-----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, F62pVk6+DrLSr5X7TNiB21jkAUKHUDLQSzTrJxv547IhjSdkTl9Ny1Zt2MXuhzne nl8+9jxyWJVEHV67yjDb5g== 0000009626-05-000218.txt : 20051020 0000009626-05-000218.hdr.sgml : 20051020 20051020082940 ACCESSION NUMBER: 0000009626-05-000218 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050930 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051020 DATE AS OF CHANGE: 20051020 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06152 FILM NUMBER: 051146269 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 8-K 1 r3q058kcover.txt 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8 - K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 20, 2005 THE BANK OF NEW YORK COMPANY, INC. ---------------------------------- (exact name of registrant as specified in its charter) NEW YORK 001-06152 13-2614959 -------- --------- ---------- (State or other jurisdiction (Commission (I.R.S. employer of incorporation) file number) identification number) One Wall Street, New York, NY 10286 ----------------------------- ----- (Address of principal executive offices) (Zip code) 212-495-1784 ------------ (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 2 ITEM 2.02 Results of Operations and Financial Condition --------------------------------------------- On October 20, 2005, The Bank of New York Company, Inc. issued a press release containing unaudited interim financial information and accompanying discussion for the third quarter of 2005. Exhibit 99.1 is a copy of such press release and is incorporated herein by reference. The information furnished under Item 2.02 of this Current Report on Form 8- K, including Exhibit 99.1 shall be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, as amended. ITEM 9.01 Financial Statements and Exhibits --------------------------------- Index to and Description of Exhibits (c) Exhibit Description ------- ----------- 99.1 Unaudited interim financial information and accompanying discussion for the third quarter of 2005 contained in the press release dated October 20, 2005, of The Bank of New York Company, Inc. 3 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. Dated: October 20, 2005 THE BANK OF NEW YORK COMPANY, INC. (Registrant) By: /s/ Thomas J. Mastro ------------------------ Name: Thomas J. Mastro Title: Comptroller 4 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 99.1 Unaudited interim financial information and accompanying discussion for the third quarter of 2005 contained in the press release dated October 20, 2005, of The Bank of New York Company, Inc. EX-99 2 r8k3q05ex99.txt EX-99 1 Exhibit 99.1 IMMEDIATELY - ----------- THE BANK OF NEW YORK COMPANY, INC. REPORTS THIRD QUARTER EPS OF 51 CENTS, UP 11% vs. YEAR-AGO; STRONG SECURITIES SERVICING REVENUE AND NET INTEREST INCOME GROWTH NEW YORK, N.Y., October 20, 2005 -- The Bank of New York Company, Inc. (NYSE: BK) reported today third quarter net income of $389 million and diluted earnings per share of 51 cents, compared with net income of $354 million and diluted earnings per share of 46 cents in the third quarter of 2004, and net income of $398 million and diluted earnings per share of 52 cents in the second quarter of 2005. Year-to-date net income was $1,166 million, or $1.51 of diluted earnings per share, compared to $1,089 million, or $1.40 of diluted earnings per share in 2004. Third Quarter 2005 Highlights * Positive operating leverage over the year-ago quarter. * Securities servicing fees up 18% versus the year-ago quarter. * Net interest income up 15% over the year-ago quarter. * Foreign exchange and other trading revenues up 39% from the third quarter of 2004. * Agreed to acquire Alcentra Group Ltd., an international asset management group (announced October 18, 2005). * New marketing alliances with leading clients in key growth markets. Chairman and Chief Executive Officer Thomas A. Renyi stated, "We are pleased with our performance this quarter and particularly the achievement of positive operating leverage. This is about making our own growth - expanding client relationships and winning new ones. Our credit performance remains strong, and our cost re-engineering efforts continue to be effective. "We believe the true earnings power of our franchise is becoming steadily more apparent and we are committed to delivering more to the bottom line by increasing the operating margins of our businesses. We remain focused on achieving annual positive operating leverage, as our efforts to manage the cost base lower through various programs continue to bear fruit. And we are laying the foundation for 2006 through acquisitions like Alcentra and by pursuing new business opportunities in faster-growing markets around the world. The Nordea alliance, under which we will jointly market and deliver custody services in the Nordic and Baltic Sea regions, is a timely example of how we are working to penetrate high-growth markets throughout Europe and Asia in the most effective and economical manner. We will seize this and other opportunities to create our own growth and pursue our goals for superior performance." 2 SECURITIES SERVICING FEES
