- Loans: Other Commercial $139 $113 $26 Foreign 46 48 (2) Regional Commercial 21 28 (7) ---- ---- --- Total Loans 206 189 17 Other Real Estate 2 4 (2) ---- ---- --- Total Nonperforming Assets $208 $193 $15 ==== ==== === Nonperforming Assets Ratio 0.6% 0.5% Allowance/Nonperforming Loans 298.2 325.6 Allowance/Nonperforming Assets 295.7 319.6
Nonperforming assets totaled $208 million at March 31, 2001, compared with $193 million at December 31, 2000. The increase in nonperforming loans primarily reflects loans to a customer in the movie theater industry and to a specialty chemical maker that sought protection from asbestos claims through a bankruptcy filing. 15 IMPAIRED LOANS The table below sets forth information about the Company's impaired loans. The Company uses the discounted cash flow method as its primary method for valuing its impaired loans: (Dollars in millions) 3/31/01 12/31/00 -------- -------- Impaired Loans with an Allowance $120 $107 Impaired Loans without an Allowance(1) 26 22 ---- ---- Total Impaired Loans $146 $129 Allowance for Impaired Loans 34 25 Average Balance of Impaired Loans during the Quarter 146 125 Interest Income Recognized on Impaired Loans during the Quarter 0.9 0.2 (1) When the discounted cash flows, collateral value or market price equals or exceeds the carrying value of the loan, then the loan does not require an allowance under the accounting standard related to impaired loans. (2) The allowance for impaired loans is included in the Company's allowance for credit losses. CREDIT LOSS PROVISION AND NET CHARGE-OFFS
1st 4th 1st Quarter Quarter Quarter ------- ------- ------- (In millions) 2001 2000 2000 ---- ---- ---- Provision $ 30 $ 35 $ 20 ==== ==== ==== Net Charge-offs: Other Commercial (28) (34) (13) Consumer (2) (2) (1) Other - - (1) ---- ---- ---- Total $(30) $(36) $(15) ==== ==== ==== Other Real Estate Expenses $ 2 $ 1 $ 1
The allowance for credit losses was $616 million, or 1.66% of loans at March 31, 2001, compared with $616 million, or 1.70% of loans at December 31, 2000 and $600 million, or 1.48% of loans at March 31, 2000. The ratio of the allowance to nonperforming assets was 295.7% at March 31, 2001, compared with 319.6% at December 31, 2000 and 378.1% at March 31, 2000. 16 Based on an evaluation of individual credits, historical credit losses, and global economic factors, the Company has allocated its allowance for credit losses as follows: 3/31/01 12/31/00 3/31/00 ------- -------- ------- Domestic Real Estate 3% 3% 3% Commercial 80 76 79 Consumer 1 1 - Foreign 11 11 12 Unallocated 5 9 6 --- --- --- 100% 100% 100% === === === Such an allocation is inherently judgmental, and the entire allowance for credit losses is available to absorb credit losses regardless of the nature of the loss. SEGMENT PROFITABILITY Segment Data The Company has an internal information system that produces performance data for its four business segments along product and service lines. The Servicing and Fiduciary businesses segment provides a broad array of fee-based services. This segment includes the Company's securities servicing, global payment services, and private client services and asset management businesses. Securities servicing includes global custody, securities clearance, mutual funds, unit investment trust, securities lending, Depositary Receipts, corporate trust, stock transfer and associated execution services. Global payment services products primarily relate to funds transfer, cash management and trade finance. Private client services and asset management provide traditional banking and trust services to affluent clients and asset management to institutional and private clients. The Corporate Banking segment focuses on providing lending services, such as term loans, lines of credit, asset based financings, and commercial mortgages, to the large public and private corporations nationwide, as well as public and private mid-size businesses in the New York metropolitan area. Special industry groups focus on financial institutions, securities, insurance, media and telecommunications, energy, real estate, retailing, automotive, and government banking institutions. Through BNY Capital Markets, the Company provides syndicated loans, bond underwriting, private placements of corporate debt and equity securities, and merger, acquisition, and advisory services. The Retail Banking segment includes consumer lending, residential mortgage lending, and retail deposit services. The Company operates 345 branches in 23 counties in three states. The Financial Markets segment includes trading of foreign exchange and interest rate products, investing and leasing activities, and treasury services to other segments. This segment offers a comprehensive array of multi-currency hedging and yield enhancement strategies. Offices in New York, London, Brussels, Tokyo, Frankfurt, Hong Kong, Seoul and Taipei provide clients a 24-hour trading capability. 17 The segments contributed to the Company's profitability as follows:
