<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) - October 17, 1995
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 5. OTHER EVENT
A. Mellon Bank Corporation announces third quarter results of operations.
B. In a separate press release dated October 17, 1995, Mellon Bank
Corporation announced that its Board of Directors authorized the
repurchase of up to 8,000,000 shares of the Corporation's common stock
and approved an increase in the quarterly common stock dividend to 55
cents per share. This repurchase program is in addition to the
previously announced repurchase program for the limited purpose of
funding the Corporation's employee benefit plans and Dividend
Reinvestment and Common Stock Purchase Plan, under which approximately
1,250,000 shares of common stock remain to be purchased. All such
repurchases are authorized to be made in open market and privately
negotiated transactions from time to time and may occur during the
monthly pricing period for purchases under the Corporation's Dividend
Reinvestment and Common Stock Purchase Plan. The Corporation believes
that the repurchases of common stock and the increase in the common
stock dividend currently represent the best use of the Corporation's
excess capital and are effective means to maximize shareholder returns
over the long term.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit
Number Description
99.1 Mellon Bank Corporation Press Release, dated October 17, 1995,
announcing third quarter results of operations.
99.2 Mellon Bank Corporation Press Release, dated October 17, 1995,
announcing its common stock repurchase program and dividend actions.
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: October 17, 1995 By: STEVEN G. ELLIOTT
Steven G. Elliott
Vice Chairman, Chief Financial
Officer & Treasurer
<PAGE>
EXHIBIT INDEX
Number Description Method of Filing
99.1 Press Release dated October 17, 1995 Filed herewith
99.2 Press Release dated October 17, 1995 Filed herewith
<PAGE>
EX-99.1
[logo of Mellon Bank Corporation] NEWS RELEASE
ANALYSTS: MEDIA:
-------- ------
Donald J. MacLeod Margaret Kirch Cohen
Contact: (412) 234-5601 (412) 234-0850 Corporate Affairs
One Mellon Bank Center
Pittsburgh, PA 15258-0001
David T. Lamar
(412) 234-4633
- --------------------------------------------------------------------------------
MELLON REPORTS RECORD THIRD QUARTER 1995 EARNINGS
-------------------------------------------------
. Earnings Per Share Increases 13 Percent Over Prior-Year Period, Excluding
Dreyfus Merger-Related Charges in 1994
. Return on Common Shareholders' Equity Reaches 18 Percent for Quarter; Return
on Assets is 1.70 Percent
PITTSBURGH, Oct. 17, 1995 -- Mellon Bank Corporation today reported net income
applicable to common stock of $166 million, or $1.15 per common share, for the
third quarter of 1995, compared with $152 million, or $1.02 per common share, in
the third quarter of 1994, excluding Dreyfus merger-related charges. Annualized
return on common shareholders' equity and return on assets were 18 percent and
1.70 percent, respectively, in the third quarter of 1995, compared with 16
percent and 1.74 percent, respectively, in the third quarter of 1994, excluding
Dreyfus merger-related charges.
Including Dreyfus merger-related charges, Mellon reported net income applicable
to common stock of $63 million, or $.42 per common share, in the third quarter
of 1994 and annualized return on common shareholders' equity and return on
assets of 7 percent and .81 percent, respectively.
"Our record third quarter earnings reflect our continued success in positioning
Mellon as a leader among financial services companies," said Frank V. Cahouet,
chairman, president and chief executive officer of Mellon Bank Corporation.
"Mellon's mergers with The Boston Company and The Dreyfus Corporation have been
key to our strategy, and we continue to experience excellent returns on capital
and assets. We have set aggressive goals for the Corporation, and we are very
pleased with our financial performance."
-more-
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 2
Net interest revenue for the quarter was $392 million, up from $376 million in
the prior-year period. Fee revenue was $422 million, up from $399 million in the
third quarter of 1994. The increases in net interest revenue resulted primarily
from a higher level of loans. The increases in fee revenue resulted primarily
from higher mortgage servicing revenue and mutual fund management revenues at
Dreyfus.
Operating expense for the third quarter of 1995 was $506 million, down from $595
million in the third quarter of 1994. Expenses were up 1 percent, excluding $104
million in Dreyfus merger-related charges recorded in the third quarter of 1994
and net revenue from acquired property.
The provision for credit losses was $30 million in the third quarter of 1995, up
from $15 million in the prior-year period. Net credit losses were $39 million,
up from $16 million in the third quarter of 1994, principally reflecting higher
losses on the CornerStone/sm/ credit card product, which experienced a
significant increase in outstanding balances generated since its introduction in
the first quarter of 1994.
