The Bank of New York Company, Inc. Reports 12% Increase in First Quarter Earnings Per Share - Positive Operating Leverage and Strong Growth in Securities Servicing Revenue and Net Interest Income.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 Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. Company, Inc. (NYSE NYSE See: New York Stock Exchange : BK) reported today first quarter net income of $422 million compared with $379 million in the year-ago quarter and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of 55 cents, up 12% over the 49 cents earned in the first quarter of 2005. In the fourth quarter of 2005, earnings were $405 million and 53 cents. Performance Highlights --Positive operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. over year-ago and sequential One after the other in some consecutive order such as by name or number. periods. --Securities servicing fees up 11% versus the year-ago quarter. The growth was led by strong performance in issuer services, broker-dealer Broker-Dealer A person or firm in the business of buying and selling securities operating as both a broker and dealer depending on the transaction. Notes: Technically, a broker is only an agent who executes orders on behalf of clients, whereas a dealer acts as a principal services, and execution and clearing services. --Net interest income was up 7% over last year, reflecting growth in liquidity from the Company's core servicing businesses. --Foreign exchange and other trading revenues were up 20% from the year-ago quarter. --Private banking and asset management revenues were up 16% from the year-ago quarter reflecting both organic growth and the acquisition of Alcentra Group Limited and Urdang Capital Management. On April 8, 2006, the Company announced a definitive agreement with JPMorgan Chase JPMorgan Chase (NYSE: JPM TYO: 8634 ) is one of the oldest financial services firms in the world. The company, headquartered in New York City, is one of the leaders in investment banking, financial services, asset and wealth management and private equity. With assets of $1. to acquire its corporate trust business, with JPMorgan Chase acquiring the Company's retail banking and regional middle-market The term middle-market may refer to either a type of newspaper or a type of company. A middle-market newspaper is one that attempts to cater to readers who want some entertainment value from their newspaper as well as adequate serious coverage of significant news businesses. The transaction will strengthen the Company's leadership position in corporate trust both in the U.S. and internationally, serving a combined client base with $8 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. in total debt outstanding in 20 countries. Chairman and Chief Executive Officer Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs A. Renyi stated, "We are pleased with our performance for the quarter, which includes double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. revenue growth and positive operating leverage. This reflects the earnings power and momentum of the growth businesses that form the core of our Company. "Our agreement with JPMorgan Chase is another significant step in advancing our strategic transformation as a leader in securities servicing, asset management and private banking. We are unlocking the value of our retail franchise to invest in strengthening our leadership position in corporate trust, a business with attractive revenue dynamics and excellent growth prospects. In doing so, we are further concentrating our capital and resources on the higher-growth, higher-margin businesses where we have scale, skill and competitive advantage."
SECURITIES SERVICING FEES
Percent Inc/(Dec)
------------------
1Q06 vs. 1Q06 vs.
(In millions) 1Q06 4Q05 1Q05 4Q05 1Q05
----------------------------------------------------------------------
Execution and Clearing Services $339 $321 $293 6 % 16 %
Issuer Services 154 171 139 (10) 11
Investor Services 277 264 263 5 5
Broker-Dealer Services 61 58 55 5 11
---------------
Securities Servicing Fees $831 $814 $750 2 11
===============
Double-digit securities servicing fee growth over the first quarter of 2005 reflects strong performance within issuer services, broker-dealer services, and execution and clearing services. On a sequential-quarter basis, fees were moderately higher, reflecting strong growth in execution and clearing services, broker-dealer services and investor services, partially offset by seasonally slower activity in issuer services. Execution and clearing fees increased from the first quarter of 2005, reflecting growth in value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: fees at Pershing and stronger transition management and cross-border trading activity in execution services. The year-over-year increase also reflects the additional revenues from the Lynch Lynch may be:
adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , reflecting higher commissions and fee-based services at Pershing, and higher cross-border trading volumes Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. in the execution business. The execution and clearing businesses include institutional agency brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. , electronic trading  This article or section is in need of attention from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. , transition management services, independent research and, through Pershing, correspondent A bank, Securities firm, or other financial institution that regularly renders services for another in an area or market to which the other party lacks direct access. A bank that functions as an agent for another bank and carries a deposit balance for a bank in another city. clearing services such as clearing, execution, financing, 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. for introducing broker-dealers. Issuer services fees increased versus the year-ago period due to higher transactional activity within ADRs and strong growth in structured and global trust products revenues within Corporate Trust. The sequential quarter decrease from the strong fourth quarter of 2005 primarily reflects seasonally lower depositary receipt depositary receipt A negotiable certificate that represents a company's publicly traded debt or equity. Depositary receipts are created when a company's shares or bonds are delivered to a depositary's custodian bank, which instructs the depositary to issue revenue. Investor services fees increased from the year-ago quarter due to higher volumes within 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. and higher custody fees. Sequential performance reflects the same factors as year-over-year. Investor services includes global fund services, global custody, securities lending, global liquidity services and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. . Broker-dealer services fees improved versus the year-ago and sequential periods as a result of increased domestic and global collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although management fees due to strong cross-border activity between the U.S. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and higher values in global markets.