In Millions Servicing and For the Quarter Ended Fiduciary Corporate Retail Financial Reconciling Consolidated March 31, 2001 Businesses Banking Banking Markets Items Total - --------------------- ---------- --------- ------- --------- ----------- ------------ Net Interest Income $ 159 $ 121 $ 128 $ 37 $ 10 $ 455 Provision for Credit Losses - 31 1 (1) (1) 30 Noninterest Income 672 77 27 74 8 858 Noninterest Expense 432 59 77 16 69 653 ------ ------- ------ ------- ------ ------- Income Before Taxes $ 399 $ 108 $ 77 $ 96 $ (50) $ 630 ====== ======= ====== ======= ====== ======= Average Assets $8,602 $27,713 $4,468 $34,119 $1,779 $76,681 ====== ======= ====== ======= ====== =======
In Millions Servicing and For the Quarter Ended Fiduciary Corporate Retail Financial Reconciling Consolidated March 31, 2000 Businesses Banking Banking Markets Items Total - --------------------- ---------- --------- ------- --------- ----------- ------------ Net Interest Income $ 156 $ 138 $ 126 $ 24 $ 3 $ 447 Provision for Credit Losses - 28 1 - (9) 20 Noninterest Income 573 75 24 63 2 737 Noninterest Expense 385 53 73 18 73 602 ------ ------- ------ ------- ------- ------- Income Before Taxes $ 344 $ 132 $ 76 $ 69 $ (59) $ 562 ====== ======= ====== ======= ======= ======= Average Assets $8,393 $31,403 $4,367 $30,726 $1,649 $76,538 ====== ======= ====== ======= ====== =======
Segment Highlights Servicing and Fiduciary Businesses - ---------------------------------- In the first quarter of 2001, noninterest income was $672 million compared with $573 million in 2000. Fees from the Company's securities servicing businesses reached $458 million for the first quarter of 2001 compared with $372 million last year. Fee revenue was particularly strong in depositary receipts ("DRs"), unit investment trust, global liquidity services, corporate trust and global execution services. The Company continues to be the world's leading custodian with assets of $6.8 trillion, including $2 trillion of cross-border custody assets. With respect to global liquidity services, average funds invested off-balance-sheet were $34 billion in the first quarter of 2001, up 39% compared with last year's first quarter. Private client services and asset management fees were $79 million for the quarter, up 14% from $70 million last year, led by the Company's acquisitions and build out in the equity-value management and alternative investment product lines. Assets under management were $63 billion while assets under administration were $33 billion at March 31, 2001. Fees from global payment services for the quarter were $69 million, up 5%, reflecting higher cash management and funds transfer fees, which grew 10% over last year's first quarter, partially offset by lower trade finance fees. Net interest income in the Servicing and Fiduciary businesses segment was $159 million for the first quarter of 2001 compared with $156 million in 2000. The increase in net interest income is primarily due to growth in deposits and associated assets. 18 Net charge-offs in the Servicing and Fiduciary Businesses segment were zero in the first quarters of 2001 and 2000. Noninterest expense for the first quarter of 2001 was $432 million compared with $385 million in 2000. The rise in noninterest expense is consistent with the significant increase in business volumes which produced higher fee revenue, as well as the Company's continued investment in technology. Corporate Banking - ----------------- The Corporate Banking segment's net interest income was $121 million in the first quarter of 2001, compared with last year's $138 million. The decrease reflects the decline in assets, principally broker dealer loans, as well as a decline in both the volume and the value of low cost short-term deposits. The first quarter of 2001 provision for credit losses was $31 million compared with $28 million last year. The increase principally reflects deterioration in the economy. Net charge-offs in the Corporate Banking segment were $27 million and $13 million in the first quarters of 2001 and 2000. Noninterest income was $77 million in the current year compared with $75 million last year reflecting strength in the Company's fixed income businesses. Noninterest expense increased to $59 million from $53 million reflecting higher compensation and an other real estate write-down. Retail Banking - -------------- In the Retail Banking segment, net interest income in the first quarter of 2001 was $128 million compared with $126 million in 2000. Noninterest income was $27 million for the quarter compared with $24 million last year. The increase reflects better penetration of the customer base and improved pricing. Noninterest expense in the first quarter of 2001 was $77 million compared with $73 million in the previous year's period. Net charge-offs were $3 million in the first quarter of 2001 and $2 million in the first quarter of 2000. Financial Markets - ----------------- In the Financial Markets segment, net interest income for the quarter was $37 million compared with 2000's $24 million reflecting an increase in assets, primarily liquid short-term investments, and faster repricing of its liabilities compared to its assets in a declining rate environment. Noninterest income was $74 million in the first quarter of 2001 compared with $63 million in the first quarter of 2000 reflecting stronger trading performance. Strong fixed income markets offset weakness in the equity