Bear Stearns Reports Third Quarter Earnings Per Share of $3.02; Net Income Rises 16% to $438 Million; Highest Ever Net Revenues, Net Income And Earnings Per Share For The First Nine Months Of 2006.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- The Bear Stearns The Bear Stearns Companies, Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., one of the largest global investment banks and securities trading and brokerage firms in the world. Companies Inc. (NYSE NYSE See: New York Stock Exchange :BSC (Binary Synchronous Communications) See bisync. ) --Fixed Income Net Revenues Up 19% --Institutional Equities Net Revenues Up 31% --Wealth Management Net Revenues Up 36% The Bear Stearns Companies Inc. (NYSE:BSC) today reported earnings per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) of $3.02 for the third quarter ended August 31, 2006, up 12% from $2.69 per share for the third quarter of 2005. Net income for the third quarter of 2006 was $438 million, up 16% from $378 million for the third quarter of 2005. Net revenues were $2.1 billion for the third quarter, up 17% from $1.8 billion for the third quarter of 2005. The annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on common stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. for the third quarter of 2006 was 15.8%, and 18.4% for the trailing 12-month period ended August 31, 2006. "Bear Stearns produced excellent results for the third quarter and record results for the first nine months of 2006," said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. E. Cayne, chairman and chief executive officer. "Our franchise continues to grow as we selectively hire talented professionals worldwide. We are seizing opportunities in the marketplace to both expand our existing core businesses and enter new areas where we can profitably develop our market presence. I am proud of our success and I am enthusiastic about our future." A brief discussion of the firm's business segments follows: CAPITAL MARKETS Net revenues for the Capital Markets segment were $1.5 billion for the quarter ended August 31, 2006, up 13% from $1.4 billion for the third quarter of 2005. --Institutional Equities net revenues were $436 million for the third quarter of 2006, a 31% increase from $334 million for the comparable prior-year quarter. Strong results from domestic and international sales and trading, structured equity products and energy/commodity activities all contributed to this robust performance. --Fixed Income net revenues were $878 million for the third quarter 2006, up 19% from $739 million reported for the quarter ended August 31, 2005. Mortgage-related revenues increased from the prior year period as customer activity and gains in market share more than offset declining industry Declining Industry An industry where growth is either negative or is not growing at the broader rate of economic growth. There are many reasons for a declining industry: consumer demand may be steadily evaporating, the depletion of a natural resource may be occurring, or there may volumes. Bear Stearns continues to be ranked as the number one underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. of U.S. Mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. for the third quarter as well as for the nine months ended August 31, 2006. The credit businesses remained very strong, led by the leveraged finance and credit trading areas. --Investment Banking net revenues were $232 million for the quarter ended August 31, 2006, down 23% from $300 million for the year-ago third quarter. Excluding merchant banking, Investment Banking net revenues increased 8% due to increased merger and acquisition advisory fees as a number of previously announced transactions were completed during the quarter. Partially offsetting the increase in merger and acquisition advisory fees were reduced underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. net revenues reflecting lower industry activity levels as compared with the prior- year quarter. GLOBAL CLEARING SERVICES Net revenues for Global Clearing Services were $269 million for the quarter ended August 31, 2006, up 4% from $258 million for the quarter ended August 31, 2005. Higher customer margin debt and customer short balances resulted in increased net interest revenues. Average customer margin debt balances were $68.8 billion during the quarter ended August 31, 2006, up 9% from $63.4 billion in the comparable quarter of fiscal 2005. Customer short balances averaged $82.1 billion for the third quarter of 2006, compared with $81.3 billion for the third quarter of 2005. WEALTH MANAGEMENT Wealth Management net revenues for the quarter ended August 31, 2006 were $231 million, an increase of 36% from $170 million for the quarter ended August 31, 2005. --Private Client Services net revenues were $127 million in the third quarter of 2006, up 12% from $114 million in the prior-year quarter. Increased client activity levels and the continued growth in fee-based assets drove the increase in net revenues for the 2006 third quarter. --Asset Management