Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS -----------------
The business of The Bank of New York Company, Inc. (the "Company") and its subsidiaries is described in the "Business Review" section of the Company's 1994 Annual Report to Shareholders which description is included in Exhibit 13 to this report and incorporated herein by reference. Also, the "Management's Discussion and Analysis" section included in Exhibit 13 contains financial and statistical information on the operations of the Company. Such information is herein incorporated by reference.
COMPETITION
The retail and commercial businesses in which the Company operates are very competitive. Competition is provided by both unregulated and regulated financial services organizations, whose products and services span the local, national, and global markets in which the Company conducts operations.
Savings banks, savings and loan associations, and credit unions actively compete for deposits, and money market funds and brokerage houses offer deposit-like services. These institutions, as well as consumer and commercial finance companies, national retail chains, factors, insurance companies and pension trusts, are important competitors for various types of loans. Issuers of commercial paper compete actively for funds and reduce demand for bank loans. For personal and corporate trust services and investment counseling services, insurance companies, investment counseling firms, and other business firms and individuals offer active competition.
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, the Company is subject to the regulation and supervision of the Federal Reserve Board under the Bank Holding Company Act ("BHC Act"). The Company is also subject to regulation by the New York State Department of Banking. Under the BHC Act, bank holding companies may not directly or indirectly acquire the ownership or control of more than 5% of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the Federal Reserve Board. In addition, bank holding companies are generally prohibited under the BHC Act from engaging in nonbanking activities, subject to certain exceptions.
The Company's subsidiary banks are subject to supervision and examination by applicable federal and state banking agencies. The Bank of New York ("BNY") is a state-chartered New York banking corporation and a member of the Federal Reserve System and is subject to regulation and supervision principally by the Federal Reserve Board. The Bank of New York (Delaware) ("BNY Del.") is a Delaware chartered FDIC insured non-member bank and therefore is subject to regulation and supervision principally by the FDIC. The Bank of New York National Association ("BNYNA") is organized as a national association under the laws of the United States and therefore is subject to regulation and supervision principally by the Comptroller of the Currency ("Comptroller").
Capital Adequacy
Bank regulators have adopted risk-based capital guidelines for bank holding companies and banks. The minimum ratio of qualifying total capital to risk-weighted assets (including certain off-balance sheet items) is 8%. At least half of the total capital is to be comprised of common stock, retained earnings, noncumulative perpetual preferred stocks, minority interests and for bank holding companies, a limited amount of qualifying cumulative perpetual preferred stock, less certain intangibles including goodwill ("Tier I capital"). The remainder ("Tier II capital") may consist of other preferred stock, certain other instruments, and limited amounts of subordinated debt and the loan and lease loss allowance.
In addition, the Federal Reserve Board has established minimum Leverage Ratio (Tier I capital to average total assets) guidelines for bank holding companies and banks. These guidelines provide for a minimum leverage ratio of 3% for bank holding companies and banks that meet certain specified criteria, including that they have the highest regulatory rating. All other banking organizations will be required to maintain a leverage ratio of 3% plus an additional cushion of at least 100 to 200 basis points. The guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. Furthermore, the guidelines indicate that the Federal Reserve Board will continue to consider a "Tangible Tier I Leverage Ratio" in evaluating proposals for expansion or new activities. The Tangible Tier I Leverage Ratio is the ratio of Tier I capital, less intangibles not deducted from Tier I capital, to average total assets. The Federal Reserve Board has not advised the Company of any specific minimum leverage ratio applicable to it.
Federal banking agencies have proposed regulations that would modify existing rules related to risk-based and leverage capital ratios. The Company does not believe that the aggregate impact of these modifications would have a significant impact on its capital position.
Bank regulators continue to indicate their desire to raise capital requirements applicable to banking organizations beyond their current levels. However, management is unable to predict whether and when higher capital requirements would be imposed and, if so, at what level and on what schedule.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), substantially revised the depository institution regulatory and funding provisions of the Federal Deposit Insurance Act ("FDIA") and made revisions to several other federal banking statutes. Among other things, FDICIA requires the federal banking regulators to take prompt corrective action in respect of FDIC-insured depository institutions that do not meet minimum capital requirements. FDICIA establishes five capital tiers: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." Under applicable regulations, an FDIC-insured bank is defined to be well capitalized if it maintains a Leverage Ratio of at least 5%, a Tier I Capital Ratio of at least 6% and a Total Capital Ratio of at least 10% and is not otherwise in a "troubled condition" as specified by its appropriate federal regulatory agency. A bank is generally considered to be adequately capitalized if it is not defined to be well capitalized but meets all of its minimum capital requirements, i.e., if it has a Total Capital Ratio of 8% or greater, a Tier I Capital Ratio of 4% or greater and a Leverage Ratio of 4% or greater. A bank will be considered undercapitalized if it fails to meet any minimum required measure, significantly undercapitalized if it is significantly below such measure and critically undercapitalized if it maintains a level of tangible equity capital equal to or less than 2% of total assets. A bank may be deemed to be in a capitalization category that is lower than is indicated by its actual capital position if it receives an unsatisfactory examination rating.
FDICIA generally prohibits an FDIC-insured depository institution from making any capital distribution (including payment of dividends) or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In addition, undercapitalized depository institutions are subject to growth limitations and are required to submit capital restoration plans. For an undercapitalized depository institution's capital restoration plan to be acceptable, its holding company must guarantee the capital plan up to an amount equal to the lesser of 5% of the depository institution's assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan. In the event of the parent holding company's bankruptcy, such guarantee would take priority over the parent's general unsecured creditors. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution's capital. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized depository institutions are subject to appointment of a receiver or conservator.
The Company's significant banking subsidiaries are well capitalized.
The table below indicates capital ratios of the Company and its significant banking subsidiaries at December 31, 1994 and 1993 and the respective guidelines for well capitalized institutions under FDICIA.
December 31, 1994 December 31, 1993
BNY BNY Company BNY Del. BNYNA Company BNY Del. BNYNA ------- --- ---- ----- ------- --- ---- ----- Well Capitalized Guidelines -----------
Tier I 8.45% 8.26% 7.27% 18.04% 8.87% 8.21% 7.53% 13.90% 6% Total Capital 13.43 12.36 11.34 19.30 13.65 12.82 11.00 15.17 10 Leverage 7.89 7.28 7.72 8.58 7.99 7.22 8.09 6.43 5 Tangible Common Equity 7.39 7.66 7.28 8.76 7.00 7.74 7.87 6.48
At December 31, 1994, the amounts of capital by which the Company and its significant banking subsidiaries exceed the guidelines are as follows:
Well Capitalized
BNY Company BNY Del. BNYNA (in millions) ------- --- ---- -----
Tier I $1,167 $839 $ 97 $247 Total Capital 1,634 877 103 191 Leverage 1,475 961 196 155
The following table presents the components of the Company's risk-based capital at December 31, 1994 and 1993:
(in millions) 1994 1993 ---- ---- Common Stock $4,234 $3,778 Preferred Stock 119 294 Less: Intangibles 329 317 ----- ------ Tier 1 Capital 4,024 3,755
Qualifying Long-term Debt 1,774 1,489 Qualifying Allowance for Loan Losses 597 534 ------ ------ Tier 2 Capital 2,371 2,023 ------ ------ Total Risk-based Capital $6,395 $5,778 ====== ======
The following table presents the components of the Company's risk adjusted assets at December 31, 1994 and 1993: 1994 1993 ------------------ ------------------ Balance Balance sheet/ Risk sheet/ Risk notional adjusted notional adjusted (in millions) amount balance amount balance -------- -------- -------- -------- Assets ------ Cash, Due From Banks and Interest- Bearing Deposits in Banks $ 3,895 $ 567 $ 4,780 $ 318 Securities 4,651 671 5,597 571 Trading Assets 940 124 1,325 270 Fed Funds Sold and Securities Purchased Under Resale Agreements 3,019 3 36 5 Loans 33,083 30,814 30,570 27,954 Allowance for Loan Losses (792) - (970) - Other Assets 4,083 3,273 4,208 3,425 ------- ------- ------- ------- Total Assets $48,879 35,452 $45,546 32,543 ======= ------- ======= ------- Off-Balance Sheet Exposures --------------------------- Commitments to Extend Credit $ 37,771 7,520 $ 30,877 6,167 Securities Lending Indemnifications 15,326 - 15,005 - Standby Letters of Credit and Other Guarantees 7,240 4,515 5,699 3,685 Interest Rate Contracts 28,632 81 36,834 145 Foreign Exchange Contracts 51,021 236 39,878 225 -------- ------- -------- ------- Total Off-Balance Sheet Exposures $139,990 12,352 $128,293 10,222 ======== ------- ======== ------- Gross Risk Adjusted Assets 47,804 42,765
Less: Allowance for Loan Losses not Qualifying as Risk Based Capital 195 436 ------- ------- Risk Adjusted Assets $47,609 $42,329 ======= =======
A discussion of the Company's capital position is incorporated by reference from the caption "Capital Resources" in the "Management's Discussion and Analysis" section of Exhibit 13.
