EX-99 3 r2001apex99.txt EX-99 EXHIBIT 99 ==================================(SLIDE 1)=================================== The Bank of New York Annual Analyst Meeting Meeting the Challenges in 2001 and Leveraged for Growth ==================================(SLIDE 2)=================================== Cautionary Language The forward looking statements presented today including, among other things, projections with respect to revenue and earnings growth and the Company's plans and objectives are subject to risks and uncertainties that could cause actual results to differ materially from the projections. These include lower than expected performance or higher than expected costs in connection with acquisitions and integration of acquired businesses, the level of capital market activity, inaccuracies in management projections or market forecasts, the actions that management could take in response to these changes and other factors described in the SEC filings referred to below. For additional detailed information, we refer you to the discussions under the heading "Forward Looking Statements" in the Company's 2000 10-K and our most recent 10-Q filed with the SEC. The forward looking statements speak only as of January 28, 2002. We will not update forward looking statements to reflect facts, assumptions, circumstances, or events which have changed after it was made. ==================================(SLIDE 3)=================================== Today's Agenda - Business recovery - Financial review - Corporate Banking - Strength of fee-based model - Global securities servicing - Financial estimates and goals ==================================(SLIDE 4)================================== Loan Portfolio $ in billions 12/31/99 12/31/01 ------------ ------------ Total $ 37.5 $ 35.7 Retail/Private Banking 4.8 5.3 Large-ticket leasing 3.9 5.0 Commercial real estate 2.6 2.4 Global financial companies 9.3 25% 9.6 27% Non-financial companies Media and telecom 4.3 4.1 Other special industries 4.7 3.4 U.S. geographic 5.1 3.3 Regional commercial 2.9 2.6 ------ ----- ------ ----- Sub-total $ 17.0 45% $ 13.4 38% ==================================(SLIDE 5)================================== Loan Disposition Program - 24 emerging telecom names and Enron - $758 million total exposure and $488 million funded at inception of program - $235 million special provision and charge in 4Q'01 - Assets in a held for sale category - Mark-to-market gains and losses flow through Other Income - 12/31/01 exposure $445 million; $197 million funded ==================================(SLIDE 6)================================== Remaining Media And Telecom Portfolio $ in millions 12/31/01 Loans % # Borrowers -------------------------------------------------------------- Broadcasting and publishing $1,027 27% 69 Entertainment and programming 909 24% 30 Cable TV 851 22% 18 All other 213 6% 17 ------ ---- --- Total Media $3,000 79% 134 Established telecommunications 793 21% 37 ------ ---- --- Total $3,793 100% 171 ====== === === ==================================(SLIDE 7)================================== Steadily Reducing Risk - Sold factoring business in 1999 - $4 billion loan portfolio with limited cross-sell opportunities - Significantly reduced exposures in higher risk industries - Marine transportation - Mortgage banking - Healthcare - Emerging telecom ==================================(SLIDE 8)================================== Steadily Reducing Risk (continued) - Non-financial companies - Commitments reduced by $8.2 billion since '99 - Outstandings reduced by $3.6 billion since '99 - Overall net interest income has been maintained - Improved loan pricing - Expanded AAA securities portfolio ==================================(SLIDE 9)================================== Declining Loan Contribution to NII 1996 2001 ---- ---- All Other Sources 47% 77% Corporate Banking Loans 37% 18% Non-Corporate Banking Loans 16% 5% ---- ---- 100% 100% ==== ==== ==================================(SLIDE 10)================================== Economic Capital Allocation Absolute Risk 2002 Sector Level Profile Return Allocation -------------------------------------------------------------------------- Retail/Private Banking Low Low High Increase Large-ticket leasing Low Medium Medium Increase Commercial real estate Low High Medium - Global financial companies Low Low High Increase Non-financial companies High High Low Decrease ==================================(SLIDE 11)================================== Corporate Banking: 2002 Goals - Reduce economic capital allocated to non-financial companies by 15%, or $325 million - Equates to $200 million in regulatory capital - Reduce commitments by $7 billion and loans outstanding by $1 billion - Maintain net interest income flat relative to 2001 - Improve ROE in non-financial companies loan portfolio by 2% to 12% ==================================(SLIDE 12)================================== Summary - Less risk in the loan portfolio - Reduced levels and volatility of loan losses - Less reliance on loans as a source of net interest income - Improved returns on capital ==================================(SLIDE 13)================================== Shifting the Earnings Contribution percent 1995 1998 2001 ---- ---- ---- Securities Serv. & Global Paymts. 