net revenues rose 87% to $104 million for the third quarter of 2006 from $56 million in the prior-year quarter. Performance fees increased compared with the third quarter of 2005 as our proprietary hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" products recorded strong performance. Management fees also increased as assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. increased 25% to $50.2 billion at quarter end, up from $40.3 billion on August 31, 2005. EXPENSES --Compensation as a percentage of net revenues was 48.1% for the third quarter of 2006 versus 47.0% in the quarter ended August 31, 2005. Compensation as a percentage of net revenues for the nine months ended August 31, 2006 was 48.3% and 47.9% for the full year ended November November: see month. 30, 2005. --Non-compensation expenses were $437 million for the quarter ended August 31, 2006, a rise of 15% from $381 million for the comparable prior-year period. The increase is primarily related to occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy fees, higher communications and technology costs associated with additional headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. as well as higher professional fees. The third quarter 2006 pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profit margin was 31.3% as compared with 32.0% for the third quarter of 2005. As of August 31, 2006, total capital, including stockholders' equity and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. borrowings, was $61.9 billion. Book value as of August 31, 2006 was $81.52 per share, based on 146.3 million shares outstanding. Founded in 1923, The Bear Stearns Companies Inc. (NYSE: BSC) is the parent company of Bear, Stearns & Co. Inc., a leading investment banking, securities trading securities trading, financial activity involving transactions of property such as stocks, bonds, commodities, and currency (see securities). Although the trading of stocks and bonds dates back several centuries in many Western nations, the development of the and brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. firm. With approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $61.9 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, securities research, private client services, derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. , foreign exchange and futures sales and trading, asset management and custody The care, possession, and control of a thing or person. The retention, inspection, guarding, maintenance, or security of a thing within the immediate care and control of the person to whom it is committed. The detention of a person by lawful authority or process. services. Through Bear, Stearns Securities Corp., it offers financing, securities lending Securities Lending When a brokerage lends securities owned by its clients to short sellers. Notes: This allows brokers to create additional revenue (commissions) on the short sale transaction. , clearing and technology solutions to hedge funds, broker-dealers and investment advisors Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission. 2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and . Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , the company has approximately 13,000 employees worldwide. For additional information about Bear Stearns, please visit the firm's web site at http://www.bearstearns.com . Financial Tables Attached Certain statements contained in this discussion are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those discussed in the forward-looking statements. For a discussion of the risks and uncertainties that may affect the Company's future results, please see "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations" and "Risk Management" in the Company's 2005 Annual Report to Stockholders, and similar sections of the Company's quarterly reports on Form 10-Q Form 10-Q See 10-Q. , which have been filed with the Securities and Exchange Commission. A conference call to discuss the Company's results will be held on Thursday Thursday: see week. , September September: see month. 14, 2006 at 10:00 a.m. (ET). The call will be open to the public. Those wishing to listen to the conference call should dial 1-800-374-2412 (or 1-706-634-7253 for international callers) at least 10 minutes prior to the commencement of the call to ensure connection. The conference call will also be accessible through the internet at http://www.bearstearns.com. For those unable to listen to the live broadcast of the call, a replay will be available at approximately 1:00 p.m. (ET) on Bear Stearns' web site or by dialing 1-800-642-1687 (or 1-706-645-9291 for international callers). The pass code for the replay is 4270598. The replay will be available until midnight on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , September 29, 2006. If you have any questions on how to obtain access to the conference call, please contact Matt London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. at 1-212-272-4417 or via e-mail at mlondon@bear.com.
THE BEAR STEARNS COMPANIES INC.
