<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 23, 1992)
$200,000,000
MELLON FINANCIAL COMPANY
(a wholly owned subsidiary of Mellon Bank Corporation)
6.30% SENIOR NOTES DUE JUNE 1, 2000
Unconditionally Guaranteed as to Payment of Principal and Interest by
------------------------
MELLON BANK CORPORATION
------------------------
The 6.30% Senior Notes due June 1, 2000 (the "Notes") of Mellon Financial
Company (the "Company") are unconditionally guaranteed as to payment of
principal and interest by Mellon Bank Corporation (the "Corporation"). Interest
on the Notes is payable on June 1 and December 1 of each year, commencing
December 1, 1995. The Notes will not be redeemable prior to maturity and are not
subject to any sinking fund. The Notes will mature on June 1, 2000.
The Notes will be denominated in U.S. dollars, are offered in an aggregate
principal amount of $200,000,000 and will be issued in denominations of $1,000
and any integral multiple thereof.
The Notes will initially be represented by one or more global notes (the
"Global Notes") registered in the name of a nominee of The Depository Trust
Company, as Depositary ("Book-Entry Notes"), but may, under certain limited
circumstances, be exchangeable for certificates issued in definitive form
("Certificated Notes"). Beneficial interests in Book-Entry Notes will trade in
the Depositary's Same-Day Funds Settlement System, and secondary market activity
in such interests will therefore settle in same-day funds. Beneficial interests
in Book-Entry Notes will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary (with respect to its
participants' interests) and its participants. See "Book-Entry System."
------------------------
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
THE NOTES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT
INSURED BY THE BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE
FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.
<TABLE>
<CAPTION>
===========================================================================================================
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.................................... 99.911% .335% 99.576%
- -----------------------------------------------------------------------------------------------------------
Total....................................... $199,822,000 $670,000 $199,152,000
===========================================================================================================
<FN>
(1) Plus accrued interest, if any, from June 19, 1995.
(2) The Company and the Corporation have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933.
(3) Before deducting expenses payable by the Company and the Corporation
estimated at $120,000.
</TABLE>
------------------------
The Notes offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that the delivery of the Global
Notes will be made in New York, New York to the Depositary on or about June 19,
1995.
------------------------
LEHMAN BROTHERS NATIONSBANC CAPITAL MARKETS, INC.
June 14, 1995
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
----------------------
MELLON BANK CORPORATION
The Corporation is a multibank holding company incorporated under the laws
of Pennsylvania and registered under the Federal Bank Holding Company Act of
1956, as amended. At December 31, 1994, the Corporation was the twenty-fourth
largest bank holding company in the United States in terms of assets. Its
principal, wholly owned subsidiaries are Mellon Bank, N.A., The Boston Company,
Inc., Mellon Bank (DE) National Association, Mellon Bank (MD), Mellon PSFS (NJ)
National Association and the companies known as the Mellon Financial Services
Corporations. The Corporation also owns a Federal savings bank located in New
Jersey, Mellon Bank, F.S.B. The Dreyfus Corporation, one of the nation's largest
mutual fund companies, is a wholly owned subsidiary of Mellon Bank, N.A.
The Corporation's banking subsidiaries engage in retail banking, commercial
banking, trust and investment management services, residential real estate loan
financing, mortgage servicing and mutual fund and various securities-related
activities. Through various non-bank subsidiaries, the Corporation provides a
broad range of bank-related services including commercial financial services,
equipment leasing, commercial loan financing, stock transfer services, cash
management and numerous trust and investment management services.
The Corporation's principal executive office is located at One Mellon Bank
Center, 500 Grant Street, Pittsburgh, Pennsylvania 15258 (telephone (412)
234-5000).
MELLON FINANCIAL COMPANY
The Company is a wholly owned subsidiary of the Corporation incorporated
under the laws of Pennsylvania to function as a financing entity for the
Corporation and its subsidiaries and affiliates through the issuance of
commercial paper and other debt guaranteed by the Corporation. Financial data
for the Company and the Corporation are combined for financial reporting
purposes due to the limited function of the Company and the unconditional
guarantees of all of the Company's obligations by the Corporation. The
registered office of the Company is located at One Mellon Bank Center, 500 Grant
Street, Pittsburgh, Pennsylvania 15258 (telephone (412) 234-5000).
RECENT DEVELOPMENTS
On June 9, 1995, the Corporation repurchased 3.75 million shares of the
Corporation's common stock and warrants for an additional 4.5 million shares of
the Corporation's common stock from American Express Travel Related Services
Company, Inc. in a private transaction. The shares and warrants were issued in
May 1993 in connection with the Corporation's acquisition of The Boston Company,
Inc. from a subsidiary of American Express Company. At March 31, 1995, the 3.75
million shares and the warrants for 4.5 million shares (if exercised)
represented approximately 5.5% of the Corporation's outstanding common shares
and
S-2
<PAGE> 3
warrants. After giving effect to such repurchase, the Corporation's common
shareholders' equity to assets ratio and leverage capital ratio at March 31,
1995 would have been approximately 8.9% and 8.3%, respectively. The Corporation
funded the repurchase of the shares and warrants from cash on hand.
USE OF PROCEEDS
The Company will apply the net proceeds from the sale of the Notes offered
hereby to its general funds to be used for its corporate financing purposes,
including extensions of credit to the Corporation and to subsidiaries and
affiliates of the Corporation, including its bank subsidiaries, which will use
the proceeds of such extensions of credit for general corporate purposes,
possibly including acquisitions, and repayments and redemptions of outstanding
indebtedness. The price, amounts and timing of the application of proceeds will
depend upon funding requirements of the Corporation and its subsidiaries and
affiliates.
DESCRIPTION OF NOTES AND GUARANTEES
The Notes will be issued under an Indenture, dated as of May 2, 1988, as
supplemented by the First Supplemental Indenture, dated as of November 29, 1990
(the "Senior Indenture"), among the Company, the Corporation and The Chase
Manhattan Bank (National Association), as Trustee (the "Trustee"). A copy of the
Senior Indenture is filed as an exhibit to the Registration Statement and its
terms are more fully described in the Prospectus. The following description of
the particular terms of the Notes offered hereby (referred to in the
accompanying Prospectus as the "Offered Debt Securities") and of the Senior
Indenture supplements, and, to the extent inconsistent therewith, replaces the
descriptions of the general terms and provisions of the Debt Securities and of
the Senior Indenture as set forth in the Prospectus, to which descriptions
reference is hereby made.
The Notes will be unsecured and will rank pari passu with all senior
indebtedness of the Company. The Guarantees will be unsecured and will rank pari
passu with all senior indebtedness of the Corporation. See "Senior Securities"
in the accompanying Prospectus.
The Notes will be limited to $200,000,000 aggregate principal amount. The
Notes will be denominated in U.S. dollars and payments of principal of and
interest on the Notes will be in U.S. dollars. The Notes will be issued only in
fully registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. Upon issuance, the Notes will be Book-Entry Notes represented
by one or more Global Notes registered in the name of the nominee of the
Depositary. See "Book-Entry System" below.
The Notes will mature on June 1, 2000, and will bear interest at the rate
per annum shown on the front cover of this Prospectus Supplement from June 19,
1995, or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semi-annually on June 1 and December 1 of each
year, commencing December 1, 1995, to the Person in whose name the Note (or any
predecessor Note) is registered at the close of business on the preceding May 15
or November 15, as the case may be. Interest payments will be computed and paid
on the basis of a 360-day year of twelve 30-day months. The Trustee will serve
as Security Registrar and Paying Agent for the Notes.
Payment of the principal of and interest on each Global Note representing
Book-Entry Notes will be made on each Interest Payment Date or at maturity by
the Trustee as Paying Agent by wire transfer of immediately available funds to a
separate account of the Depositary or its nominee at the Federal Reserve Bank of
New York, provided that, in the case of payments made at maturity of such Global
Note, the Global Note is presented to the Trustee in time for the Trustee to
make such payments in accordance with its normal procedures. Payments to
beneficial owners of Book-Entry Notes will be made through the Depositary and
its participants. See "Book-Entry System." For a description of the payment of
principal and interest on Certificated Notes, see "Description of Debt
Securities and Guarantees--Payment and Paying Agents" in the accompanying
Prospectus.