22 37 47 Private Client & Asset Mgmt. 5 9 8 --- --- --- Fiduciary/Securities Servicing 27 46 55 === === === Corporate Banking 20 23 17 Retail Banking 15 12 11 Financial Market Services 13 11 17 Asset Based Lending 7 8 0 Credit Card 18 0 0 --- --- --- 100 100 100 ==================================(SLIDE 14)================================== 2001 Selected New Business Wins Issuer Services Depositary Receipts Corporate Trust ------------------- --------------- Aluminum Corp. of China Chicago Housing Authority Asia Satellite Telecom Holdings Fortis Bank CP HOLDRs General Motors Corp. Delhaize Le Lion Long Island Power Authority Europe 2001 HOLDRs Prudential Investment Management France Telecom State of California Lloyds TSB Group Mitsubishi Tokyo Financial Stock Transfer Nomura Holdings -------------- Van Der Moolen Holding American Home Products Vivendi Environment Hilton Hotels Moody's Corporation TJX Companies ==================================(SLIDE 15)================================== 2001 Selected New Business Wins Investor Services Global Custody Mutual Fund & Investment Services -------------- --------------------------------- Agricultural Bank of China AXA B Funds Alliance & Leicester Blackrock Financial Management Bordon, Inc. Credit Lyonnais Asset Management Cathay Life Insurance Co. Edinburgh Fund Managers The Colorado Trust Julius Baer International New York Life Insurance Co. Pacific Capital Funds Skandia Life Reich & Tang Funds TOA Reinsurance Vanguard Global Clearing & Collateral Mgmt. Securities Lending ---------------------------------- ------------------ Abbey National Securities, Inc. Bank of Korea Fortis Bank Lincoln National Life Landesbank Baden-Wurttemberg Mitsubishi Trust & Banking Mizuho Trust USA SEI Investments Spear Leeds Kellogg ==================================(SLIDE 16)================================== 2001 Selected New Business Wins Execution Services BNY ESI BNY Clearing ------- ------------ Allstate Corporation Avian Securities American Electric Power First Kentucky Securities Bank of America Foothill Securities Comerica IBIS Securities LLC Federated Department Stores Jencks & Co. LLC Fifth Third Bank Korea Securities Depository Knight Capital Markets Tradebonds.com Massachusetts Financial Services Unibanco Securities PNC Bank/Black Rock Wellington Investments ==================================(SLIDE 17)================================== 2001 Selected New Business Wins Global Payment Services Asset Management ----------------------- ---------------- American International Group Credit Agricole Funds Archer Daniels Midland First Energy Cablevision Systems HSBC Funds Dresdner Bank Lafayette College Ford Motor Company Long Island Power Authority Maytag International Nomura Luxembourg San Paolo/IMI Old Mutual Asset Mgt. Sanford Bernstein Public Service Enterprises Zale Corporation Vodafone Group ==================================(SLIDE 18)================================== Capital Management - ROE consistently among highest of major banks - Disciplined capital allocation process - Highest growth businesses have highest ROE - Capital used for acquisitions, technology investments, and growth initiatives - Traditional bank activities have lower growth and ROE - Exit from credit cards and factoring - Reduction in capital to Corporate Bank and equity investing ==================================(SLIDE 19)================================== Capital Management Reallocation of Capital - Corporate Bank - Target 15% reduction in economic capital - Securities portfolio - Fixed income, equities and sponsor/direct investing - Continued reduction in capital allocated to equities and sponsor/direct investing - Redeploy capital - Securities servicing/asset management acquisitions - Technology investment - Share buybacks ==================================(SLIDE 20)================================== Capital Management P&L Implications - Securities and special gains in 2001: $197 million - $200 million of unrealized gains at 12/31/01 - 2002 target level of $90 to $110 million - Special nature of NYCE gain in '01 - Capital reallocation initiative - Reduction offsets 9 cents per share new GAAP benefit - Capital extracted from Corporate Bank will occur gradually over '02 with minimal P&L impact ==================================(SLIDE 21)================================== Expense Management WTC Disaster: Impact on Future Expenses - Planning assumption: interim space costs covered by insurance - Higher occupancy run-rate plus sublease tails - May have additional equipment write-off which should be offset by insurance recovery - In short-term, expenses should rise somewhat given additional technology infrastructure - Will aggressively seek offsets ==================================(SLIDE 22)================================== Expense Management WTC Disaster: Insurance Recoveries - $175 million booked in fourth quarter - Claim process requires significant documentation - More recoveries expected in '02 - Continue to treat as non-operating ==================================(SLIDE 23)================================== Expense Management 2002 Outlook - WTC disaster, securities gain reduction, and new GAAP goodwill benefit will add some "noise" to reported operating leverage - Committed to maintain 200 basis point positive spread in core operating leverage Expect continued expense discipline ==================================(SLIDE 24)================================== 2002 Forecast Assumptions - Mild recovery commencing mid-2002 - 100 bp increase in Federal Funds rate in second half '02 - Equity Markets: 10% rise in major U.S. market indices ==================================(SLIDE 25)================================== Securities Servicing Revenues '00% '01% '02E% $ in millions '00 Change '01 Change Range ---------------------------------------------------------------------- ADRs Corporate Trust 646 28% 713 10% 13-17% Stock Transfer ---------------------------------------------------------------------- International Custody Domestic Custody 637 46% 660 4% 8-12% Securities Lending ---------------------------------------------------------------------- Mutual Funds Securities Clearance 367 20% 390 6% 12-15% ETF/UIT ---------------------------------------------------------------------- Total Fee Revenue 1,650 33% 1,763 7% 12-15% ==================================(SLIDE 26)================================== Securities Servicing Long-Term Growth Market Long-Term Rank Business Core Growth ------ -------- ----------- 2 International Custody 15-20% 2 Mutual Funds 15-20% 1 Securities Clearance 15-20% 1 Depositary Receipts 15-20% 2 Corporate Trust 10-15% 1 ETF/UIT 10-15% 2 Securities Lending 7-12% 2 Domestic Custody 7-12% 3 Stock Transfer 7-12% ------- Overall 14%+ ==================================(SLIDE 27)================================== Technology Investment $ in millions 1997 $308 1998 $360 1999 $400 2000 $493 2001 $588 2002 $660 12% increase in 2002 compared to 2001 ==================================(SLIDE 28)================================== Credit Costs - Economic outlook not likely to improve until mid-year - Credit quality is a lagging indicator - NPAs will rise through mid-year, at least - However, loss content likely to be manageable - Will use charge-off capacity to achieve capital reduction objectives, where necessary ==================================(SLIDE 29)================================== 2002 Tier 1 Capital Sources & Uses $ in millions Base capital generation $1,600 Plus: Employee purchases 275 Capital reallocated from Corporate Bank/equity investing 250 ------- $2,125 Less: Dividends (560) Acquisitions (600) Other (100) ------- Capital Available For Further Acquisitions/Stock Buyback $ 865 ==================================(SLIDE 30)================================== Target Capital Ratios 2002 2001 Target ---- ------ Tier 1 capital ratio 8.05% 7.85% Total capital ratio 11.52% 11.75% Tangible common equity ratio 5.36% 5.50% ==================================(SLIDE 31)================================== 2002 EPS Guidance 2001 normalized EPS $2.01 Core growth of 8 to 10% .16 to .21 Non-core items - New GAAP goodwill benefit .09 - Reduce securities gains (.09) 2002 EPS estimate $2.17 to $2.22 ==================================(SLIDE 32)================================== BNY Investment Thesis - Focused strategy - Diverse fee-based businesses - Global leadership in securities servicing - High-quality earnings - Active capital and expense management - Attractive long-term growth prospects ==================================(SLIDE 33)================================== Long-term Financial Goals Target Goal ------ ---- -Return on Equity 25%+ -Return on Assets 2% -Efficiency Ratio 49% -EPS Growth Rate 12 to 14% ====================================(END)=====================================