Percent Inc/(Dec) ----------------- Year-to-date Percent 3Q05 vs. 3Q05 vs. -------------- Inc/ (In millions) 3Q05 2Q05 3Q04 2Q05 3Q04 2005 2004 (Dec) ------ ------ ------ -------- -------- ------ ------ ------- Execution and Clearing Services $ 314 $ 294 $ 262 7% 20% $ 901 $ 844 7% Investor Services 265 265 228 - 16 793 683 16 Issuer Services 170 159 141 7 21 468 433 8 Broker-Dealer Services 57 58 53 (2) 8 171 156 10 ------ ------ ------ ------ ------ Securities Servicing Fees $ 806 $ 776 $ 684 4 18 $2,333 $2,116 10 ====== ====== ====== ====== ======
Securities servicing fee growth over the year-ago period reflects solid growth across all business segments. On a sequential-quarter basis, fees were up 4%, reflecting strong growth in issuer services as well as the early success of the Lynch, Jones & Ryan, Inc. ("LJR") acquisition within execution and clearing. Execution and clearing fees were up considerably from 2004, reflecting good organic growth at Pershing and in the execution businesses, as well as the additional revenues from the LJR acquisition. Excluding the impact of the LJR acquisition, execution and clearing revenues were still up on a quarterly basis and demonstrated strong growth year-over-year. The organic growth over the prior quarter was principally driven by the significant increase in revenues from transition management. Pershing's revenues were essentially flat sequentially. The execution and clearing businesses include institutional agency brokerage, electronic trading, transition management services, independent research and through Pershing, correspondent clearing services such as clearing, execution, financing, and custody for introducing broker-dealers. Investor services fees rose significantly from the year-ago quarter due to strong performance across all business lines, which include global fund services, global custody, securities lending, global liquidity services and outsourcing. Global fund services was favorably impacted by new business and higher international transaction volumes, while securities lending improved year-over-year due to higher loan volumes driven by new business wins as well as a favorable spread environment. Sequential performance was flat as a seasonal slowdown in securities lending was offset by solid results across most businesses. Issuer services fees increased substantially versus the year-ago quarter due to an increase in trading volumes and corporate actions in depositary receipts, as well as continued strength in international issuance and structured products in corporate trust. The same trends drove improved sequential performance in depositary receipts. In corporate trust, international issuance was seasonally slower, which was offset by strength in structured, municipal, and corporate products. Broker-dealer services fees improved versus the year-ago period as a result of increased collateral management activity and higher volumes in government securities clearance. Sequential performance was marginally lower, as higher fees from collateral management were offset by lower volumes in government securities clearance. 3 NONINTEREST INCOME
Percent Inc/(Dec) ----------------- Year-to-Date Percent 3Q05 vs. 3Q05 vs. -------------- Inc/ (In millions) 3Q05 2Q05 3Q04 2Q05 3Q04 2005 2004 (Dec) ------ ------ ------ -------- ------- ------ ------ ------- Servicing Fees Securities $ 806 $ 776 $ 684 4% 18% $2,333 $2,116 10% Global Payment Services 75 76 85 (1) (12) 226 247 (9) ------ ------ ------ ------ ------ 881 852 769 3 15 2,559 2,363 8 Private Client Services and Asset Management Fees 120 122 113 (2) 6 363 333 9 Service Charges and Fees 93 103 98 (10) (5) 288 286 1 Foreign Exchange and Other Trading Activities 93 103 67 (10) 39 292 273 7 Securities Gains 15 23 14 (35) 7 50 59 (15) Other* 46 53 38 (13) 21 130 160 (19) ------ ------ ------ ------ ------ Total Noninterest Income $1,248 $1,256 $1,099 (1) 14 $3,682 $3,474 6 ====== ====== ====== ====== ====== *See Note (3).
The increase in noninterest income versus the third quarter and year-to- date periods of 2004 reflects broadly stronger performance in securities servicing, foreign exchange and other trading, and private client services and asset management. The sequential decline in noninterest income primarily reflects declines in foreign exchange and other trading, service charges and fees, and securities gains. Global payment services fees were lower than the third quarter and year- to-date periods of 2004 and on a sequential-quarter basis. The decline reflects customers choosing to pay with higher compensating balances, which benefits net interest income. On an invoiced services basis, total revenue was up 6% over the third quarter of 2004 and 3% sequentially. Private client services and asset management fees for the third quarter were up from the third quarter of 2004 reflecting higher fees at Ivy Asset Management. The sequential quarter decrease reflects higher asset management fees which were more than offset by seasonally lower private client fees. Total assets under management were $107 billion, up from $97 billion a