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8-K - FORM 8-K - GOLDMAN SACHS GROUP INC | y90862e8vk.htm |
Exhibit 99.1
The
Goldman Sachs Group, Inc. | 200 West Street |
New York, New York 10282
GOLDMAN SACHS REPORTS FIRST
QUARTER EARNINGS PER COMMON SHARE OF $1.56 |
||||
EXCLUDING A PREFERRED DIVIDEND OF $1.64 BILLION RELATED TO THE REDEMPTION OF THE FIRMS SERIES G PREFERRED STOCK, EARNINGS PER COMMON SHARE WERE $4.38 (1) |
NEW YORK, April 19, 2011 The Goldman Sachs Group, Inc. (NYSE: GS) today reported net
revenues of $11.89 billion and net earnings of $2.74 billion for the first quarter ended March 31,
2011. Diluted earnings per common share were $1.56 compared with $5.59 for the first quarter of
2010 and $3.79 for the fourth quarter of 2010. Annualized return on average common shareholders
equity (ROE) (2) was 12.2% for the first quarter of 2011.
Excluding the preferred dividend of $1.64 billion related to the redemption of the firms
Series G Preferred Stock, diluted earnings per common share were $4.38 (1) and
annualized ROE was 14.5% (1) for the first quarter of 2011.
Highlights
| The firm ranked first in worldwide equity and equity-related offerings, common stock
offerings and initial public offerings for the
year-to-date.
(3) |
|
| Institutional Client Services generated net revenues of $6.65 billion, including Fixed
Income, Currency and Commodities Client Execution net revenues of $4.33 billion, which
reflected improved client activity levels. |
|
| During the quarter, the firm gave notice of redemption for the firms Series G Preferred
Stock held by Berkshire Hathaway. Despite the impact of the preferred dividend of
$1.64 billion related to the redemption, both book value per common share and tangible book
value per common share (4) increased slightly during the quarter. Excluding the
impact of this preferred dividend, both book value per common share and tangible
book value per common share (4) increased approximately 3% (4) during
the quarter. |
We are pleased with our first quarter results, said Lloyd C. Blankfein, Chairman and Chief
Executive Officer. Generally improving market and economic conditions, coupled with our strong
client franchise, produced solid results. Looking ahead, we continue
to see encouraging indications for economic activity globally.
Media Relations: Lucas van Praag 212-902-5400 | | | Investor Relations: Dane E. Holmes 212-902-0300 |
Net Revenues
Investment Banking
Net revenues in Investment Banking were $1.27 billion, 5% higher than the first quarter of 2010 and
16% lower than the fourth quarter of 2010. Net revenues in Financial Advisory were $357 million,
23% lower than the first quarter of 2010. Net revenues in the firms Underwriting business were
$912 million, 23% higher than the first quarter of 2010, due to strong net revenues in debt
underwriting, which were significantly higher compared with the first quarter of 2010, as well as
higher net revenues in equity underwriting. The increase in both debt and equity underwriting
primarily reflected an increase in client activity. The firms investment banking transaction
backlog increased compared with the end of 2010. (5)
Institutional Client Services
Net revenues in Institutional Client Services were $6.65 billion, 22% lower than a strong first
quarter of 2010 and 83% higher than the fourth quarter of 2010.
Net revenues in Fixed Income, Currency and Commodities Client Execution were $4.33 billion, 28%
lower than a particularly strong first quarter of 2010. Client activity levels improved during the
first quarter of 2011, resulting in solid performances in credit products, interest rate products,
currencies and mortgages, although net revenues in each were lower compared with the first quarter
of 2010. Net revenues in commodities were also solid and were higher compared with the same prior
year period.
Net revenues in Equities were $2.32 billion, 7% lower than the first quarter of 2010, reflecting
lower net revenues in equities client execution. The decline in equities client execution compared
with the first quarter of 2010 reflected lower net revenues in derivatives and shares. This
decrease was partially offset by higher commissions and fees, reflecting higher transaction
volumes. Securities services net revenues were essentially unchanged compared with the first
quarter of 2010. During the first quarter of 2011, Equities operated in an environment generally
characterized by an increase in global equity prices and slightly lower average volatility levels.