-------------------------------
SEGMENT DATA
------------
(UNAUDITED)
-----------
Three Months Ended % Change From
----------------------------------- ------------------
August 31, August 31, May 31, August 31, May 31,
2006 2005 2006 2005 2006
----------- ----------- ----------- ---------- -------
(In thousands)
NET REVENUES
Capital Markets
Institutional
Equities $ 435,543 $ 333,620 $ 554,469 30.6% (21.4%)
Fixed Income 877,910 739,242 1,167,308 18.8% (24.8%)
Investment
Banking 232,253 299,935 278,405 (22.6%) (16.6%)
----------- ----------- -----------
Total Capital
Markets 1,545,706 1,372,797 2,000,182 12.6% (22.7%)
Global Clearing
Services 269,351 258,042 289,523 4.4% (7.0%)
Wealth
Management
Private Client
Services(1) 127,304 113,897 128,889 11.8% (1.2%)
Asset
Management 104,040 55,686 22,182 86.8% nm
----------- ----------- -----------
Total Wealth
Management 231,344 169,583 151,071 36.4% 53.1%
Other(2) 82,734 11,858 58,666 nm 41.0%
----------- ----------- -----------
Total net
revenues $2,129,135 $1,812,280 $2,499,442 17.5% (14.8%)
=========== =========== ===========
PRE-TAX INCOME
Capital Markets $ 499,824 $ 492,155 $ 702,005 1.6% (28.8%)
Global Clearing
Services 113,968 127,486 139,045 (10.6%)(18.0%)
Wealth
Management 20,737 4,894 (13,317) nm nm
Other(2) 32,709 (44,380) 6,466 nm nm
----------- ----------- -----------
Total pre-tax
income $ 667,238 $ 580,155 $ 834,199 15.0% (20.0%)
=========== =========== ===========
(1) Private
Client Services
Detail:
Gross
Revenues,
before
transfer to
Capital
Markets
Segment $ 148,404 $ 138,987 $ 153,014
Revenue
transferred
to Capital
Markets
Segment (21,100) (25,090) (24,125)
----------- ----------- -----------
Private
Client
Services
net
revenues $ 127,304 $ 113,897 $ 128,889
=========== =========== ===========
(2) Includes consolidation and elimination entries, unallocated
revenues (predominantly interest) and certain corporate
administrative functions, including certain legal costs and costs
related to the Capital Accumulation Plan for Senior Managing
Directors ("CAP Plan").
nm - not meaningful
Nine Months Ended % Change
----------------------- ---------
August 31, August 31,
2006 2005
----------- -----------
(In thousands)
NET REVENUES
Capital Markets
Institutional Equities $1,478,506 $1,037,013 42.6%
Fixed Income 2,933,956 2,412,762 21.6%
Investment Banking 807,252 749,264 7.7%
----------- -----------
Total Capital Markets 5,219,714 4,199,039 24.3%
Global Clearing Services 822,866 804,594 2.3%
Wealth Management
Private Client Services(1) 384,987 333,409 15.5%
Asset Management 220,697 161,149 37.0%
----------- -----------
Total Wealth Management 605,684 494,558 22.5%
Other(2) 165,516 25,301 nm
----------- -----------
Total net revenues $6,813,780 $5,523,492 23.4%
=========== ===========
PRE-TAX INCOME
Capital Markets $1,836,580 $1,429,614 28.5%
Global Clearing Services 382,585 408,249 (6.3%)
Wealth Management 39,593 25,927 52.7%
Other(2) (4,968) (242,868) 98.0%
----------- -----------
Total pre-tax income $2,253,790 $1,620,922 39.0%
=========== ===========
(1) Private Client Services Detail:
Gross Revenues, before transfer to
Capital Markets Segment $ 454,496 $ 402,566
Revenue transferred to Capital
Markets Segment (69,509) (69,157)
----------- -----------
Private Client Services net
revenues $ 384,987 $ 333,409
=========== ===========
(2) Includes consolidation and elimination entries, unallocated
revenues (predominantly interest) and certain corporate
administrative functions, including certain legal costs and costs
related to the Capital Accumulation Plan for Senior Managing
Directors ("CAP Plan").