Nonperforming assets totaled $261 million at Sept. 30, 1995, down from $276
million at June 30, 1995, and up slightly from $260 million at Sept. 30, 1994.
Nonperforming assets as a percentage of total loans and net acquired property
was .93 percent at Sept. 30, 1995, compared with .99 percent at both June 30,
1995, and Sept. 30, 1994.
With balance sheet assets of approximately $42 billion and assets under
management or administration of approximately $925 billion, Mellon Bank
Corporation is a major financial services company headquartered in Pittsburgh;
its primary subsidiary is Mellon Bank, N.A. Mellon provides a full range of
banking and investment products and services to individuals and small, midsize
and large businesses and institutions. Its principal mutual fund business is The
Dreyfus Corporation.
###
NOTE: DETAILED SUPPLEMENTAL INFORMATION FOLLOWS.
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 3
<TABLE>
<CAPTION>
NET INTEREST REVENUE
- --------------------
(taxable equivalent basis) Three months Nine months
ended Sept. 30, ended Sept. 30,
(dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest revenue $ 395 $ 380 $ 15 $ 1,174 $ 1,118 $ 56
- --------------------------------------------------------------------------------------------
Average loans $27,774 $25,084 $2,690 $27,177 $24,658 $2,519
- --------------------------------------------------------------------------------------------
Average interest-earning
assets $34,361 $32,322 $2,039 $33,541 $32,055 $1,486
- --------------------------------------------------------------------------------------------
Net interest margin 4.56% 4.66% (10)bp 4.68% 4.66% 2bp
- --------------------------------------------------------------------------------------------
</TABLE>
The improvement in net interest revenue in the third quarter of 1995, compared
with the third quarter of 1994, primarily resulted from higher loan levels.
Average loans increased $2.7 billion, or 11%, primarily as a result of a $900
million increase in credit card loans, including $600 million related to the
CornerStone/sm/ credit card product, a $700 million increase in retail loans, a
$700 million increase in mortgage warehouse loans and a $500 million increase in
domestic wholesale loans. The decrease in the net interest margin in the third
quarter of 1995, compared with the prior-year period, primarily reflects a
higher level of wholesale funding, in support of loan growth.
The improvement in net interest revenue in the first nine months of 1995
principally resulted from the same factors responsible for the third quarter
increase.
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 4
CREDIT QUALITY EXPENSE AND NET CREDIT LOSSES
- --------------------------------------------
<TABLE>
<CAPTION>
Three months Nine months
ended Sept. 30, ended Sept. 30,
(dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision for credit losses $30 $15 $15 $ 70 $55 $15
Net revenue from acquired property (3) (12) 9 (15) (23) 8
- ------------------------------------------------------------------------------------------------
Credit quality expense $27 $ 3 $24 $ 55 $32 $23
- ------------------------------------------------------------------------------------------------
Net credit losses (recoveries)(a):
Domestic:
Credit card $49 $13 $36 $117 $35 $82
Other consumer credit 3 1 2 11 5 6
Commercial real estate (14) 1 (15) (19) (2) (17)
Commercial and financial 2 1 1 7 6 1
- ------------------------------------------------------------------------------------------------
Total domestic 40 16 24 116 44 72
- ------------------------------------------------------------------------------------------------
International (1) -- (1) (5) 3 (8)
- ------------------------------------------------------------------------------------------------
Total net credit losses $39 $16 $23 $111 $47 $64
- ------------------------------------------------------------------------------------------------
Annualized net credit losses
to average loans .57% .25% 32 bp .55% .25% 30 bp
- ------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes net credit losses on segregated assets.
Credit quality expense increased in the third quarter and first nine months of
1995, compared with the prior-year periods, as a result of a higher provision
for credit losses and lower gains on the sale of acquired property. The higher
provision for credit losses was made in response to credit losses from the
CornerStone/sm/ credit card portfolio.
The $23 million increase in net credit losses compared with the third quarter of
1994 resulted from a $36 million increase in net credit card losses, including a
$29 million increase related to the CornerStone/sm/ portfolio. The Corporation
currently expects a modest increase in the level of CornerStone/sm/ credit
losses in the fourth quarter of 1995, compared with the third quarter. At
September 30, 1995, this portfolio had total outstandings of $1.0 billion,
substantially unchanged from June 30, 1995. CornerStone/sm/ outstandings were
$757 million at December 31, 1994 and $500 million at September 30, 1994. Net
credit losses increased $64 million in the first nine months of 1995 compared
with the first nine months of 1994, reflecting the higher level
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 5
of credit card losses. Partially offsetting credit losses were strong credit
recoveries on commercial real estate and other commercial loans in the second
and third quarters of 1995.
NONINTEREST REVENUE
- -------------------
<TABLE>
<CAPTION>
Three months Nine months
ended Sept. 30, ended Sept. 30,
(in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fee revenue:
Trust and investment management:
Mutual fund:
Management $ 80 $ 72 $ 8 $ 227 $ 222 $ 5
Administration/Custody 30 36 (6) 90 124 (34)
Institutional trust 54 56 (2) 156 173 (17)
Institutional asset management 32 34 (2) 100 108 (8)
Private asset management 37 34 3 104 102 2
- ----------------------------------------------------------------------------------------------
Total trust and investment
management 233 232 1 677 729 (52)
Cash management and deposit
transaction charges 49 49 -- 144 148 (4)
Mortgage servicing 32 21 11 82 54 28
Foreign currency and
securities trading 24 21 3 73 54 19
Credit card fees 21 19 2 62 51 11
Other 63 57 6 188 211 (23)
- ----------------------------------------------------------------------------------------------
Total fee revenue 422 399 23 1,226 1,247 (21)
Losses on sale of securities -- (15) 15 -- (5) 5
- ----------------------------------------------------------------------------------------------
Total noninterest revenue $422 $384 $ 38 $1,226 $1,242 $(16)
- ----------------------------------------------------------------------------------------------
</TABLE>
The $1 million increase in trust and investment management fees in the third
quarter of 1995, compared with the prior-year period, primarily resulted from an
$8 million increase in mutual fund management revenue and a $3 million increase
in private asset management fees. Partially offsetting these increases was a $6
million decrease in mutual fund administration and custody fees. The higher
revenue from the management of mutual funds resulted from a higher average level
of mutual fund assets managed and lower fee waivers at Dreyfus. Mutual fund
management revenues have grown to $80 million in the third quarter from $76
million in the second quarter and $71 million in the first quarter, paralleling
the growth in these assets. Average proprietary funds managed at Dreyfus in the
third quarter of 1995 were $77 billion, compared with $72 billion in the second
quarter and $68 billion in the first quarter. These increases primarily
resulted from higher average
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 6
institutional money market and cash management funds, as well as an overall
increase in the market values of assets managed, reflecting the improvement in
the bond and equity markets in 1995. At September 30, 1995, total mutual fund
assets managed at Dreyfus were $76 billion, compared to $73 billion at June 30,
1995 and $66 billion at December 31, 1994.
The increase in mortgage servicing fees, compared with the prior-year period,
resulted from acquisitions of mortgage servicing rights. On August 31, 1995,
the Corporation acquired Metmor Financial Inc. (Metmor), a residential and
commercial mortgage banking company. Included in this acquisition was a $13
billion residential and commercial loan servicing portfolio that generated $4
million in fees in the last month of the third quarter. The Corporation expects
the Metmor servicing portfolio, at current levels, to generate servicing revenue
of approximately $13 million per quarter. The Corporation's total mortgage
servicing portfolio was $51 billion at September 30, 1995, compared with $32
billion at September 30, 1994.
The increase in foreign currency and securities trading fee revenue in the third
quarter of 1995 was attributable to higher foreign exchange fees earned,
primarily as a result of increased global custody and corporate customer
activity. Credit card revenue increased in the third quarter of 1995, compared
with the third quarter of 1994, primarily as a result of fee revenue generated
by portfolio acquisitions and the Corporation's CornerStone/sm/ credit card
product.
The $15 million pretax, or $10 million after tax, loss on the sale of securities
available for sale in the third quarter of 1994 related to the disposition of
securities held by Dreyfus prior to its merger with the
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 7
Corporation, that did not meet the investment objectives, interest rate or
credit risk characteristics required by the Corporation.
The decrease in fee revenue in the first nine months of 1995, compared with the
prior-year period, resulted from lower trust and investment management fees and
lower other fee revenue in the first half of 1995, which more than offset the
third quarter increases. The primary factor impacting the comparison of year-
to-date other fee revenue was the Corporation's election not to offer its
seasonal tax refund anticipation loan program in 1995 resulting in a $30 million
decrease in other fee revenue.
<TABLE>
<CAPTION>
OPERATING EXPENSE
- -----------------
Three months Nine months
ended Sept. 30, ended Sept. 30,
(dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Staff expense $240 $237 $3 $709 $ 719 $(10)
Net occupancy expense 54 50 4 153 152 1
Professional, legal and
other purchased services 47 51 (4) 135 148 (13)
Equipment expense 35 30 5 103 97 6
Amortization of goodwill
and other intangible assets 24 23 1 72 73 (1)
Amortization of mortgage
servicing rights and purchased
credit card relationships 17 9 8 43 31 12
FDIC assessment and regulatory
examination fees 1 15 (14) 31 47 (16)
Other expense 91 88 3 270 285 (15)
- ----------------------------------------------------------------------------------------------------
Operating expense before the net
revenue from acquired property
and merger expense 509 503 6 1,516 1,552 (36)
- ----------------------------------------------------------------------------------------------------
Net revenue from acquired property (3) (12) 9 (15) (23) 8
- ----------------------------------------------------------------------------------------------------
Merger expense -- 104 (104) -- 104 (104)
- ----------------------------------------------------------------------------------------------------
Total operating expense $506 $595 $(89) $1,501 $1,633 $(132)
- ----------------------------------------------------------------------------------------------------
Average full-time equivalent staff 24,200 24,400 (200) 24,200 24,100 100
- ----------------------------------------------------------------------------------------------------
Efficiency ratio (a) 62% 64% (2) 63% 65% (2)
Efficiency ratio excluding
amortization of goodwill and other
intangible assets 59 61 (2) 60 62 (2)
- ----------------------------------------------------------------------------------------------------
</TABLE>
(a) Operating expense before the net revenue from acquired property and merger
expense as a percentage of revenue, computed on a taxable equivalent basis,
excluding securities gains (losses).
Operating expense before the net revenue from acquired property and merger
expense increased $6 million in the third quarter of 1995, compared with the
prior-year period. This increase primarily resulted from increases in the
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 8
amortization of mortgage servicing rights and purchased credit card
relationships and equipment expense. The increase in the amortization of
mortgage servicing rights reflects the $19 billion increase in the Corporation's
mortgage servicing portfolio. This portfolio has increased approximately 60%
from September 30, 1994. The increase in equipment expense primarily reflects
the internalization of certain data processing operations at The Boston Company
as well as various equipment upgrades. This increase is partially offset by a
reduction in expense for purchased data processing services. Primarily
offsetting these increases was a $14 million decrease in the third quarter in
the FDIC deposit insurance premium from $.23 to $.04 for every $100 of deposits,
retroactive to June 1, 1995. Using the new rate, the FDIC premium will now be
approximately $2 million per quarter, compared with approximately $13 million
per quarter prior to the rate reduction. Partially offsetting this benefit will
be lower fee and/or net interest revenue of approximately $2 million per quarter
from cash management customers where the FDIC premium on deposits is passed
through to these customers.
The decrease in operating expense before the net revenue from acquired property
and merger expense in the first nine months of 1995, compared with the first
nine months of 1994, resulted from lower marketing expense related to the
CornerStone/sm/ credit card, a reduction in professional, legal and other
purchased services and lower staff expense, as well as a lower FDIC assessment
charge.
Merger expense of $104 million, or $79 million after tax, was recorded in the
third quarter of 1994 to reflect expense associated with the Dreyfus merger.
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 9
Except for the merger with Dreyfus, which was accounted for as a pooling of
interests, the Corporation historically has accounted for business combinations
under the purchase method of accounting, resulting in the recording of goodwill
and other identified intangibles which are amortized into operating expense in
future years. Net income applicable to common stock, excluding the after-tax
impact of the amortization of these intangibles, is shown in the table below:
<TABLE>
<CAPTION>
Three months Nine months
ended Sept. 30, ended Sept. 30,
(in millions) 1995 1994 1995 1994
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income applicable
to common stock excluding the
Dreyfus merger related charges $166 $152 $488 $436
After-tax impact of
amortization of intangibles
from purchase acquisitions 18 16 55 56
- -------------------------------------------------------------------
Total $184 $168 $543 $492
- -------------------------------------------------------------------
</TABLE>
INCOME TAXES
- ------------
The Corporation's effective tax rate for the first nine months of 1995 was 37%.
It is currently anticipated that the effective tax rate will be approximately
37% in the fourth quarter of 1995.