NONINTEREST INCOME
Percent Inc/(Dec)
------------------
1Q06 vs. 1Q06 vs.
(In millions) 1Q06 4Q05 1Q05 4Q05 1Q05
----------------------------------------------------------------------
Servicing Fees
Securities $ 831 $ 814 $ 750 2 % 11 %
Global Payment Services 70 68 75 3 (7)
---------------------
901 882 825 2 9
Private Banking and Asset
Management Fees 141 128 122 10 16
Service Charges and Fees 89 94 92 (5) (3)
Foreign Exchange and Other
Trading Activities 115 98 96 17 20
Securities Gains 17 18 12 (6) 42
Other 69 53 31 30 123
---------------------
Total Noninterest Income $1,332 $1,273 $1,178 5 13
=====================
The increase in noninterest income versus the first quarter of 2005 reflects positive revenue trends in securities servicing, foreign exchange and other trading, private banking and asset management, and other income. The sequential increase in noninterest income primarily reflects increases in foreign exchange and other trading, private banking and asset management, and other income. Global payment services fees decreased from the first quarter of 2005 but increased moderately on a sequential-quarter basis. The year-over-year decline reflects customers choosing to pay with higher compensating balances Compensating balance An excess balance that is left in a bank to provide indirect compensation for loans extended or services provided. compensating balance , which benefits net interest income. The sequential quarter increase reflects growth from U.S. financial institutions. On an invoiced services basis, total revenue was up 6% over the first quarter of 2005 and 1% on a sequential-quarter basis. Private banking and asset management fees increased significantly from the first quarter of 2005 and on a sequential-quarter basis primarily due to the acquisition of Alcentra Group Limited on January January: see month. 3, 2006 and the acquisition of Urdang Capital Management on March 2, 2006, as well as higher fees in private banking. Total 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. for these activities were $113 billion, up from $105 billion at March 31, 2005 and December December: see month. 31, 2005. Service charges and fees were down from the first quarter of 2005 and the fourth quarter of 2005. The year-over-year decline reflects lower underwriting fees Underwriting fee The portion of the gross underwriting spread that compensates the securities firms that underwrite a public offering for their services. . The sequential quarter decrease is due to lower syndication See syndication format. fees. Foreign exchange and other trading revenues were up significantly from the first quarter of 2005 and on a sequential-quarter basis. Foreign exchange was up from the first quarter of 2005 and sequentially due to higher volumes fueled by cross-border investment, particularly in emerging markets. On a year-over-year basis, other trading decreased slightly reflecting a decline in interest rate derivative An interest rate derivative is a derivative where the underlying asset is the right to pay or receive a (usually notional) amount of money at a given interest rate. The interest rate derivatives market is the largest derivatives market in the world. activity and lower trading revenues at Pershing. On a sequential-quarter basis, other trading increased primarily as a result of improved performance in fixed income trading. Securities gains in the first quarter were up $5 million from the year-ago quarter and down slightly on a sequential-quarter basis. The gains in the quarter were primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the sponsor fund portfolio. Other noninterest income increased versus the first quarter of 2005 and the fourth quarter of 2005. The first quarter of 2006 includes a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain of $31 million related to the conversion of the Company's New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. seats into cash and shares of NYSE. The fourth quarter of 2005 included the sale of a building for a $10 million pre-tax gain and four New York Stock Exchange seats for a $6 million pre-tax gain. During the first quarter of 2006, the higher than anticipated gain on the NYSE seats was partially offset by several items, including: the impact of the loss of a major Pershing customer ($6 million) for which the Company is pursuing a termination fee termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. ; a final adjustment to the Company's reserve position with the Federal Reserve ($6 million); and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when tied to relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. initiatives ($6 million).