nm - not meaningful
THE BEAR STEARNS COMPANIES INC.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Three Months Ended
-----------------------------------------
August 31, August 31, May 31,
2006 2005 2006
------------- ------------- -------------
(In thousands, except share and per
share data)
REVENUES
Commissions $ 280,033 $ 290,799 $ 305,251
Principal transactions 1,093,997 883,142 1,492,478
Investment banking 283,507 315,897 318,150
Interest and dividends 2,322,992 1,344,089 2,110,876
Asset management and
other income 155,158 91,467 76,994
------------- ------------- -------------
Total revenues 4,135,687 2,925,394 4,303,749
Interest expense 2,006,552 1,113,114 1,804,307
------------- ------------- -------------
Revenues, net of
interest expense 2,129,135 1,812,280 2,499,442
------------- ------------- -------------
NON-INTEREST EXPENSES
Employee compensation and
benefits 1,024,748 850,985 1,220,216
Floor brokerage, exchange
and clearance fees 58,621 55,029 58,621
Communications and
technology 126,938 97,668 118,169
Occupancy 52,976 43,354 45,422
Advertising and market
development 38,243 32,784 35,093
Professional fees 78,110 60,018 65,468
Other expenses 82,261 92,287 122,254
------------- ------------- -------------
Total non-interest
expenses 1,461,897 1,232,125 1,665,243
------------- ------------- -------------
Income before provision
for income taxes 667,238 580,155 834,199
Provision for income
taxes 229,682 201,850 294,866
------------- ------------- -------------
Net income $ 437,556 $ 378,305 $ 539,333
============= ============= =============
Net income applicable to
common shares $ 432,240 $ 372,357 $ 533,957
============= ============= =============
Adjusted net income used
for diluted earnings per
share (1) $ 449,118 $ 394,919 $ 558,233
============= ============= =============
Basic earnings per share $ 3.34 $ 2.96 $ 4.12
============= ============= =============
Diluted earnings per
share $ 3.02 $ 2.69 $ 3.72
============= ============= =============
Weighted average common
shares outstanding:
Basic 132,086,016 130,194,452 132,810,062
============= ============= =============
Diluted 148,899,406 147,051,538 149,945,896
============= ============= =============
Cash dividends declared
per common share $ 0.28 $ 0.25 $ 0.28
============= ============= =============
% Change From
---------------------
August 31, May 31,
2005 2006
---------- ----------
REVENUES
Commissions (3.7%) (8.3%)
Principal transactions 23.9% (26.7%)
Investment banking (10.3%) (10.9%)
Interest and dividends 72.8% 10.0%
Asset management and other income 69.6% 101.5%
Total revenues 41.4% (3.9%)
Interest expense 80.3% 11.2%
Revenues, net of interest expense 17.5% (14.8%)
NON-INTEREST EXPENSES
Employee compensation and benefits 20.4% (16.0%)
Floor brokerage, exchange and clearance fees 6.5% 0.0%
Communications and technology 30.0% 7.4%
Occupancy 22.2% 16.6%
Advertising and market development 16.7% 9.0%
Professional fees 30.1% 19.3%
Other expenses (10.9%) (32.7%)
Total non-interest expenses 18.6% (12.2%)
Income before provision for income taxes 15.0% (20.0%)
Provision for income taxes 13.8% (22.1%)
Net income 15.7% (18.9%)
Net income applicable to common shares 16.1% (19.0%)
Adjusted net income used for diluted
earnings per share (1) 13.7% (19.5%)
Basic earnings per share 12.8% (18.9%)
Diluted earnings per share 12.3% (18.8%)
Weighted average common shares outstanding:
Basic
Diluted
Cash dividends declared per common share
(1) Represents net income reduced for preferred stock dividends and
increased for costs related to the CAP Plan and the redemption of
preferred stock. For earnings per share, the costs related to the
CAP Plan (net of tax) are added back as the shares related to the
CAP Plan are included in weighted average common shares
outstanding.
THE BEAR STEARNS COMPANIES INC.