markets, resulting in a relatively consistent level of securities gains in the first quarter of 2001 compared with the quarter a year ago. Net charge-offs were zero in the first quarters of 2001 and 2000. Segment Accounting Principles - ----------------------------- The Company's segment data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles used for consolidated financial reporting. These measurement principles are designed so that reported results of the segments will track their economic performance. Segment results are subject to restatement whenever improvements are made in the measurement principles or organizational changes are made. In the third quarter of 2000, the Company changed certain assumptions related to the duration of sector assets and liabilities and the related interest rates. As a result, sector results for 2000 were restated. 19 The measure of revenues and profit or loss by operating segment has been adjusted to present segment data on a taxable equivalent basis. The provision for credit losses allocated to each reportable segment is based on management's judgment as to average credit losses that will be incurred in the operations of the segment over a credit cycle of a period of years. Management's judgment includes the following factors among others: historical charge-off experience and the volume, composition and growth of the loan portfolio. This method is different from that required under generally accepted accounting principles as it anticipates future losses which are not yet probable and therefore not recognizable under generally accepted accounting principles. Assets and liabilities are match funded. Support and other indirect expenses are allocated to segments based on general guidelines. Reconciling Items - ----------------- Reconciling items for net interest income primarily relate to the recording of interest income on a taxable equivalent basis, reallocation of capital and the funding of goodwill. Reconciling items for noninterest income primarily relate to the sale of certain securities. Reconciling items for noninterest expense include $29 million and $28 million of amortization of intangibles in the first quarters of 2001 and 2000, and corporate overhead. The adjustment to the provision for credit losses reflects the difference between the aggregate of the credit provision over a credit cycle for the reportable segments and the Company's recorded provision. The reconciling items for average assets consist of goodwill and other intangible assets. FORWARD LOOKING STATEMENTS The information presented with respect to, among other things, earnings growth, projected business volume, the outcome of legal and investigatory proceedings, the Company's plans and objectives in moving into fee-based business, and future loan losses, is forward looking information. Forward looking statements are the Company's current estimates or expectations of future events or future results. The Company or its executive officers and directors on behalf of the Company, may from time to time make forward looking statements. When used in this report, any press release or oral statements, the words "estimate", "forecast", "project", "anticipate", "expect", "intend", "believe", "plan", "goal", "should", and words of like import are intended to identify forward looking statements in addition to statements specifically identified as forward looking statements. Forward looking statements, including the Company's future results of operations, discussions of future plans and other forward looking statements contained in Management's Discussion and Analysis and elsewhere in this Form 10-K, are subject to risks and uncertainties, some of which are discussed herein, that could cause actual results to differ materially from projected results. Forward looking statements, projections or future plans, could be affected by lower than expected performance or higher than expected costs in connection with acquisitions and integration of acquired businesses, changes in relationships with customers, variations in management projections or market forecasts and the actions that management could take in response to these changes, management's ability to achieve efficiency goals and changes in customer credit quality, as well as by a number of factors that the Company is necessarily unable to predict with accuracy. These include future changes in interest rates, general credit quality, the level of capital market activity, economic activity, consumer behavior, government monetary policy, domestic and foreign legislation, regulation and investigation, competition, credit, market and operating risk, and loan demand. This is not an exhaustive list and as a 20 result of variations in any of these factors actual results may differ materially from any forward looking statements. Forward looking statements speak only as of the date they are made. The Company will not update forward looking statements to reflect facts, assumptions, circumstances or events which have changed after a forward looking statement was made. Government Monetary Policies The Federal Reserve Board has the primary responsibility for United States monetary policy. 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. 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. Commercial banks, 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. 21 THE BANK OF NEW YORK COMPANY, INC. Average Balances and Rates on a Taxable Equivalent Basis (Dollars in millions)