S-3
<PAGE> 4
The Notes will not be redeemable by the Company prior to their Stated
Maturity and will not be entitled to the benefit of a sinking fund. The Company
may at any time repurchase Notes at any price in the open market or otherwise.
Notes so purchased by the Company may be held or resold or, at the discretion of
the Company, may be surrendered to the Trustee for cancellation.
BOOK-ENTRY SYSTEM
Upon issuance, all Notes will be represented by one or more Global Notes
issued in registered form. Such Global Notes representing Book-Entry Notes will
be deposited with, or on behalf of, The Depository Trust Company, New York, New
York (the "Depositary") and registered in the name of a nominee of the
Depositary. Except under the circumstances described below, Book-Entry Notes
will not be exchangeable for Certificated Notes.
Ownership of Book-Entry Notes will be limited to institutions that have
accounts with such Depositary or its nominee ("participants") or persons that
may hold interests through such participants. In addition, ownership of
Book-Entry Notes by participants will only be evidenced by, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee, as the case may be. Ownership of Book-Entry Notes by
persons that hold through participants will only be evidenced by, and the
transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer Book-Entry Notes.
The Company has been advised by the Depositary that upon the issuance of a
permanent Global Note or Notes representing Book-Entry Notes, and the deposit of
such permanent Global Note or Notes with the Depositary, the Depositary will
immediately credit, on its book-entry registration and transfer system, the
respective principal amounts of the Book-Entry Notes represented by such
permanent Global Note or Notes to the accounts of participants. The accounts to
be credited shall be designated by the Underwriters.
Payments of principal of and interest on Book-Entry Notes represented by
any permanent Global Note or Notes registered in the name of or held by the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner and the Holder of the permanent Global Note
or Notes representing such Book-Entry Notes. Such payments to the Depositary or
its nominee, as the case may be, will be made by the Trustee by wire transfer of
immediately available funds to a separate account of the Depositary or its
nominee at the Federal Reserve Bank of New York, provided that, in the case of
payments made at maturity of such Global Note or Notes, the Global Note or Notes
are presented to the Trustee in time for the Trustee to make such payments in
accordance with its normal procedures. None of the Company, the Corporation or
the Trustee or any agent of the Company, the Corporation or the Trustee will
have any responsibility or liability for any aspect of the Depositary's records
or any participant's records relating to, or payments made on account of,
Book-Entry Notes or for maintaining, supervising or reviewing any of the
Depositary's records or any participant's records relating to such Book-Entry
Notes.
The Company has been advised by the Depositary that upon receipt of any
payment of principal of or interest on a permanent Global Note, the Depositary
will immediately credit, on its book-entry registration and transfer system,
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such permanent Global
Note or Notes as shown on the records of the Depositary. Payments by
participants to owners of Book-Entry Notes held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street name,"
and will be the responsibility of such participants.
No permanent Global Note or Notes described above may be transferred except
as a whole by the Depositary for such permanent Global Note or Notes to a
nominee of the Depositary or to a successor depositary or by a nominee of the
Depositary to the Depositary, another nominee of the Depositary or to a
successor depositary.
S-4
<PAGE> 5
Book-Entry Notes represented by a permanent Global Note are exchangeable
for definitive Notes in registered form, of like tenor and of an equal aggregate
principal amount, only if (a) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such permanent Global Note or
if at any time the Depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, (b) the Company in its sole discretion
determines that such Book-Entry Notes shall be exchangeable for definitive Notes
in registered form, or (c) any event shall have happened and be continuing
which, after notice or lapse of time, or both, would become an Event of Default
with respect to the Notes. Any permanent Global Note representing Book-Entry
Notes that is exchangeable pursuant to the preceding sentence shall be
exchangeable in whole for Certificated Notes in registered form, of like tenor
and of an equal aggregate principal amount, in denominations of $1,000 and
integral multiples thereof. Such definitive Notes shall be registered in the
name or names of such person or persons as the Depositary shall instruct the
Security Registrar. It is expected that such instructions will be based upon
directions received by the Depositary from its participants with respect to
ownership of Book-Entry Notes.
Except as provided above, owners of Book-Entry Notes will not be entitled
to receive physical delivery of Notes in definitive form and will not be
considered the Holders thereof for any purpose under the Senior Indenture, and
no permanent Global Note representing Book-Entry Notes shall be exchangeable,
except for another permanent Global Note of like denomination and tenor to be
registered in the name of the Depositary or its nominee. Accordingly, each
person owning a Book-Entry Note must rely on the procedures of the Depositary
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a Holder
under the Senior Indenture. The Senior Indenture provides that the Depositary,
as a Holder, may appoint agents and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a Holder is entitled to give or take under the Senior
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of Holders or an owner of a
Book-Entry Note desires to give or take any action a Holder is entitled to give
or take under the Senior Indenture, the Depositary would authorize the
participants owning the relevant Book-Entry Notes to give or take such action,
and such participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Depositary has advised the Company and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. The Depositary was created to hold securities
of its participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
S-5
<PAGE> 6
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Lehman Brothers Inc. ............................................. $100,000,000
NationsBanc Capital Markets, Inc. ................................ 100,000,000
------------
Total................................................... $200,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Company has been advised by the Underwriters that they propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus Supplement, and to certain dealers at
such price less a discount not in excess of .250% of the principal amount of the
Notes. The Underwriters may allow, and such dealers may reallow, a concession to
certain other dealers not in excess of .125% of the principal amount of the
Notes. After the initial public offering, the public offering price, discount
and concession may be changed.
The Notes are a new issue of securities with no established trading market.
The Company currently has no intention to list the Notes on any securities
exchange. The Company has been advised by the Underwriters that they intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Company and the Corporation have agreed to indemnify the Underwriters
against certain liabilities, including civil liabilities under the Securities
Act of 1933.
Certain of the Underwriters engage in transactions with and perform
services for the Corporation and its subsidiaries in the ordinary course of
business.
VALIDITY OF NOTES AND GUARANTEES
The validity of the Notes and related Guarantees will be passed upon for
the Company and the Corporation by James M. Gockley, Esq., Assistant General
Counsel and Secretary of the Corporation, One Mellon Bank Center, 500 Grant
Street, Pittsburgh, Pennsylvania 15258, and for the Underwriters by Sullivan &
Cromwell, 125 Broad Street, New York, New York 10004. Sullivan & Cromwell will
rely as to all matters of Pennsylvania law upon the opinion of Mr. Gockley.
Sullivan & Cromwell from time to time performs legal services for the
Corporation.
S-6
<PAGE> 7
PROSPECTUS
MELLON FINANCIAL COMPANY
(A WHOLLY OWNED SUBSIDIARY OF MELLON BANK CORPORATION)
$750,000,000
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST, IF ANY, BY
MELLON BANK CORPORATION
Mellon Financial Company (the "Company") may issue from time to time in one
or more series up to $750,000,000 aggregate principal amount of its unsecured
debt securities consisting of debentures, notes and/or other unsecured evidences
of indebtedness (the "Debt Securities"), which may be either senior (the "Senior
Securities") or subordinated (the "Subordinated Securities") in priority of
payment. All Senior Securities will be unconditionally guaranteed on a senior
basis as to payment of principal, premium, if any, and interest, if any, by
Mellon Bank Corporation (the "Corporation"). All Subordinated Securities will be
unconditionally guaranteed on a subordinated basis as to payment of principal,
premium, if any, and interest, if any, by the Corporation. The Debt Securities
may be offered as separate series in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in supplements to this
Prospectus (the "Prospectus Supplement").