Brokered Deposits
The FDIC has adopted regulations under FDICIA governing the receipt of brokered deposits. Under the regulations, a bank cannot accept, rollover or renew brokered deposits unless (i) it is well capitalized or (ii) it is adequately capitalized and receives a waiver from the FDIC. A bank that cannot receive brokered deposits also cannot offer "pass-through" insurance on certain employee benefit accounts. Whether or not it has obtained such a waiver, an adequately capitalized bank may not pay an interest rate on any deposits in excess of 75 basis points over certain prevailing market rates specified by regulation. There are no such restrictions on a bank that is well capitalized. Because BNY and BNY Del. are well capitalized, the Company believes the brokered deposits regulation will have no material effect on the funding or liquidity of BNY and BNY Del. BNYNA is well capitalized, but has no brokered deposits.
FDIC Insurance Assessments
BNY, BNY Del., and BNYNA are subject to FDIC deposit insurance assessments. As required by FDICIA, the FDIC adopted a risk-based premium schedule to determine the assessment rates for most FDIC-insured depository institutions. Under the schedule, the premiums initially range from $.23 to $.31 for every $100 of deposits. Each financial institution is assigned to one of three capital groups --- well capitalized, adequately capitalized, or undercapitalized --- and further assigned to one of three subgroups within a capital group, on the basis of supervisory evaluations by the institution's primary federal and, if applicable, state supervisors and other information relevant to the institution's financial condition and the risk posed to the applicable insurance fund. The actual assessment rate applicable to a particular institution will, therefore, depend in part upon the risk assessment classification so assigned to the institution by the FDIC. In February 1995, the FDIC issued a proposal to change the premium range from $.04 to $0.31 for every $100 of deposits. If implemented, this proposal would result in a significant reduction in FDIC insurance assessments of BNY, BNY Delaware and BNYNA.
The FDIC is authorized to raise insurance premiums in certain circumstances. Any increase in premiums would have an adverse effect on the Company's earnings.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order, or condition imposed by a bank's federal regulatory agency.
Depositor Preference
The Omnibus Budget Reconciliation Act of 1993 provides for a national depositor preference on amounts realized from the liquidation or other resolution of any depository institution insured by the FDIC. That act requires claims to be paid in the following order of priority: the receiver's administrative expenses; deposits; other general or senior liabilities of the institution; obligations subordinated to depositors or general creditors; and obligations to shareholders. Under an FDIC interim rule, which became effective August 13, 1993, "administrative expenses of the receiver" are defined as those incurred by the receiver in liquidating or resolving the affairs of a failed insured depository institution.
Acquisitions
The BHC Act generally limits acquisitions by the Company to commercial banks and companies engaged in activities that the Federal Reserve Board has determined to be so closely related to banking as to be a proper incident thereto. The Company's direct activities are generally limited to furnishing to its subsidiaries services that qualify under the "closely related" and "proper incident" tests. Prior Federal Reserve Board approval is required under the BHC Act for new activities and acquisitions of most nonbanking companies.
The BHC Act, the Federal Bank Merger Act, and the New York Banking Law regulate the acquisition of commercial banks. The BHC Act requires the prior approval of the Federal Reserve Board for the direct or indirect acquisition of more than 5% of the voting shares of a commercial bank. The BHC Act generally prohibits the acquisition of a domestic bank located outside the Company's state of principal operations, New York State, unless authorized by the law of the state of the target bank. Most states have enacted interstate banking laws that permit the Company to acquire banks located in their states, but some states (particularly in the Southeast) presently do not permit entry by New York bank holding companies. The New York Banking Law requires state regulatory approval before the Company can acquire more than 5% of the voting shares of a commercial bank in New York.
The Riegle-Neal Interstate banking and Branching Efficiency Act of 1994 which was enacted in September, 1994, authorizes (i) bank holding companies to engage in interstate acquisitions of banks beginning one year after the date of its enactment, (ii) interstate branching through interstate bank mergers beginning June 1, 1997 (subject to the ability of states to "opt-in" and thereby permit such mergers earlier or to "opt-out" and thereby prohibit them), (iii) de novo interstate branching provided that such action is specifically authorized by the law of the state in which the branch is to be located and (iv) banks to receive deposits, close and service loans, and receive payments on loans and other obligations as agent for a bank affiliate in the same or a different state beginning September 29, 1995. One effect of this legislation, subject to the state authority described above, will be to permit the Company to merge two or more of its banking subsidiaries which, as a result, may create greater efficiency in its operations.
The merger of BNY with another bank would require the approval of the Federal Reserve Board or other federal bank regulatory authority and, if the surviving bank is a state bank, the New York Superintendent of Banks. With respect to BNYNA, the approval of the Comptroller is required for branching of national banks, purchasing the assets of other banks and for bank mergers in which the continuing bank is a national bank.
In reviewing bank acquisition and merger applications, the bank regulatory authorities will consider, among other things, the competitive effect and public benefits of the transactions, the capital position of the combined organization, and the applicant's record under the Community Reinvestment Act.
Under Federal Reserve Board policy, the Company is expected to act as a source of financial strength to its banks and to commit resources to support such banks in circumstances where it might not do so absent such policy. In addition, any loans by the Company to its banks would be subordinate in right of payment to deposits and to certain other indebtedness of its banks.
Regulated Banking Subsidiaries
As a New York State chartered bank and a member of the Federal Reserve System, BNY is subject to the supervision of, and is regularly examined by, the New York State Banking Department and the Federal Reserve Board. As a bank insured by the FDIC, BNY is also subject to examination by that agency. BNY Del. is subject to the supervision of, and is regularly examined by, the FDIC and the Office of State Bank Commissioner of the State of Delaware. BNYNA is a national bank subject to the regulation and supervision of, and regular examination by, the Comptroller and subject to regulations of the FDIC and Federal Reserve Board.
Both federal and state laws extensively regulate various aspects of the banking business, such as permissible types and amounts of loans and investments, permissible activities, and reserve requirements. These regulations are intended primarily for the protection of depositors rather than the Company's stockholders.
Restrictions on Transfer of Funds
Restrictions on the transfer of funds to the Company are discussed in Note 9 to the Consolidated Financial Statements included in Exhibit 13. Such discussion is incorporated herein by reference.
FIRREA
A depository institution insured by the FDIC can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with (i) the default of a commonly controlled institution or (ii) any assistance provided by the FDIC to a commonly controlled, FDIC-insured depository institution in danger of default. "Default" is defined generally as the appointment of a conservator or receiver, and "in danger of default" is defined generally as the existence of certain conditions indicating that a "default" is likely to occur in the absence of regulatory assistance.