Investing & Lending
Net revenues in Investing & Lending were $2.71 billion for the first quarter of 2011. These
results generally reflected an increase in global equity prices and favorable credit markets during
the quarter. Results for the first quarter of 2011 primarily included a gain of $316 million from
the firms investment in the ordinary shares of Industrial and Commercial Bank of China Limited
(ICBC), net gains of $1.05 billion from equity securities (excluding ICBC), and net gains and net
interest of $1.02 billion from debt securities and loans.
Investment Management
Net revenues in Investment Management were $1.27 billion, 16% higher than the first quarter of 2010
and 16% lower than the fourth quarter of 2010. The increase in net revenues compared with the
first quarter of 2010 was primarily due to an increase in management
and other fees, reflecting favorable changes in the mix of assets under management, as well as higher incentive fees.
Assets under management were $840 billion as of March 31, 2011, unchanged compared with the end of
2010, reflecting net market appreciation of $12 billion, offset by net outflows in money market and
fixed income assets of $12 billion.
- 2 -
Expenses
Operating expenses were $7.85 billion, 3% higher than the first quarter of 2010 and 52% higher than
the fourth quarter of 2010.
Compensation and Benefits
The accrual for compensation and benefits expenses (including salaries, estimated year-end
discretionary compensation, amortization of equity awards and other items such as benefits) was
$5.23 billion for the first quarter of 2011, a 5% decline compared with the first quarter of 2010.
The ratio of compensation and benefits to net revenues for the first quarter of 2011 was 44.0%.
Non-Compensation Expenses
Non-compensation expenses were $2.62 billion, 23% higher than the first quarter of 2010 and 14%
lower than the fourth quarter of 2010. The increase compared with the first quarter of 2010
reflected the impact of impairment charges of approximately $220 million related to assets
classified as held for sale during the first quarter of 2011, primarily related to Litton Loan
Servicing LP, the firms residential mortgage servicing subsidiary. The remainder of the increase
compared with the first quarter of 2010 generally reflected increased levels of business activity,
including higher operating expenses related to the firms consolidated entities held for investment
purposes. The first quarter of 2011 also included net provisions for litigation and regulatory
proceedings of $24 million.
Provision for Taxes
The effective income tax rate for the first quarter of 2011 was 32.3%. (6)
Capital
As of March 31, 2011, total capital was $246.26 billion, consisting of $72.47 billion in total
shareholders equity (common shareholders equity of $69.37 billion and preferred stock of $3.10
billion) and $173.79 billion in unsecured long-term borrowings. Book value per common share was
$129.40 and tangible book value per common share (4) was $119.63, both slightly higher
compared with the end of 2010. Book value and tangible book value per common share are based on
common shares outstanding, including restricted stock units granted to employees with no future
service requirements, of 536.1 million at period end.
During the quarter, the firm gave notice of redemption for the 50,000 shares of the firms 10%
Cumulative Perpetual Series G Preferred Stock. The redemption date was April 18, 2011. The
redemption included a preferred dividend of $1.64 billion, which was included in the
firms results for the first quarter of 2011. The redemption also resulted in the acceleration of
$24 million of preferred dividends related to the period from April 1, 2011 to the redemption
date, which was included in the firms results for the first quarter of 2011. Excluding the
preferred dividend of $1.64 billion, both book value per common share and tangible book
value per common share (4) increased approximately 3% (4) compared with the
end of 2010.
- 3 -
In keeping with the firms long-standing policy of repurchasing shares to offset increases in
share count over time resulting from employee share-based compensation, the firm repurchased 9.0
million shares of its common stock at an average cost per share of $163.22, for a total cost of
$1.47 billion during the quarter.
Under the regulatory capital guidelines currently applicable to bank holding companies (Basel 1),
the firms Tier 1 capital ratio (7) was 14.6% as of March 31, 2011, compared with 16.0%
as of December 31, 2010. Substantially all of the decrease in the firms Tier 1 capital ratio
reflected the impact of the redemption of the firms Series G Preferred Stock. The firms Tier 1
common ratio (8) was 12.8% as of March 31, 2011,
compared with 13.3% as of December
31, 2010.