NET INTEREST INCOME
Percent
Inc/
(Dec)
----------
1Q06 1Q06
vs. vs.
(Dollars in millions) 1Q06 4Q05 1Q05 4Q05 1Q05
----------------------------------------------------------------------
Net Interest Income $488 $492 $455 (1)% 7 %
Tax Equivalent Adjustment* 7 7 7
-----------------
Net Interest Income on a
Tax Equivalent Basis $495 $499 $462 (1) 7
=================
Net Interest Rate Spread 1.73% 1.71% 1.94%
Net Yield on Interest Earning Assets 2.35 2.35 2.36
* See Note (1).
Net interest income increased on a year-over-year quarterly basis reflecting higher earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin and the higher value of interest-free interest-free adj → libre de interés interest-free adj → sans intérêt interest-free interest adj, adv → balances in a rising rate environment. Net interest income decreased on a sequential-quarter basis reflecting a decline in interest earning assets and fewer days in the quarter. The first quarter of 2006 included a $6 million impact of a cumulative adjustment in the Company's reserve position with the Federal Reserve, which concludes this matter, while the fourth quarter of 2005 reflected $8 million related to this item.
NONINTEREST EXPENSE AND INCOME TAXES
Percent
Inc/(Dec)
-----------
1Q06 1Q06
vs. vs.
(In millions) 1Q06 4Q05 1Q05 4Q05 1Q05
----------------------------------------------------------------------
Salaries and Employee Benefits $ 668 $ 647 $ 618 3 % 8 %
Net Occupancy 88 84 78 5 13
Furniture and Equipment 53 53 52 - 2
Clearing 50 50 46 - 9
Sub-custodian Expenses 34 24 23 42 48
Software 56 53 53 6 6
Communications 27 26 23 4 17
Amortization of Intangibles 13 12 8 8 63
Other 189 199 176 (5) 7
---------------------
Total Noninterest Expense $1,178 $1,148 $1,077 3 9
=====================
Noninterest expense was up compared with the first quarter of 2005 and the fourth quarter of 2005. The increase versus the year-ago quarter reflects increased staffing costs associated with new business and acquisitions, as well as higher pension expenses. 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 was up reflecting acquisitions and higher business continuity expenses. Relative to the year-ago quarter, salaries rose 6% as tight 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. control and reengineering Using information technology to improve performance and cut costs. Its main premise, as popularized by the book "Reengineering the Corporation" by Michael Hammer and James Champy, is to examine the goals of an organization and to redesign work and business processes from the ground up and relocation projects offset the impact of growth related to business wins, and acquisitions, as well as the impact of severance and additional legal and compliance personnel. Severance expense, which was largely related to relocation initiatives, was $6 million in the first quarter of 2006. Benefit expense increased due to higher pension and medical costs, as well as higher incentives tied to growth in revenues. Salaries and employee benefits expense for the first quarter increased on a sequential-quarter basis, reflecting higher seasonal social security expense, higher pension expenses reflecting the new 2006 assumptions, and increased expenses associated with acquisitions. Occupancy expenses were up on a year-over-year quarter basis reflecting the costs associated with the Company's new out-of-region data center in the mid-south Mid-South may refer to:
Manchester (măn`chəstər, –chĕs'tər), city and metropolitan district (1991 pop. 397,400), NW England, on the Irwell, Medlock, Irk, and Tib rivers. , England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. . On a sequential-quarter basis, occupancy expenses were up 5%, primarily reflecting acquisitions. Other expenses were higher compared with the first quarter of 2005 reflecting higher costs for advertising, travel and entertainment, as well as vendor services related expenses associated with business growth. On a sequential-quarter basis, other expenses in the first quarter of 2006 decreased due to lower legal and Depository Trust Company Depository Trust Company (DTC) DTC is the world's largest central securities depository. It accepts deposits of over 2 million equity and debt securities issues (valued at $23 trillion) from over 65 countries for custody, executes book-entry deliveries (valued at over $116 trillion expense. The effective tax rate for the first quarter of 2006 was 33.7%, compared to 33.1% in the first quarter of 2005 and 33.3% in the fourth quarter of 2005. The increases primarily reflect lower expected Section 29 tax credits.