For the three months For the three months ended March 31, 2001 ended March 31, 2000 ------------------------------ ------------------------------ Average Average Average Average Balance Interest Rate Balance Interest Rate ------- -------- ------- ------- -------- ------- ASSETS - ------ Interest-Bearing Deposits in Banks (primarily foreign) $ 5,833 $ 70 4.85% $ 6,395 $ 71 4.47% Federal Funds Sold and Securities Purchased Under Resale Agreements 3,731 51 5.54 3,647 49 5.40 Loans Domestic Offices 19,116 338 7.18 20,113 361 7.22 Foreign Offices 19,111 338 7.17 20,156 355 7.09 ------- ----- ------- ----- Total Loans 38,227 676 7.18 40,269 716 7.15 ------- ----- ------- ----- Securities U.S. Government Obligations 1,275 18 5.73 2,774 42 6.08 U.S. Government Agency Obligations 1,794 31 6.78 826 14 6.62 Obligations of States and Political Subdivisions 682 13 7.91 592 12 8.01 Other Securities, including Trading Securities 13,468 188 5.65 9,614 142 5.93 ------- ----- ------- ----- Total Securities 17,219 250 5.87 13,806 210 6.09 ------- ----- ------- ----- Total Interest-Earning Assets 65,010 1,047 6.53% 64,117 1,046 6.56% ----- ----- Allowance for Credit Losses (614) (609) Cash and Due from Banks 2,632 3,283 Other Assets 9,653 9,747 ------- ------- TOTAL ASSETS $76,681 $76,538 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Interest-Bearing Deposits Money Market Rate Accounts $ 6,204 71 4.61% $ 5,522 65 4.75% Savings 7,493 49 2.65 7,647 47 2.46 Certificates of Deposit $100,000 & Over 407 6 6.19 465 6 5.44 Other Time Deposits 1,905 24 4.96 2,204 26 4.73 Foreign Offices 26,814 313 4.74 27,691 328 4.75 ------- ----- ------- ----- Total Interest-Bearing Deposits 42,823 463 4.38 43,529 472 4.36 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 2,473 32 5.22 2,792 36 5.25 Other Borrowed Funds 2,029 31 6.26 1,996 29 5.80 Long-Term Debt 3,018 52 6.94 2,823 49 6.84 ------- ----- ------- ----- Total Interest-Bearing Liabilities 50,343 578 4.65% 51,140 586 4.60% ----- ----- Noninterest-Bearing Deposits 11,010 11,291 Other Liabilities 7,811 7,587 Minority Interest-Preferred Securities 1,500 1,500 Preferred Stock 1 1 Common Shareholders' Equity 6,016 5,019 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $76,681 $76,538 ======= ======= Net Interest Earnings and Interest Rate Spread $ 469 1.88% $ 460 1.96% ===== ==== ===== ==== Net Yield on Interest-Earning Assets 2.93% 2.89% ==== ====
22 PART 2. OTHER INFORMATION Item 1. Legal Proceedings - -------------------------- The Company continues to cooperate with investigations by federal and state law enforcement and bank regulatory authorities. The investigations focus on funds transfer activities in certain accounts at BNY, principally involving wire transfers from Russian and other sources in Eastern Europe, as well as certain other matters involving BNY and its affiliates. The funds transfer investigations center around accounts controlled by Peter Berlin, his wife, Lucy Edwards (until discharged in September 1999, an officer of BNY), and companies and persons associated with them. Berlin and Edwards pled guilty to various federal criminal charges. The Company cannot predict when or on what basis the investigations will conclude or their effect, if any, on the Company. On February 8, 2000, BNY entered into a written agreement with both the Federal Reserve Bank of New York and the New York State Banking Department, which imposed a number of reporting requirements and controls. Substantially all of these reporting requirements and controls are now in place. Four purported shareholder derivative actions have been filed in connection with these Russian related matters - - two in the United States District Court for the Southern District of New York and two in the New York Supreme Court, New York County - - against certain directors and officers of the Company and BNY alleging that the defendants have breached their fiduciary duties of due care and loyalty by aggressively pursuing business with Russian banks and entities without implementing sufficient safeguards and failing to supervise properly those responsible for that business. The actions seek, on behalf of the Company and BNY, monetary damages from the defendants, corrective action and attorneys' fees. On September 1, 2000, plaintiffs in the two federal actions filed an amended, consolidated complaint that names all of the directors and certain officers of BNY and the Company as defendants, repeats the allegations of the original complaints and adds allegations that certain officers of BNY and the Company participated in a scheme to transfer cash improperly from Russia to various off-shore accounts and to avoid Russian customs, currency and tax laws. Management believes that the allegations of both the original and the amended complaint are without merit. On September 12, 2000, the boards of directors of BNY and the Company authorized a Special Litigation Committee to consider the response of