Other Balance Sheet and Liquidity Metrics
| Total assets (9) were $933 billion as of March 31, 2011, compared with $911 billion as of December 31, 2010. | |
| Level 3 assets (9) were $46 billion as of March 31, 2011 (compared
with $45 billion as of December 31, 2010) and represented
4.9% of total assets. |
|
| The firms global core excess liquidity (10) was $171 billion as of
March 31, 2011 and averaged $168 billion for the first quarter of 2011, compared with an
average of $170 billion for the fourth quarter of 2010. |
Dividends
The Goldman Sachs Group, Inc. declared a dividend of $0.35 per common share to be paid on June 29,
2011 to common shareholders of record on June 1, 2011. The firm also declared dividends of
$231.77, $387.50, $247.22 and $247.22 per share of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, respectively (represented by
depositary shares, each representing a 1/1,000th interest in a share of preferred stock), to be
paid on May 10, 2011 to preferred shareholders of record on April 25, 2011.
- 4 -
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment
management firm that provides a wide range of financial services to a substantial and diversified
client base that includes corporations, financial institutions, governments and high-net-worth
individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all
major financial centers around the world.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements are not historical facts, but instead represent only the firms beliefs regarding future
events, many of which, by their nature, are inherently uncertain and outside of the firms control.
It is possible that the firms actual results and financial condition may differ, possibly
materially, from the anticipated results and financial condition indicated in these forward-looking
statements. For a discussion of some of the risks and important factors that could affect the
firms future results and financial condition, see Risk Factors in Part I, Item 1A of the firms
Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
Certain of the information regarding the firms capital ratios, risk-weighted assets, total assets,
level 3 assets and global core excess liquidity consist of preliminary estimates. These estimates
are forward-looking statements and are subject to change, possibly materially, as the firm
completes its financial statements.
Statements about the firms investment banking transaction backlog also may constitute
forward-looking statements. Such statements are subject to the risk that the terms of these
transactions may be modified or that they may not be completed at all; therefore, the net revenues,
if any, that the firm actually earns from these transactions may differ, possibly materially, from
those currently expected. Important factors that could result in a modification of the terms of a
transaction or a transaction not being completed include, in the case of underwriting transactions,
a decline or continued weakness in general economic conditions, outbreak of hostilities, volatility
in the securities markets generally or an adverse development with respect to the issuer of the
securities and, in the case of financial advisory transactions, a decline in the securities
markets, an inability to obtain adequate financing, an adverse development with respect to a party
to the transaction or a failure to obtain a required regulatory approval. For a discussion of
other important factors that could adversely affect the firms investment banking transactions, see
Risk Factors in Part I, Item 1A of the firms Annual Report on Form 10-K for the fiscal year
ended December 31, 2010.
Conference Call
A conference call to discuss the firms results, outlook and related matters will be held at 9:30
am (ET). The call will be open to the public. Members of the public who would like to listen to
the conference call should dial 1-888-281-7154 (U.S. domestic) or 1-706-679-5627 (international).
The number should be dialed at least 10 minutes prior to the start of the conference call. The
conference call will also be accessible as an audio webcast through the Investor Relations section
of the firms web site, www.gs.com/shareholders. There is no charge to access the call.
For those unable to listen to the live broadcast, a replay will be available on the firms web site
or by dialing 1-800-642-1687 (U.S. domestic) or 1-706-645-9291 (international) passcode number
53633450, beginning approximately two hours after the event. Please direct any questions regarding
obtaining access to the conference call to Goldman Sachs Investor Relations, via e-mail, at
gs-investor-relations@gs.com.