year ago and $105 billion at June 30, 2005. Service charges and fees were down from the third quarter of 2004 and from the second quarter of 2005. For the nine months of 2005, service charges and fees increased slightly from 2004. The sequential quarter decrease reflects lower capital markets fees due to seasonally lower market activity. Foreign exchange and other trading revenues were up significantly from the third quarter of 2004 and down on a sequential-quarter basis. The positive variance year-over-year results from significantly higher client activity in foreign exchange as well as more favorable markets in interest rate derivatives. Sequential quarter results were impacted by a decline in fixed income trading, lower retail flows at Pershing, and a seasonal slowdown in foreign exchange activity. 4 Securities gains in the third quarter were up from the third quarter of 2004 and down from the second quarter of 2005. The sequential quarter decrease reflects lower gains in the Company's sponsor fund portfolio. Securities gains declined in the first nine months of 2005 versus a year ago reflecting $19 million of realized gains on four sponsor fund investments recorded in the first quarter of 2004. Other noninterest income increased versus the third quarter of 2004 and decreased from the second quarter of 2005. The third quarter of 2005 included gains on the sale of certain Community Reinvestment Act ("CRA") investments of $12 million ($5 million after related tax considerations) and four New York Stock Exchange seats of $6 million ($4 million after-tax). On a year-to-date basis, other noninterest income also included a $17 million gain on the second quarter 2005 sale of the Company's interest in Financial Models Company, Inc. For the nine months ended September 30, 2005, other noninterest income was down from the nine months ended September 30, 2004, primarily reflecting a 2004 pre-tax gain of $48 million on the sale of a portion of the Company's investment in Wing Hang Bank Limited. See Note 1. NET INTEREST INCOME
Percent Inc/(Dec) Year-to-Date Percent ----------------- ----------------------- Inc/(Dec) (Dollars in millions) 3Q05 vs. 3Q05 vs. 2005 2004 2004 --------------- 3Q05 2Q05 3Q04 2Q05 3Q04 Reported Core** Reported Core** ---- ---- ---- -------- -------- ----------------------- --------------- Net Interest Income $492 $470 $428 5% 15% $1,417 $ 1,118 $1,263 27% 12% Tax Equivalent Adjustment* 8 7 8 21 20 20 ---- ---- ---- ------ -------- ------ Net Interest Income on a Tax Equivalent Basis $500 $477 $436 5 15 $1,438 $ 1,138 $1,283 26 12 ==== ==== ==== ====== ======== ====== Net Interest Rate Spread 1.84% 1.84% 1.88% 1.87% 1.62% 1.86% Net Yield on Interest Earning Assets 2.42 2.34 2.18 2.37 1.88 2.11 * See Note (2). ** Excludes SFAS 13 adjustment. See Note 1.
The increases in net interest income over 2004 reflect the higher value of interest-free deposits as short-term rates increased, as well as growth in earning assets. The third quarter of 2005 also includes $4 million ($3 million after-tax) related to the recognition of interest on nonaccrual loans that were sold. In addition, the increase from the prior quarter also reflects asset-sensitive interest rate positioning, driven in part by the continued expansion of deposit spreads and increased liquidity generated by servicing activities. 5 NONINTEREST EXPENSE AND INCOME TAXES
Percent Inc/(Dec) ----------------- Year-to-date Percent 3Q05 vs. 3Q05 vs. -------------- Inc/ (In millions) 3Q05 2Q05 3Q04 2Q05 3Q04 2005 2004 (Dec) ------ ------ ------ -------- -------- ------ ------ ------- Salaries & Employee Benefits $ 644 $ 640 $ 564 1% 14% $1,902 $1,708 11% Net Occupancy 79 82 77 (4) 3 239 230 4 Furniture & Equipment 52 51 51 2 2 155 153 1 Clearing 49 42 39 17 26 137 131 5 Sub-custodian Expenses 25 24 21 4 19 72 65 11 Software 54 55 52 (2) 4 162 151 7 Communications 24 22 22 9 9 69 69 - Amortization of Intangibles 10 10 9 - 11 28 26 8 Other 198 197 164 1 21 571 492 16 ------ ------ ----- ------ ------ Total Noninterest Expense $1,135 $1,123 $ 999 1 14 $3,335 $3,025 10 ====== ====== ===== ====== ======
Noninterest expense was up compared with the third quarter of 2004 and the second quarter of 2005. The increase versus the year-ago quarter reflects increased staffing and clearing costs associated with new business and acquisitions, as well as higher pension and option expenses, expanded occupancy costs associated with business continuity, and higher legal and consulting costs. Other expenses in the third quarter included $14 million (both pre- and after-tax) of expenses associated with an anticipated settlement of the previously disclosed Russian funds transfer matter. The sequential increase reflects higher salaries & employee benefits and clearing expenses tied to the LJR acquisition. Relative to the year-ago quarter, salaries & employee benefits expense increased reflecting higher pension and stock option expense as well as higher staffing levels associated with growth in investor services and expansion of certain staff functions. Salaries & employee benefits expense for the third quarter increased