BNY and the Company to the state and federal court shareholder derivative actions. Additionally, on October 7, 1999, six alleged depositors of Joint Stock Bank Inkombank ("Inkombank"), a Russian bank, filed a purported class action in the United States District Court for the Southern District of New York on behalf of all depositors of Inkombank who lost their deposits when that bank collapsed in 1998. The complaint, as subsequently amended twice, alleges that the Company and BNY and their senior officers knew about, and aided and abetted the looting of Inkombank by its principals and participated in a scheme to transfer cash improperly from Russia to various off-shore accounts and to avoid Russian customs, currency and tax laws. The amended complaint asserts causes of action for conversion and aiding and abetting conversion under New York law. In addition, the amended complaint states a claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). On March 21, 2001, the court dismissed the second amended complaint without leave to replead. On April 16, 2001, plaintiffs filed a Notice of Appeal of that decision. Argument is expected on that appeal in September-October 2001. 23 On October 24, 2000, three alleged shareholders of Inkombank filed an action in the Supreme Court, New York County against the Company, BNY and Inkombank. The complaint alleges that the defendants fraudulently induced the plaintiffs to refrain from redeeming their alleged $40 million investment in Inkombank. The complaint asserts a single case of action for fraud, seeking $40 million plus 12% interest from January 1994, punitive damages, costs, interest and attorney fees. The Company and BNY have moved to dismiss the amended complaint. That motion is pending. The Company and BNY believe that the allegations of the complaint are without merit and intend to defend the action vigorously. The Company does not expect that any of the foregoing civil actions will have a material impact on the Company's consolidated financial statements. In the ordinary course of business, there are various legal claims pending against the Company and its subsidiaries. In the opinion of management, liabilities arising from such claims, if any, would not have a material effect on the Company's consolidated financial statements. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) The exhibits filed as part of this report are as follows: Exhibit 12 - Statement Re: Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Distributions on Preferred Trust Securities for the Three Months Ended March 31, 2001 and 2000. (b) The Company filed the following reports on Form 8-K since December 31, 2000: On January 16, 2001, the Company filed a Form 8-K Current Report (Items 5 and 7), which report included unaudited interim financial information and accompanying discussion for the fourth quarter of 2000 contained in the Company's press release dated January 16, 2001. On April 16, 2001, the Company filed a Form 8-K Current Report (Items 5 and 7), which report included unaudited interim financial information and accompanying discussion for the first quarter of 2001 contained in the Company's press release dated April 16, 2001. 24 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE BANK OF NEW YORK COMPANY, INC. ---------------------------------- (Registrant) Date: May 14, 2001 By: \s\ Thomas J. Mastro --------------------------------- Name: Thomas J. Mastro Title: Comptroller 25 EXHIBIT INDEX -------------- Exhibit Description - ------- ----------- 12 Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Distributions on Preferred Trust Securities for the Three Months Ended March 31, 2001 and 2000. EX-12 2 ex121q01.txt EX-12 EXHIBIT 12 THE BANK OF NEW YORK COMPANY, INC. Ratios of Earnings to Fixed Charges and Ratios of Earnings to Combined Fixed Charges, and Distributions on Preferred Trust Securities (Dollars in millions)
Three Months Ended March 31, 2001 2000 ---- ---- EARNINGS - -------- Income Before Income Taxes $ 630 $ 562 Fixed Charges, Excluding Interest on Deposits 125 123 ------ ------ Income Before Income Taxes and Fixed Charges Excluding Interest on Deposits 755 685 Interest on Deposits 463 472 ------ ------ Income Before Income Taxes and Fixed Charges, Including Interest on Deposits $1,218 $1,157 ====== ====== FIXED CHARGES - ------------- Interest Expense, Excluding Interest on Deposits $ 115 $ 114 One-Third Net Rental Expense* 10 9 ------ ------ Total Fixed Charges, Excluding Interest on Deposits 125 123 Interest on Deposits 463 472 ------ ------ Total Fixed Charges, Including Interest on Deposits $ 588 $ 595 ====== ====== DISTRIBUTION ON PREFERRED TRUST SECURITIES, PRE-TAX BASIS $ 28 $ 28 - ------------------------------- ====== ====== EARNINGS TO FIXED CHARGES RATIOS - -------------------------------- Excluding Interest on Deposits 6.04x 5.57x Including Interest on Deposits 2.07 1.94 EARNINGS TO COMBINED FIXED CHARGES AND DISTRIBUTION ON PREFERRED TRUST SECURITIES - ------------------------------------------- Excluding Interest on Deposits 4.93 4.54 Including Interest on Deposits 1.98 1.86 *The proportion deemed representative of the interest factor.
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