The terms of each series of Debt Securities, including, where applicable,
the specific designation, priority, aggregate principal amount, denominations,
maturity, premium, if any, rate or rates and time or times of payment of
interest, if any, terms for redemption at the option of the Company or the
holder, if any, terms for sinking or purchase fund payments, if any, the initial
public offering price, the proceeds to the Company, and any other specific terms
in connection with the offering and sale of the Debt Securities in respect of
which this Prospectus is being delivered, are set forth in the accompanying
Prospectus Supplement. The Subordinated Indenture does not provide for any right
of acceleration of the payment of principal of the Subordinated Securities upon
a default in the payment of principal or interest or in the performance of any
covenant or agreement in the Subordinated Securities or the Subordinated
Indenture. See "Subordinated Securities-- Events of Default and Limited Rights
of Acceleration". As used herein, Debt Securities shall include securities
denominated in United States dollars or, at the option of the Company if so
specified in the Prospectus Supplement, in any other currency or in composite
currencies or in amounts determined by reference to an index.
Debt Securities of a series will be issued in registered form without
coupons and may be issued, at the option of the Company, in the form of a
certificate in definitive form (a "Certificated Security") or in the form of one
or more global securities in registered form (each a "Global Security").
The Debt Securities may be sold by the Company directly to purchasers,
through agents designated from time to time, through underwriting syndicates led
by one or more managing underwriters or through one or more underwriters acting
alone. If the Company, directly or through agents, solicits offers to purchase
the Debt Securities, the Company reserves the sole right to accept and, together
with its agents, to reject, in whole or in part, any such offer. See "Plan of
Distribution".
If any agent of the Company, or any underwriter, is involved in the sale of
the Debt Securities, the name of such agent or underwriter, the principal amount
to be purchased by it, any applicable commissions or discounts and the net
proceeds to the Company from such sale are set forth in, or may be calculated
from, the Prospectus Supplement. The aggregate net proceeds to the Company from
the sale of all the Debt Securities will be the public offering or purchase
price of the Debt Securities sold less the aggregate of such commissions and
discounts and other expenses of issuance and distribution. See "Plan of
Distribution" for possible indemnification and contribution arrangements with
agents or underwriters.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS AND ARE NOT
INSURED BY THE BANK INSURANCE FUND OR SAVINGS ASSOCIATION INSURANCE
FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.
------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF DEBT SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------
The date of this Prospectus is December 23, 1992.
<PAGE> 8
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE CORPORATION OR ANY UNDERWRITER OR AGENT. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY DEBT SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION OR THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE CORPORATION SINCE SUCH
DATE.
STATEMENT OF AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at 1400
Northwestern Atrium Center, 500 Madison Street, Suite 1400, Chicago, Illinois
60661 and 75 Park Place, 14th Floor, New York, NY 10007. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, such
reports, proxy statements and other information concerning the Corporation can
also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
The Company and the Corporation have filed with the Commission a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Debt Securities and the related
guarantees with respect to payment by the Corporation. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
portions of which have been omitted as permitted by the rules and regulations of
the Commission. For further information with respect to the Company and the
Corporation and the Debt Securities and related guarantees, reference is made to
the Registration Statement, including the exhibits thereto. The Registration
Statement may be inspected by anyone without charge at the principal office of
the Commission in Washington, D.C., and copies of all or part of it may be
obtained from the Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by the
Corporation are incorporated in this Prospectus by reference and made a part
hereof:
(1) The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1991, filed pursuant to Section 13 of the Exchange Act.
(2) The Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1992, June 30, 1992 and September 30, 1992, each filed
pursuant to Section 13 of the Exchange Act.
(3) The Corporation's Current Reports on Form 8-K dated December 31, 1991
(filed on January 2, 1992), January 13, 1992, January 16, 1992, April
21, 1992, July 21, 1992, July 30, 1992, August 7, 1992, September 14,
1992 (filed on September 16, 1992), September 14, 1992 (filed on October
19, 1992, as amended by Amendment No. 1 on Form 8 filed on November 10,
1992), October 20, 1992, November 9, 1992, and November 16, 1992 each
filed pursuant to Section 13 of the Exchange Act.
Each document or report subsequently filed by the Corporation with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date hereof and prior to the termination of the offering of the Debt
Securities shall be deemed to be incorporated by reference into this Prospectus
and to be a part of this Prospectus from the date of filing of such document.
Any statement contained herein, or in a
2
<PAGE> 9
document all or a portion of which is incorporated or deemed to be incorporated
by reference herein, shall be deemed to be modified or superseded for purposes
of the Registration Statement and this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference, other than
certain exhibits to such documents. Written requests should be directed to:
Secretary, Mellon Bank Corporation, Room 1820, One Mellon Bank Center, 500 Grant
Street, Pittsburgh, Pennsylvania 15258. Telephone requests may be directed to
the Corporation at (412) 234-5222.
------------------
MELLON BANK CORPORATION
The Corporation is a multibank holding company incorporated under the laws
of Pennsylvania and registered under the Federal Bank Holding Company Act of
1956, as amended (the "BHC Act"). At September 30, 1992, it was the twenty-third
largest bank holding company in the United States in terms of assets. Its
principal, wholly owned subsidiaries are Mellon Bank, N.A. (the "Bank"), Mellon
Bank (DE) National Association, Mellon Bank (MD) and the companies known as the
Mellon Financial Services Corporations. The Corporation's banking subsidiaries
engage in domestic retail banking, worldwide commercial banking, trust banking,
investment management, and other financial services, as well as various
securities-related activities. Through the Mellon Financial Services
Corporations, the Corporation provides a broad range of banking-related
services, including commercial financial services, equipment leasing, data
processing, stock transfer services, mortgage servicing and numerous investment
management services, and originates consumer real estate and commercial loans.
The Corporation's principal executive office is located at One Mellon Bank
Center, 500 Grant Street, Pittsburgh, Pennsylvania 15258 (telephone (412)
234-5000).
MELLON FINANCIAL COMPANY
The Company is a wholly owned subsidiary of the Corporation incorporated
under the laws of Pennsylvania to function as a financing entity for the
Corporation and its subsidiaries and affiliates through the issuance of
commercial paper and other debt guaranteed by the Corporation. Financial data
for the Company and the Corporation are combined for financial reporting
purposes due to the limited function of the Company and the unconditional
guarantees of all of the Company's obligations by the Corporation. The
registered office of the Company is located at One Mellon Bank Center, 500 Grant
Street, Pittsburgh Pennsylvania 15258 (telephone (412) 234-5000).
USE OF PROCEEDS
The Company will apply the net proceeds from the sale of the Debt
Securities offered hereby to its general funds to be used for its corporate
financing purposes, including extensions of credit to the Corporation and to
subsidiaries and affiliates of the Corporation, including its bank subsidiaries,
which will use the proceeds of such extensions of credit for general corporate
purposes, possibly including acquisitions, and repayment at maturity of
commercial paper and other outstanding indebtedness. The precise amounts and
timing of the application of proceeds will depend upon funding requirements of
the Corporation and its subsidiaries and affiliates and the amount of Debt
Securities offered from time to time pursuant to this Prospectus. For a more
precise description regarding the application of the proceeds, see "Use of
Proceeds" in the Prospectus Supplement.
In view of its anticipated funding requirements, the Company expects that
it may, on a recurring basis, engage in additional private or public financings
of a character and amount to be determined as the need arises.
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CERTAIN REGULATORY CONSIDERATIONS
GENERAL
The Company and the Corporation (together sometimes referred to herein as
the "parent Corporation") are legal entities separate and distinct from the
Corporation's bank subsidiaries, although the principal source of the parent
Corporation's cash revenues are payments of interest and dividends from such
subsidiaries. There are various legal and regulatory limitations on the extent
to which the Corporation's bank subsidiaries can finance or otherwise supply
funds to the Company, the Corporation and certain of its other affiliates.