slightly on a sequential quarter basis, reflecting the LJR acquisition. For the first nine months of 2005, salaries & employee benefit expense also was higher, reflecting many of these same factors affecting the year-over-year quarterly comparison. Occupancy expenses were down sequentially as a result of a write-off in the second quarter. On a year-to-date basis, occupancy expenses were up from 2004 primarily reflecting business continuity initiatives and higher energy costs. Occupancy expense in 2004 included lease termination expenses of $8 million recorded in the first quarter of 2004. The increase in clearing expenses both year-over-year and sequentially reflects the LJR acquisition. Communication expense was up sequentially reflecting the start-up of the Company's new out-of-region data center. The effective tax rate for the third quarter of 2005 was 34.7%, compared to 32.8% in the third quarter of 2004 and 33.4% in the second quarter of 2005. The effective tax rate for the nine months period ended September 30, 2005 was 33.7%, compared with 29.5% for the nine months period ended September 30, 2004. The increase in the year-to-date period reflects the benefit associated with the SFAS 13 leasing adjustment related to the Company's leasing portfolio in the first quarter of 2004. The sequential quarter increase principally reflects the nondeductibility of the amount associated with the anticipated 6 settlement referenced above and the tax impact on the sale of the CRA investments. The effective tax rates in all periods reflect a reclassification related to Section 42 tax credits. See Note 3. CREDIT LOSS PROVISION AND NET CHARGE-OFFS 3rd 2nd 3rd Quarter Quarter Quarter Year-to-date (In millions) 2005 2005 2004 2005 2004 ------- ------- ------- ----------------- Provision $ 10 $ 5 $ - $ 5 $ 22 ======= ======= ======= ======= ======= Net Charge-offs: Commercial $ (2) $ (2) $ (4) $ (7) $ (21) Foreign (2) (4) (9) (6) (26) Regional Commercial (3) 2 (1) (3) (1) Consumer (6) (7) (5) (18) (22) -------- -------- -------- -------- -------- Total $ (13) $ (11) $ (19) $ (34) $ (70) ======= ======= ======= ======= ======= LOANS September 30, June 30, September 30, (Dollars in millions) 2005 2005 2004 ------------ ------------ ------------ Margin Loans $ 6,320 $ 6,055 $ 5,911 Non-Margin Loans 35,823 34,626 31,208 ------------ ------------ ------------ Total Loans $ 42,143 $ 40,681 $ 37,119 ============ ============ ============ Allowance for Loan Losses $ 561 $ 562 $ 598 Allowance for Lending-Related Commitments 146 148 158 ------------ ------------ ------------ Total Allowance for Credit Losses $ 707 $ 710 $ 756 ============ ============ ============ Allowance for Loan Losses As a Percent of Total Loans 1.33% 1.38% 1.61% Allowance for Loan Losses As a Percent of Non-Margin Loans 1.57 1.62 1.92 Total Allowance for Credit Losses As a Percent of Total Loans 1.68 1.75 2.04 Total Allowance for Credit Losses As a Percent of Non-Margin Loans 1.97 2.05 2.42 7 NONPERFORMING ASSETS
Change Percent 9/30/05 vs. Inc/ (Dollars in millions) 9/30/05 6/30/05 6/30/05 (Dec) --------- --------- ----------- -------- Loans: Commercial $ 35 $ 78 $ (43) (55)% Foreign 15 15 - - Other 57 47 10 21 --------- --------- ----------- Total Nonperforming Loans 107 140 (33) (24) Other Real Estate - - - - --------- --------- ----------- Total Nonperforming Assets $ 107 $ 140 $ (33) (24) ========= ========= =========== Nonperforming Assets Ratio 0.3% 0.4% Allowance for Loan Losses/Nonperforming Loans 524.9 400.5 Allowance for Loan Losses/Nonperforming Assets 524.9 400.5 Total Allowance for Credit Losses/Nonperforming Loans 661.2 506.1 Total Allowance for Credit Losses/Nonperforming Assets 661.2 506.1
The sequential quarter decrease in nonperforming loans primarily reflects the Company's partial sale of exposure to a cable operator that is categorized as nonperforming. 8 OTHER DEVELOPMENTS In July 2005, the Company signed a definitive agreement to acquire the bond administration business of Marshall & Ilsley Trust Company N.A., and M&I Marshall & Ilsley Bank (together, "M&I"), where they act as bond trustee, paying/fiscal agent, master trustee, transfer agent and/or registrar. The transaction involves the acquisition of approximately 560 bond trusteeships and agency appointments, representing $4.8 billion of principal debt outstanding for an estimated 225 clients. In August 2005, the Company and Nordea, the leading financial services provider in the Nordic region, have entered into a strategic agreement to provide global custody and selected related services to Nordea's institutional clients in the Nordic and Baltic Sea regions. The scope of the agreement involves approximately EUR 240 billion of assets which represent about half of Nordea's EUR 500 billion assets under custody. In August 2005, the Company announced a strategic arrangement with IL&FS Trust Company Limited ("ITCL"), a leading provider of trust and fiduciary services in India. The arrangement between the two organizations will provide Indian issuers with access to the Company's global network, a comprehensive array of services to the