GOVERNMENT MONETARY POLICIES
The Federal Reserve Board has the primary responsibility for monetary policy; accordingly, its actions have an important influence on the demand for credit and investments and the level of interest rates.
ADDITIONAL FINANCIAL INFORMATION ------------------------------------------------------------------------------ Average Balances and Rates on a Taxable Equivalent Basis (dollars in millions) 1994 1993 1992 ============================================================================== Aver- Aver- Aver- Average Inter- age Average Inter- age Average Inter- age Balance est Rate Balance est Rate Balance est Rate ----------------------------------------------------------------- Assets ------ Interest -Bearing Deposits in Banks (Primarily Foreign) $ 1,266 $ 68 5.33% $ 452 $ 24 5.42% $ 753 $ 76 10.14% Federal Funds Sold and Securities Purchased Under Resale Agreements 3,653 161 4.39 3,149 97 3.06 2,379 85 3.54 Loans Domestic Offices Consumer 9,549 1,015 10.62 8,259 806 9.76 7,016 704 10.04 Commercial 12,340 833 6.76 11,998 741 6.18 11,643 755 6.48 Foreign Offices 10,140 564 5.56 10,170 485 4.77 11,686 651 5.57 ------- ------ ------- ------ ------- ------ Total Loans 32,029 2,412* 7.53 30,427 2,032* 6.68 30,345 2,110* 6.95 ------- ------ ------- ------ ------- ------ Securities U.S. Government Obligations 3,516 197 5.61 3,732 215 5.78 3,611 240 6.66 Obligations of States and Political Subdivisions 893 89 10.02 1,070 110 10.29 1,224 135 11.04 Other Securities, including Trading Securities Domestic Offices 1,341 70 5.25 1,358 64 4.74 1,190 91 7.65 Foreign Offices 191 11 5.64 192 14 7.36 177 17 9.44 ------- ------ ------- ------ ------- ------ Total Other Securities 1,532 81 5.30 1,550 78 5.06 1,367 108 7.88 ------- ------ ------- ------ ------- ------ Total Securities 5,941 367 6.19 6,352 403 6.36 6,202 483 7.79 ------- ------ ------- ------ ------- ------ Total Interest- Earning Assets 42,889 $3,008 7.01% 40,380 $2,556 6.33% 39,679 $2,754 6.94% ====== ====== ====== Allowance for Loan Losses (906) (1,045) (1,057) Cash and Due from Banks 2,827 2,735 2,522 Other Assets 5,470 4,574 5,083 ------- ------- ------- Total Assets $50,280 $46,644 $46,227 ======= ======= ======= Assets Attributable to Foreign Offices 24.30% 24.37% 28.63% ===== ===== =====
*Includes fees of $118 million in 1994, $103 million in 1993, and $96 million in 1992. Nonaccrual loans are included in the average loan balance; the associated income, recognized on the cash basis, is included in interest. Taxable equivalent adjustments were $46 million in 1994, $54 million in 1993, and $66 million in 1992, and are based on the federal statutory tax rate (35% in 1994 and 1993, and 34% in 1992) and applicable state and local taxes.
Continued on page 10
Average Balances and Rates on a Taxable Equivalent Basis (dollars in millions)
1994 1993 1992 =============================================================================== Aver- Aver- Aver- Average Inter- age Average Inter- age Average Inter- age Balance est Rate Balance est Rate Balance est Rate ------------------------------------------------------------- Liabilities and Shareholders' Equity --------------- Interest-Bearing Deposits Domestic Offices Money Market Rate Accounts $ 3,593 $ 108 3.01% $ 3,666 $ 91 2.48% $ 3,468 $ 108 3.11% Savings 8,166 190 2.32 8,379 198 2.37 7,189 216 3.01 Certificates of Deposit of $100,000 or More 1,041 42 4.03 1,189 36 3.00 1,709 64 3.75 Other Time Deposits 2,296 97 4.24 2,701 119 4.39 2,965 152 5.15 ------- ------ ------- ------ ------- ------ Total Domestic Offices 15,096 437 2.90 15,935 444 2.78 15,331 540 3.53 ------- ------ ------- ------ ------- ------ Foreign Offices Banks in Foreign Countries 2,917 125 4.30 2,829 93 3.28 4,018 204 5.07 Government and Official Institutions 1,384 60 4.37 1,306 57 4.34 1,270 61 4.81 Other Time and Savings 5,689 220 3.84 3,752 107 2.87 4,716 200 4.24 ------- ------ ------- ------ ------- ------ Total Foreign Offices 9,990 405 4.05 7,887 257 3.26 10,004 465 4.64 ------- ------ ------- ------ ------- ------ Total Interest- Bearing Deposits 25,086 842 3.35 23,822 701 2.94 25,335 1,005 3.97 ------- ------ ------- ------ ------- ------ Federal Funds Purchased and Securities Sold Under Repurchase Agreements 2,843 106 3.73 3,467 102 2.94 4,001 136 3.40 Other Borrowed Funds 4,135 191 4.63 2,348 86 3.66 2,045 85 4.13 Long-Term Debt 1,530 106 6.93 1,729 117 6.79 1,386 94 6.77 ------- ------ ------- ------ ------- ------ Total Interest- Bearing Liabilities 33,594 $1,245 3.71% 31,366 $1,006 3.21% 32,767 $1,320 4.03% ======= ======= ======= Noninterest- Bearing Deposits Domestic Offices 8,897 8,946 7,797 Foreign Offices 58 69 105 ------- ------- ------- Total Noninterest- Bearing Deposits 8,955 9,015 7,902 ------- ------- ------- Other Liabilities 3,594 2,366 2,153 Preferred Stock 157 334 409 Common Shareholders' Equity 3,980 3,563 2,996 ------- ------- ------- Total Liabilities and Shareholders' Equity $50,280 $46,644 $46,227 ======= ======= ======= Net Interest Earnings and Interest Rate Spread $1,763 3.30 $1,550 3.12 $1,434 2.91 ====== ====== ====== Net Yield on Interest-Earning Assets 4.11% 3.84% 3.61% ==== ==== ==== Liabilities Attributable to Foreign Offices 22.79% 19.74% 24.91% ===== ===== =====
Rate/Volume Analysis on a Taxable Equivalent Basis (in millions) ---------------------------------------------------------------- 1994 vs. 1993 1993 vs. 1992 ---------------------------------------------------------------------------- Increase (Decrease) Increase (Decrease) due to change in: due to change in: ---------------- Total ----------------- Total Average Average Increase Average Average Increase Balance Rate (Decrease) Balance Rate (Decrease) ------- ------- ---------- ------- ------- --------- Interest Income --------------- Interest-Bearing Deposits in Banks $ 44 $ - $ 44 $ (24) $ (28) $ (52) Federal Funds Sold and Securities Purchased Under Resale Agreements 17 47 64 25 (13) 12 Loans Domestic Offices Consumer 134 75 209 122 (20) 102 Commercial 22 70 92 23 (37) (14) Foreign Offices (1) 80 79 (79) (87) (166) ----- ----- ----- ------ ------ ------ Total Loans 155 225 380 66 (144) (78) Securities U.S. Government Obligations (12) (6) (18) 8 (33) (25) Obligations of States and Political Subdivisions (18) (3) (21) (16) (9) (25) Other Securities, including Trading Assets Domestic Offices (1) 7 6 12 (39) (27) Foreign Offices - (3) (3) 1 (4) (3) ----- ----- ----- ----- ----- ------ Total Other Securities (1) 4 3 13 (43) (30) ----- ----- ----- ----- ----- ------ Total Securities (31) (5) (36) 5 (85) (80) ----- ----- ----- ----- ----- ------ Total Interest Income 185 267 452 72 (270) (198) ----- ----- ----- ----- ----- ------ Interest Expense ---------------- Interest-Bearing Deposits Domestic Offices Money Market Rate Accounts (2) 19 17 6 (23) (17) Savings (5) (3) (8) 32 (50) (18) Certificate of Deposits of $100,000 or More (5) 11 6 (17) (11) (28) Other Time Deposits (18) (4) (22) (12) (21) (33) ----- ----- ----- ----- ----- ------ Total Domestic Offices (30) 23 (7) 9 (105) (96) ----- ----- ----- ----- ----- ------ Foreign Offices Banks in Foreign Countries 3 29 32 (51) (60) (111) Government and Official Institutions 3 - 3 2 (6) (4) Other Time and Savings 67 46 113 (37) (56) (93) ----- ----- ----- ----- ----- ------ Total Foreign Offices 73 75 148 (86) (122) (208) ----- ----- ----- ----- ----- ------ Total Interest- Bearing Deposits 43 98 141 (77) (227) (304) Federal Funds Purchased and Securities Sold Under Repurchase Agreements (20) 24 4 (17) (17) (34) Other Borrowed Funds 77 28 105 11 (10) 1 Long-Term Debt (13) 2 (11) 23 - 23 ----- ----- ----- ----- ----- ------ Total Interest Expense 87 152 239 (60) (254) (314) ----- ----- ----- ----- ----- ------ Change in Net Interest Income $ 98 $ 115 $ 213 $ 132 $ (16) $ 116 ===== ===== ===== ===== ===== ======
Changes which are not solely due to balance changes or rate changes are allocated to such categories on the basis of the respective percentage changes in average balances and average rates.