The prior approval of the Comptroller of the Currency (the "Comptroller")
is required if the total of all dividends declared by any such national bank
subsidiary in any calendar year exceeds its net profits (as defined) for that
year combined with its retained net profits for the preceding two calendar
years. Additionally, national bank subsidiaries may not declare dividends in
excess of net profits on hand, after deducting the amount by which the principal
amount of all loans on which interest is past due for a period of six months or
more exceeds the reserve for credit losses. Under the first and currently more
restrictive of the foregoing dividend limitations, the Corporation's national
bank subsidiaries can, without prior regulatory approval, declare dividends in
the fourth quarter of 1992, of approximately $460 million, less any dividends
declared and plus or minus net profits or losses, as defined, between October 1,
1992, and the date of any such dividend declaration. The national bank
subsidiaries declared dividends to the parent Corporation of $50 million in the
first nine months of 1992, $129 million in the full year 1991, $44 million in
1990 and $26 million in 1989.
The Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") and the Comptroller also have issued guidelines that require bank
holding companies and national banks to evaluate continuously the level of cash
dividends in relation to the organization's net income, capital needs, asset
quality and overall financial condition. The Comptroller also has authority
under the Financial Institutions Supervisory Act to prohibit national banks from
engaging in what, in the Comptroller's opinion, constitutes an unsafe or unsound
practice. The payment of a dividend by a bank could, depending upon the
financial condition of such bank and other factors, be construed by the
Comptroller to be such an unsafe or unsound practice. The Comptroller has stated
that a dividend by a national bank should bear a direct correlation to the level
of the bank's current and expected earnings stream, the bank's need to maintain
an adequate capital base and the marketplace's perception of the bank and should
not be governed by the financing needs of the bank's parent corporation. As a
result, notwithstanding the level of dividends which could be declared without
regulatory approval by the Corporation's national bank subsidiaries as set forth
in the preceding paragraph, the level of dividends from such subsidiaries to the
parent Corporation in 1993 generally is not expected to exceed the earnings for
those subsidiaries. If the ability of such subsidiaries to pay dividends to the
Corporation were to become restricted, the parent Corporation would need to rely
on alternative means of raising funds to satisfy its dividend requirements,
which might include, but would not be restricted to, non-bank subsidiary
dividends, asset sales or other capital market transactions.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
contains a "cross-guarantee" provision which could result in any insured
depository institution owned by the Corporation (i.e., any bank subsidiary)
being assessed for losses incurred by the Federal Deposit Insurance Corporation
in connection with assistance provided to, or the failure of, any other
depository institution owned by the Corporation. Under Federal Reserve Board
policy, the Corporation may be expected to act as a source of financial strength
to each of its bank subsidiaries and to commit resources to support each such
bank in circumstances where such bank might not be in a financial position to do
so.
FDICIA
In December 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") was enacted, which substantially revises the bank regulatory
and funding provisions of the Federal Deposit Insurance Act and makes revisions
to several other federal banking statutes.
Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized", "adequately capitalized", "undercapitalized", "significantly
undercapitalized"
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and "critically undercapitalized". Federal banking agencies have recently
adopted final rules, effective December 16, 1992, relating to these capital
tiers.
Under the final rules, an institution will be deemed to be: "well
capitalized" if the institution has a total risk-based capital ratio of 10.0% or
greater, a Tier I risk-based ratio of 6.0% or greater, and a leverage ratio of
5.0% or greater, and the institution is not subject to an order, written
agreement, capital directive, or prompt corrective action directive to meet and
maintain a specific level for any capital measure; "adequately capitalized" if
the institution has a total risk-based capital ratio of 8.0% or greater, a Tier
I risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or
greater (or a leverage ratio of 3.0% or greater if the institution is rated
composite 1 in its most recent report of examination, subject to appropriate
Federal banking agency guidelines), and the institution does not meet the
definition of a well-capitalized institution; "undercapitalized" if the
institution has a total risk-based capital ratio that is less than 8.0%, a Tier
I risk-based capital ratio that is less than 4.0% or a leverage ratio that is
less than 4.0% (or a leverage ratio that is less than 3.0% if the institution is
rated composite 1 in its most recent report of examination, subject to
appropriate Federal banking agency guidelines) and the institution does not meet
the definition of a significantly undercapitalized or critically
undercapitalized institution; "significantly undercapitalized" if the
institution has a total risk-based capital ratio that is less than 6.0%, a Tier
I risk-based capital ratio that is less than 3.0%, or a leverage ratio that is
less than 3.0% and the institution does not meet the definition of a critically
undercapitalized institution; and "critically undercapitalized" if the
institution has a ratio of tangible equity to total assets that is equal to or
less than 2.0%.
At September 30, 1992, the Corporation and Mellon Bank, N.A. each fell into
the well capitalized category based on the ratios and guidelines noted above.
The appropriate Federal banking agency may, under certain circumstances,
reclassify a well capitalized insured depository institution as adequately
capitalized. The appropriate agency is also permitted to require an adequately
capitalized or undercapitalized institution to comply with the supervisory
provisions as if the institution were in the next lower category (but not treat
a significantly undercapitalized institution as critically undercapitalized)
based on supervisory information other than the capital levels of the
institution.
The statute provides that an institution may be reclassified if the
appropriate Federal banking agency determines (after notice and opportunity for
hearing) that the institution is in an unsafe or unsound condition or deems the
institution to be engaging in an unsafe or unsound practice.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to growth
limitations and are required to submit a capital restoration plan. The Federal
banking agencies may not accept a capital plan without determining, among other
things, that the plan is based on realistic assumptions and is likely to succeed
in restoring the depository institution's capital. In addition, for a capital
restoration plan to be acceptable, the depository institution's parent holding
company must guarantee that the institution will comply with such capital
restoration plan. The aggregate liability of the parent holding company is
limited to the lesser of (i) an amount equal to 5% of the depository
institution's total assets at the time it became undercapitalized, and (ii) the
amount which is necessary (or would have been necessary) to bring the
institution into compliance with all capital standards applicable with respect
to such institution as of the time it fails to comply with the plan. If a
depository institution fails to submit an acceptable plan, it is treated as if
it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA also contains a variety of other provisions that may affect the
operations of the Corporation, including new reporting requirements, regulatory
standards for real estate lending, "truth in savings" provisions, and the
requirement that a depository institution give 90 days prior notice to customers
and regulatory authorities before closing any branch.
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CAPITAL
The risk-based capital guidelines for bank holding companies and banks
adopted by the Federal banking agencies will be fully phased in at the end of
1992. The minimum ratio of qualifying total capital to risk-weighted assets
(including certain off-balance sheet items, such as standby letters of credit)
under the fully phased in guidelines will be 8%. Until year-end 1992, the
minimum ratio is 7.25%. At least half of the total capital is to be comprised of
common stock, retained earnings, noncumulative perpetual preferred stocks,
minority interests, and, for bank holding companies, a limited amount of
qualifying cumulative perpetual preferred stock, less goodwill ("Tier I
capital"). The remainder ("Tier II capital") may consist of other preferred
stock, certain other instruments, and limited amounts of subordinated debt and
the loan and lease loss allowance.
In addition, the Federal Reserve Board has established minimum leverage
ratio (Tier I capital to total assets) guidelines for bank holding companies and
banks. These guidelines provide for a minimum leverage ratio of 3% for bank
holding companies and banks that meet certain specified criteria, including that
they have the highest regulatory rating. All other banking organizations will be
required to maintain a leverage ratio of 3% plus an additional cushion of at
least 100 to 200 basis points. The guidelines also provide that banking
organizations experiencing internal growth or making acquisitions will be
expected to maintain strong capital positions substantially above the minimum
supervisory levels, without significant reliance on intangible assets.
Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "tangible Tier I leverage ratio" in evaluating proposals
for expansion or new activities. The tangible Tier I leverage ratio is the ratio
of Tier I capital, less intangibles not deducted from Tier I capital, to total
assets, less all intangibles. Neither the Corporation nor Mellon Bank, N.A. has
been advised of any specific minimum leverage ratio applicable to it.
Federal banking agencies have proposed regulations that would modify
existing rules related to risk-based and leverage capital ratios. The
Corporation does not believe that the aggregate impact of these modifications
would have a significant impact on its capital position.
Bank regulators continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
However, the Corporation is unable to predict whether and when higher capital
requirements would be imposed and, if so, at what level and on what schedule.
Certain consolidated ratios of the Corporation are included herein under
"Mellon Bank Corporation-- Consolidated Summary Financial Data."
FDIC INSURANCE ASSESSMENTS
The FDIC recently adopted a risk-based assessment system to replace the
existing flat-rate system. The new system will impose insurance premiums based
upon a matrix that takes into account a bank's capital level and supervisory
rating. Under this risk-based system, the assessment rate imposed on banks
ranges from 23 cents for each $100 of domestic deposits (for well capitalized
banks with the highest of three supervisory rating categories) to 31 cents (for
inadequately capitalized banks with the lowest of the three supervisory rating
categories). Mellon Bank, N.A. has been informed that its annual assessment rate
for the first six months of 1993 will be 23 cents for each $100 of domestic
deposits, unchanged from the current rate. Because of decreases in the reserves
of the Bank Insurance Fund due to the increased number of bank failures in
recent years, it is possible that deposit insurance premiums will be increased
and it is possible that there may be a special assessment.
BROKERED DEPOSITS
On May 20, 1992, the FDIC adopted final regulations under FDICIA, effective
June 16, 1992, governing the receipt of brokered deposits. Under these
regulations, a bank cannot accept brokered deposits (which term is defined to
include payment of an interest rate more than 75 basis points above prevailing
rates for comparable maturities) unless (i) it is well capitalized, or (ii) it
is adequately capitalized and receives a waiver from the FDIC. A bank that
cannot receive brokered deposits also cannot offer "pass-through" insurance on
certain employee benefit accounts. In addition, a bank that is adequately
capitalized may not pay an interest rate on any deposits in excess of 75 basis
points over certain prevailing market rates. There are no such restrictions on a
bank that is well capitalized. At September 30, 1992, Mellon Bank, N.A. was well
capitalized under this regulation. The Corporation does not presently anticipate
that the regulations will have an adverse effect on its operations.
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MELLON BANK CORPORATION
CONSOLIDATED SUMMARY FINANCIAL DATA
This summary is qualified in its entirety by the detailed information and
financial statements included in the documents incorporated herein by reference.
See "Incorporation of Certain Documents By Reference". Additional consolidated
summary financial data may be set forth in the Prospectus Supplement.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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(DOLLAR AMOUNTS IN MILLIONS) 1991 1990 1989 1988 1987
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net interest revenue................................. $ 974 $ 867 $ 819 $ 838 $ 823
Provision for credit losses.......................... 250 315 297 321 1,056
Net interest revenue after provision for
credit losses...................................... 724 552 522 517 (233)
Service fee and other revenue........................ 848 748 785 725 790
Gain on sale of consumer finance subsidiary.......... -- 74 -- -- --
Operating expense.................................... 1,264 1,181 1,103 1,279 1,403
Provision for income taxes........................... 28 19 23 28 (2)
Income (loss) before extraordinary gains............. 280 174 181 (65) (844)
Extraordinary gains on early retirement of debt...... -- -- 29 -- --
Net income (loss).................................... 280 174 210 (65) (844)
Net income (loss) applicable to common stock......... 231 124 157 (104) (863)
CONSOLIDATED BALANCE SHEET--AVERAGE BALANCES (A):
Money market investments............................. $ 1,344 $ 2,752 $ 6,204 $ 4,407 $ 3,641
Securities........................................... 5,333 4,722 3,298 3,432 4,023
Loans................................................ 18,509 18,840 17,958 19,423 21,471
Total interest-earning assets........................ 25,495 26,592 27,693 27,410 29,381
Total assets......................................... 29,050 30,216 30,555 30,237 32,565
Total deposits....................................... 21,384 22,029 21,240 20,605 21,881
Notes and debentures (with original maturities
over one year)..................................... 1,448 1,722 1,762 1,950 1,843
Common shareholders' equity.......................... 1,479 1,336 1,114 892 1,361
Total shareholders' equity........................... 1,904 1,732 1,442 1,158 1,474
CONSOLIDATED PERCENTAGES:
Return on common shareholders' equity (A)............ 15.80% 9.56%(B) 12.97%(C) * *
Return on assets (A)................................. .96 .58(B) .59(C) * *
Net interest margin (A):
Taxable equivalent basis (D)....................... 3.93 3.38 3.10 3.24% 3.15%
Without taxable equivalent increments.............. 3.82 3.26 2.96 3.06 2.80
Dividends per common share as a percentage of fully
diluted income per common share before
extraordinary gains................................ 30.37 49.47(E) 42.04 * *
CAPITAL RATIOS:
Common shareholders' equity to assets (F)............ 5.61% 4.50% 3.88% 2.81% 2.82%
Average common shareholders' equity to average
assets............................................. 5.09 4.42 3.65 2.95 4.18
Tier I capital ratio (F)(G).......................... 5.66 4.30 4.60 3.10 NA
Total (Tier I plus Tier II) capital ratio (F)(G)..... 9.86 8.24 8.79 6.20 NA
Leverage capital ratio (F)(G)........................ 5.42 4.04 4.34 3.24 NA
ASSET QUALITY RATIOS:
Reserve for credit losses as a percentage of:
Total loans (F).................................... 3.12% 2.80% 3.15% 4.79% 5.59%
Nonperforming loans (F)............................ 113 100 124 115 90
Net credit losses as a percentage of average loans:
Total.............................................. 1.24 2.15 3.33 2.79 1.96
Excluding net losses (recoveries) on LDC loans..... 1.14 1.11 .82 .60(H) 1.80
Total nonperforming assets as a percentage of total
loans and net acquired property (F)................ 4.78 4.11 3.55(I) 5.03(I) 8.01
RATIO OF EARNINGS TO FIXED CHARGES:
Mellon Bank Corporation (parent Corporation) (J)..... 2.22 1.61(K) 1.52(L) 1.50 1.37
Mellon Bank Corporation and its subsidiaries (M):
Excluding interest on deposits..................... 1.88 1.24(N) 1.31(O) .94(P) (.44)(P)
Including interest on deposits..................... 1.23 1.07(N) 1.10(O) .98(P) .51(P)
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*Loss.
Footnotes on following pages.
</TABLE>
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Note: The comparability of the information set forth on the prior page has been
affected by the Corporation's December 31, 1991 acquisition of United Penn
Bank, the June 1990 sale of the Corporation's Chicago-based consumer
finance subsidiary at a $74 million gain, the Corporation's acquisition of
54 branch offices of PSFS in May 1990, the 1989 adoption of FASB No. 96
("Accounting for Income Taxes"), the Corporation's capital financing and
asset restructuring program, begun in July 1988 and completed in June
1989, and the 1988 adoption of FASB No. 91 ("Accounting for the
Nonrefundable Fees and Costs Associated with Originating or Acquiring
Loans and Initial Direct Costs of Leases"). These are described in detail
in the Corporation's Annual Reports on Form 10-K for the years ended
December 31, 1991, 1990, 1989 and 1988.
NA--Not applicable.
<TABLE>
<C> <S>
(A) Computed on a daily average basis.
(B) Includes the $74 million gain on the sale of the consumer finance subsidiary. Excluding
this gain, return on common shareholders' equity and return on assets would have been
4.06% and .33%, respectively.
(C) Excludes the effect of $29 million of extraordinary gains on the early retirement of
debt. Including these extraordinary gains, 1989 return on common shareholders' equity
was 15.59% and return on assets was .69%.
(D) Calculated on a taxable equivalent basis, at tax rates approximating 34% in 1991, 1990,
1989 and 1988, and 40% in 1987. Loan fees, nonaccrual loans and the related income
effect have been included in the calculation of the net interest margin.
(E) Includes the effect of the $74 million gain on the sale of the consumer finance
subsidiary. Excluding this gain, this ratio would have been 116.67%.
(F) Period-end ratio.
(G) Calculated under the requirements applicable to year-end 1992.
(H) Excludes net losses on assets held for sale to Grant Street National Bank (GSNB).
(I) Includes the effect of the Corporation's investment in GSNB senior preferred stock,
which was on nonperforming status at year-end 1989 and 1988.
(J) The parent Corporation ratios include the accounts of the Corporation and the Company.
For purposes of computing these ratios, earnings represent parent Corporation income
before income taxes, and before extraordinary gains on early retirement of debt and
equity in undistributed net income (loss) of subsidiaries, plus the fixed charges of
the parent Corporation. Fixed charges represent interest expense, one-third (the
proportion deemed representative of the interest factor) of rental expense net of
income from subleases, and amortization of debt issuance costs. Because these ratios
exclude from earnings the equity in undistributed net income (loss) of subsidiaries,
these ratios vary with the payment of dividends by such subsidiaries.
(K) The ratio of earnings to fixed charges for the year ended December 31, 1990 excludes
from earnings (as defined) the $74 million gain on the sale of the consumer finance
subsidiary. Had this computation included this gain, the ratio of earnings (as defined)
to fixed charges would have been 2.11.
(L) The ratio of earnings to fixed charges for the year ended December 31, 1989, excludes
from earnings (as defined) $29 million of extraordinary gains on the early retirement
of debt. Including these extraordinary gains, the ratio of earnings (as defined) to
fixed charges would have been 1.69.
(M) For purposes of computing these ratios, earnings represent consolidated income (loss)
before income taxes and extraordinary gains on early retirement of debt, plus
consolidated fixed charges. Fixed charges, excluding interest on deposits, include
interest expense (other than on deposits), one-third (the proportion deemed
representative of the interest factor) of rental expense net of income from subleases,
and amortization of debt issuance costs. Fixed charges, including interest on deposits,
include all interest expense, one-third (the proportion deemed representative of the
interest factor) of rental expense net of income from subleases, and amortization of
debt issuance costs.
</TABLE>
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<TABLE>
<C> <S>
(N) The ratio of earnings to fixed charges for the year ended December 31, 1990, excludes
from earnings (as defined) the $74 million gain on the sale of the consumer finance
subsidiary. Had this computation included this gain, the ratio of earnings to fixed
charges would have been 1.39 excluding interest on deposits and 1.11 including interest
on deposits.
(O) The ratio of earnings to fixed charges for the year ended December 31, 1989, excludes
from earnings (as defined) $29 million of extraordinary gains on the early retirement
of debt. Including these extraordinary gains, the ratio of earnings to fixed charges
would have been 1.36 excluding interest on deposits and 1.12 including interest on
deposits.
(P) The Corporation's consolidated earnings (as defined) did not cover fixed charges as a
result of a pretax loss for 1988 and 1987. For the ratio of earnings (as defined) to
fixed charges, either excluding or including interest on deposits, to have been 1.00,
pretax earnings for 1988 and 1987 would have had to increase by approximately $37
million and $846 million, respectively.
</TABLE>
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities and the guarantees
thereof by the Corporation (the "Guarantees") to which any Prospectus Supplement
may relate (the "Offered Debt Securities"). The particular terms of the Offered
Debt Securities and the extent, if any, to which such general provisions may
apply to the Debt Securities and the Guarantees so offered will be described in
the Prospectus Supplement relating to such Offered Debt Securities. Except where
specifically noted, the following description applies to both Senior Securities
and Subordinated Securities.
DEBT SECURITIES
The Debt Securities will be unsecured obligations of the Company and are
not insured by the Savings Association Insurance Fund or the Bank Insurance Fund
of the Federal Deposit Insurance Corporation.
The Debt Securities will constitute either senior debt of the Company (the
"Senior Securities") or subordinated debt of the Company (the "Subordinated
Securities"). The Senior Securities will be issued under an Indenture dated as
of May 2, 1988, as supplemented by the First Supplemental Indenture dated as of
November 29, 1990 (the "Senior Indenture"), among the Company, the Corporation
and The Chase Manhattan Bank (National Association), as Trustee ("Chase"). The
Subordinated Securities will be issued under an Indenture dated as of April 15,
1991, as supplemented by the First Supplemental Indenture dated as of November
24, 1992 (the "Subordinated Indenture"), among the Company, the Corporation and
Continental Bank, National Association, as Trustee ("Continental"). The Senior
Indenture and the Subordinated Indenture are collectively referred to herein as
the "Indentures". References to the "Trustee" shall mean Chase or Continental,
as applicable.
The statements which follow under this caption are brief summaries of
certain provisions contained in the Indentures, do not purport to be complete
and are qualified in their entirety by reference to all the provisions of the
applicable Indenture, copies of which have been filed with the Commission as
exhibits to the Registration Statement or incorporated by reference therein.
Whenever defined terms are used but not defined herein, such terms shall have
the meanings ascribed to them in the applicable Indenture, it being intended
that such defined terms shall be incorporated herein by reference. References to
Sections are references to Sections in the applicable Indenture or, where
appropriate, to both Indentures.
Neither Indenture limits the aggregate principal amount of Debt Securities
which may be issued thereunder and each Indenture provides that Debt Securities
of any series may be issued thereunder up to the aggregate principal amount
which may be authorized from time to time by the Company. Neither the Indentures
nor the Debt Securities will limit or otherwise restrict the amount of other
indebtedness which may be incurred or the other securities which may be issued
by the Company or any of its affiliates.
Reference is made to the Prospectus Supplement for a description of the
following terms, where applicable, of each series of the Offered Debt Securities
in respect of which this Prospectus is being delivered:
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(1) the title of the Offered Debt Securities; (2) any limit upon the aggregate
principal amount or aggregate initial public offering price of the Offered Debt
Securities; (3) the Person to whom any interest on an Offered Debt Security
shall be payable, if other than the Person in whose name the Offered Debt
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest; (4) the date or dates on
which the principal of the Offered Debt Securities is payable; (5) the rate or
rates at which the Offered Debt Securities shall bear interest, if any, or the
Floating or Adjustable Rate Provision pursuant to which such rates are
determined, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be payable and the Regular
Record Date for the interest payable on any Interest Payment Date; (6) the place
or places where the principal of (and premium, if any) and interest on, or the
principal (and premium, if any) only of, Offered Debt Securities shall be
payable; (7) the period or periods within which, the price or prices at which
and the terms and conditions upon which Offered Debt Securities may be redeemed,
in whole or in part, at the option of the Company; (8) the obligation, if any,
of the Company to redeem or purchase Offered Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Offered Debt Securities shall be redeemed or
purchased, in whole or in part, pursuant to such obligations; (9) if other than
denominations of $100,000 and any integral multiple of $1,000 in excess thereof,
the denominations in which Offered Debt Securities shall be issuable; (10) any
other Event or Events of Default applicable with respect to Offered Debt
Securities in addition to those provided in Section 601 of the applicable
Indenture; (11) if other than the principal amount thereof, the portion of the
principal amount of Offered Debt Securities which shall be payable upon
declaration of acceleration of the Maturity thereof; (12) any other covenant or
warranty included for the benefit of Offered Debt Securities in addition to (and
not inconsistent with) those included in the applicable Indenture for the
benefit of all Debt Securities; (13) whether the Offered Debt Securities shall
be Certificated Securities or shall be issued in whole or in part in the form of
one or more Global Securities and, in such case, the Depositary for such Global
Security or Securities; (14) the currency or currencies, including composite
currencies, in which payment of the principal of and any premium and interest on
the Offered Debt Securities shall be payable if other than the currency of the
United States of America; (15) if the amount of payments of principal of and any
premium or interest on the Offered Debt Securities may be determined with
reference to an index, the manner in which such amounts shall be determined;
(16) if the principal of (and premium, if any) or interest on the Offered Debt
Securities are to be payable, at the election of the Company or a Holder
thereof, in a coin or currency other than that in which the Offered Debt
Securities are stated to be payable, the coin or currency in which payment of
the principal of (and premium, if any) or interest on Offered Debt Securities as
to which such election is made shall be payable, the period or periods within
which, and the terms and conditions upon which, such election may be made; (17)
whether the Offered Debt Securities are Senior Securities or Subordinated
Securities; (18) the price or prices (which may be expressed as a percentage of
the aggregate principal amount thereof) at which the Offered Debt Securities
will be issued; (19) any other terms of the Offered Debt Securities (which terms
shall not be inconsistent with the provisions of the applicable Indenture).