international capital markets, and leading-edge technology capabilities. Under the arrangement, ITCL will perform corporate trust services in India, and the Company will provide offshore services. In October 2005, the Company announced a marketing alliance with National Australia Bank ("National"). The arrangement will enable the Company to offer commission recapture services to National's custody clients in Australia and New Zealand. The alliance continues the strategic international build-out of the Company's transition management and commission recapture capabilities, which has included the opening of its Sydney office and acquisition of LJR. On October 18, 2005, the Company announced a definitive agreement to acquire Alcentra Group Limited, an international asset management group focused on funds that invest in sub-investment grade debt. Alcentra's management team will retain a 20 percent interest. Alcentra has operations in London and Los Angeles and currently manages 15 different investment funds with over $6.2 billion of assets. The transaction is expected to close by year-end, subject to regulatory approval and other customary conditions of closing. Construction of the new data center in the mid-south region of the U.S. has been completed and the Company has obtained a certificate of occupancy. The data center is expected to be operating at two-thirds capacity in early November and fully operational next year. The new data center will improve the geographic diversification and resilience of the Company's operations and will support the processing needs of the Company's institutional and retail customers. 9 CONFERENCE CALL INFORMATION Thomas A. Renyi, chairman and chief executive officer, and Bruce W. Van Saun, senior executive vice president and chief financial officer, will review the quarterly results in a live conference call and audio webcast today at 8:00 a.m. ET. The presentation will be accessible from the Company's website at * www.bankofny.com/earnings and * By telephone at (888) 677-2456 within the United States or (517) 623-4161 internationally. * Passcode is "The Bank of New York." * Replay of the call will be available through the Company's website and also by telephone at (800) 945-7247 within the United States or (203) 369-3951 internationally. The Bank of New York Company, Inc. (NYSE: BK) is a global leader in providing a comprehensive array of services that enable institutions and individuals to move and manage their financial assets in more than 100 markets worldwide. The Company has a long tradition of collaborating with clients to deliver innovative solutions through its core competencies: securities servicing, treasury management, investment management, and individual & regional banking services. The Company's extensive global client base includes a broad range of leading financial institutions, corporations, government entities, endowments and foundations. Its principal subsidiary, The Bank of New York, founded in 1784, is the oldest bank in the United States and has consistently played a prominent role in the evolution of financial markets worldwide. *************************** 10
THE BANK OF NEW YORK COMPANY, INC. Financial Highlights (Dollars in millions, except per share amounts) (Unaudited) September 30, June 30, September 30, 2005 2005 2004 ------------- ------------- ------------- Quarter ------- Revenue (tax equivalent basis) $ 2,126 $ 2,077 $ 1,747 Net Income 389 398 354 Basic EPS 0.51 0.52 0.46 Diluted EPS 0.51 0.52 0.46 Cash Dividends Per Share 0.21 0.20 0.20 Return on Average Common Shareholders' Equity 16.15% 17.12% 15.90% Return on Average Assets 1.53 1.59 1.45 Efficiency Ratio 65.5 65.7 65.2 Year-to-date ------------ Revenue (tax equivalent basis) $ 6,103 $ 3,995 $ 5,197 Net Income 1,166 777 1,089 Basic EPS 1.52 1.01 1.41 Diluted EPS 1.51 1.00 1.40 Cash Dividends Per Share 0.61 0.40 0.59 Return on Average Common Shareholders' Equity 16.59% 16.82% 16.73% Return on Average Assets 1.56 1.57 1.47 Efficiency Ratio 65.8 65.9 66.0 Assets $ 101,766 $ 103,063 $ 93,175 Loans 42,143 40,681 37,119 Securities 26,230 25,779 23,246 Deposits - Domestic 34,807 37,921 34,786 - Foreign 26,270 26,076 23,654 Long-Term Debt 7,529 7,586 6,137 Common Shareholders' Equity 9,608 9,471 9,054 Common Shareholders' Equity Per Share $ 12.48 $ 12.29 $ 11.66 Market Value Per Share of Common Stock 29.41 28.78 29.17 Allowance for Loan Losses as a Percent of Total Loans 1.33% 1.38% 1.61% Allowance for Loan Losses as a Percent of Non-Margin Loans 1.57 1.62 1.92 Total Allowance for Credit Losses as a Percent of Total Loans 1.68 1.75 2.04 Total Allowance for Credit Losses as a Percent of Non-Margin Loans 1.97 2.05 2.42 Tier 1 Capital Ratio 7.93 8.07 8.09 Total Capital Ratio 12.20 12.49 12.09 Leverage Ratio 6.59 6.55 6.38 Tangible Common Equity Ratio 5.32 5.26 5.49 Employees 23,081 22,993 23,034 11 THE BANK OF NEW YORK COMPANY, INC. Financial Highlights (Dollars in millions, except per share amounts) (Estimated) September 30, June 30, September 30, 2005 2005 2004 ------------- ------------- ------------- Assets Under Custody (In trillions) ----------------------------------- Assets Under Custody $ 10.3 $ 10.3 $ 8.9 Equity Securities 31% 35% 33% Fixed Income Securities 69 65 67 Cross-Border Assets 3.1 2.9 2.5 Assets Under Management (In billions) ------------------------------------- Total Assets Under Management $ 107 $ 105 $ 97 Equity Securities 34% 34% 35% Fixed Income Securities 21 21 21 Alternative Investments 14 14 15 Liquid Assets 31 31 29