CREDIT LOSS PROVISION AND NET CHARGE-OFFS
(In millions) 1Q06 4Q05 1Q05
------------------
Provision $5 $10 $(10)
------------------
Net Charge-offs:
Commercial $1 $(139) $(3)
Foreign 2 (1) -
Regional Commercial 1 (3) (2)
Consumer (8) (8) (5)
------------------
Total $(4) $(151) $(10)
==================
The sequential decline in the provision reflects a decline in charge-offs and a decline in nonperforming loans. During the fourth quarter of 2005 the Company charged-off $140 million of leases with two domestic bankrupt BANKRUPT. A person who has done, or suffered some act to be done, which is by law declared an act of bankruptcy; in such case he may be declared a bankrupt. 2. It is proper to notice that there is much difference between a bankrupt and an insolvent. airline customers.
LOANS
(Dollars in millions) March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
Margin Loans $ 5,312 $ 6,089 $ 6,038
Non-Margin Loans 34,742 34,637 32,726
--------------------------------------
Total Loans $40,054 $40,726 $38,764
======================================
Allowance for Loan Losses $419 $411 $583
Allowance for Lending-Related
Commitments 147 154 133
--------------------------------------
Total Allowance for
Credit Losses $566 $565 $716
======================================
Allowance for Loan Losses As a
Percent of Total Loans 1.05 % 1.01 % 1.50 %
Allowance for Loan Losses As a
Percent of Non-Margin Loans 1.21 1.19 1.78
Total Allowance for Credit
Losses As a Percent of
Total Loans 1.41 1.39 1.85
Total Allowance for Credit
Losses As a Percent of
Non-Margin Loans 1.63 1.63 2.19
NONPERFORMING ASSETS
Change
3/31/2006 vs. Percent
(Dollars in millions) 3/31/2006 12/31/2005 12/31/2005 Inc/(Dec)
---------------------------------------------
Loans:
Commercial $16 $17 $(1) (6)%
Foreign 13 14 (1) (7)
Other 29 35 (6) (17)
------------------------------------
Total Nonperforming
Loans 58 66 (8) (12)
Other Assets Owned 8 13 (5) (38)
------------------------------------
Total Nonperforming
Assets $66 $79 $(13) (16)
====================================
Nonperforming Assets
Ratio 0.2 % 0.2 %
Allowance for Loan
Losses/Nonperforming
Loans 720.6 629.7
Allowance for Loan
Losses/Nonperforming
Assets 635.2 524.0
Total Allowance for
Credit Losses/
Nonperforming Loans 974.1 865.4
Total Allowance for
Credit Losses/
Nonperforming Assets 858.8 720.2
The sequential quarter decrease in nonperforming assets primarily
reflects the sale of aircraft.