-------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
-----------
Nine Months Ended % Change
--------------------------- ---------
August 31, August 31,
2006 2005
------------- -------------
(In thousands, except share
and per share data)
REVENUES
Commissions $ 871,355 $ 901,784 (3.4%)
Principal transactions 3,736,907 2,841,954 31.5%
Investment banking 939,510 800,033 17.4%
Interest and dividends 6,157,857 3,557,493 73.1%
Asset management and other
income 372,225 270,079 37.8%
------------- -------------
Total revenues 12,077,854 8,371,343 44.3%
Interest expense 5,264,074 2,847,851 84.8%
------------- -------------
Revenues, net of interest
expense 6,813,780 5,523,492 23.4%
------------- -------------
NON-INTEREST EXPENSES
Employee compensation and
benefits 3,291,814 2,680,668 22.8%
Floor brokerage, exchange and
clearance fees 168,485 169,609 (0.7%)
Communications and technology 349,141 296,950 17.6%
Occupancy 143,025 123,704 15.6%
Advertising and market
development 108,009 95,933 12.6%
Professional fees 197,451 168,015 17.5%
Other expenses 302,065 367,691 (17.8%)
------------- -------------
Total non-interest
expenses 4,559,990 3,902,570 16.8%
------------- -------------
Income before provision for
income taxes 2,253,790 1,620,922 39.0%
Provision for income taxes 762,745 565,702 34.8%
------------- -------------
Net income $ 1,491,045 $ 1,055,220 41.3%
============= =============
Net income applicable to
common shares $ 1,474,939 $ 1,036,351 42.3%
============= =============
Adjusted net income used for
diluted earnings per share
(1) $ 1,536,683 $ 1,098,611 39.9%
============= =============
Basic earnings per share $ 11.38 $ 8.22 38.4%
============= =============
Diluted earnings per share $ 10.28 $ 7.42 38.5%
============= =============
Weighted average common
shares outstanding:
Basic 132,539,603 130,716,960
============= =============
Diluted 149,484,747 148,041,526
============= =============
Cash dividends declared per
common share $ 0.84 $ 0.75
============= =============
(1) Represents net income reduced for preferred stock dividends and
increased for costs related to the CAP Plan and the redemption of
preferred stock. For earnings per share, the costs related to the
CAP Plan (net of tax) are added back as the shares related to the
CAP Plan are included in weighted average common shares
outstanding.
THE BEAR STEARNS COMPANIES INC.
-------------------------------
SELECTED FINANCIAL INFORMATION
------------------------------
(UNAUDITED)
-----------
Three Months Ended
---------------------------------------
August 31, May 31, February 28,
2006 2006 2006
---------------------------------------
(In thousands, except common share data
and other data)
Results
-------
Revenues, net of interest
expense $ 2,129,135 $ 2,499,442 $ 2,185,203
Net income $ 437,556 $ 539,333 $ 514,156
Net income applicable to common
shares $ 432,240 $ 533,957 $ 508,742
Adjusted net income used for
diluted earnings per share (1)$ 449,118 $ 558,233 $ 529,332
Financial Position
------------------
Stockholders' equity, at period
end $ 11,721,947 $ 11,707,594 $ 11,165,592
Total capital, at period end $ 61,931,124 $ 58,354,738 $ 57,589,034
Common Share Data
-----------------
Basic earnings per share $ 3.34 $ 4.12 $ 3.92
Diluted earnings per share $ 3.02 $ 3.72 $ 3.54
Book value per common share, at
period end $ 81.52 $ 79.30 $ 75.46
Weighted average common shares
outstanding:
Basic 132,086,016 132,810,062 132,738,565
Diluted 148,899,406 149,945,896 149,417,369
Common shares outstanding, at
period end (2) 146,303,331 147,021,508 145,163,510
Financial Ratios
----------------
Return on average common equity
(annualized) 15.8% 20.1% 20.1%
Adjusted pre-tax profit margin
(3) 32.7% 35.1% 36.1%
Pre-tax profit margin (4) 31.3% 33.4% 34.4%
After-tax profit margin (5) 20.6% 21.6% 23.5%
Compensation & benefits /
Revenues, net of interest