12 Notes: (1) Other First Quarter Developments in 2004 is summarized in the following table: (In millions) Income Statement Pre-Tax After-Tax Item Caption Income Tax Income - -------------------- ---------------- ------- ----- --------- Net Interest Income(a) - --------------------- SFAS 13 cumulative lease adjustment - Net Interest leasing portfolio Income $ (145) $ 113 $ (32) Noninterest Income(b) - -------------------- Gain on sale of Wing Hang Other Income 48 (21) 27 Gain on sponsor Securities fund investments Gains 19 (7) 12 Subtotal- Noninterest ------- ----- -------- Income 67 (28) 39 Noninterest Expense(c) - --------------------- Severance tied to Salaries & relocations Employee Benefits (10) 4 (6) Lease terminations Net Occupancy (8) 3 (5) Subtotal-Noninterest ------- ----- -------- Expense (18) 7 (11) ------- ----- -------- Total $ (96) $ 92 $ (4) ======= ===== ======== (a) An after-tax charge of $32 million resulting from a cumulative adjustment to the leasing portfolio, which was triggered under Statement of Financial Accounting Standards No. 13 "Accounting for Leases" ("SFAS 13") by the combination of a reduction in state and local taxes and a restructuring of the lease portfolio completed in the first quarter. The SFAS 13 adjustment impacts the timing of lease income reported by the Company, and resulted in a reduction in net interest income of $145 million, offset by tax benefits of $113 million. (b) A $27 million after-tax gain on the sale of a portion of the Company's interest in Wing Hang Bank Limited ("Wing Hang"), a Hong Kong based bank, which was recorded in other income, and $19 million ($12 million after-tax) of higher than anticipated securities gains in the first quarter resulting from realized gains on sponsor fund investments in Kinkos, Inc., Bristol West Holdings, Inc., Willis Group Holdings, Ltd., and True Temper Sports, Inc. (c) The Company also took several actions associated with its long-term cost reduction initiatives. These actions included an after-tax severance charge of $6 million related to staff reductions tied to job relocations and a $5 million after-tax charge for terminating high cost leases associated with the staff redeployments. (2) A number of amounts related to net interest income are presented on a "taxable equivalent basis". The Company believes that this presentation provides comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry standards. (3) The Company participates in unconsolidated investments that own real estate qualifying for low income housing tax credits based on Section 42 of the Internal Revenue Code. The Company's share of operating losses generated by these investments is recorded as other income. The Company has 13 historically netted the tax credits generated by these investments against the related operating losses. The Company has reviewed this accounting method and has decided to record these tax credits as a reduction of income tax expense. Prior period results for other income and income tax expense have been reclassified and did not have an impact on net income. See pages 43 to 45 of the Company's June 30, 2005 Form 10-Q. FORWARD LOOKING STATEMENTS All statements in this press release other than statements of historical fact are forward looking statements including, among other things, projections with respect to revenue and earnings and the Company's plans and objectives and as such are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements. 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 and trading activity, changes in customer credit quality, market performance, the effects of capital reallocation, portfolio performance, changes in regulatory expectations and standards, ultimate differences from management projections or market forecasts, the actions that management could take in response to these changes and other factors described under the heading "Forward Looking Statements and Factors That Could Affect Future Results" in the Company's 2004 Form 10-K and Second Quarter 2005 Form 10-Q which have been filed with the SEC and are available at the SEC's website (www.sec.gov). Forward looking statements speak only as of the date they are made. The Company will not update forward looking statements to reflect factual assumptions, circumstances or events that have changed after a forward looking statement was made. (Financial highlights and detailed financial statements are attached.) Contact Information Media: Investors: - --------- ------------- R. Jeep Bryant, MD Joseph F. Murphy, MD (212) 635-1569 (212) 635-7740 Gregg A. Scheuing, VP (212) 635-1578 James S. Rhodes, AVP (212) 635-7062 14