OTHER DEVELOPMENTS
On January 3, 2006, the Company acquired Alcentra Group Limited, an international asset management group focused on managing funds that invest in non-investment grade debt. Alcentra's management team will retain a 20 percent interest. Alcentra has operations in 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. and Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and currently manages 15 different investment funds Noun 1. investment funds - money that is invested with an expectation of profit investment assets - anything of material value or usefulness that is owned by a person or company with over $6.2 billion of assets. On March 2, 2006, the Company acquired Urdang Capital Management, a real estate investment management firm that manages approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.0 billion in direct investments and portfolios of REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). securities. As previously noted, the Company entered into a definitive agreement to sell its retail and regional middle-market businesses to JPMorgan Chase for $3.1 billion with a premium of $2.3 billion. JPMorgan Chase will sell its corporate trust business to the Company for $2.8 billion with a premium of $2.15 billion. The difference in premiums results in a net cash payment of $150 million to the Company. There is also a contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the payment of up to $50 million to the Company tied to customer retention. The transaction further increases the Company's focus on the securities services and wealth management businesses that have fueled the Company's growth in recent years and that are at the core of its 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. business strategy. The transaction has been approved by each company's board of directors and is expected to be completed late in the third quarter or during the fourth quarter of 2006, subject to regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals. The Company expects to record an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $1.3 billion and to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. after-tax charges of $90-120 million related to the acquisition. The transaction is expected to be dilutive to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings per share through 2009 (4.5 percent in 2007 to 1.5 percent in 2009), but will be accretive to cash earnings per share in 2009 when cost savings are fully phased in. JPMorgan Chase's corporate trust business comprises issues representing $5 trillion in total debt outstanding. It has 2,400 employees in more than 40 locations globally. The Company's corporate trust business comprises issues representing $3 trillion in total debt outstanding. It has 1,300 employees in 25 locations globally. The Company's retail bank consists of 338 branches in the tri-state region For other tri-state regions, see . The Tri-State Region is commonly used in the area surrounding New York City to unambiguously refer to the greater metropolitan area. Sometimes the phrase is shortened to "the Tri-State," or "the Tri-State Area" is used instead. , serving approximately 700,000 consumer households and small businesses with $14.5 billion in deposits and $15.4 billion in assets. The Company's regional middle-market businesses provide financing, banking and treasury services Treasury services is a function of an investment bank which provides transaction, investment and information services for chief financial officers, treasurers. Treasury services concentrates and invests client money, and provides trade finance and logistics solutions as well as for middle market clients, serving more than 2,000 clients in the tri-state region. Together, the units have 4,000 employees located in New York, New Jersey, Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). and Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). . During the first quarter of 2006, the Company repurchased 0.9 million shares of its common stock in the open market and through employee benefit plans. The Company also repurchased 1.5 million shares of its common stock in February February: see month. at an initial price of $34.31 through an accelerated share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. CONFERENCE CALL INFORMATION Thomas A. Renyi, chairman and chief executive officer, and Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. W. Van Saun, vice chairman 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. 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) 216-4454 within the United States or (402) 220-3883 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 Financial assets Claims on real 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 A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
THE BANK OF NEW YORK COMPANY, INC.
Financial Highlights
(Dollars in millions, except per share amounts)
(Unaudited)
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
Revenue $2,330 $2,230 $1,904
Tax Equivalent Adjustment 7 7 7
Revenue (tax equivalent basis) 2,337 2,237 1,911
Net Income 422 405 379
Basic EPS 0.55 0.53 0.49
Diluted EPS 0.55 0.53 0.49
Cash Dividends Per Share 0.21 0.21 0.20
Return on Average Common
Shareholders' Equity 17.31% 16.57% 16.52%
Return on Average Assets 1.61 1.53 1.55
Efficiency Ratio 65.1 65.5 66.2