Interest-Rate Sensitivity -------------------------
The Company actively manages interest-rate sensitivity (the exposure of net interest income to interest rate movements). The relationship of interest-earning assets and interest-bearing liabilities between repricing dates is closely monitored, yet the Company's policies are flexible enough to capitalize on profit opportunities, while minimizing adverse effects on earnings when changes in short-term and long-term interest rates occur. The Company uses complex simulation models to adjust the structure of its assets and liabilities in response to interest rate exposures. The Company uses three basic scenarios to model interest rate sensitivity, these include base line, high rate, and low rate. The base line scenario is the Company's estimated most likely path for future short-term interest rates. The base line scenario forecast in January 1995 assumes rising rates. The "high rate" scenario assumes a 79 basis point increase from the base line scenario (already a rising rate scenario). The "low rate" scenario assumes the average rate declines 121 basis points under the base line scenario. Additionally, other scenarios are reviewed to examine the impact of other interest rate changes. The Company quantifies interest rate sensitivity by calculating the change in net interest income between the three scenarios over a 12 month policy measurement period. Net interest income as calculated by the earnings simulation model under the base line scenario becomes the standard. The measurement of interest rate sensitivity is the percentage change in net interest income calculated by the model under high rate versus base-line scenario and under low rate versus base-line scenario. The scenarios do not include the adjustments that management would make as rate expectations change. The Company's policy limit for fluctuations in net interest income resulting from either the high rate or low rate scenario is 6 percent. Based upon the January 1995 outlook, if interest rates were to rise to follow the high rate scenario, then net interest income during the policy measurement period would be positively affected by 1.82% percent (assuming management took no actions.) If interest rates were to follow the low rate scenario, then net interest income would be negatively affected by 1.94% In addition to the policy limit discussed above, the Company also has a global mismatch limit to control the impact of interest rate fluctuations on the Company's earnings. The Company's global mismatch is defined as the absolute value of the Company's asset repricings less liability repricings in 24 maturity bands ranging from one day to over 10 years. Off balance sheet instruments, such as swaps and futures used to hedge balance sheet items are included in the calculation of the global mismatch. Each year the Company's Board of Directors approves specific mismatch limits. The global mismatch is reviewed weekly by senior management. The following table reflects the year-end position of the Company's interest-earning assets and interest-bearing liabilities that either reprice or mature within the designated time periods. Further, within each time period assets and liabilities reprice on different dates and at different levels. Interest sensitivity gaps change daily. A positive interest sensitivity gap, for a particular time period, is one in which more assets reprice or mature than liabilities. A negative interest sensitivity gap results from a greater amount of liabilities repricing or maturing. A positive gap implies that there are more rate sensitive assets than liabilities which suggests that as interest rates rise, the return on assets will rise faster than the funding costs. Conversely, a negative gap indicates a higher ratio of rate sensitive liabilities than assets. In such cases, if interest rates rise, then funding costs will rise at a faster rate than the return on assets. Finally, the cumulative gap is the sum of the dollar gap for sequential time periods.
December 31, 1994 ----------------------------------------------- Within Greater Within Within Within 7-12 Than 1 Mo. 2-3 Mos. 4-6 Mos. Mos. 12 Mos. Total ------ -------- -------- ------ ------- ------- (in millions) Interest-Earning Assets ----------------------- Foreign Offices $ 5,840 $ 4,025 $1,677 $ 196 $ 217 $11,955 Domestic Offices Loans 16,976 471 392 564 4,387 22,790 Securities 131 60 93 309 3,380 3,973 Trading Assets 686 - - - - 686 Federal Funds Sold and Securities Purchased Under Resale Agreement 3,019 - - - - 3,019 ------- ------- ------ ------ ------ ------- 26,652 4,556 2,162 1,069 7,984 $42,423 ------- ------- ------ ------ ------ =======
Interest-Bearing Liabilities ---------------------------- Foreign Offices 8,323 1,614 625 488 32 11,082 Domestic Offices Interest-Bearing Deposits Money Market Rate Accounts 3,330 - - - - 3,330 Savings 6,444 - - 13 1,296 7,753 Certificates of Deposit of $100,000 or More 493 399 224 304 901 2,321 Other Time Deposits 335 235 322 219 355 1,466 ------- ------- ------ ------ ------ ------- Total Interest-Bearing Deposits 18,925 2,248 1,171 1,024 2,584 25,952 ------- ------- ------ ------ ------ ------- Federal Funds Purchased and Other Borrowed Funds 4,344 737 147 555 17 5,800 Long-Term Debt - - 64 - 1,710 1,774 ------- ------- ------ ------ ------ -------
Noninterest-Bearing Sources of Funds 3,581 25 38 76 5,177 8,897 --------------------------- ------- ------- ------ ------ ------ ------- Total 26,850 3,010 1,420 1,655 9,488 $42,423 ======= Effect of Financial Futures and Swaps 933 (2,401) (396) 1,055 809 --------------------------- ------- ------- ------ ------ ------ Interest-Sensitive Gap $ 735 $ (855) $ 346 $ 469 $ (695) ---------------------- ======= ======= ====== ====== ====== Cumulative Interest- Sensitivity Gap $ 735 $ (120) $ 226 $ 695 $ - -------------------- ======= ======= ====== ====== ======
PROVISION AND ALLOWANCE FOR LOAN LOSSES ---------------------------------------
At December 31, 1994, the domestic commercial real estate portfolio had approximately 76% of its loans in New York and New Jersey, 5% in California, 5% in Pennsylvania, 3% in New England, and 1% in Florida; no other state accounts for more than 1% of the portfolio. This portfolio consists of the following types of properties:
Business loans secured by real estate 45% Offices 28 Retail 8 Hotels 5 Mixed-Used 4 Land 2 Condominiums and cooperatives 1 Industrial/Warehouse 1 Other 6 ---- 100% ====
At December 31, 1994 and 1993, the Company's nonperforming real estate loans and real estate acquired in satisfaction of loans aggregated $119 million and $171 million, respectively. Net charge-offs of real estate loans were $6 million in 1994 and $69 million in 1993. In addition, other real estate charges were $11 million and $53 million in 1994 and 1993. A discussion of other real estate charges under "Noninterest Expense and Income Taxes" in the "Management's Discussion and Analysis" section included in Exhibit 13 is incorporated herein by reference.
