<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - July 19, 1994
MELLON BANK CORPORATION
(Exact name of registrant as specified in charter)
Pennsylvania 1-7410 25-1233834
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
One Mellon Bank Center
500 Grant Street
Pittsburgh, Pennsylvania 15258
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code - (412) 234-5000
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
<C> <S>
99.1 Mellon Bank Corporation's Press Release, dated
July 19, 1994, regarding second quarter results of
operations.
</TABLE>
Pursuant to the requirements 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.
MELLON BANK CORPORATION
Date: July 19, 1994 By: Steven G. Elliott
---------------------
Steven G. Elliott
Vice Chairman, Chief
Financial Officer and
Treasurer
<PAGE>
<TABLE>
<CAPTION>
Number Description Method of Filing
<C> <S> <C>
99.1 Press Release dated Filed herewith
July 19, 1994
</TABLE>
<PAGE>
[LOGO OF MELLON BANK CORPORATION] EX-99.1
ANALYSTS:
Donald J. MacLeod John W. Calnan
412-234-5601 412-234-4633
MEDIA: Corporate Affairs Group
Contact: Thomas W. Butch One Mellon Bank Center
412-234-6436 Pittsburgh, PA 15258-0001
- - --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
MELLON REPORTS RECORD QUARTERLY NET INCOME IN SECOND QUARTER 1994
o Earnings Per Share Increases 36 Percent and Net Income
Increases 35 Percent
o Return on Equity is 17.04 Percent; Return on Assets Reaches
1.47 Percent for Quarter
o Fee Revenue Increases 20 Percent, Comprises Nearly 50 Percent
of Total Revenue for Quarter
PITTSBURGH, July 19, 1994 -- Mellon Bank Corporation today reported
second quarter 1994 net income of $134 million, or $1.80 per common
share, compared with net income of $99 million, or $1.32 per common
share, in the second quarter of 1993. Net income was at the highest
quarterly level in the Corporation's history, excluding those quarters
affected by certain nonrecurring gains. Annualized return on common
shareholders' equity and return on assets were 17.04 percent and 1.47
percent, respectively, in the second quarter of 1994.
"Mellon continues to generate strong and consistent earnings, and we
look forward to completing our merger with The Dreyfus Corporation in
the third quarter," said Mellon Chairman, President and Chief Executive
Officer Frank V. Cahouet.
-more-
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 2
Net interest revenue for the quarter was $357 million, up 14 percent
from $314 million in the prior-year period. Fee revenue was $336
million, up 20 percent from $281 million in the second quarter of
1993. The increase in net interest revenue was attributable primarily
to the Corporation's 1993 acquisitions of The Boston Company and AFCO
Credit Corporation; the increase in fee revenue was attributable
principally to The Boston Company acquisition.
Operating expense for the second quarter of 1994 was $456 million,
compared with $391 million in the second quarter of 1993. The increase
resulted primarily from the effect of The Boston Company acquisition
and expenses associated with the Corporation's CornerStone(sm) credit
card product.
The provision for credit losses was $20 million in the second quarter
of 1994, compared with $35 million in the prior-year period. Net
credit losses were $14 million, down significantly from $40 million in
the second quarter of 1993.
Nonperforming assets totaled $264 million at June 30, 1994, down
$50 million, or 16 percent, from $314 million at March 31, 1994.
Nonperforming assets decreased by $214 million, or 45 percent, compared
with June 30, 1993.
-more-
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 3
With balance sheet assets of approximately $37 billion and assets under
management and administration of approximately $750 billion, Mellon
Bank Corporation is a major financial services company headquartered in
Pittsburgh, providing commercial banking, retail financial services and
numerous fee-based service products, including trust and investment,
cash management and mortgage banking.
##
NOTE: Detailed supplemental information follows.
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 4
SUPPLEMENTAL INFORMATION
- - ------------------------
Pending Dreyfus Corporation Merger
- - ----------------------------------
In December 1993, the Corporation entered into a definitive agreement to merge
with The Dreyfus Corporation (Dreyfus). Dreyfus is the nation's sixth-largest
mutual fund company, with approximately $71 billion of assets under management
and administration at June 30, 1994. The merger of the Corporation and Dreyfus
is expected to create a diversified financial services organization with annual
revenues of approximately $3.2 billion, including fee revenue of approximately
$1.7 billion. Dreyfus is headquartered in New York City and employs
approximately 2,100.