Assets $103,611 $102,074 $96,537
Loans 40,054 40,726 38,764
Securities 27,288 27,326 23,907
Deposits - Domestic 35,175 37,374 33,634
- Foreign 29,549 27,050 25,328
Long-Term Debt 8,309 7,817 7,389
Common Shareholders' Equity 10,101 9,876 9,335
Common Shareholders' Equity
Per Share $13.09 $12.79 $12.02
Market Value Per Share of
Common Stock 36.04 31.85 29.05
Allowance for Loan Losses as
a Percent of Total Loans 1.05% 1.01% 1.50%
Allowance for Loan Losses as
a Percent of Non-Margin Loans 1.21 1.19 1.78
Total Allowance for Credit
Losses as a Percent of
Total Loans 1.41 1.39 1.85
Total Allowance for Credit
Losses as a Percent of
Non-Margin Loans 1.63 1.63 2.19
Tier 1 Capital Ratio 8.24 8.38 8.13
Total Capital Ratio 12.38 12.48 12.54
Leverage Ratio 6.51 6.60 6.56
Tangible Common Equity Ratio 5.42 5.58 5.48
Employees 23,500 23,451 23,160
Assets Under Custody -
Estimated (In trillions)
-------------------------
Assets Under Custody $11.3 $10.9 $9.9
Equity Securities 33% 32% 34%
Fixed Income Securities 67 68 66
Cross-Border Assets
Under Custody $3.7 $3.4 $2.8
Assets Under Management -
Estimated (In billions)
-------------------------
Total Assets Under Management 173 155 150
Asset Management Sector 65% 69% 70%
Equity Securities 21% 24% 25%
Fixed Income
Securities 12 14 14
Alternative
Investments 15 10 10
Liquid Assets 17 21 21
Foreign Exchange Overlay 6 6 6
Securities Lending Short-
term Investment Funds 29 25 24
Notes: (1) A number of amounts related to net interest income are presented on a "tax equivalent basis". The Company believes that this presentation provides comparability of net interest income arising from both taxable and tax-exempt tax-ex·empt adj. 1. Not subject to taxation, as the capital or income of a philanthropic organization. 2. Producing interest that is exempt from income tax: tax-exempt bonds. n. sources and is consistent with industry standards. (2) Operating leverage is measured by comparing the rate of increase in revenue to the rate of increase in expenses. The chart below shows the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of operating leverage.
Operating Leverage
(Dollars in millions) 1Q 2006 1Q 2005 % Change
------- ------- ---------
Noninterest Income $1,332 $1,178 13.1 %
Net Interest Income 488 455 7.3
Total Revenue 1,820 1,633 11.5
Total Expense 1,178 1,077 9.4
Operating Leverage 2.1 %
========
(Dollars in millions) 1Q 2006 4Q 2005 % Change
------- ------- ---------
Noninterest Income $1,332 $1,273 4.6 %
Net Interest Income 488 492 (0.8)
Total Revenue 1,820 1,765 3.1
Total Expense 1,178 1,148 2.6
Operating Leverage 0.5 %
========
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 Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. 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 Risk Factors That Could Affect Future Results" in the Company's 2005 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. which has been filed with the SEC and is available at the SEC's website (www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. ). 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or events that have changed after a forward looking statement was made. (Financial highlights and detailed financial statements are attached.)
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Statements of Income
(Dollars in millions, except per share amounts)
(Unaudited)
For the three Percent
months ended Inc/
March 31, (Dec)
2006 2005
--------- --------- ---------
Interest Income
---------------
Loans $ 441 $ 335 32%
Margin loans 77 55 40
Securities
Taxable 298 207 44
Exempt from Federal Income Taxes 10 9 11
--------- ---------
308 216 43
Deposits in Banks 86 71 21
Federal Funds Sold and Securities
Purchased Under Resale Agreements 35 27 30
Trading Assets 51 22 132
--------- ---------
Total Interest Income 998 726 37
--------- ---------
Interest Expense
----------------
Deposits 334 184 82
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 20 6 233
Other Borrowed Funds 20 7 186
Customer Payables 40 25 60
Long-Term Debt 96 49 96
--------- ---------
Total Interest Expense 510 271 88
--------- ---------
Net Interest Income 488 455 7
-------------------
Provision for Credit Losses 5 (10)
--------- ---------
Net Interest Income After Provision for
Credit Losses 483 465 4
--------- ---------
Noninterest Income
------------------
Servicing Fees
Securities 831 750 11
Global Payment Services 70 75 (7)
--------- ---------
901 825 9
Private Banking and
Asset Management Fees 141 122 16
Service Charges and Fees 89 92 (3)
Foreign Exchange and
Other Trading Activities 115 96 20
Securities Gains 17 12 42
Other 69 31 123
--------- ---------
Total Noninterest Income 1,332 1,178 13
--------- ---------
Noninterest Expense
-------------------
Salaries and Employee Benefits 668 618 8
Net Occupancy 88 78 13
Furniture and Equipment 53 52 2
Clearing 50 46 9
Sub-custodian Expenses 34 23 48
Software 56 53 6
Communications 27 23 17
Amortization of Intangibles 13 8 63
Other 189 176 7
--------- ---------
Total Noninterest Expense 1,178 1,077 9
--------- ---------
Income Before Income Taxes 637 566 13
Income Taxes 215 187 15
--------- ---------
Net Income $ 422 $ 379 11
---------- ========= =========
Per Common Share Data:
----------------------
Basic Earnings $ 0.55 $ 0.49 12
Diluted Earnings 0.55 0.49 12
Cash Dividends Paid 0.21 0.20 5
Diluted Shares Outstanding 774 779 (1)
THE BANK OF NEW YORK COMPANY, INC.