At December 31, 1994, the Company's LDC exposures consisted of $78 million in medium-term loans (and no material commitments), $334 million in short-term loans, $14 million in accrued interest, and $48 million in equity investments. At December 31, 1994, the allowance for loan losses associated with LDC loans was $98 million. In addition, the Company has $318 million of debt securities to emerging market countries, including $270 million (book value) of bonds whose principal payments are collateralized by U.S. Treasury zero coupon obligations and whose interest payments are partially collateralized.
The Company's consumer loan portfolio is comprised principally of credit card, other installment, and residential loans. Residential and auto loans are collateralized, thereby reducing the risk. Credit card net charge-offs were $149 million in 1994 compared to $121 million in 1993. The 1994 and 1993 amounts exclude $32 million and $56 million in net charge-offs related to the portion of the portfolio that is securitized. As a percentage of average credit card outstandings, net charge-offs were to 2.47% in 1994 compared to 2.88% in 1993. On a managed receivables basis, net charge-offs as a percentage of average outstandings were 2.68% in 1994 compared to 3.19% in 1993. Other consumer net charge-offs were $7 million in 1994 and $23 million in 1993.
Lending to the utility industry is concentrated in investor-owned electric utilities. The Company also makes loans to gas and telephone utilities. Nonperforming loans in this industry amounted to $2 million at year-end 1994 and 1993. There were no charge-offs in 1994 and 1993.
The Company's loans to the communications, entertainment, and publishing industries primarily consist of credits with cable television operators, broadcasters, magazine and newspaper publishers and motion picture theaters. There were no nonperforming communications loans at December 31, 1994 and 1993. Charge-offs of communications loans were $1 million in 1993. There were no charge-off in 1994.
The Company's portfolio of loans for purchasing or carrying securities is comprised largely of overnight loans which are fully collateralized, with appropriate margins, by marketable securities. Throughout its many years of experience in this area, the Company has rarely experienced a loss.
The Company makes short-term, collateralized loans to mortgage bankers to fund mortgages sold to investors. Nonperforming loans and charge-offs have not been significant.
Based on an evaluation of individual credits, historical loan losses, and global economic factors, the Company has allocated its allowance for loan losses as follows:
1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Real Estate Loans 9% 8% 9% 10% 11% HLT Loans 5 6 7 11 17 Other Domestic Commercial and Industrial Loans 51 58 57 51 38 Consumer Loans 16 10 9 10 8 Foreign Loans (excluding medium-term LDC loans) 7 6 6 6 6 LDC Loans 12 12 12 12 20 ---- ---- ---- ---- ---- 100% 100% 100% 100% 100% ==== ==== ==== ==== ====
Such an allocation is inherently judgmental, and the entire allowance for loan losses is available to absorb loan losses regardless of the nature of the loan.
The following table details changes in the Company's allowance for loan losses for the last five years.
(dollars in millions) 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Loans Outstanding, December 31, $33,083 $30,570 $29,497 $30,335 $35,776 Average Loans Outstanding 32,029 30,427 30,345 32,719 38,139
Allowance for Loan Losses ------------------------- Balance, January 1 Regular Domestic $ 794 $ 878 $ 889 $ 831 $ 593 Foreign 60 70 60 62 24 Less Developed Countries 116 124 135 218 537* ------- ------- ------- ------- ------- Total, January 1 970 1,072 1,084 1,111 1,154 ------- ------- ------- ------- ------- Allowance of Acquired Companies and Other Changes - - 56 (10) 1 Credit Card Securitizations 14 1 - (18) - Charge-Offs Domestic Commercial and Industrial (158) (142) (311) (358) (111) Real Estate & Construction (6) (71) (103) (165) (45) Consumer Loans (191) (173) (181) (226) (157) Foreign (38) (54) (20) (32) (9) Less Developed Countries (18) (9) (13) (39) (270) ------- ------- ------- ------- ------- Total (411) (449) (628) (820) (592) ------- ------- ------- ------- ------- Recoveries Domestic Commercial and Industrial 14 28 66 11 35 Real Estate & Construction - 2 13 1 - Consumer Loans 35 29 26 21 16 Foreign 8 2 10 4 1 Less Developed Countries - 1 2 6 1 ------- ------- ------- ------- ------- Total 57 62 117 43 53 Net Charge-Offs (354) (387) (511) (777) (539) ------- ------- ------- ------- ------- Provision Domestic 135 242 423 742 449 Foreign 27 42 20 36 46 ------- ------- ------- ------- ------- Total 162 284 443 778 495 ------- ------- ------- ------- ------- Balance, December 31, Regular Domestic 637 794 878 889* 831* Foreign 57 60 70 60 62 Less Developed Countries 98 116 124 135* 218* ------- ------- ------- ------- ------- Total, December 31, $ 792 $ 970 $ 1,072 $ 1,084 $ 1,111 ======= ======= ======= ======= ======= Ratios ------ Net Charge-Offs to Average Loans Outstandings 1.11% 1.27% 1.68% 2.37% 1.41% ======= ======= ======= ======= ======= Net Charge-Offs to Total Allowance 44.70% 39.90% 47.67% 71.68% 48.51% ======= ======= ======= ======= ======= Total Allowance to Year-End Loans Outstanding 2.40% 3.17% 3.63% 3.57% 3.11% ====== ====== ===== ====== ======
*Each year includes a $50 million transfer from the LDC Allowance for Loan Losses to the Regular Allowance.
Nonperforming Assets -------------------- A summary of nonperforming assets is presented in the following table.
(in millions) December 31,
1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- Nonaccrual ---------- Domestic $ 220 $ 408 $ 581 $1,014 $1,294 Foreign (including Medium-term LDC) 77 130 198 146 86 ----- ------ ------ ------ ------ 297 538 779 1,160 1,380
Reduced Rate (Domestic) - 2 9 13 15 ------------ ----- ------ ------ ------ ------ 297 540 788 1,173 1,395
Real Estate Acquired in ----------------------- Satisfaction of Loans 56 99 268 369 355 --------------------- ----- ------ ------ ------ ------
$ 353 $ 639 $1,056 $1,542 $1,750 ===== ====== ====== ====== ====== Past Due 90 Days or More ------------------------ and Still Accruing Interest --------------------------- Domestic $ 163 $ 156 $ 218 $ 178 $ 215 Foreign - - - 66 11 ----- ------ ------ ------ ------ $ 163 $ 156 $ 218 $ 244 $ 226 ===== ====== ====== ====== ======
Securities ---------- The following table shows the maturity distribution by carrying amount and yield (not on a taxable equivalent basis) of the Company's securities portfolio at December 31, 1994.