- 5 -
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SEGMENT NET REVENUES
(UNAUDITED)
$ in millions
SEGMENT NET REVENUES
(UNAUDITED)
$ in millions
Three Months Ended | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Investment Banking |
||||||||||||||||||||
Financial Advisory |
$ | 357 | $ | 628 | $ | 464 | (43 | )% | (23 | )% | ||||||||||
Equity underwriting |
426 | 555 | 372 | (23 | ) | 15 | ||||||||||||||
Debt underwriting |
486 | 324 | 367 | 50 | 32 | |||||||||||||||
Total Underwriting |
912 | 879 | 739 | 4 | 23 | |||||||||||||||
Total Investment Banking |
1,269 | 1,507 | 1,203 | (16 | ) | 5 | ||||||||||||||
Institutional Client Services |
||||||||||||||||||||
Fixed Income, Currency and Commodities Client Execution |
4,325 | 1,636 | 6,017 | 164 | (28 | ) | ||||||||||||||
Equities client execution |
979 | 772 | 1,287 | 27 | (24 | ) | ||||||||||||||
Commissions and fees |
971 | 863 | 844 | 13 | 15 | |||||||||||||||
Securities services |
372 | 368 | 359 | 1 | 4 | |||||||||||||||
Total Equities |
2,322 | 2,003 | 2,490 | 16 | (7 | ) | ||||||||||||||
Total Institutional Client Services |
6,647 | 3,639 | 8,507 | 83 | (22 | ) | ||||||||||||||
Investing & Lending |
||||||||||||||||||||
ICBC |
316 | 55 | (222 | ) | N.M. | N.M. | ||||||||||||||
Equity securities (excluding ICBC) |
1,054 | 1,066 | 847 | (1 | ) | 24 | ||||||||||||||
Debt securities and loans |
1,024 | 537 | 1,130 | 91 | (9 | ) | ||||||||||||||
Other (11) |
311 | 330 | 215 | (6 | ) | 45 | ||||||||||||||
Total Investing & Lending |
2,705 | 1,988 | 1,970 | 36 | 37 | |||||||||||||||
Investment Management |
||||||||||||||||||||
Management and other fees |
1,048 | 1,057 | 932 | (1 | ) | 12 | ||||||||||||||
Incentive fees |
74 | 310 | 26 | (76 | ) | 185 | ||||||||||||||
Transaction revenues |
151 | 141 | 137 | 7 | 10 | |||||||||||||||
Total Investment Management |
1,273 | 1,508 | 1,095 | (16 | ) | 16 | ||||||||||||||
Total net revenues |
$ | 11,894 | $ | 8,642 | $ | 12,775 | 38 | (7 | ) | |||||||||||
- 6 -
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
In millions, except per share amounts and total staff
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
In millions, except per share amounts and total staff
Three Months Ended | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Revenues |
||||||||||||||||||||
Investment banking |
$ | 1,269 | $ | 1,507 | $ | 1,203 | (16 | )% | 5 | % | ||||||||||
Investment management |
1,174 | 1,415 | 1,008 | (17 | ) | 16 | ||||||||||||||
Commissions and fees |
1,019 | 904 | 880 | 13 | 16 | |||||||||||||||
Market making |
4,462 | 1,594 | 6,385 | 180 | (30 | ) | ||||||||||||||
Other principal transactions |
2,612 | 1,884 | 1,881 | 39 | 39 | |||||||||||||||
Total non-interest revenues |
10,536 | 7,304 | 11,357 | 44 | (7 | ) | ||||||||||||||
Interest income |
3,107 | 3,069 | 3,001 | 1 | 4 | |||||||||||||||
Interest expense |
1,749 | 1,731 | 1,583 | 1 | 10 | |||||||||||||||
Net interest income |
1,358 | 1,338 | 1,418 | 1 | (4 | ) | ||||||||||||||
Net revenues, including net interest income |
11,894 | 8,642 | 12,775 | 38 | (7 | ) | ||||||||||||||
Operating expenses |
||||||||||||||||||||
Compensation and benefits |
5,233 | 2,253 | 5,493 | 132 | (5 | ) | ||||||||||||||
U.K. bank payroll tax |
| (135 | ) | | N.M. | | ||||||||||||||
Brokerage, clearing, exchange and distribution fees |
620 | 578 | 562 | 7 | 10 | |||||||||||||||
Market development |
179 | 175 | 110 | 2 | 63 | |||||||||||||||
Communications and technology |
198 | 204 | 176 | (3 | ) | 13 | ||||||||||||||
Depreciation and amortization |
590 | 725 | 372 | (19 | ) | 59 | ||||||||||||||
Occupancy |
267 | 259 | 256 | 3 | 4 | |||||||||||||||
Professional fees |
233 | 262 | 182 | (11 | ) | 28 | ||||||||||||||
Other expenses |
534 | 847 | 465 | (37 | ) | 15 | ||||||||||||||
Total non-compensation expenses |
2,621 | 3,050 | 2,123 | (14 | ) | 23 | ||||||||||||||
Total operating expenses |
7,854 | 5,168 | 7,616 | 52 | 3 | |||||||||||||||
Pre-tax earnings |
4,040 | 3,474 | 5,159 | 16 | (22 | ) | ||||||||||||||