Consolidated Balance Sheets
(Dollars in millions, except per share amounts)
(Unaudited)
March 31, 2006 December 31, 2005
----------------- -----------------
Assets
------
Cash and Due from Banks $ 3,408 $ 3,515
Interest-Bearing Deposits in Banks 7,635 8,644
Securities
Held-to-Maturity (fair value of
$2,123 in 2006 and $1,951 in
2005) 2,165 1,977
Available-for-Sale 25,123 25,349
----------------- -----------------
Total Securities 27,288 27,326
Trading Assets at Fair Value 7,129 5,930
Federal Funds Sold and Securities
Purchased Under Resale Agreements 4,781 2,425
Loans (less allowance for loan
losses of $419 in 2006 and $411
in 2005) 39,635 40,315
Premises and Equipment 1,059 1,060
Due from Customers on Acceptances 272 233
Accrued Interest Receivable 378 391
Goodwill 3,848 3,619
Intangible Assets 896 811
Other Assets 7,282 7,805
----------------- -----------------
Total Assets $ 103,611 $ 102,074
================= =================
Liabilities and
Shareholders' Equity
---------------------
Deposits
Noninterest-Bearing (principally
domestic offices) $ 16,639 $ 18,236
Interest-Bearing
Domestic Offices 18,863 19,522
Foreign Offices 29,222 26,666
----------------- -----------------
Total Deposits 64,724 64,424
Federal Funds Purchased and
Securities Sold Under Repurchase
Agreements 903 834
Trading Liabilities 2,358 2,401
Payables to Customers and
Broker-Dealers 7,556 8,623
Other Borrowed Funds 1,158 860
Acceptances Outstanding 276 235
Accrued Taxes and Other Expenses 3,676 4,124
Accrued Interest Payable 171 172
Other Liabilities (including
allowance for lending-related
commitments of $147 in 2006 and
$154 in 2005) 4,379 2,708
Long-Term Debt 8,309 7,817
----------------- -----------------
Total Liabilities 93,510 92,198
----------------- -----------------
Shareholders' Equity
Common Stock-par value $7.50 per
share, authorized 2,400,000,000
shares, issued 1,047,597,230
shares in 2006 and 1,044,994,517
shares in 2005 7,857 7,838
Additional Capital 1,904 1,826
Retained Earnings 7,347 7,089
Accumulated Other
Comprehensive Income (189) (134)
----------------- -----------------
16,919 16,619
Less: Treasury Stock (275,833,078
shares in 2006 and
273,662,218 shares in
2005), at cost 6,811 6,736
Loan to ESOP (203,507
shares in 2006 and
203,507 shares in
2005), at cost 7 7
----------------- -----------------
Total Shareholders' Equity 10,101 9,876
----------------- -----------------
Total Liabilities and
Shareholders' Equity $ 103,611 $ 102,074
================= =================
----------------------------------------------------------------------
Note: The balance sheet at December 31, 2005 has been derived from the
audited financial statements at that date.
THE BANK OF NEW YORK COMPANY, INC.