expense 48.1% 48.8% 47.9%
Other Data (in billions, except
employees)
-------------------------------
Margin debt balances, at period
end $ 68.9 $ 72.7 $ 64.5
Margin debt balances, average
for period $ 68.8 $ 68.4 $ 64.5
Customer short balances, at
period end $ 85.6 $ 81.7 $ 78.1
Customer short balances,
average for period $ 82.1 $ 80.2 $ 78.2
Securities borrowed, at period
end $ 53.1 $ 52.1 $ 52.4
Securities borrowed, average
for period $ 54.7 $ 54.8 $ 52.9
Free credit balances, at period
end $ 36.5 $ 34.1 $ 30.6
Free credit balances, average
for period $ 35.9 $ 30.8 $ 29.9
Assets under management, at
period end $ 50.2 $ 47.9 $ 45.4
Employees, at period end 13,134 12,519 12,061
Three Months Ended
-----------------------------------------------------
November 30, August 31, May 31, February 28,
2005 2005 2005 2005
----------------------------------------------------
(In thousands, except common share data and other
data)
Results
-------
Revenues, net of
interest expense $ 1,887,302 $ 1,812,280 $ 1,873,552 $ 1,837,660
Net income $ 406,957 $ 378,305 $ 298,110 $ 378,805
Net income
applicable to
common shares $ 401,505 $ 372,357 $ 291,667 $ 372,327
Adjusted net
income used for
diluted earnings
per share (1) $ 421,496 $ 394,919 $ 309,660 $ 394,032
Financial
Position
---------
Stockholders'
equity, at
period end $ 10,791,432 $ 9,881,046 $ 9,641,514 $ 9,518,898
Total capital, at
period end $ 54,281,048 $ 52,070,689 $ 49,330,143 $ 48,491,012
Common Share Data
-----------------
Basic earnings
per share $ 3.21 $ 2.96 $ 2.32 $ 2.94
Diluted earnings
per share $ 2.90 $ 2.69 $ 2.09 $ 2.64
Book value per
common share, at
period end $ 71.08 $ 67.18 $ 64.67 $ 62.88
Weighted average
common shares
outstanding:
Basic 128,999,257 130,194,452 130,663,337 131,261,212
Diluted 145,534,789 147,051,538 148,037,979 149,193,402
Common shares
outstanding, at
period end (2) 146,431,767 146,341,980 145,928,440 146,012,775
Financial Ratios
----------------
Return on average
common equity
(annualized) 17.7% 16.9% 13.5% 17.8%
Adjusted pre-tax
profit margin
(3) 32.9% 34.2% 26.4% 33.5%
Pre-tax profit
margin (4) 31.1% 32.0% 24.7% 31.5%
After-tax profit
margin (5) 21.6% 20.9% 15.9% 20.6%
Compensation &
benefits /
Revenues, net of
interest expense 46.2% 47.0% 49.3% 49.3%
Other Data (in
billions, except
employees)
-----------------
Margin debt
balances, at
period end $ 66.6 $ 65.9 $ 59.8 $ 67.3
Margin debt
balances,
average for
period $ 67.4 $ 63.4 $ 64.7 $ 64.0
Customer short
balances, at
period end $ 79.9 $ 80.6 $ 82.5 $ 93.9
Customer short
balances,
average for
period $ 81.2 $ 81.3 $ 86.8 $ 88.5
Securities
borrowed, at
period end $ 49.9 $ 50.0 $ 56.6 $ 64.6
Securities
borrowed,
average for
period $ 52.8 $ 56.1 $ 61.9 $ 66.6
Free credit
balances, at
period end $ 31.0 $ 29.6 $ 31.6 $ 30.2
Free credit
balances,
average for
period $ 28.4 $ 28.6 $ 30.6 $ 31.1
Assets under
management, at
period end $ 41.9 $ 40.3 $ 39.9 $ 40.0
Employees, at
period end 11,843 11,498 11,141 11,019
(1) Represents net income reduced for preferred stock dividends and
increased for costs related to the CAP Plan and the redemption of
preferred stock.
For earnings per share, the costs related to the CAP Plan (net of
tax) are added back as the shares related to the CAP Plan are
included in weighted average common shares outstanding.
(2) Represents shares used to calculate book value per common share.
Common shares outstanding include units issued under certain stock
compensation plans which will be distributed as shares of common
stock.
(3) Represents the ratio of income before both CAP Plan costs and
provision for income taxes to revenues, net of interest expense.
(4) Represents the ratio of income before provision for income taxes
to revenues, net of interest expense.
(5) Represents the ratio of net income to revenues, net of interest
expense.
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