(Section 301) However, with respect to Offered Debt Securities sold through
underwriters or dealers acting as agents, the aforementioned terms of such
Offered Debt Securities may be fixed by the Company from time to time, in which
case such aforementioned terms will be set forth in the Pricing Supplement
relating thereto, to be made available through such underwriters or dealers.
If any of the Offered Debt Securities are sold for one or more foreign
currencies or foreign currency units or if the principal of, premium, if any, or
interest, if any, on any series of Offered Debt Securities is payable in one or
more foreign currencies or foreign currency units, the restrictions, elections,
tax consequences, specific terms and other information with respect to such
issue of Offered Debt Securities and such currencies or currency units will be
set forth in the Prospectus Supplement relating thereto.
Debt Securities may be issued as Original Issue Discount Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates), to be sold at a substantial discount below the stated
principal amount thereof due at the Stated Maturity of such Original Issue
Discount Securities. In the event of an acceleration of the Maturity of any
Original Issue Discount Security, the amount payable to the holder of such
Original Issue Discount Security upon such acceleration will be determined in
accordance with the applicable Prospectus Supplement, the terms of such security
and the applicable Indenture, but will be an
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amount less than the amount payable at the Maturity of the principal of such
Original Issue Discount Security. (Section 101) Special Federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the Prospectus Supplement relating thereto.
GUARANTEES
The Corporation will unconditionally guarantee the due and punctual payment
of the principal of, and premium, if any, and interest, if any, and sinking fund
payments, if any, on the Debt Securities, when and as the same shall become due
and payable, whether at maturity, by acceleration or redemption or otherwise.
The Guarantees of the Senior Securities rank pari passu with all other general
credit obligations of the Corporation. The Guarantees of the Subordinated
Securities are subordinate in right of payment to all Senior Indebtedness of the
Corporation. (Section 401)
Because the Corporation is a holding company, the rights of its creditors,
including the Holders of the Debt Securities in the event the Guarantees are
enforced, to share in the distribution of the assets of any subsidiary upon the
subsidiary's liquidation or recapitalization will be subject to the prior claims
of the subsidiary's creditors (including in the case of the Corporation's bank
subsidiaries, their depositors), except to the extent that the Corporation may
itself be a creditor with recognized claims against the subsidiary. In addition,
there are certain regulatory limitations on the payment of dividends and on
loans and other transfers of funds to the Corporation by its bank subsidiaries.
See "Certain Regulatory Considerations".
REGISTRATION AND TRANSFER
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities will be issued only in fully registered form without
coupons in denominations of U.S. $100,000 and any integral multiple of $1,000 in
excess thereof, or in the case of foreign currency notes, in the denominations
indicated in the applicable Prospectus Supplement, and no service charge will be
made for any transfer or exchange of such Offered Debt Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Sections 302 and 305)
Certificated Securities may be presented for transfer (with the form of
transfer endorsed thereon duly executed) or exchange for other Debt Securities
of the same series at the office of the Security Registrar specified according
to the terms of the applicable Indenture. (Section 305) The Company has agreed
in each of the Indentures that, with respect to Debt Securities having The City
of New York as a place of payment, the Company will appoint an office or agency
located in The City of New York where Debt Securities of that series may be
surrendered for such transfer or exchange. (Section 1102) Such transfer or
exchange shall be made without service charge, but the Company may require
payment of any taxes or other governmental charges as described in the
applicable Indenture.
GLOBAL SECURITIES
Debt Securities of like tenor and having the same date of issue may be
issued in whole or in part in the form of one or more Global Securities that
will be deposited with, or on behalf of, a depositary (the "Depositary")
identified in the Prospectus Supplement relating thereto. Global Securities will
be issued in registered form. Unless and until it is exchanged in whole or in
part for the individual Debt Securities represented thereby, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by the Depositary or
any such nominee to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to any
offered Debt Securities will be described in the Prospectus Supplement relating
thereto. The Company anticipates that the following provisions will generally
apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such
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Depositary ("participants"). Such accounts will be designated by the
underwriters or agents with respect to such Debt Securities or by the Company if
such Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in a Global Security will be limited to participants of the
applicable Depositary or persons that may hold interests through such
participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depositary or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants). The laws of some states require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner and Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of any
such Debt Securities in definitive form and will not be considered the owners or
Holders thereof under the Indenture governing such Debt Securities. Accordingly,
each person owning a beneficial interest in the Global Security must rely on the
procedures of the Depositary and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a Holder under the Indenture. The Indenture provides that
the Depositary may grant proxies and otherwise authorize participants to take
any action which a Holder is entitled to take under the Indenture. The Company
understands that under existing industry practice, in the event that the Company
requests any action of Holders or a beneficial owner desires to take any action
a Holder is entitled to take, the Depositary would authorize the participants to
take such action and that the participants would authorize beneficial owners
owning through such participants to take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. None of the Company, the Corporation, the
Trustee for such Debt Securities, any Paying Agent, the Security Registrar for
such Debt Securities or any agent for such persons will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Global Security for such Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company and the Corporation expect that the Depositary for Debt
Securities or its nominee, upon receipt of any payment of principal, premium or
interest in respect of a Global Security representing any of such Debt
Securities immediately will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security for such Debt Securities as shown on the records
of such Depositary or its nominee. The Company and the Corporation also expect
that payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name".
Such payments will be the responsibility of such participants.
If (i) the Depositary for any series of Offered Debt Securities is at any
time unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days or (ii) an Event of
Default shall occur and be continuing with respect to such series, the Company
will issue individual Debt Securities of such series in definitive form in
exchange for the Global Security representing such Debt Securities. In addition,
the Company may at any time and in its sole discretion, subject to any
limitations described in the Prospectus Supplement relating to such Offered Debt
Securities, determine not to have any Debt Securities of a series represented by
one or more Global Securities and, in such event, will issue individual Debt
Securities of such series in definitive form in exchange for the Global Security
or Securities representing such series of Debt Securities. (Section 305)
Further, if the Company so specifies with respect to the Debt Securities of a
series, an owner of a beneficial interest in a Global Security representing Debt
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<PAGE> 19
Securities of such series may, on terms acceptable to the Company, the
applicable Trustee and the Depositary for such Global Security, receive Debt
Securities of such series in definitive form in exchange for such beneficial
interest, subject to any limitations described in the Prospectus Supplement
relating to such Debt Securities. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery in
definitive form of Debt Securities of the series represented by such Global
Security equal in principal amount to such beneficial interest and to have such
Debt Securities registered in its name. Debt Securities of such series so issued
in definitive form will be issued in denominations, unless otherwise specified
by the Company, of $100,000 and any integral multiple of $1,000 in excess
thereof, or, in the case of foreign currency notes, in the denominations
indicated in the applicable Prospectus Supplement.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on Offered Debt
Securities will be made at the office of such Paying Agent or Paying Agents as
the Company may designate from time to time, except that, at the option of the
Company, payment of any interest may be made (i) by check mailed to the address
of the person entitled thereto as such address shall appear in the applicable
Security Register or (ii) by wire transfer to an account maintained by the
person entitled thereto as specified in the applicable Security Register.