Average Balances and Rates on a Taxable Equivalent Basis
(Preliminary)
(Dollars in millions)
For the three months
ended March 31, 2006
---------------------------
Average Average
Balance Interest Rate
--------- -------- --------
ASSETS
------
Interest-Bearing
Deposits in Banks
(primarily foreign) $9,624 $86 3.61%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 3,518 35 4.05
Margin Loans 5,655 77 5.54
Loans
Domestic Offices 22,984 298 5.23
Foreign Offices 10,965 143 5.30
--------- --------
Non-Margin Loans 33,949 441 5.26
--------- --------
Securities
U.S. Government Obligations 225 2 4.22
U.S. Government Agency Obligations 3,953 44 4.45
Obligations of States and
Political Subdivisions 227 4 6.66
Other Securities 22,678 265 4.66
Trading Securities 4,714 51 4.42
--------- --------
Total Securities 31,797 366 4.61
--------- --------
Total Interest-Earning Assets 84,543 1,005 4.79%
--------
Allowance for Credit Losses (415)
Cash and Due from Banks 4,881
Other Assets 17,124
---------
TOTAL ASSETS $106,133
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
Money Market Rate Accounts $6,025 $32 2.14%
Savings 8,123 31 1.56
Certificates of Deposit
$100,000 & Over 4,258 48 4.58
Other Time Deposits 1,623 15 3.65
Foreign Offices 30,220 208 2.80
--------- --------
Total Interest-Bearing Deposits 50,249 334 2.70
Federal Funds Purchased and
Securities Sold Under Repurchase
Agreements 1,966 20 4.19
Other Borrowed Funds 1,980 20 4.02
Payables to Customers and
Broker-Dealers 5,231 40 3.10
Long-Term Debt 8,011 96 4.81
--------- --------
Total Interest-Bearing Liabilities 67,437 510 3.06%
--------
Noninterest-Bearing Deposits 15,391
Other Liabilities 13,417
Common Shareholders' Equity 9,888
---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $106,133
=========
Net Interest Earnings
and Interest Rate Spread $495 1.73%
======== ========
Net Yield on Interest-Earning Assets 2.35%
========
For the three months
ended March 31, 2005
---------------------------
Average Average
Balance Interest Rate
-------- --------- -------
ASSETS
------
Interest-Bearing
Deposits in Banks
(primarily foreign) $9,824 $71 2.95%
Federal Funds Sold and Securities
Purchased Under Resale Agreements 4,816 27 2.31
Margin Loans 6,407 55 3.46
Loans
Domestic Offices 22,135 239 4.38
Foreign Offices 10,302 96 3.76
-------- ---------
Non-Margin Loans 32,437 335 4.19
-------- ---------
Securities
U.S. Government Obligations 358 3 3.04
U.S. Government Agency Obligations 3,302 31 3.74
Obligations of States and
Political Subdivisions 199 4 7.34
Other Securities 19,681 185 3.77
Trading Securities 2,464 22 3.60
-------- ---------
Total Securities 26,004 245 3.77
-------- ---------
Total Interest-Earning Assets 79,488 733 3.74%
-------- ---------
Allowance for Credit Losses (589)
Cash and Due from Banks 4,166
Other Assets 16,177
--------
TOTAL ASSETS $99,242
========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
Money Market Rate Accounts $6,915 $21 1.25%
Savings 8,901 21 0.94
Certificates of Deposit
$100,000 & Over 2,880 18 2.57
Other Time Deposits 899 4 1.76
Foreign Offices 25,464 120 1.92
-------- ---------
Total Interest-Bearing Deposits 45,059 184 1.66
Federal Funds Purchased and
Securities Sold Under Repurchase
Agreements 1,390 6 1.84
Other Borrowed Funds 1,825 7 1.54
Payables to Customers and
Broker-Dealers 6,385 25 1.57
Long-Term Debt 6,605 49 2.98
-------- ---------
Total Interest-Bearing Liabilities 61,264 271 1.80%
-------- ---------
Noninterest-Bearing Deposits 15,520
Other Liabilities 13,158
Common Shareholders' Equity 9,300
--------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $99,242
========
Net Interest Earnings
and Interest Rate Spread $462 1.94%
========= ========
Net Yield on Interest-Earning Assets 2.36%
========
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion