In the midst of a restructuring to get ready for its merger with Deutsche Bank AG, Bankers Trust Corp. said Monday that its first-quarter earnings fell 37%, to $140 million.

The $127 billion-asset bank blamed the hefty decline on lower revenues from its corporate finance unit and a continued retreat from emerging markets.

Earnings per share of $1.30 beat Wall Street's forecast by 22 cents. As with other banks, analysts were caught off guard by the sudden first- quarter surge in trading markets that benefited Bankers Trust.

But the market-related gains were not quite as strong at Bankers Trust, the nation's eighth-largest banking company, as at some other institutions.

The first quarter "was positive in the sense that it was better than Deutsche Bank expected" last fall, when the German bank was negotiating the deal, said Raphael Soifer, an analyst at Brown Brothers Harriman & Co.

Frank N. Newman, Bankers Trust's chairman and chief executive officer said, "We are gratified by the firm's progress as we prepare for our merger."

To get ready for the scheduled closing, Bankers Trust dismantled its private client services group, transferring brokerage and portfolio management for high-net-worth individuals to its investment banking unit. Traditional banking services for private clients were moved to a miscellaneous corporate unit.

In addition, the bank realigned the management of much of its emerging- markets exposure-loans, securities, and derivatives-under a new restructuring portfolio unit.

Bankers Trust has continued to reduce its exposure overseas after suffering severe trading losses in emerging markets last year. Those hits led to a $6 million loss in 1998.

At the end of March, Bankers Trust had slashed its total cross-border exposure to Asia, Latin America, and Russia by 61%, to $4.8 billion. Exposure to Asia was sliced in half, to $2.6 billion. Exposure to Russia was reduced to $200 million from $1.4 billion in the same period last year.

The reorganization and the reduction of risks are "the way Deutsche Bank looks at the world," said Lawrence Cohn, an analyst at Ryan Beck & Co. The moves "reflect the change in ownership," he said.

But the deal, which is expected to be completed by June 30, had some negative effects on earnings as well. Analysts said part of the decline in underwriting could be attributed to the merger. The company has lost some prospective clients, they said, and the deal has become something of a distraction internally.

Overall, Bankers Trust's performance was down significantly from the records set last year.

Fee revenues edged up 1.4%, to $1.25 billion, as gains in trading and fund management were offset by declines in corporate finance activities.

Trading revenues, including interest income, rose 7%, to $417 million. Revenues from fiduciary and funds management activities rose 4%, to $271 million.

But a weaker market for high-yield bond underwriting-one of Bankers Trust's specialties-led to a 40% drop in corporate finance fees, to $197 million. In addition, revenue from equity investments fell 24%, to $99 million.

Bankers Trust said results were similarly mixed in its business units. Investment banking suffered a 19% decline in revenues, to $655 million, and a 60% decline in profits, to $72 million.

Trading and sales profits grew 34%, to $86 million. The bank attributed the gain to its equity investment in Long-Term Capital Management LP, a Greenwich, Conn., hedge fund that needed a $3.5 billion bailout by 14 financial institutions last fall. Bankers Trust chipped in $300 million.

Without the gain from Long-Term Capital, Bankers Trust said, trading profits would have declined because of a reduction in risk positions.

Global institutional services had a 1% gain in revenues, to $258 million, and a 20% gain in profits, to $24 million.

At the close of trading Monday, Bankers Trust shares were unchanged at $90.0625. +++

First Tennessee National Corp.

Memphis

Dollar amounts in millions (except per share)

First Quarter 1Q99 1Q98

Net income $53.2 $46.4

Per share 0.40 0.35

ROA 1.15% 1.26%

ROE 19.10% 19.60%

Net interest margin 3.76% 4.03%

Net interest income 148.9 128.2

Noninterest income 286.6 190.0

Noninterest expense 336.8 230.9

Balance Sheet 3/31/99 3/31/98

Assets $18,325.0 $15,897.6

Deposits 12,197.8 10,814.8

Loans 8,782.8 8,488.4

Bankers Trust Corp.

New York

Dollar amounts in millions (except per share)

First Quarter 1Q99 1Q98

Net income $140.0 $222.0

Per share 1.30 2.01

ROA 0.41% 0.60%

ROE 12.50% 16.70%

Net interest margin 1.09% 1.47%

Net interest income 261.0 402.0

Noninterest income 1,249.0 1,231.0

Noninterest expense 1,301.0 1,325.0

Loss provision 0.0 0.0

Net chargeoffs 49.0 4.0

Balance Sheet 3/31/99 3/31/98

Assets $127,106.0 $157,537.0

Deposits 36,337.0 46,341.0

Loans 19,690.0 21,178.0

Reserve/nonp. loans 184% 281%

Nonperf. loans/loans 1.60% 1.10%

Nonperf. assets/assets 0.40% 0.30%

Nonperf. assets/loans + OREO 2.20% 2.10%

Leverage cap. ratio 3.80%* 4.50%

Tier 1 cap. ratio 8.10%* 8.20%

Tier 1+2 cap. ratio 14.50%* 14.20%

* Estimated

Commerce Bancshares Inc.

Kansas City, Mo.

Dollar amounts in millions (except per share)

First Quarter 1Q99 1Q98

Net income $39.0 $34.0

Per share 0.62 0.56

ROA 1.40% 1.38%

ROE 14.53% 14.01%

Net interest margin 4.49% 4.66%

Net interest income 113.0 105.0

Noninterest income 57.0 50.0

Noninterest expense 103.0 90.0

Balance Sheet 3/31/99 3/31/98

Assets $11,072.0 $10,367.0

Deposits 9,322.0 8,700.0

Loans 6,829.0 6,316.0 ===

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