Dreyfus shareholders will receive .88017 shares of the Corporation's common
stock for each share of Dreyfus common stock outstanding. Dreyfus has
approximately 37 million shares outstanding. The transaction will be accounted
for under the pooling-of-interests method, with prior period financial results
restated to reflect the merger. The Corporation's capital ratios following the
merger are expected to be approximately 200 basis points higher than the June
30, 1994 ratios. However, as a result of the approximately 33 million
additional shares of the Corporation's common stock to be issued to the Dreyfus
shareholders, the Corporation's book value per common share is expected to be
approximately 13% lower than previously reported amounts. Earnings per common
share are also expected to be approximately 19% lower than previously reported
amounts.
In connection with the transaction, the Corporation expects to record one-time
after-tax merger expenses of approximately $85 million at closing, which is
anticipated to occur during the third quarter of 1994.
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 5
The Corporation has received notification that its proposed merger with Dreyfus
has received the approval of all required regulatory agencies. Completion of
the merger is contingent upon the approval of the shareholders of the
Corporation and Dreyfus and certain approvals by the boards of directors and
shareholders of the mutual funds managed, advised or administered by Dreyfus.
<TABLE>
<CAPTION>
Net Interest Revenue
- - ----------------------------------------------------------------------------------------------------------
(taxable equivalent basis) Three months Six months
ended June 30, ended June 30,
(dollar amounts in millions) 1994 1993 Increase 1994 1993 Increase
<S> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------
Net interest revenue $ 359 $ 317 $ 42 $ 724 $ 636 $ 88
- - ----------------------------------------------------------------------------------------------------------
Average interest-earning assets $31,092 $29,548 $1,544 $31,261 $28,701 $2,560
- - ----------------------------------------------------------------------------------------------------------
Net interest margin 4.63% 4.30% 33 bp 4.67% 4.47% 20 bp
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
The 14% improvement in net interest revenue in the second quarter of 1994,
compared with the second quarter of 1993, primarily reflected a $1.5 billion
higher level of average interest-earning assets resulting from the May 1993
acquisition of The Boston Company and the December 1993 acquisition of AFCO
Credit Corporation (AFCO). In addition, these acquisitions enabled the
Corporation to replace lower-margin money market assets with higher-margin loans
and securities. Average loans increased $3.6 billion and average securities
increased $650 million, partially offset by a decrease of $2.8 billion in money
market assets. Average credit card loans increased approximately $200 million,
or 17%, in the second quarter of 1994, compared with the prior-year period,
primarily driven by the CornerStone credit card product introduced during the
first quarter. At June 30, 1994, this product had generated 495,000 new
accounts with total outstandings of approximately $215 million. A further
reduction in nonperforming assets also contributed to the improved net interest
revenue and net interest margin compared with the prior-year period.
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 6
The improvement in net interest revenue in the first six months of 1994
principally resulted from the same factors responsible for the second quarter
increase.
Credit Quality Expense and Net Credit Losses
- - --------------------------------------------
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(dollar amounts in millions) 1994 1993 Inc/(Dec) 1994 1993 Inc/(Dec)
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision for credit losses $20 $35 $(15) $40 $ 70 $(30)
Net expense (revenue) of
acquired property (3) 13 (16) (11) 38 (49)
- - ----------------------------------------------------------------------------------------
Credit quality expense $17 $48 $(31) $29 $108 $(79)
- - ----------------------------------------------------------------------------------------
Net credit losses (recoveries)(a):
Domestic:
Consumer credit $12 $13 $ (1) $26 $ 28 $ (2)
Commercial real estate - 28 (28) (3) 57 (60)
Commercial and financial 2 (1) 3 5 5 -
- - ----------------------------------------------------------------------------------------
Total domestic 14 40 (26) 28 90 (62)
- - ----------------------------------------------------------------------------------------
International - - - 3 (1) 4
- - ----------------------------------------------------------------------------------------
Total net credit losses $14 $40 $(26) $31 $ 89 $(58)
- - ----------------------------------------------------------------------------------------
Annualized net credit losses
to average loans .24% .78% (54)bp .25% .89% (64)bp
- - ----------------------------------------------------------------------------------------
</TABLE>
(a) Excludes net credit losses on segregated assets.
Credit quality expense, defined as the provision for credit losses plus the net
expense of acquired property, was $31 million lower in the second quarter of
1994, compared with the prior-year period, reflecting continuing improvement in
the credit quality of the loan portfolio and the lower level of real estate
acquired (OREO). The $3 million in net revenue from acquired property in the
second quarter of 1994 resulted from $3 million in net gains on the sale of
acquired property. Net expense of acquired property of $13 million in the
second quarter of 1993 included $9 million of provision to the reserve for OREO.
No provision to the reserve for OREO was recorded in the second quarter of 1994.
Net credit losses decreased $26 million compared with the second quarter of 1993
primarily resulting from lower commercial real estate net credit losses.
Credit quality expense was $29 million for the first six months of 1994,
compared with $108 million in the first half of 1993. Improved credit
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 7
quality led to a $30 million decrease in the provision for credit losses in the
first half of 1994, compared with the prior-year period. The net expense of
acquired property decreased $49 million in the first half of 1994, compared with
the prior year period. No provision to the reserve for OREO was recorded in the
first half of 1994, compared to $30 million in the first half of 1993. Net
credit losses in the first six months of 1994 were down by $58 million compared
with the first half of 1993, primarily resulting from lower commercial real
estate net credit losses.
Noninterest Revenue
- - -------------------
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(in millions) 1994 1993 Inc/(Dec) 1994 1993 Inc/(Dec)
- - -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fee revenue:
Trust and investment management $165 $106 $ 59 $340 $179 $161
Cash management and deposit
transaction charges 48 47 1 99 95 4
Information services 19 41 (22) 39 77 (38)
Mortgage servicing 17 15 2 33 32 1
Credit card 18 15 3 32 28 4
Foreign currency and
securities trading 18 9 9 40 13 27
Other 51 48 3 96 89 7
- - -------------------------------------------------------------------------------------
Total fee revenue 336 281 55 679 513 166
Gains on sale of securities - - - - 87 (87)
- - -------------------------------------------------------------------------------------
Total noninterest revenue $336 $281 $ 55 $679 $600 $ 79
- - -------------------------------------------------------------------------------------
</TABLE>
Fee revenue increased by $55 million, or 20%, in the second quarter of 1994,
compared with the second quarter of 1993, primarily reflecting an increase of
$67 million of fee revenue attributable to The Boston Company acquisition
completed in May 1993. Partially offsetting this increase was an approximately
$25 million reduction in fee revenue resulting from the divestiture of three fee
based businesses.
The $59 million improvement in trust and investment management fees in the
second quarter of 1994 resulted principally from $55 million of these fees
earned at The Boston Company. Partially offsetting this increase was the
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 8
May 6, 1994, completion of the sale of part of the Corporation's Boston based
third-party mutual fund administration business. As a result of the sale of
this business, trust and investment management fee revenue was reduced by
approximately $4 million in the second quarter of 1994 and will be reduced by
approximately $7 million per quarter in the future.
Information services fees decreased $22 million compared with the prior-year
period, primarily as a result of the Corporation's December 1993 sale of two
information services businesses. The two businesses sold generated quarterly
revenues of approximately $21 million.
The increase in mortgage servicing fees, compared with the prior-year period,
resulted principally from higher levels of mortgage servicing rights acquired in
the first half of 1994 and the second half of 1993. The increase in credit card
revenue in the second quarter of 1994, compared with the second quarter of 1993,
primarily resulted from revenue generated by the Corporation's CornerStone
credit card product.
The increase in foreign currency and securities trading fee revenue in the
second quarter of 1994 was attributable to foreign exchange fees earned,
primarily from global custody customers at The Boston Company. Other fee
revenue included $20 million from the Corporation's seasonal tax refund
anticipation loan program. Fee revenue generated by this seasonal product
increased $2 million compared with the prior-year period. No significant
revenue is expected in the second half of 1994 from this product.
Fee revenue in the first six months of 1994 was up $166 million, or 32%, from
the first six months of 1993, primarily as a result of the same factors
responsible for the second quarter increase.
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 9
The Corporation recorded $87 million in gains on the sale of securities during
the first six months of 1993, resulting from the sale of securities in the
available for sale portfolio. These sales were undertaken as part of the
financing plan and balance sheet restructuring related to the acquisition of The
Boston Company.
Operating Expense
- - -----------------
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(dollar amounts in millions) 1994 1993 Inc/(Dec) 1994 1993 Inc/(Dec)
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Staff expense $210 $174 $ 36 $425 $329 $ 96
Net occupancy expense 47 39 8 92 76 16
Professional, legal and
other purchased services 47 30 17 90 61 29
Equipment expense 28 26 2 61 52 9
Amortization of goodwill, core deposit
and other identified intangibles 23 17 6 50 33 17
FDIC assessment and regulatory
examination fees 16 15 1 32 29 3
Amortization of purchased mortgage
servicing rights and purchased
credit card relationships 10 13 (3) 21 21 -
Other expense 78 64 14 167 110 57
- - -----------------------------------------------------------------------------------------
Operating expense before the
net expense of acquired property
and merger expenses 459 378 81 938 711 227
- - -----------------------------------------------------------------------------------------
Net expense (revenue) of
acquired property (3) 13 (16) (11) 38 (49)
- - -----------------------------------------------------------------------------------------
Merger expenses - - - - 175 (175)
- - -----------------------------------------------------------------------------------------
Total operating expense $456 $391 $ 65 $927 $924 $ 3
- - -----------------------------------------------------------------------------------------
Average full-time equivalent staff 21,800 19,100 2,700 21,800 18,600 3,200
- - -----------------------------------------------------------------------------------------
Efficiency ratio (1):
Including amortization of
all intangibles 66% 63% 3 67% 62% 5
Excluding amortization of
intangibles (2) 63 60 3 63 60 3
- - -----------------------------------------------------------------------------------------
</TABLE>
(1) Operating expense before the net expense (revenue) of acquired property and
merger expenses as a percentage of revenue, computed on a fully taxable
equivalent basis, excluding securities gains.
(2) Excludes amortization of goodwill, core deposit and other identified
intangibles.
Operating expense before the net expense of acquired property and merger
expenses increased by $81 million, or 21%, in the second quarter of 1994,
compared with the second quarter of 1993. The increase was primarily the result
of an increase of $58 million attributable to The Boston Company, acquired in
May 1993, and an increase in marketing expense of $7 million, primarily related
to the Corporation's CornerStone credit card product. The increase in expenses
attributable to AFCO were approximately offset by the decrease in expenses
related to the information services businesses
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 10
sold in December 1993. Also impacting second quarter 1994 operating expense
were increases in various categories in support of revenue growth.
Operating expense before the net expense of acquired property and merger
expenses totaled $938 million in the first six months of 1994, compared with
$711 million in the first half of 1993. The increase was primarily the result
of the same factors responsible for the second quarter increase, including the
increased marketing expense of $27 million, recorded in the first six months,
primarily related to the introduction of the Corporation's CornerStone credit
card product.
The Corporation has historically accounted for mergers under the purchase method
of accounting, resulting in the recording of goodwill and other identified
intangibles which are subsequently amortized in future years into operating
expense. These intangibles primarily include goodwill from The Boston Company
and Meritor acquisitions as well as core deposit intangibles and covenants not
to compete. Net income, excluding the after tax impact of the amortization
expense of intangibles recorded in purchase acquisitions of $19 million and $40
million for the second quarter and first half of 1994, would have been $153
million and $305 million, respectively.
The increase in average full-time equivalent staff level, compared with the
prior-year period, primarily reflected the addition of the employees of The
Boston Company.
Merger expenses of $175 million pretax, or $112 million after-tax, were recorded
in the first quarter of 1993 to reflect management's estimate of expenses
associated with the merger of The Boston Company.
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 11
Income Taxes
- - ------------
The provision for income taxes totaled $166 million in the first six months of
1994, for an effective tax rate of approximately 38.5%, compared with $104
million in the first six months of 1993. Excluding the impact of the merger
expenses and securities gains, the Corporation's effective tax rate for the
first half of 1993 was 41%. The decrease in the effective rate between periods
is primarily the result of tax legislation, enacted in August 1993, which
permitted the tax deductibility of certain intangible amortization expense.
After completion of the merger with The Dreyfus Corporation, it is currently
anticipated that the effective tax rate will increase to approximately 39%.
CREDIT QUALITY
- - --------------
<TABLE>
<CAPTION>
Nonperforming Assets(a)
- - --------------------
June 30, March 31, Dec. 31, June 30,
(dollar amounts in millions) 1994 1994 1993 1993
- - ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic nonperforming loans:
Consumer mortgage $ 61 $ 67 $ 61 $ 73
Commercial real estate 35 57 89 121
Other domestic 53 56 45 79
International nonperforming loans 6 16 7 8
- - ---------------------------------------------------------------------------------------
Total nonperforming loans 155 196 202 281
- - ---------------------------------------------------------------------------------------
Acquired property:
Real estate acquired
through foreclosures 109 109 100 123
In-substance real estate foreclosures 30 43 75 83
Reserve for real estate acquired (31) (35) (37) (18)
- - ---------------------------------------------------------------------------------------
Real estate acquired, net of reserve 108 117 138 188
Other assets acquired 1 1 1 9
- - ---------------------------------------------------------------------------------------
Total acquired property 109 118 139 197
- - ---------------------------------------------------------------------------------------
Total nonperforming assets $ 264 $ 314 $ 341 $ 478
- - ---------------------------------------------------------------------------------------
Nonperforming loans as a percentage of
total loans .63% .80% .83% 1.18%
Total nonperforming assets as a
percentage of total loans and net
acquired property 1.06% 1.27% 1.39% 1.99%
- - ---------------------------------------------------------------------------------------
</TABLE>
(a) Excludes segregated assets.
Nonperforming assets totaled $264 million at June 30, 1994, a decrease of $50
million, or 16%, compared with March 31, 1994. Domestic nonperforming real
estate assets, which include nonperforming commercial and consumer
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 12
real estate loans and OREO net of the reserve, decreased by $37 million during
the quarter primarily as a result of returns to accrual status, asset sales and
repayments. The decrease in other domestic nonperforming loans primarily
resulted from repayments offset, in part, by additions. The decrease in
international nonperforming loans resulted from the sale of loans made to a real
estate developer.
Nonperforming assets decreased by $214 million, or 45%, compared with June 30,
1993, primarily due to the $178 million reduction in domestic nonperforming real
estate assets. The reduction resulted primarily from asset sales, returns to
accrual status and repayments. Other domestic nonperforming loans decreased by
$26 million primarily due to repayments and credit losses. The $8 million
decrease in other assets acquired resulted from asset sales.
<TABLE>
<CAPTION>
Reserve for Credit Losses
- - -------------------------
June 30, March 31, Dec. 31, June 30,
(dollar amounts in millions) 1994 1994 1993 1993
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserve for credit losses (a) $ 609 $ 603 $ 600 $ 586
Reserve as a percentage of
total loans 2.46% 2.46% 2.45% 2.46%
- - ------------------------------------------------------------------------------------------
(a) Excludes reserve for segregated assets.
</TABLE>
<PAGE>
Mellon Reports Earnings
July 19, 1994
Page 13
<TABLE>
<CAPTION>
Selected Capital Data
- - ---------------------
June 30, March 31, Dec. 31, June 30,
(dollar amounts in millions) 1994 1994 1993 1993
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common shareholders' equity $2,867 $ 2,793 $2,721 $ 2,586
Common shareholders' equity
to assets ratio 7.75% 7.63% 7.53% 7.15%
Tangible common shareholders'
equity to assets ratio (a) 5.16% 4.89% 4.67% 4.29%
Total shareholders' equity $3,459 $ 3,385 $3,313 $ 3,246
Total shareholders' equity
to assets ratio 9.36% 9.25% 9.17% 8.97%
Tier I capital ratio 7.9%(b) 7.62% 7.39% 7.42%
Total (Tier I and Tier II)
capital ratio 11.4%(b) 11.17% 10.97% 10.63%
Leverage capital ratio 7.4%(b) 6.90% 6.88% 6.99%
Book value per common share (c) $43.75 $ 42.76 $41.75 $ 39.81
Closing common stock price $56.25 $56.125 $53.00 $56.375
- - --------------------------------------------------------------------------------
</TABLE>
(a) Common shareholders' equity less goodwill, core deposit and other
identified intangibles divided by total assets less goodwill, core deposit
and other identified intangibles.
(b) Estimated.
(c) The book value per common share assumes full conversion of the Series D
preferred stock to common stock. Accordingly, this includes the additional
paid-in capital on the Series D preferred stock because this paid-in
capital has no liquidation preference over the common stock.
The increase in the Corporation's common and total shareholders' equity in the
second quarter of 1994, compared with March 31, 1994, was the result of earnings
retention.
<PAGE>
SUMMARY DATA
Mellon Bank Corporation (and its subsidiaries)
<TABLE>
<CAPTION>
(dollar amounts in millions, Three months ended Six months ended
except per share amounts; June 30, June 30,
common shares in thousands) ------------------ -----------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Selected key data (a)
- - ---------------------
Primary net income per common share $ 1.80 $ 1.32 $ 3.57 $ 1.63
Return on assets 1.47% 1.16% 1.45% .80%
Return on common shareholders' equity 17.04% 13.69% 17.14% 8.71%
Yield on interest-earning assets,
on a taxable equivalent basis 6.89% 6.51% 6.80% 6.76%
Cost of funds supporting interest-
earning assets 2.26% 2.21% 2.13% 2.29%
Dividends per common share $ .56 $ .38 $ 1.12 $ .76
Results excluding certain items (b)
- - -----------------------------------
Primary net income per common share $ 1.80 $ 1.32 $ 3.57 $ 2.59
Return on assets 1.47% 1.16% 1.45% 1.16%
Return on common shareholders' equity 17.04% 13.69% 17.14% 13.60%
Average balances for the period (c)
- - -----------------------------------
Money market investments $ 1,676 $ 4,477 $ 1,779 $ 3,741
Trading account securities 386 312 445 303
Securities 4,785 4,136 4,602 4,394
Loans 24,245 20,623 24,435 20,263
Total interest-earning assets 31,092 29,548 31,261 28,701
Total assets 36,571 34,421 36,877 33,284
Deposits 26,964 25,886 27,362 25,392
Total interest-bearing liabilities 24,897 23,647 24,858 22,935
Common shareholders' equity 2,824 2,464 2,792 2,400
Total shareholders' equity 3,416 3,124 3,384 3,035
Computation of primary net income per common share
- - --------------------------------------------------
Net income applicable to
common stock (d) $ 120 $ 84 $ 237 $ 104
======= ======= ======= =======
Average common shares outstanding 63,729 61,852 63,642 60,379
Average common shares issuable upon
conversion of Series D preferred stock 1,702 1,607 1,702 1,607
Other common stock equivalents, net of
shares assumed repurchased 1,202 1,572 1,114 1,659
------- ------- ------- -------
Total stock and stock equivalents 66,633 65,031 66,458 63,645
======= ======= ======= =======
Primary net income per common share (e) $ 1.80 $ 1.32 $ 3.57 $ 1.63
======= ======= ======= =======
- - ---------------
</TABLE>
(a) Percentages are annualized where applicable. All amounts are based on
unrounded numbers.
(b) Results for the first half of 1993 exclude $112 million after-tax merger
expenses and $53 million in after-tax gains on the sale of securities.
(c) Computed on a daily average basis.
(d) After adding back Series D preferred stock dividends.
(e) Based on unrounded numbers.
<PAGE>
CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Bank Corporation
<TABLE>
<CAPTION>
Three months ended Six months ended
(in millions, except per June 30, June 30,
share amounts) ------------------ ---------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest revenue
- - --------------------------------------------
Loans and loan fees $ 444 $ 379 $ 880 $ 762
Money market investments 16 35 32 60
Trading account securities 6 5 13 9
Securities 66 58 124 126
----- ----- ------ -----
Total interest revenue 532 477 1,049 957
Interest expense
- - --------------------------------------------
Deposits in domestic offices 100 98 192 206
Deposits in foreign offices 17 10 27 19
Short-term borrowings 30 24 55 40
Notes and debentures (with original
maturities over one year) 28 31 56 61
----- ----- ------ -----
Total interest expense 175 163 330 326
----- ----- ------ -----
Net interest revenue 357 314 719 631
Provision for credit losses 20 35 40 70
----- ----- ------ -----
Net interest revenue after provision
for credit losses 337 279 679 561
Noninterest revenue
- - --------------------------------------------
Fee revenue 336 281 679 513
Gains on sale of securities - - - 87
----- ----- ------ -----
Total noninterest revenue 336 281 679 600
Operating expense
- - --------------------------------------------
Staff expense 210 174 425 329
Net occupancy expense 47 39 92 76
Professional, legal and other
purchased services 47 30 90 61
Equipment expense 28 26 61 52
Amortization of goodwill, core deposit
and other identified intangibles 23 17 50 33
FDIC assessment and
regulatory examination fees 16 15 32 29
Amortization of purchased mortgage
servicing rights and purchased
credit card relationships 10 13 21 21
Other expense 78 64 167 110
Net expense (revenue) of acquired property (3) 13 (11) 38
Merger expenses - - - 175
----- ----- ------ -----
Total operating expense 456 391 927 924
----- ----- ------ -----
Income before income taxes 217 169 431 237
Provision for income taxes 83 70 166 104
----- ----- ------ -----
Net income 134 99 265 133
Dividends on preferred stock 15 16 30 31
----- ----- ------ -----
Net income applicable to common stock $ 119 $ 83 $ 235 $ 102
===== ===== ====== =====
Primary net income per common share $1.80 $1.32 $3.57 $1.63
===== ===== ====== =====
Fully diluted net income per common share $1.80 $1.32 $3.57 $1.63
===== ===== ====== =====
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET
Mellon Bank Corporation
<TABLE>
<CAPTION>
(dollar amounts in millions) June 30, Dec. 31, June 30,
1994 1993 1993
--------- --------- ---------
<S> <C> <C> <C>
Assets
- - ------------------------------------------------------
Cash and due from banks $ 1,701 $ 2,169 $ 1,875
Money market investments 1,131 1,467 2,505
Trading account securities 365 116 165
Securities:
Available for sale (approximate fair value of
$2,920 and $2,705 at December 31, 1993 and
June 30, 1993, respectively) 2,756 2,916 2,691
Investment (approximate fair value
of $3,085, $2,139 and $2,260) 3,217 2,096 2,194
Loans, net of unearned discount of $70, $74 and $48 24,726 24,473 23,844
Reserve for credit losses (609) (600) (586)
------- ------- -------
Net loans 24,117 23,873 23,258
Premises and equipment 449 463 491
Acquired property, net of reserves of
$31, $37 and $18 109 139 197
Goodwill 775 825 768
Core deposit and other identified intangibles 234 258 311
Purchased mortgage servicing rights and
purchased credit card relationships 259 204 195
Segregated assets, net of reserves
of $4, $4 and $5 147 183 264
Other assets 1,714 1,430 1,252
------- ------- -------
Total assets $36,974 $36,139 $36,166
======= ======= =======
Liabilities
- - ------------------------------------------------------
Deposits in domestic offices $24,316 $26,355 $26,013
Deposits in foreign offices 1,867 1,183 1,294
Short-term borrowings 3,951 2,126 2,571
Other liabilities 1,460 1,172 1,029
Notes and debentures (with original maturities
over one year) 1,921 1,990 2,013
------- ------- -------
Total liabilities 33,515 32,826 32,920
Shareholders' equity
- - ------------------------------------------------------
Preferred stock 592 592 660
Common shareholders' equity
Common stock - $.50 par value
Authorized - 200,000,000 shares
Issued - 63,924,983; 63,843,493
and 63,337,695 shares 32 32 32
Additional paid-in capital 1,780 1,774 1,753
Retained earnings 1,055 898 764
Warrants 37 37 37
Net unrealized loss on assets
available for sale (net of taxes) (32) - -
Treasury stock - 95,502 and 365,700 shares at cost (5) (20) -
------- ------- -------
Total common shareholders' equity 2,867 2,721 2,586
------- ------- -------
Total shareholders' equity 3,459 3,313 3,246
------- ------- -------
Total liabilities and shareholders' equity $36,974 $36,139 $36,166
======= ======= =======
- - --------------------------
</TABLE>
Note: In accordance with the January 1, 1994 adoption of FAS No. 115, certain
assets available for sale are reported at fair value at June 30, 1994
with the unrealized loss of $32 million, net of taxes, included in
common shareholders' equity. No reclassifications of assets were made
to adopt this new accounting standard. The impact of recording the
unrealized loss resulted in a reduction of book value per common share
at June 30, 1994 of $.49 cents.