THE BANK OF NEW YORK COMPANY, INC. Consolidated Statements of Income (Dollars in millions, except per share amounts) (Unaudited) For the three For the nine months ended months ended September 30, September 30, 2005 2004 2005 2004 ------ ------ ------ ------ Interest Income - --------------- Loans $ 392 $ 290 $1,082 $ 680 Margin loans 71 40 188 108 Securities Taxable 253 181 694 543 Exempt from Federal Income Taxes 10 10 30 30 ------ ------ ------ ------ 263 191 724 573 Deposits in Banks 68 77 206 224 Federal Funds Sold and Securities Purchased Under Resale Agreements 38 20 102 53 Trading Assets 38 11 98 34 ------ ------ ------ ------ Total Interest Income 870 629 2,400 1,672 ------ ------ ------ ------ Interest Expense - ---------------- Deposits 248 139 652 384 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 9 4 23 10 Other Borrowed Funds 13 9 33 27 Customer Payables 35 14 88 38 Long-Term Debt 73 35 187 95 ------ ------ ------ ------ Total Interest Expense 378 201 983 554 ------ ------ ------ ------ Net Interest Income 492 428 1,417 1,118 - ------------------- Provision for Credit Losses 10 - 5 22 ------ ------ ------ ------ Net Interest Income After Provision for Credit Losses 482 428 1,412 1,096 ------ ------ ------ ------ Noninterest Income - ------------------ Servicing Fees Securities 806 684 2,333 2,116 Global Payment Services 75 85 226 247 ------ ------ ------ ------ 881 769 2,559 2,363 Private Client Services and Asset Management Fees 120 113 363 333 Service Charges and Fees 93 98 288 286 Foreign Exchange and Other Trading Activities 93 67 292 273 Securities Gains 15 14 50 59 Other 46 38 130 160 ------ ------ ------ ------ Total Noninterest Income 1,248 1,099 3,682 3,474 ------ ------ ------ ------ Noninterest Expense - ------------------- Salaries and Employee Benefits 644 564 1,902 1,708 Net Occupancy 79 77 239 230 Furniture and Equipment 52 51 155 153 Clearing 49 39 137 131 Sub-custodian Expenses 25 21 72 65 Software 54 52 162 151 Communications 24 22 69 69 Amortization of Intangibles 10 9 28 26 Other 198 164 571 492 ------ ------ ------ ------ Total Noninterest Expense 1,135 999 3,335 3,025 ------ ------ ------ ------ Income Before Income Taxes 595 528 1,759 1,545 Income Taxes 206 174 593 456 ------ ------ ------ ------ Net Income $ 389 $ 354 $1,166 $1,089 - ---------- ====== ====== ====== ====== Per Common Share Data: - ---------------------- Basic Earnings $ 0.51 $ 0.46 $ 1.52 $ 1.41 Diluted Earnings 0.51 0.46 1.51 1.40 Cash Dividends Paid 0.21 0.20 0.61 0.59 Diluted Shares Outstanding 769 778 773 778
15
THE BANK OF NEW YORK COMPANY, INC. Consolidated Balance Sheets (Dollars in millions, except per share amounts) (Unaudited) September 30, 2005 December 31, 2004 ------------------ ----------------- Assets - ------ Cash and Due from Banks $ 3,493 $ 3,886 Interest-Bearing Deposits in Banks 7,058 8,192 Securities Held-to-Maturity 2,071 1,886 Available-for-Sale 24,159 21,916 ------------------ ----------------- Total Securities 26,230 23,802 Trading Assets at Fair Value 6,292 4,627 Federal Funds Sold and Securities Purchased Under Resale Agreements 3,572 5,708 Loans (less allowance for loan losses of $561 in 2005 and $591 in 2004) 41,582 35,190 Premises and Equipment 1,040 1,097 Due from Customers on Acceptances 175 137 Accrued Interest Receivable 357 285 Goodwill 3,613 3,477 Intangible Assets 813 793 Other Assets 7,541 7,335 ------------------ ----------------- Total Assets $ 101,766 $ 94,529 ================== ================= Liabilities and Shareholders' Equity - ------------------------------------ Deposits Noninterest-Bearing (principally domestic offices) $ 16,289 $ 17,442 Interest-Bearing Domestic Offices 18,966 18,692 Foreign Offices 25,822 22,587 ------------------ ----------------- Total Deposits 61,077 58,721 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 3,349 1,205 Trading Liabilities 3,000 2,873 Payables to Customers and Broker-Dealers 8,103 8,664 Other Borrowed Funds 1,270 533 Acceptances Outstanding 176 139 Accrued Taxes and Other Expenses 4,552 4,452 Accrued Interest Payable 132 113 Other Liabilities (including allowance for lending-related commitments of $146 in 2005 and $145 in 2004) 2,970 2,418 Long-Term Debt 7,529 6,121 ------------------ ----------------- Total Liabilities 92,158 85,239 ------------------ ----------------- Shareholders' Equity Common Stock-par value $7.50 per share, authorized 2,400,000,000 shares, issued 1,048,772,989 shares in 2005 and 1,044,841,603 shares in 2004 7,866 7,836 Additional Capital 1,865 1,790 Retained Earnings 6,843 6,162 Accumulated Other Comprehensive Income (104) (6) ------------------ ----------------- 16,470 15,782 Less: Treasury Stock (278,556,517 shares in 2005 and 266,720,629 shares in 2004), at cost 6,852 6,492 Loan to ESOP (305,261 shares in 2005), at cost 10 - ------------------ ----------------- Total Shareholders' Equity 9,608 9,290 ------------------ ----------------- Total Liabilities and Shareholders' Equity $ 101,766 $ 94,529 ================== ================= - ------------------------------------------------------------------------------------------------ Note: The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date.