Provision for taxes |
1,305 | 1,087 | 1,703 | 20 | (23 | ) | ||||||||||||||
Net earnings |
2,735 | 2,387 | 3,456 | 15 | (21 | ) | ||||||||||||||
Preferred stock dividends |
1,827 | 160 | 160 | N.M. | N.M. | |||||||||||||||
Net earnings applicable to common shareholders |
$ | 908 | $ | 2,227 | $ | 3,296 | (59 | ) | (72 | ) | ||||||||||
Earnings per common share |
||||||||||||||||||||
Basic (12) |
$ | 1.66 | $ | 4.10 | $ | 6.02 | (60 | )% | (72 | )% | ||||||||||
Diluted |
1.56 | 3.79 | 5.59 | (59 | ) | (72 | ) | |||||||||||||
Average common shares outstanding |
||||||||||||||||||||
Basic |
540.6 | 541.0 | 546.0 | | (1 | ) | ||||||||||||||
Diluted |
583.0 | 587.5 | 590.0 | (1 | ) | (1 | ) | |||||||||||||
Selected Data |
||||||||||||||||||||
Total staff at period end (13) |
35,400 | 35,700 | 33,100 | (1 | ) | 7 | ||||||||||||||
Total staff at period end including consolidated entities held for
investment purposes (14) |
38,300 | 38,700 | 38,500 | (1 | ) | (1 | ) |
- 7 -
THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(UNAUDITED)
SELECTED FINANCIAL DATA
(UNAUDITED)
Average Daily VaR (15)
$ in millions
$ in millions
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||
Risk Categories |
||||||||||||||||||||
Interest rates |
$ | 87 | $ | 86 | $ | 109 | ||||||||||||||
Equity prices |
49 | 65 | 88 | |||||||||||||||||
Currency rates |
24 | 32 | 35 | |||||||||||||||||
Commodity prices |
37 | 23 | 49 | |||||||||||||||||
Diversification effect (16) |
(84 | ) | (86 | ) | (120 | ) | ||||||||||||||
Total |
$ | 113 | $ | 120 | $ | 161 | ||||||||||||||
Assets Under Management (17) $ in billions |
||||||||||||||||||||
As of | % Change From | |||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | March 31, | ||||||||||||||||
2011 | 2010 | 2010 | 2010 | 2010 | ||||||||||||||||
Asset Class |
||||||||||||||||||||
Alternative investments |
$ | 151 | $ | 148 | $ | 147 | 2 | % | 3 | % | ||||||||||
Equity |
150 | 144 | 150 | 4 | | |||||||||||||||
Fixed income |
338 | 340 | 324 | (1 | ) | 4 | ||||||||||||||
Total non-money market assets |
639 | 632 | 621 | 1 | 3 | |||||||||||||||
Money markets |
201 | 208 | 219 | (3 | ) | (8 | ) | |||||||||||||
Total assets under management |
$ | 840 | $ | 840 | $ | 840 | | | ||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | December 31, | March 31, | ||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||
Balance, beginning of period |
$ | 840 | $ | 823 | $ | 871 | ||||||||||||||
Net inflows / (outflows) |
||||||||||||||||||||
Alternative investments |
| (2 | ) | 1 | ||||||||||||||||
Equity |
| (2 | ) | (2 | ) | |||||||||||||||
Fixed income |
(5 | ) | | 7 | ||||||||||||||||
Total non-money market net inflows / (outflows) |
(5 | ) | (4 | ) | 6 | |||||||||||||||
Money markets |
(7 | ) | 9 | (45 | ) | |||||||||||||||
Total net inflows / (outflows) |
(12 | ) | 5 | (39 | ) | |||||||||||||||
Net market appreciation / (depreciation) |
12 | 12 | 8 | |||||||||||||||||
Balance, end of period |
$ | 840 | $ | 840 | $ | 840 | ||||||||||||||
- 8 -
Footnotes
(1) | Management believes that presenting the firms results excluding the impact of the $1.64
billion preferred dividend related to the redemption of the firms Series G
Preferred Stock (calculated as the difference between the carrying value and the redemption
value of the preferred stock) is meaningful because it increases the comparability of
period-to-period results. The tables below present the calculation of net earnings applicable
to common shareholders, diluted earnings per common share and average common shareholders
equity excluding the impact of this dividend: |
For the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, in millions, | ||||
except per share | ||||
amounts) | ||||
Net earnings applicable to common shareholders |
$ | 908 | ||
Impact of the Series G Preferred Stock dividend |
1,643 | |||
Net earnings applicable to common shareholders, excluding the impact
of the Series G Preferred Stock dividend |
$ | 2,551 | ||
Divided by: average diluted common shares outstanding |