<TABLE>
<CAPTION>
NONPERFORMING ASSETS(a)
- -----------------------
Sept. 30, June 30, Dec. 31, Sept. 30,
(dollar amounts in millions) 1995 1995 1994 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic nonperforming loans:
Consumer mortgage $ 62 $ 59 $ 56 $ 51
Commercial real estate 32 42 28 32
Other domestic 89 98 66 72
International nonperforming loans -- -- 1 1
- -----------------------------------------------------------------------------------------
Total nonperforming loans 183 199 151 156
- -----------------------------------------------------------------------------------------
Acquired property:
Real estate acquired 99 98 116 133
Reserve for real estate acquired (21) (21) (29) (30)
- -----------------------------------------------------------------------------------------
Real estate acquired, net of reserve 78 77 87 103
Other assets acquired -- -- 1 1
- -----------------------------------------------------------------------------------------
Total acquired property 78 77 88 104
- -----------------------------------------------------------------------------------------
Total nonperforming assets $261 $276 $239 $260
- -----------------------------------------------------------------------------------------
Nonperforming loans as a percentage of
total loans .65% .72% .56% .60%
Total nonperforming assets as a
percentage of total loans and net
acquired property .93% .99% .89% .99%
- -----------------------------------------------------------------------------------------
</TABLE>
(a) Excludes segregated assets.
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 10
Nonperforming assets decreased $15 million from June 30, 1995, as a result of a
lower level of nonperforming loans. Total nonperforming loans decreased $16
million as repayments, returns to accrual status and credit losses more than
offset additions. Total nonperforming assets increased $1 million compared with
September 30, 1994 as an increase in nonperforming loans was substantially
offset by a decrease in acquired property.
<TABLE>
<CAPTION>
RESERVE FOR CREDIT LOSSES
- -------------------------
Sept. 30, June 30, Dec. 31, Sept. 30,
(dollar amounts in millions) 1995 1995 1994 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserve for credit losses (a) $574 $583 $607 $611
Reserve as a percentage of
total loans 2.04% 2.10% 2.27% 2.35%
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes reserve for segregated assets.
<TABLE>
<CAPTION>
SELECTED CAPITAL DATA
- ---------------------
(dollar amounts in millions, Sept. 30, June 30, Dec. 31, Sept. 30,
except per share amounts) 1995 1995 1994 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common shareholders' equity $3,693 $ 3,643 $ 3,687 $3,695
Common shareholders' equity
to assets ratio 8.81% 9.10% 9.54% 9.41%
Tangible common shareholders'
equity to assets ratio (a) 6.66% 6.78% 7.05% 6.88%
Total shareholders' equity $4,128 $ 4,078 $ 4,122 $4,285
Total shareholders' equity
to assets ratio 9.85% 10.19% 10.67% 10.92%
Tier I capital ratio 8.80%(b) 8.98% 9.48% 10.03%
Total (Tier I and Tier II)
capital ratio 12.00%(b) 12.31% 12.90% 13.50%
Leverage capital ratio 8.20%(b) 8.32% 8.67% 9.16%
Book value per common share $26.13 $ 25.59 $ 25.06 $25.15
Closing common stock price $44.75 $41.625 $30.625 $37.50
Market capitalization $6,324 $ 5,925 $ 4,507 $5,510
- ----------------------------------------------------------------------------------------------
</TABLE>
(a) Common shareholders' equity less goodwill and other intangibles divided
by total assets less goodwill and other intangibles.
(b) Estimated.
The increase in the Corporation's common and total shareholders' equity at
September 30, 1995, compared with June 30, 1995, primarily resulted from
earnings retention offset in part by a higher level of treasury stock
repurchased on the open market. The decrease in the Corporation's equity ratios
from June 30, 1995, primarily resulted from asset growth. The decrease in the
Corporation's common and total shareholders' equity at September 30,
<PAGE>
Mellon Reports Earnings
Oct. 17, 1995
Page 11
1995, compared with September 30, 1994, resulted from the second quarter 1995
repurchase of the common stock and warrants issued in 1993 as part of the
purchase price of The Boston Company and the redemption of the Corporation's
$160 million Series H preferred stock.
The repurchase of the common stock and warrants in the second quarter of 1995
increased earnings per common share by $.02 in the third quarter. It is
anticipated that this transaction will enhance earnings per common share by
approximately $.05 for the full year 1995. This transaction increased the third
quarter return on common shareholders' equity by approximately 80 basis points,
reduced the September 30, 1995 book value per share by $.80 and reduced the
capital ratios by 50 to 60 basis points.
On July 18, 1995, the Corporation's board of directors authorized the repurchase
of up to 2.5 million shares of the Corporation's common stock to be used to meet
the Corporation's current and near-term common stock requirements for its stock-
based benefit plans and its dividend reinvestment plan. In 1994, the
Corporation authorized similar repurchases of up to 3 million shares. As of
September 30, 1995, the Corporation has repurchased approximately 4.3 million
shares under both programs and has reissued 2.2 million of the repurchased
shares.
<PAGE>
SUMMARY DATA
Mellon Bank Corporation (and its subsidiaries)
<TABLE>
<CAPTION>
(dollar amounts in millions, Three months ended Nine months ended
except per share amounts; Sept. 30, Sept. 30,
common shares in thousands) ------------------------ ---------------------
1995 1994 1995 1994
----- ---- ---- ----
<S> <C> <C> <C> <C>
Selected key data (a)
- -----------------
Primary net income per common share $ 1.15 $ .42 $ 3.32 $ 2.35
Return on common shareholders' equity 17.98% 6.76% 17.67% 12.77%
Return on assets 1.70% .81% 1.74% 1.39%
Yield on interest-earning assets,
on a taxable equivalent basis 8.43% 7.32% 8.48% 6.94%
Cost of funds supporting interest-
earning assets 3.87% 2.66% 3.80% 2.28%
Results excluding certain items (a)(b)
- -------------------------------
Primary net income per common share $ 1.15 $ 1.02 $ 3.32 $ 2.95
Return on common shareholders' equity 17.98% 16.10% 17.67% 15.99%
Return on assets 1.70% 1.74% 1.74% 1.70%
Average balances for the period (c)
- -------------------------------
Money market investments $ 1,286 $ 1,466 $ 1,228 $ 1,806
Trading account securities 363 351 300 413
Securities 4,938 5,421 4,836 5,178
Loans 27,774 25,084 27,177 24,658
Total interest-earning assets 34,361 32,322 33,541 32,055
Total assets 40,955 38,016 39,745 37,875
Deposits 28,417 26,963 27,615 27,244
Total interest-bearing liabilities 28,159 25,601 27,486 25,128
Common shareholders' equity 3,648 3,755 3,691 3,672
Total shareholders' equity 4,083 4,346 4,126 4,264
Computation of primary net income per common share
- ----------------------------------------------------
Net income applicable to
common stock $ 166 $ 64(d) $ 488 $ 351(d)
======== ======== ======== ========
Average common shares outstanding 141,897 145,591 144,740 144,355
Average common shares issuable upon
conversion of Series D preferred stock - 1,692 - 2,263
Other common stock equivalents, net of
shares assumed repurchased 2,072 2,610 2,176 2,630
-------- -------- -------- --------
Total stock and stock equivalents 143,969 149,893 146,916 149,248
======== ======== ======== ========
Primary net income per common share (e) $ 1.15 $ .42 $ 3.32 $ 2.35
======== ======== ======== ========
- -----------------------
</TABLE>
(a) Percentages are annualized where applicable. All amounts are based on
unrounded numbers.
(b) Results for the third quarter and first nine months of 1994 exclude $79
million after tax of merger expenses and $10 million after tax of losses
on the disposition of securities available for sale previously owned by
Dreyfus.
(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 Nine months ended
(in millions, except per Sept. 30, Sept. 30,
share amounts) ------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest revenue
- ----------------
Interest and fees on loans (loan fees
of $20, $18, $55, and $65) $ 623 $491 $1,815 $1,371
Interest-bearing deposits with banks 10 8 25 26
Federal funds sold and securities
under resale agreements 8 7 27 21
Other money market investments - 1 1 4
Trading account securities 6 6 15 19
Securities 80 80 235 213
----- ---- ------ ------
Total interest revenue 727 593 2,118 1,654
Interest expense
- ----------------
Interest on deposits 227 145 652 363
Federal funds purchased and securities
under repurchase agreements 32 23 94 46
Other short-term borrowings 44 22 117 55
Notes and debentures 32 27 89 83
----- ---- ------ ------
Total interest expense 335 217 952 547
----- ---- ------ ------
Net interest revenue 392 376 1,166 1,107
Provision for credit losses 30 15 70 55
----- ---- ------ ------
Net interest revenue after provision
for credit losses 362 361 1,096 1,052
Noninterest revenue
- -------------------
Trust and investment management fees 233 232 677 729
Cash management and deposit
transaction charges 49 49 144 148
Mortgage servicing fees 32 21 82 54
Foreign currency and securities trading 24 21 73 54
Credit card fees 21 19 62 51
Other 63 57 188 211
----- ---- ------ -------
Total fee revenue 422 399 1,226 1,247
Losses on sale of securities - (15) - (5)
----- ---- ------ -------
Total noninterest revenue 422 384 1,226 1,242
Operating expense
- -----------------
Staff expense 240 237 709 719
Net occupancy expense 54 50 153 152
Professional, legal and other
purchased services 47 51 135 148
Equipment expense 35 30 103 97
Amortization of goodwill and
other intangible assets 24 23 72 73
Other expense 109 112 344 363
Net revenue from acquired property (3) (12) (15) (23)
Merger expense - 104 - 104
----- ---- ------ ------
Total operating expense 506 595 1,501 1,633
----- ---- ------ ------
Income before income taxes 278 150 821 661
Provision for income taxes 103 72 304 269
----- ---- ------ ------
Net income 175 78 517 392
Dividends on preferred stock 9 15 29 45
----- ---- ------ ------
Net income applicable to common stock $ 166 $ 63 $ 488 $ 347
===== ==== ====== ======
Primary net income per common share $1.15 $.42 $ 3.32 $ 2.35
===== ==== ====== ======
Fully diluted net income per common share $1.14 $.42 $ 3.30 $ 2.35
===== ==== ====== ======
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET
Mellon Bank Corporation
<TABLE>
<CAPTION>
(dollar amounts in millions) Sept. 30, Dec. 31, Sept. 30,
1995 1994 1994
--------- --------- ---------
<S> <C> <C> <C>
Assets
- ------
Cash and due from banks $ 2,515 $ 2,285 $ 2,222
Money market investments 1,370 860 1,025
Trading account securities 302 71 310
Securities:
Available for sale 2,276 1,881 2,847
Investment (approximate fair value
of $3,211, $3,033 and $3,130) 3,189 3,244 3,301
Loans, net of unearned discount of
$56, $62 and $72 28,073 26,733 26,012
Reserve for credit losses (574) (607) (611)
Premises and equipment 550 558 546
Acquired property, net of reserves of
$21, $29 and $30 78 88 104
Goodwill and other intangibles 968 1,036 1,067
Mortgage servicing rights and purchased
credit card relationships 637 352 323
Other assets 2,523 2,143 2,105
------- ------- -------
Total assets $41,907 $38,644 $39,251
======= ======= =======
Liabilities
- -----------
Deposits in domestic offices $23,934 $24,100 $23,972
Deposits in foreign offices 5,377 3,470 3,160
Short-term borrowings 4,775 3,472 4,515
Other liabilities 1,791 1,912 1,747
Notes and debentures (with original maturities
over one year) 1,902 1,568 1,572
------- ------- -------
Total liabilities 37,779 34,522 34,966
Shareholders' equity
- --------------------
Preferred stock 435 435 590
Common shareholders' equity:
Common stock - $.50 par value
Authorized - 200,000,000 shares
Issued - 147,165,480; 147,165,480
and 146,934,696 shares 74 74 73
Additional paid-in capital 1,846 1,851 1,844
Retained earnings 2,039 1,780 1,773
Warrants - 37 37
Net unrealized loss on assets
available for sale (net of taxes) (17) (55) (32)
Treasury stock of 5,856,254; - and -
shares at cost (249) - -
------- ------- -------
Total common shareholders' equity 3,693 3,687 3,695
------- ------- -------
Total shareholders' equity 4,128 4,122 4,285
------- ------- -------
Total liabilities and shareholders' equity $41,907 $38,644 $39,251
======= ======= =======
</TABLE>
<PAGE>
EX-99.2
ANALYSTS:
--------
Donald J. MacLeod David T. Lamar
(412) 234-5601 (412) 234-4633
MEDIA:
-----
Margaret Kirch Cohen
(412) 234-0850
FOR IMMEDIATE RELEASE
MELLON ANNOUNCES COMMON STOCK REPURCHASE OF 8 MILLION
- -----------------------------------------------------
SHARES; INCREASES COMMON DIVIDEND 10 PERCENT
- --------------------------------------------
PITTSBURGH, Oct. 17, 1995 -- At its regular meeting, the board of directors of
Mellon Bank Corporation (NYSE:MEL) today authorized the repurchase of up to 8
million shares of its common stock. Mellon said it will make the repurchases
from time to time in the open market or through privately negotiated
transactions and, subject to market conditions, expects to complete the
repurchase by March 31, 1996.
In addition to the share repurchase, the board of directors has approved a 10
percent increase in the quarterly cash dividend to 55 cents per common share.
The dividend is payable on Nov. 15, l995, to shareholders of record on Oct. 31,
l995. Mellon said this is its fourth common stock dividend increase in two
years, with total increases of 117 percent.
"Our strategic goal is to maximize shareholder returns over the long term," said
Mellon Chairman, President and Chief Executive Officer Frank V. Cahouet. "We
believe that buying back our common stock and increasing our common dividend is
consistent with that strategy and currently represents the best use of our
excess capital."
Upon completion of the 8 million common share repurchase announced today, Mellon
will have reduced through repurchases its common shares outstanding and common
share equivalents by about 16 million shares, representing approximately $750
million of common equity. Mellon will have reduced through repurchases its
common and preferred equity by approximately $910 million since its August 1994
merger with The Dreyfus Corporation.
-more-
<PAGE>
Mellon Announces Stock Repurchase, Dividend Increase Page 2
Oct. 17, 1995
Effect of 8 Million Share Repurchase
- ------------------------------------
Mellon said it expects the 8 million share repurchase to increase annualized
earnings per share by approximately 17 cents and annual return on common equity
by approximately 1.7 percent. If the transaction had been completed as of July
1, 1995, annualized return on common equity for the third quarter would have
increased from 18 percent to 19.7 percent.
After giving effect to the share repurchase, Mellon's capital ratios will be
reduced by approximately 1 percent. Based upon its capital at Sept. 30, 1995,
its common equity ratio will be reduced from 8.8 percent to approximately 7.8
percent, and its tangible common equity ratio will be reduced from 6.7 percent
to approximately 5.7 percent. The Corporation's capital ratios will remain well
in excess of the FDIC's well-capitalized thresholds. The Corporation's pro
forma book value at Sept. 30, 1995, would be about $24.70, down from $26.13. The
8 million share repurchase will reduce the cash requirement for the
Corporation's annual common dividend by approximately $18 million.
Previously Announced Share Repurchases for Stock-Based Benefit Plans/
- ---------------------------------------------------------------------
Other 1995 Equity Reductions
- ----------------------------
In the fourth quarter of 1994, Mellon's board of directors authorized the
repurchase of up to 3 million shares for its stock-based employee benefit plans
and its dividend reinvestment plan. In July 1995, Mellon's board increased the
authorization by 2.5 million shares to a total of 5.5 million shares. As of
Sept. 30, 1995, the Corporation had repurchased approximately 4.3 million shares
under both programs and had reissued 2.2 million of these shares to meet the
requirements of its stock based benefit plans and dividend reinvestment plan.
Subject to market conditions, the Corporation expects to complete the repurchase
of the remaining 1.2 million shares under this authorization in the fourth
quarter of 1995.
-more-
<PAGE>
Mellon Announces Stock Repurchase, Dividend Increase Page 3
Oct. 17, 1995
In March 1995, Mellon completed the redemption of its $160 million Series H
preferred stock. In June 1995 the Corporation purchased 3.75 million shares of
Mellon common stock and warrants for an additional 4.5 million shares of common
stock from American Express, for a total of $213 million. The shares and
warrants were issued in connection with Mellon's 1993 acquisition of The Boston
Company.
Preferred Stock Dividend
- ------------------------
In addition to its increased common dividend, the board of directors of Mellon
Bank Corporation today also declared quarterly dividends on Mellon Series I
preferred stock (NYSE: MEL Pr I) at the annual rate of $2.40 per share; Mellon
Series J preferred stock (NYSE: MEL Pr J) at the annual rate of $2.125 per
share; and Mellon Series K preferred stock (NYSE: MEL Pr K) at the annual rate
of $2.05 per share.
Dividends on the Series I preferred stock, Series J preferred stock and Series K
preferred stock also are payable on Nov. 15, l995, to shareholders of record at
the close of business on Oct. 31, l995.
With balance sheet assets of approximately $42 billion and assets under
management or administration of approximately $925 billion, Mellon Bank
Corporation is a major financial services company headquartered in Pittsburgh;
its primary subsidiary is Mellon Bank, N.A. The Corporation provides a full
range of banking and investment products and services to individuals and small,
midsize and large businesses and institutions. Mellon's principal mutual fund
business is The Dreyfus Corporation.
# # #