States and U.S. Government Political U.S. Government Agency Subdivisions --------------- ---------------- ------------- Amount Yield Amount Yield Amount Yield ------ ----- ------ ----- ------ ----- (dollars in millions)
Securities Held- ---------------- to-Maturity ----------- One Year or Less $ 256 5.47% $ 1 6.04% $ 264 5.44% Over 1 through 5 Years 736 4.99 153 5.08 119 6.94 Over 5 through 10 Years 436 5.63 - - 111 7.78 Over 10 years - - - - 275 7.53 Mortgage-Backed Securities - - - - - - ------ ----- ------ $1,428 5.27 $ 154 5.08 $ 769 6.76 ====== ===== ====== Securities Available- -------------------- for-Sale ---------- One Year or Less $ 25 5.50% $ - -% $ - -% Over 1 through 5 Years 958 5.87 - - 2 5.23 Over 5 through 10 Years 436 6.10 - - 2 5.34 Over 10 years 7 11.19 - - 3 5.74 Equity Securities - - - - - - ------ ----- ----- $1,426 5.96 $ - - $ 7 5.45 ====== ===== =====
Other Bonds, Mortgage-Backed Notes and and Equity Debentures Securities ------------- ------------ Amount Yield Amount Yield Total ------ ----- ------ ----- ----- (dollars in millions)
Securities Held- ---------------- to-Maturity ----------- One Year or Less $ 28 5.13% $ - - % $ 549 Over 1 through 5 Years 39 6.19 - - 1,047 Over 5 through 10 Years 53 5.90 - - 600 Over 10 years 294 7.07 - - 569 Mortgage-Backed Securities - - 165 7.49 165 ---- ---- ------ $414 6.70 $165 7.49 $2,930 ==== ==== ====== Securities Available- -------------------- for-Sale ---------- One Year or Less $ 2 -% $ - -% $ 27 Over 1 through 5 Years 7 - - - 967 Over 5 through 10 Years 3 - - - 441 Over 10 years 10 5.22 - - 20 Equity Securities - - 266 4.77 266 ----- ---- ------ $ 22 2.48 $266 4.77 $1,721 ===== ==== ======
Loans -----
The following table shows the maturity structure of the Company's commercial loan portfolio at December 31, 1994. Over 1 Year 1 Year Through Over or Less 5 Years 5 Years Total ------ ----------- ------- ----- (in millions) Domestic -------- Real Estate, Excluding Loans Collateralized by 1-4 Family Residential Properties $ 599 $1,392 $ 876 $ 2,867 Commercial and Industrial Loans 3,755 4,131 3,263 11,149 Other, Excluding Loans to Individuals and those Collateralized by 1-4 Family Residential Properties 3,154 340 184 3,678 ------ ------ ------ ------- 7,508 5,863 4,323 17,694 Foreign 1,425 695 1,531 3,651 ------- ------ ------ ------ ------- Total $8,933 $6,558 $5,854 $21,345 ====== ====== ====== =======
Loans with: Predetermined Interest Rates $ 437 $ 193 $1,109 $ 1,739 Floating Interest Rates 8,496 6,365 4,745 19,606 ------ ------ ------ ------- Total $8,933 $6,558 $5,854 $21,345 ====== ====== ====== =======
Deposits --------
The aggregate amount of deposits by foreign customers in domestic offices was $875 million, $739 million, and $789 million at December 31, 1994, 1993, and 1992.
The following table shows the maturity breakdown of domestic time deposits of $100,000 or more at December 31, 1994.
Time (in millions) Certificates Deposits- of Deposits Other Total ------------------------------------------------
3 Months or Less $ 842 $654 $1,496 Over 3 Through 6 Months 224 5 229 Over 6 Through 12 Months 374 5 379 Over 12 Months 881 19 900 ------ ---- ------ Total $2,321 $683 $3,004 ====== ==== ======
The majority of deposits in foreign offices are time deposits in denominations of $100,000 or more.
Other Borrowed Funds --------------------- Information related to other borrowed funds in 1994, 1993, and 1992 is presented in the table below. 1994 1993 1992 --------------- --------------- -------------- (dollars in millions) Average Average Average Amount Rate Amount Rate Amount Rate ------ ------- ------ ------- ------ -------
Federal Funds Purchased and --------------------------- Securities Sold Under --------------------- Repurchase Agreements --------------------- At December 31 $1,502 4.91% $2,711 2.85% $1,773 2.81% Average During Year 2,843 3.73 3,467 2.94 4,001 3.40 Maximum Month-End Balance During Year 6,415 3.36 4,894 2.80 5,467 3.88
Other* ----- At December 31 4,176 5.79% 2,781 3.61 3,029 3.82 Average During Year 4,135 4.63 2,348 3.66 2,045 4.13 Maximum Month-End Balance During Year 5,639 4.57 3,161 3.60 3,029 3.82
*Other borrowings consist primarily of commercial paper, bank notes, extended federal funds purchased, and amounts owed to the U.S. Treasury.
Foreign Assets -------------- The only foreign country in which the Company's assets exceed .75% of year end total assets was the United Kingdom in 1993 ($351 million). There were no foreign countries in which the Company's assets exceeded .75% of year end total assets in 1994. However, at December 31, 1994 the Company had outstanding commitments to extend credit to customers in the United Kingdom amounting to $651 million.
ITEM 2.



ITEM 2. PROPERTIES ------------------- In New York City, the Company owns the thirty story building housing its executive headquarters at 48 Wall Street, a forty-nine story office building at One Wall Street, and an operations center at 101 Barclay Street. In addition, the Company owns and/or leases administrative and operations facilities in New York City; various locations in New Jersey; Harrison, New York; Newark, Delaware; London, England; and Utica, New York. Other real properties owned or leased by the Company, when considered in the aggregate, are not material to its operations.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS -------------------------- Litigation regarding Northeast Bancorp., Inc. is described in Note 12 to the Consolidated Financial Statements included in Exhibit 13, and such description is incorporated herein by reference.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ------------------------------------------------------------ There were no matters submitted to a vote of security holders of the registrant during the fourth quarter of 1994.
PART II ------- ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND -------------------------------------------------- RELATED STOCKHOLDER MATTERS --------------------------- Information with respect to the market for the Company's common equity and related stockholder matters is incorporated herein by reference from the "Quarterly Data" section included in Exhibit 13. The Company's securities that are listed on the New York Stock Exchange (NYSE), are indicated as such on the front cover of this report. The NYSE symbol for the Company's Common Stock is BK. The Warrants (to purchase the Company's Common Stock) are traded over the counter. All of the Company's other securities are not currently listed. The Company had 26,473 common shareholders of record at February 28, 1995.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA -------------------------------- Selected financial data are incorporated herein by reference from the "Financial Highlights" section included in Exhibit 13.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ---------------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- Management's discussion and analysis of financial condition and results of operations is incorporated herein by reference from the corresponding section of Exhibit 13.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ---------------------------------------------------- Consolidated financial statements and notes and the independent auditors' report are incorporated herein by reference from Exhibit 13 to this report.
The report of Independent Public Accountants for National Community Banks, Inc. is incorporated herein by reference from Exhibit 99 to this report.
Supplementary financial information is incorporated herein by reference from the "Quarterly Data" section included in Exhibit 13.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND ------------------------------------------------------------------------ FINANCIAL DISCLOSURE -------------------- There have been no events which require disclosure under Item 304 of Regulation S-K.
PART III --------
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ------------------------------------------------------------
The directors of the registrant are identified on pages 27 and 28 of this report. Additional material responsive to this item is contained in the Company's definitive Proxy Statement for its 1995 Annual Meeting of Shareholders, which information is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT AND BUSINESS EXPERIENCE DURING THE PAST ---------------------------------------------------------------------------- FIVE YEARS ----------
Company Officer Name Office and Experience Age Since ---- --------------------- --- -----
J. Carter Bacot 1990-1995 Chairman and Chief Executive 62 1975 Officer of the Company and the Bank
Thomas A. Renyi 1994-1995 President of the Company and 49 1992 President and Chief Operating Officer of the Bank 1992-1994 President of the Company and Vice Chairman of the Bank 1990-1992 Senior Executive Vice President and Chief Credit Officer of the Bank
Alan R. Griffith 1994-1995 Vice Chairman of the Company and 53 1990 the Bank 1990-1994 Senior Executive Vice President of the Company, and President and Chief Operating Officer of the Bank
Samuel F. Chevalier 1990-1995 Vice Chairman of the Company and 61 1989 the Bank 1990 Chief Operating Officer and President of Irving Bank Corporation
Deno D. Papageorge 1990-1995 Senior Executive Vice President of 56 1980 the Company, Senior Executive Vice President and Chief Financial Officer of the Bank
Richard D. Field 1990-1995 Executive Vice President of the 54 1987 Company, Senior Executive Vice President of the Bank
Robert E. Keilman 1990-1995 Comptroller of the Company and the 49 1984 Bank, Senior Vice President of the Bank
Phebe C. Miller 1995 Secretary and Chief Legal Officer 45 1995 of the Company, Senior Vice President and Chief Legal Officer of the Bank 1994-1995 Senior Vice President of the Bank 1991-1994 Managing Director, General Counsel and Secretary, Discount Corporation of New York 1990-1991 Vice President and Counsel, Discount Corporation of New York
Robert J. Goebert 1990-1995 Auditor of the Company, Senior Vice 53 1982 President of the Bank
Officers of BNY who perform major policy making functions: Bank Executive Officer Name Office and Experience Age Since ---- --------------------- --- ------
Gerald L. Hassell 1994-1995 Senior Executive Vice President 43 1990 and Chief Commercial Banking Officer 1992-1994 Executive Vice President - Special Industries Banking 1990-1991 Executive Vice President - Communications, Entertainment, and Publishing Division
Robert J. Mueller 1992-1995 Senior Executive Vice President - 53 1989 Chief Credit Policy Officer 1990-1992 Executive Vice President - Mortgage & Construction Lending
Richard A. Pace 1990-1995 Executive Vice President and Chief 49 1989 Technologist
There are no family relationships between the executive officers of the Company. The terms of office of the executive officers of the Company extend until the annual organizational meeting of the Board of Directors.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION --------------------------------
The material responsive to such item in the Company's definitive Proxy Statement for its 1995 Annual Meeting of Shareholders is incorporated by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ------------------------------------------------------------------------
The material responsive to such item in the Company's definitive Proxy Statement for its 1995 Annual Meeting of Shareholders is incorporated by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS --------------------------------------------------------
The material responsive to such item in the Company's definitive Proxy Statement for its 1995 Annual Meeting of Shareholders is incorporated by reference.