16
THE BANK OF NEW YORK COMPANY, INC. Average Balances and Rates on a Taxable Equivalent Basis (Preliminary) (Dollars in millions) For the three months For the three months ended September 30, 2005 ended September 30, 2004 ---------------------------- ---------------------------- Average Average Average Average Balance Interest Rate Balance Interest Rate ---------------------------- ---------------------------- ASSETS - ------ Interest-Bearing Deposits in Banks (primarily foreign) $ 8,629 $ 68 3.13% $ 11,416 $ 77 2.69% Federal Funds Sold and Securities Purchased Under Resale Agreements 4,465 38 3.37 6,443 20 1.22 Margin Loans 6,392 71 4.40 6,315 40 2.50 Loans Domestic Offices 22,955 271 4.69 21,333 218 4.06 Foreign Offices 10,561 121 4.53 9,939 72 2.89 --------- -------- --------- -------- Non-Margin Loans 33,516 392 4.64 31,272 290 3.69 --------- -------- --------- -------- Securities U.S. Government Obligations 228 2 3.55 450 3 2.64 U.S. Government Agency Obligations 3,956 41 4.19 3,560 30 3.37 Obligations of States and Political Subdivisions 231 4 6.59 227 4 8.29 Other Securities 21,227 224 4.23 18,137 162 3.57 Trading Securities 3,361 38 4.49 1,587 11 2.81 --------- -------- --------- -------- Total Securities 29,003 309 4.27 23,961 210 3.52 --------- -------- --------- -------- Total Interest-Earning Assets 82,005 878 4.25% 79,407 637 3.19% -------- --------- -------- Allowance for Credit Losses (562) (592) Cash and Due from Banks 2,974 3,027 Other Assets 16,493 15,513 --------- --------- TOTAL ASSETS $ 100,910 $ 97,355 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Interest-Bearing Deposits Money Market Rate Accounts $ 6,827 $ 30 1.74% $ 6,474 $ 13 0.83% Savings 8,637 27 1.23 9,296 16 0.70 Certificates of Deposit $100,000 & Over 3,137 28 3.56 3,640 14 1.56 Other Time Deposits 1,529 11 2.84 934 4 1.61 Foreign Offices 25,887 152 2.33 25,227 92 1.44 --------- -------- --------- -------- Total Interest-Bearing Deposits 46,017 248 2.14 45,571 139 1.22 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 1,245 9 2.96 1,572 4 1.12 Other Borrowed Funds 1,716 13 3.10 2,416 9 1.51 Payables to Customers and Broker-Dealers 5,714 35 2.41 5,785 14 0.95 Long-Term Debt 7,568 73 3.81 6,083 35 2.26 --------- -------- --------- -------- Total Interest-Bearing Liabilities 62,260 378 2.41% 61,427 201 1.31% -------- --------- -------- Noninterest-Bearing Deposits 15,815 14,576 Other Liabilities 13,271 12,489 Common Shareholders' Equity 9,564 8,863 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 100,910 $ 97,355 ========= ========= Net Interest Earnings and Interest Rate Spread $ 500 1.84% $ 436 1.88% ======== ======= ======== ======= Net Yield on Interest-Earning Assets 2.42% 2.18% ======= =======
17 THE BANK OF NEW YORK COMPANY, INC. Average Balances and Rates on a Taxable Equivalent Basis (Preliminary) (Dollars in millions)
For the nine months For the nine months ended September 30, 2005 ended September 30, 2004 -------------------------- -------------------------- Average Average Average Average Balance Interest Rate Balance Interest Rate ------- -------- ------- ------- -------- ------- ASSETS - ------ Interest-Bearing Deposits in Banks (primarily foreign) $ 9,207 $ 206 2.99% $11,960 $ 224 2.50% Federal Funds Sold and Securities Purchased Under Resale Agreements 4,813 102 2.82 6,964 53 1.02 Margin Loans 6,380 188 3.94 6,330 108 2.29 Loans Domestic Offices 22,606 760 4.50 21,547 483 2.99 Foreign Offices 10,336 322 4.17 9,364 197 2.81 --------- -------- --------- -------- Non-Margin Loans 32,942 1,082 4.39 30,911 680 2.94 --------- -------- --------- -------- Securities U.S. Government Obligations 289 7 3.23 456 8 2.47 U.S. Government Agency Obligations 3,690 110 3.97 3,955 98 3.29 Obligations of States and Political Subdivisions 214 11 7.03 236 13 7.23 Other Securities 20,449 617 4.02 18,136 474 3.48 Trading Securities 3,084 98 4.30 2,139 34 2.17 --------- -------- --------- -------- Total Securities 27,726 843 4.06 24,922 627 3.36 --------- -------- --------- -------- Total Interest-Earning Assets 81,068 2,421 3.99% 81,087 1,692 2.79% -------- --------- -------- Allowance for Credit Losses (578) (633) Cash and Due from Banks 3,342 2,947 Other Assets 16,379 15,728 -------- -------- TOTAL ASSETS $100,211 $ 99,129 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Interest-Bearing Deposits Money Market Rate Accounts $ 6,939 $ 77 1.49% $ 6,648 $ 36 0.73% Savings 8,824 72 1.09 9,267 47 0.68 Certificates of Deposit $100,000 & Over 3,028 70 3.09 3,847 39 1.33 Other Time Deposits 1,101 20 2.37 967 11 1.55 Foreign Offices 25,896 413 2.13 25,874 251 1.30 --------- -------- --------- -------- Total Interest-Bearing Deposits 45,788 652 1.90 46,603 384 1.10 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 1,262 23 2.44 1,599 10 0.82 Other Borrowed Funds 1,831 33 2.43 2,400 27 1.50 Payables to Customers and Broker-Dealers 6,025 88 1.95 6,521 38 0.78 Long-Term Debt 7,223 187 3.21 6,143 95 2.04 --------- -------- --------- -------- Total Interest-Bearing Liabilities 62,129 983 2.12% 63,266 554 1.17% -------- --------- -------- Noninterest-Bearing Deposits 15,533 14,465 Other Liabilities 13,152 12,701 Common Shareholders' Equity 9,397 8,697 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $100,211 $ 99,129 ======== ======== Net Interest Earnings and Interest Rate Spread $ 1,438 1.87% $ 1,138 1.62% ======== ======= ======== ======= Net Yield on Interest-Earning Assets 2.37% 1.88% ======= =======
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