EX-99.1 CHARTER 4 slides.txt EX-99.1 EXHIBIT 99.1 ==================================(SLIDE 1)=================================== The Bank of New York Acquisition of Pershing January 8, 2003 ==================================(SLIDE 2)=================================== Cautionary Language The forward looking statements presented today including, among other things, projections with respect to revenue and earnings and the Company's financial condition, 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 2001 10-K and our most recent 10-Q filed with the SEC. The forward looking statements speak only as of January 8, 2003. We will not update forward looking statements to reflect facts, assumptions, circumstances, or events which have changed after they were made. ==================================(SLIDE 3)=================================== Transaction Summary - Acquisition of Pershing unit of Credit Suisse First Boston - Cash purchase price of $2.0 billion - $1.4 billion premium to book value - Earn-out potential of $50 million - To be financed through public issuance of debt and common stock - Accretive to GAAP EPS in 2004 with an IRR well in excess of cost of capital - Expected closing 2Q of 2003 ==================================(SLIDE 4)================================== Pershing Franchise - Premier brand with more than 60-year history - World's largest correspondent clearing firm - Leading provider of financial services outsourcing solutions - Powerful product distribution network - Diversified revenue base - Industry leading technology - Respected and experienced management team ==================================(SLIDE 5)================================== Strategic Benefits - Accelerates transformation of the BNY business model - Fee-based revenues increase to approximately 74% in '03 on a pro forma basis - BNY becomes largest provider of agency execution and clearing services - Broadens global product distribution network - Significant scale benefits through cost savings and new revenue opportunities - Enhances long-term growth rate An exceptional fit for BNY ==================================(SLIDE 6)================================== Long-Term Growth Rates - Represents substantial investment in BNY's fastest growing business segment Long-Term Business Core Growth* -------- ------------ Issuer Services 13% Investor Services 10% Broker-dealer Services 13% Execution and Clearing 14% Overall 12.5%+ * Figures from 12/18/02 analyst presentation ==================================(SLIDE 7)================================== Three Pillars of the BNY Franchise - Leading product capabilities - Extensive global client base - Valuable product distribution network Pershing strengthens each of these pillars ==================================(SLIDE 8)================================== Pershing Offers Leading Product Capabilities - Clearance & settlement - Asset gathering products & services - Custody & related services - Product & services development/delivery - Financing & cash management - Order routing - Technology services Substantial cross-sell opportunities ==================================(SLIDE 9)================================== Pershing has a Large, Diversified Client Base % of Client Assets ----------------------------- IFAs and RIAs 31% Full Service Firms 22% Banks 15% Investment Companies 11% International 8% Online Discount 7% Institutional 6% ---- Total 100% ===== - Approximately $400 billion of client assets Note: As of September 30, 2002 ==================================(SLIDE 10)================================== Pershing has a Powerful Distribution Network - Largest network of introducing brokers - 793 introducing brokers/RIAs in the U.S. - 66 introducing brokers in the U.K. - Relationships with the largest institutional and mutual fund investment managers - Estimated 100,000 investment professionals - Over 5 million end clients - Infrastructure for managed account asset gathering ==================================(SLIDE 11)================================== Pershing has the Leading U.S. Market Share Firm # of Correspondents - U.S. ---- --------------------------- Pershing 793* Fiserv/Investec 600 U.S. Clearing 400 Bear Stearns 380 BNY Clearing 285 SWS Securities 200 Spear Leeds 200 RBC Dain 175 Fidelity 164 Corresp. Services 140 Source: Clearing Quarterly & Directory, December 2001 edition. Reflects companies responding to survey. * Pershing 9/30/2002 Customer List. ==================================(SLIDE 12)================================== Pershing's Worldwide Resources - United States - 10 locations nationwide - Approximately 2,700 employees - Europe - Locations in London and Dublin - Approximately 600 employees - India - Technology development center - Approximately 650 employees ==================================(SLIDE 13)================================== Solidifies BNY's Leadership Position - BNY Securities Group becomes the market leader in agency execution and clearing services - Agency execution services: - Over 3,000 institutional clients - Over 325 million shares executed daily - 29 NYSE seats - Largest electronic broker for global execution - Largest provider of commission management services - Clearing services: - Over 1,200 correspondent brokerage firms - Servicing over 100,000 investment professionals - Over 500,000 trades cleared daily - Serving clients in over 65 global markets ==================================(SLIDE 14)================================== Attractive Growth Prospects - Increasing market share in U.S. and Europe - Continued consolidation among clearing firms - Focusing on self clearing firms - Increasing share with RIAs and institutional market - Expanding in Ireland & Europe - Expanding product offerings - Mutual funds, annuities and insurance products - Fee-based brokerage accounts - Managed accounts - Increasing productivity and profitability - Capturing incremental order flow - Reengineering for STP ==================================(SLIDE 15)================================== Transaction Terms - Cash purchase price of $2.0 billion at closing - $1.4 billion premium to book value - Earn-out of up to $50 million tied to `03 revenue growth - Both Boards of Directors have approved the transaction - Requires regulatory clearance from banking, securities and anti-trust agencies - Expected closing 2Q of 2003 ==================================(SLIDE 16)================================== Transaction Financing - Purchase price of $2.0 billion financed from: - $0.9 billion from public issuance of debt and general corporate resources - $1.1 billion issuance of common equity - Timing, amount and mix may be adjusted based on market conditions - Model assumes issuance of 40-45 million shares ==================================(SLIDE 17)================================== Financial Metrics - Adds annual revenues of approximately $875 million - Balance sheet is expected to increase by approximately $9 billion at closing - IRR projected to be approximately 20% ==================================(SLIDE 18)================================== EPS Impact - One-time integration charge of $0.06 per share in 2003 - Projected earnings impact: - 2003: dilutive by approximately $0.02 - $0.03 per share excluding one- time integration costs - 2004: accretive by $0.02 - $0.03 per share - Achievement of $50 million earn-out payment will result in incremental accretion ==================================(SLIDE 19)================================== Synergies - Projected aggregate pre-tax income synergies*: - 2003: $22 million - 2004: $115 million - Expense reductions: $85 million - Revenue-related: $30 million - 2005 and beyond: $150+ million per annum * Assumes June 30, 2003 closing ==================================(SLIDE 20)================================== Capital Ratios Remain Strong - Projected capital ratios: 12/31/02E Closing 12/31/03 6/30/04 --------- ------- -------- ------- Tier 1 7.61% 6.95% 7.50% 7.75% Total 11.94% 11.05% 11.20% 11.75% Tangible common equity 5.27% 4.65% 5.05% 5.25% - Stock repurchases deferred while capital ratios return to targeted levels ==================================(SLIDE 21)================================== Integration Plan - Retention of Pershing management team and technology platform will minimize any disruptions - BNY Clearing clients will migrate onto Pershing platform - Rationalize headcount and eliminate redundant technology spending - Integration will be substantially complete within 12 months of closing ==================================(SLIDE 22)================================== Summary - Acquiring a premier franchise - Strategy complements BNY's global franchise and core businesses - Minimal integration risk - Substantially increases presence in our fastest growing business segment - Financially attractive to both EPS and IRR - Further enhances BNY's role as the infrastructure for the global capital markets ==================================(SLIDE 23)================================== THE BANK OF NEW YORK =====================================(END)====================================