PART IV -------
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K -------------------------------------------------------------------------- (a) 1 Financial Statements:
See Item 8.
(a) 2 Financial Statement Schedules:
Financial statement schedules are omitted since the required information is either not applicable, not deemed material, or is shown in the respective financial statements or in the notes thereto.
(a) 3 Listing of Exhibits:
Exhibit No. Per Regulation S-K Description -------------- -----------
3 (a) The By-Laws of The Bank of New York Company, Inc. as amended through October 13, 1987. (Filed as Exhibit 3(a) to the Company's 1987 Annual Report on Form 10-K Form 10-K and incorporated herein by reference.)
(b) Restated Certificate of Incorporation of The Bank of New York Company, Inc. dated July 20, 1994. (Filed as Exhibit 4 to Form 10-Q filed by the Company on November 10, 1994 and incorporated herein by reference.)
4 (a) None of the outstanding instruments defining the rights of holders of long-term debt of the Company represent long-term debt in excess of 10% of the total assets of the Company. The Company hereby agrees to furnish to the Commission, upon request, a copy of any of such instruments.
(b) Rights Agreement, including form of Preferred Stock Purchase Rights, incorporated herein by reference to the Company's Registration Statement on Form 8-A dated December 18, 1985.
(c) First Amendment, dated as of June 13, 1989, to the Rights Agreement, including form of Preferred Stock Purchase Right, dated as of December 10, 1985, between The Bank of New York Company, Inc. and The Bank of New York, as Rights Agent, incorporated by reference to the amendment on Form 8, dated June 14, 1989, to the registrant's Registration Statement on Form 8-A, dated December 18, 1985.
(d) Second Amendment, dated as of April 30, 1993, to the Rights Agreement, including form of Preferred Stock Purchase Right, dated as of December 10, 1985, between The Bank of New York Company, Inc. and The Bank of New York, as Rights Agent, incorporated by reference to the amendment on Form 8-A/A, dated April 30, 1993, to the registrant's Registration Statement on Form 8-A dated December 18, 1985.
(e) Third Amendment, dated as of March 8, 1994, to the Rights Agreement, dated as of December 10, 1985, between The Bank of New York Company, Inc. and The Bank of New York, as Rights Agent, Incorporated by reference to Exhibit 4(a) to the Company's Current Report on Form 8-K for the Report Date March 8, 1994.
10 (a) 1984 Stock Option Plan of The Bank of New York Company, Inc. as amended through February 23, 1988. (Filed as Exhibit 10(a) to the Company's 1988 Annual Report on Form 10-K and incorporated herein by reference.)*
(b) Amendment dated October 11, 1994 to 1984 Stock Option Plan of The Bank of New York Company, Inc.*
(c) The Bank of New York Company, Inc. Excess Contribution Plan as amended through July 10, 1990. (Filed as Exhibit 10(b) to the Company's 1990 Annual Report on Form 10-K and incorporated herein by reference.)*
(d) Amendments to The Bank of New York Company, Inc. Excess Contribution Plan dated February 23, 1994 and November 9, 1993. (Filed as Exhibit 10(c) to the Company's 1993 Annual Report on Form 10-K and incorporated herein by reference.)*
Exhibit No. Per Regulation S-K Description -------------- -----------
10 (e) The Bank of New York Company, Inc. Excess Benefit Plan as amended through December 8, 1992. (Filed as Exhibit 10(d) to the Company's 1992 Annual Report on Form 10-K and incorporated herein by reference.)*
(f) Amendments to The Bank of New York Company, Inc. Excess Benefit Plan dated February 23, 1994 and November 9, 1993. (Filed as Exhibit 10(e) to the Company's 1993 Annual Report on Form 10-K and incorporated herein by reference.)*
(g) Amendment dated May 10, 1994 to The Bank of New York Company, Inc. Excess Benefit Plan.*
(h) 1994 Management Incentive Compensation Plan of The Bank of New York Company, Inc. (Filed as Exhibit 10(g) to the Company's 1993 Annual Report on Form 10-K and incorporated herein by reference.)*
(i) 1988 Long-Term Incentive Plan as amended through December 8, 1992. (Filed as Exhibit 10(f) to the Company's 1992 Annual Report on Form 10-K and incorporated herein by reference.)*
(j) Amendment dated October 11, 1994 to the 1988 Long-Term Incentive Plan of The Bank of New York Company, Inc.*
(k) The Bank of New York Company, Inc. 1993 Long-Term Incentive Plan. (Filed as Exhibit 10(m) to the Company's 1992 Annual Report on Form 10-K and incorporated herein by reference.)*
(l) Amendment dated October 11, 1994 to the 1993 Long-Term Incentive Plan of The Bank of New York Company, Inc.*
(m) The Bank of New York Company, Inc. Supplemental Executive Retirement Plan. (Filed as Exhibit 10(n) to the Company's 1992 Annual Report on Form 10-K and incorporated herein by reference.)*
(n) Amendment to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan dated March 9, 1993. (Filed as Exhibit 10(k) to the Company's 1993 Annual Report on Form 10-K and incorporated herein by reference.)*
(o) Amendment dated October 11, 1994 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.*
(p) Trust Agreement dated April 19, 1988 related to certain executive compensation plans and agreements. (Filed as Exhibit 10(h) to the Company's 1988 Annual Report on Form 10-K and incorporated herein by reference.)*
(q) Trust Agreement dated November 16, 1993 related to certain executive compensation plans and agreements. (Filed as Exhibit 10(m) to the Company's 1993 Annual Report on Form 10-K and incorporated herein by reference.)*
(r) Amendment dated October 11, 1994 to Trust Agreement dated November 16, 1993, related to certain executive compensation plans and agreements.*
Exhibit No. Per Regulation S-K Description -------------- -----------
10 (s) Trust Agreement dated December 15, 1994 related to certain executive compensation plans and agreements.*
(t) Form of Remuneration Agreement between the Company and two of the five most highly compensated executive officers of the Company. (Filed as Exhibit 10 to the Company's 1982 Annual Report on Form 10-K and incorporated herein by reference.)*
(u) Form of Tax Reimbursement Agreement dated as of July 13, 1994 between the Company and two of the five most highly compensated executive officers of the Company.*
(v) Form of Remuneration Agreement dated October 11, 1994 between the Company and three of the five most highly compensated officers of the Company.*
(w) The Bank of New York Company, Inc. Retirement Plan for Non- Employee Directors. (Filed as Exhibit 10(r) to the Company's 1993 Annual Report on Form 10-K and incorporated herein by reference.)*
(x) Amendment dated November 8, 1994 to The Bank of New York Company, Inc. Retirement Plan for Non-Employee Directors.*
(y) Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc. (Filed as Exhibit 10(s) to the Company's 1993 Annual Report on Form 10-K and incorporated herein by reference.)*
(z) Amendment dated November 8, 1994 to the Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc.*
11 Statement - Re: Computation of Per Common Share Earnings
12 Statement - Re: Computation of Earnings to Fixed Charges Ratios
13 Portions of the 1994 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
27 Financial Data Schedule
99 Report of Independent Public Accountants for National Community Banks, Inc. -------------------- * Indicates a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K:
October 13, 1994: Unaudited interim financial information and accompanying discussion for the third quarter of 1994.