583.0 | |||
Diluted earnings per common share, excluding the impact of the
Series G Preferred Stock dividend |
$ | 4.38 | ||
Average for the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, | ||||
$ in millions) | ||||
Total shareholders equity |
$ | 76,052 | ||
Preferred stock |
(5,993 | ) | ||
Common shareholders equity |
70,059 | |||
Impact of the Series G Preferred Stock dividend |
411 | |||
Common shareholders equity, excluding the impact of the Series G Preferred Stock dividend |
$ | 70,470 | ||
(2) | Annualized ROE is computed by dividing annualized net earnings applicable to common
shareholders by average monthly common shareholders equity. The impact of the $1.64 billion
Series G Preferred Stock dividend was not annualized in the calculation of
annualized net earnings applicable to common shareholders as this amount has no impact on
other quarters in the year. The table below presents the firms average common shareholders
equity: |
Average for the | ||||
Three Months Ended | ||||
March 31, 2011 | ||||
(unaudited, | ||||
$ in millions) | ||||
Total shareholders equity |
$ | 76,052 | ||
Preferred stock |
(5,993 | ) | ||
Common shareholders equity |
$ | 70,059 | ||
(3) | Thomson Reuters January 1, 2011 through March 31, 2011. | |
(4) | Tangible common shareholders equity equals total shareholders equity less preferred stock,
goodwill and identifiable intangible assets. Tangible book value per common share is computed
by dividing tangible common shareholders equity by the number of common shares outstanding,
including restricted stock units granted to employees with no future service requirements.
Management believes that tangible common shareholders equity and tangible book value per
common share are meaningful because they are measures that the firm and investors use to
assess capital adequacy. In addition, management believes that presenting the change in book
value and tangible book value per common share excluding the impact of the $1.64 billion
Series G Preferred Stock dividend provides a meaningful period-to-period comparison
of these measures. The table below presents the reconciliation of total shareholders equity
to tangible common shareholders equity, as well as the calculation of common shareholders
equity and tangible common shareholders equity excluding the impact of the $1.64 billion
Series G Preferred Stock dividend: |
As of March 31, 2011 | ||||||||||||
Add back: | Excluding the | |||||||||||
impact of the | impact of the | |||||||||||
Series G Preferred Stock | Series G Preferred Stock | |||||||||||
As reported | dividend | dividend | ||||||||||
(unaudited, $ in millions) | ||||||||||||
Total shareholders equity |
$ | 72,469 | $ | 1,643 | $ | 74,112 | ||||||
Preferred stock |
(3,100 | ) | | (3,100 | ) | |||||||
Common shareholders equity |
69,369 | 1,643 | 71,012 | |||||||||
Goodwill and identifiable intangible assets |
(5,238 | ) | | (5,238 | ) | |||||||
Tangible common shareholders equity |
$ | 64,131 | $ | 1,643 | $ | 65,774 | ||||||
- 9 -
Footnotes (continued)
(5) | The firms investment banking transaction backlog represents an estimate of the firms
future net revenues from investment banking transactions where management believes that
future revenue realization is more likely than not. |
|
(6) | The effective income tax rate for the first quarter of 2011 was 32.3%, compared with 32.7%
for 2010, which excluded the impact of the $465 million U.K. bank payroll tax and the $550
million SEC settlement, substantially all of which was non-deductible. Management believes
that presenting the firms effective income tax rate for 2010 excluding the impact of these
items is meaningful as excluding them increases the comparability of period-to-period
results. Including the impact of these items, the effective income tax rate was 35.2% for
2010. The table below presents the calculation of the effective income tax rate excluding the
impact of these amounts: |
For the | ||||||||||||
Year Ended December 31, 2010 | ||||||||||||