December 6, 1994: An Underwriting Agreement dated December 6, 1994, a Form of Note, an Officers' Certificate, an Opinion of Counsel, and a Consent of Counsel in connection with a Registration Statement on Form S-3 (File Nos. 33-51984 and 33-50333) covering the Company's 8.50% Subordinated Notes Due 2004 issuable under an Indenture dated October 1, 1993.
January 17, 1995: Unaudited interim financial information and accompanying discussion for the fourth quarter of 1994.
(c) Exhibits:
Submitted as a separate section of this report.
(d) Financial Statements Schedules:
None
SIGNATURES ----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in New York, New York, on the 27th day of March, 1995.
THE BANK OF NEW YORK COMPANY, INC.
By: \s\ Deno D. Papageorge ------------------------------------- (Deno D. Papageorge Senior Executive Vice President)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been duly signed below by the following persons on behalf of the registrant and in the capacities indicated on the 27th day of March, 1995.
Signature Title --------- -----
\s\J. Carter Bacot Chairman and ----------------------------------- Chief Executive Officer (J. Carter Bacot) (principal executive officer)
\s\ Deno D. Papageorge Senior Executive Vice President ----------------------------------- (principal financial officer) (Deno D. Papageorge)
\s\ Robert E. Keilman Comptroller ------------------------------------ (principal accounting officer) (Robert E. Keilman)
Director ------------------------------------ (Richard Barth)
\s\ William R. Chaney Director ------------------------------------ (William R. Chaney)
\s\ Samuel F. Chevalier Vice Chairman and Director ------------------------------------ (Samuel F. Chevalier)
Director ------------------------------------ (Anthony P. Gammie)
\s\ Ralph E. Gomory Director ------------------------------------ (Ralph E. Gomory)
\s\ Alan R. Griffith Vice Chairman ------------------------------------ and Director (Alan R. Griffith)
\s\ Edward L. Hennessy, Jr. Director
------------------------------------ (Edward L. Hennessy, Jr.)
\s\ John C. Malone Director ------------------------------------ (John C. Malone)
\s\ Donald L. Miller Director ------------------------------------ (Donald L. Miller)
\s\ H. Barclay Morley Director ------------------------------------ (H. Barclay Morley)
\s\ Martha T. Muse Director ------------------------------------ (Martha T. Muse)
\s\ Catherine A. Rein Director ------------------------------------ (Catherine A. Rein)
\s\ Thomas A. Renyi President and ------------------------------------ Director (Thomas A. Renyi)
\s\ Harold E. Sells Director ------------------------------------ (Harold E. Sells)
\s\ Delbert C. Staley Director ------------------------------------ (Delbert C. Staley)
\s\ W. S. White, Jr. Director ------------------------------------ (W. S. White, Jr.)
\s\ Samuel H. Woolley Director ------------------------------------ (Samuel H. Woolley)
INDEX TO EXHIBITS Exhibit No. ------------ 3 (a) The By-Laws of The Bank of New York Company, Inc. as amended through October 13, 1987.*
(b) Restated Certificate of Incorporation of The Bank of New York Company, Inc. dated July 20, 1994.*
4 (a) None of the outstanding instruments defining the rights of holders of long-term debt of the Company represent long-term debt in excess of 10% of the total assets of the Company. The Company hereby agrees to furnish to the Commission, upon request, a copy of any of such instruments.
(b) Rights Agreement, including form of Preferred Stock Purchase Rights.*
(c) First Amendment, dated as of June 13, 1989, to the Rights Agreement, including form of Preferred Stock Purchase Right, dated as of December 10, 1985, between The Bank of New York Company, Inc. and The Bank of New York, as Rights Agent.*
(d) Second Amendment, dated as of April 30, 1993, to the Rights Agreement, including form of Preferred Stock Purchase Right, dated as of December 10, 1985, between The Bank of New York Company, Inc. and The Bank of New York, as Rights Agent.*
(e) Third Amendment, dated as of March 8, 1994, to the Rights Agreement, dated as of December 10, 1985, between The Bank of New York Company, Inc. and The Bank of New York, as Rights Agent.*
10 (a) 1984 Stock Option Plan of The Bank of New York Company, Inc. as amended through February 23, 1988.*
(b) Amendment dated October 11, 1994 to 1984 Stock Option Plan of The Bank of New York Company, Inc.
(c) The Bank of New York Company, Inc. Excess Contribution Plan as amended through July 10, 1990.*
(d) Amendments to The Bank of New York Company, Inc. Excess Contribution Plan dated February 23, 1994 and November 9, 1993.*
(e) The Bank of New York Company, Inc. Excess Benefit Plan as amended through December 8, 1992.*
(f) Amendments to The Bank of New York Company, Inc. Excess Benefit Plan dated February 23, 1994 and November 9, 1993.*
(g) Amendment dated May 10, 1994 to The Bank of New York Co., Inc. Excess Benefit Plan.
(h) 1994 Management Incentive Compensation Plan of The Bank of New York Company, Inc.*
(i) 1988 Long-Term Incentive Plan as amended through December 8, 1992.*
(j) Amendment dated October 11, 1994 to the 1988 Long-Term Incentive Plan of The Bank of New York Company, Inc.
(k) The Bank of New York Company, Inc. 1993 Long-Term Incentive Plan.*
(l) Amendment dated October 11, 1994 to the 1993 Long-Term Incentive Plan of The Bank of New York Company, Inc.
(m) The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.*
INDEX TO EXHIBITS Exhibit No. ------------ 10 (n) Amendment to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan dated March 9, 1993.*
(o) Amendment dated October 11, 1994 to The Bank of New York Company, Inc. Supplemental Executive Retirement Plan.
(p) Trust Agreement dated April 19, 1988 related to deferred compensation plans.*
(q) Trust Agreement dated November 16, 1993 related to deferred compensation plans.*
(r) Amendment dated October 11, 1994 to Trust Agreement dated Novemeber 16, 1993, related to deferred compensation plans.
(s) Trust Agreement dated December 15, 1994 related to certain executive compensation plans and agreements.
(t) Form of Remuneration Agreement between the Company and two of the five most highly compensated executive officers of the Company.*
(u) Form of Tax Reimbursement Agreement dated as of July 13, 1994 between the Company and two of the five most highly compensated executive officers of the Company.
(v) Form of Remuneration Agreement dated October 11, 1994 between the Company and three of the five most highly compensated officers of the Company.
(w) The Bank of New York Company, Inc. Retirement Plan for Non- Employee Directors.*
(x) Amendment dated November 8, 1994 to The Bank of New York Company, Inc. Retirement Plan for Non-Employee Directors.
(y) Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc.*
(z) Amendment dated November 8, 1994 to the Deferred Compensation Plan for Non-Employee Directors of The Bank of New York Company, Inc.
11 Statement - Re: Computation of Per Common Share Earnings
12 Statement - Re: Computation of Earnings to Fixed Charges Ratios
13 Portions of the 1994 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
27 Financial Data Schedule
99 Report of Independent Public Accountants for National Community Banks, Inc. ------------------- * Incorporated by reference