Pre-tax | Provision | Effective income | ||||||||||
earnings | for taxes | tax rate | ||||||||||
(unaudited, $ in millions) | ||||||||||||
As reported |
$ | 12,892 | $ | 4,538 | 35.2 | % | ||||||
Add back: |
||||||||||||
Impact of the U.K. bank payroll tax |
465 | | ||||||||||
Impact of the SEC settlement |
550 | 6 | ||||||||||
As adjusted |
$ | 13,907 | $ | 4,544 | 32.7 | % | ||||||
(7) | The Tier 1 capital ratio equals Tier 1 capital divided by risk-weighted assets. The firms
risk-weighted assets under Basel 1 were approximately
$456 billion as of
March 31, 2011. This
ratio represents a preliminary estimate as of the date of this earnings release and may be
revised in the firms Quarterly Report on Form 10-Q for the period ended March 31, 2011. For
a further discussion of the firms capital ratios, see Equity Capital in Part II, Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(8) | The Tier 1 common ratio equals Tier 1 common capital divided by risk-weighted assets. As of
March 31, 2011, Tier 1 common capital was $58.3 billion,
consisting of Tier 1 capital of
$66.4 billion less preferred stock of $3.1 billion and junior subordinated debt issued to
trusts of $5.0 billion. Management believes that the Tier 1 common ratio is meaningful
because it is one of the measures that the firm and investors use to assess capital adequacy.
This ratio represents a preliminary estimate as of the date of this earnings release and may
be revised in the firms Quarterly Report on Form 10-Q for the period ended March 31, 2011.
For a further discussion of the firms capital ratios, see Equity Capital in Part II, Item
7 Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(9) | This amount represents a preliminary estimate as of the date of this earnings release and
may be revised in the firms Quarterly Report on Form 10-Q for the period ended March 31,
2011. |
|
(10) | The firms global core excess represents a pool of excess liquidity consisting of
unencumbered, highly liquid securities and cash. These amounts represent preliminary
estimates as of the date of this earnings release and may be revised in the firms Quarterly
Report on Form 10-Q for the period ended March 31, 2011. For a further discussion of the
firms global core excess liquidity pool, see Liquidity Risk in Part II, Item 7
Managements Discussion and Analysis of Financial Condition and Results of Operations in
the firms Annual Report on Form 10-K for the year ended December 31, 2010. |
|
(11) | Primarily includes net revenues related to the firms consolidated entities held for
investment purposes. |
|
(12) | Unvested share-based payment awards that have non-forfeitable rights to dividends or
dividend equivalents are treated as a separate class of securities in calculating earnings
per common share. The impact of applying this methodology was a reduction to basic earnings
per common share of $0.02 for each of the three months ended March 31, 2011, December 31,
2010 and March 31, 2010. |
|
(13) | Includes employees, consultants and temporary staff. |
|
(14) | Compensation and benefits and non-compensation expenses related to consolidated
entities held for investment purposes are included in their respective line items in the
consolidated statements of earnings. |
|
(15) | VaR is the potential loss in value of the firms inventory positions due to adverse market
movements over a one-day time horizon with a 95% confidence level. For a further discussion
of VaR, see Market Risk Management in Part II, Item 7 Managements Discussion and Analysis
of Financial Condition and Results of Operations in the firms Annual Report on Form 10-K
for the year ended December 31, 2010. |
|
(16) | Equals the difference between total VaR and the sum of the VaRs for the four risk
categories. This effect arises because the four market risk categories are not perfectly
correlated. |
|
(17) | Assets under management include only those client assets where the firm earns a fee for
managing assets on a discretionary basis. |
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