(Section 1102) Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any instalment of interest on Debt Securities will be
made to the person in whose name such Debt Security is registered at the close
of business on the Regular Record Date for such payment. (Section 307)
CONSOLIDATION, MERGER OR SALE OF ASSETS
Each Indenture provides that each of the Company and the Corporation may,
without the consent of the holders of any of the Debt Securities outstanding
under the applicable Indenture, consolidate with, merge into or transfer its
assets substantially as an entirety to any person, provided that (i) any such
successor assumes the Company's or the Corporation's obligations on the
applicable Debt Securities and under the applicable Indenture, (ii) after giving
effect thereto, no Event of Default (as defined in the Senior Indenture) in the
case of the Senior Securities, or Event of Default or Default (each as defined
in the Subordinated Indenture) in the case of the Subordinated Securities, shall
have happened and be continuing and (iii) certain other conditions under the
applicable Indenture are met. (Sections 901 and 903)
MODIFICATION AND WAIVER
Modifications and amendments of each Indenture may be made by the Company,
the Corporation and the applicable Trustee with the consent of the Holders of
66 2/3% in principal amount of the Outstanding Debt Securities of each series
affected thereby; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Debt Security affected
thereby, (1) change the Stated Maturity of the principal of, or any instalment
or principal of or interest on, any Debt Security; (2) reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon the
redemption thereof; (3) reduce the amount of the Principal of an Original Issue
Discount Security that would be due and payable upon acceleration of the
Maturity thereof; (4) change any Place of Payment where, or the coin or currency
in which, the principal of any Debt Security or any premium, or interest thereon
is payable; (5) impair the right to institute suit for the enforcement of any
such payment on or with respect to a Debt Security, (6) in the case of
Subordinated Securities, modify the provisions of the Subordinated Indenture
with respect to the subordination of such Debt Securities and the Guarantees
thereof in a manner adverse to the Holders thereof; (7) reduce the percentage in
principal amount of the Outstanding Debt Securities of any series, the consent
of whose Holders is required for any such modification or amendment or for
waiver of certain defaults; (8) change certain provisions relating to
modification of the terms of each Indenture and waiver of defaults thereunder;
or (9) modify or affect in any manner adverse to the Holders the terms and
conditions of the Guarantees. (Section 1002)
Each Indenture provides that the Holders of 66 2/3% in principal amount of
the Outstanding Debt Securities of any series may on behalf of the Holders of
all Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company or the Corporation with certain restrictive provisions
of such
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Indenture. (Section 1108) Also, the Holders of a majority in principal amount of
the Outstanding Debt Securities of any series may on behalf of the Holders of
all Debt Securities of that series waive any past default under the Indenture
with respect to that series, except a default (i) in the payment of the
principal of, or premium, if any, or interest, if any, on any Debt Security of
that series or (ii) in respect of a provision which under the Indenture cannot
be modified or amended without the consent of the Holder of each Outstanding
Debt Security of that series affected. (Section 613)
EVENTS OF DEFAULT
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding shall occur and be continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of that series may declare to be due and payable
immediately by a notice in writing to the Company and to the Corporation (and to
the Trustee if given by Holders) the principal amount (or, if the Debt
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
Debt Securities of that series. However, at any time after such a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on such acceleration has been obtained, the
Holders of a majority in principal amount of Outstanding Debt Securities of that
series may, under certain circumstances, rescind and annul such acceleration if
all Events of Default, and, in the case of Subordinated Securities, all
Defaults, with respect to Debt Securities of that series have been cured or
waived as provided in the applicable Indenture. (Section 602) For information as
to waiver of defaults, see "Modification and Waiver". The term "Event of
Default" is defined differently in the Senior Indenture than in the Subordinated
Indenture. (Section 601) For information as to what constitutes Events of
Default, see "Senior Securities--Events of Default" and "Subordinated
Securities--Events of Default and Limited Rights of Acceleration".
Reference is made to the Prospectus Supplement relating to each series of
Debt Securities which are Original Issue Discount Securities for the particular
provisions relating to acceleration of the Maturity of a portion of the
principal amount of such Original Issue Discount Securities upon the occurrence
of an Event of Default and the continuation thereof.
Each Indenture provides that the Trustee thereunder will be under no
obligation, subject to the duty of the Trustee during default to act with the
required standard of care, to exercise any of its rights or powers under such
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 703) Subject to
such provisions for indemnification of the Trustee, the Holders of a majority in
principal amount of the Outstanding Debt Securities of any series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Debt Securities of that series. (Section 612)
No Holder of any Debt Security of any series will have the right to
institute any proceeding with respect to the applicable Indenture or for any
remedy thereunder unless such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default or, in the case of Subordinated
Securities, a Default, with respect to Debt Securities of that series and unless
also the Holders of at least 25% in principal amount of the Outstanding Debt
Securities of that series shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee,
and the Trustee shall not have received from the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. (Section 607) However, the Holders of any Debt
Security will have an absolute right to receive payment of the principal of, and
premium, if any, and interest, if any, on such Debt Security on or after the due
dates expressed in such Debt Security and to institute suit for the enforcement
of any such payment. (Section 608)
The Company and the Corporation are required to file annually with each
Trustee a written statement of officers as to performance or fulfillment of
certain of their obligations under each Indenture and as to the existence or
non-existence of defaults under each Indenture or the Debt Securities issued
thereunder. (Sections 1105 and 1106)
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SENIOR SECURITIES
PRIORITY
The Senior Securities will rank pari passu with all outstanding senior
indebtedness of the Company. The Guarantees of the Senior Securities will rank
pari passu with all outstanding senior indebtedness of the Corporation.
LIMITATION UPON DISPOSITION OF VOTING STOCK AND CERTAIN TRANSACTIONS
The Senior Indenture contains a covenant by the Corporation that, so long
as any of the Senior Securities are outstanding, it will not sell, assign,
transfer, grant a security interest in or otherwise dispose of any shares of, or
securities convertible into, or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of the Bank or the Company, nor will it permit
the Bank or the Company to issue, except to the Corporation and except for
directors' qualifying shares, any shares of, or securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of, Voting Stock
of the Bank or the Company, unless, in the case of Voting Stock of the Bank (i)
any such sale, assignment, transfer, grant of a security interest or other
disposition by the Corporation or any such issuance by the Bank, is made for
fair market value, and (ii) the Corporation will own at least 80% of the issued
and outstanding Voting Stock of the Bank free and clear of any security interest
after giving effect to such transaction. The covenant also provides that so long
as any of the Senior Securities are outstanding, but subject to the provisions
of Article Nine (Consolidation, Merger and Sale), the Corporation will not
permit the Bank or the Company (a) to merge or consolidate with another
corporation or (b) to sell, assign, transfer, grant a security interest in or
otherwise dispose of ("Transfer") or lease all or substantially all of the
assets of the Bank or the Company unless, in the case of the Bank, (i) any such
Transfer or lease by the Bank or any such merger or consolidation with the Bank
is made for fair market value (provided, however, that satisfaction of this fair
market value provision will not be required in the event the Transfer, lease,
merger or consolidation is to or with a corporation at least 80% of the issued
and outstanding Voting Stock of which is owned, directly or indirectly, by the
Corporation), and (ii) after giving effect to such transaction, the Corporation
will own, directly or indirectly, at least 80% of the issued and outstanding
shares of Voting Stock of the Bank free and clear of any security interest. As
used in this paragraph, the terms "the Bank" and "the Company" include any
successor corporation. (Section 1107)
Unless otherwise indicated in the applicable Pricing Supplement, neither
the Senior Indenture nor the Senior Securities contains covenants specifically
designed to protect Holders in the event of a highly leveraged transaction
involving the Company, the Corporation or the Bank.
EVENTS OF DEFAULT
The following will be Events of Default under the Senior Indenture with
respect to Senior Securities of any series: (1) failure to pay any interest on
any Senior Security of that series when due, continued for 30 days; (2) failure
to pay principal of, or premium, if any, on any Senior Security of that series
when due; (3) failure to deposit any sinking fund payment, when due, in respect
of any Senior Security of that series; (4) failure to perform or breach of any
other covenant of the Company or the Corporation in the Senior Indenture (other
than a covenant included in the Senior Indenture solely for the benefit of a
series of Senior Securities other than that series), continued for 60 days after
written notice; (5) certain events of bankruptcy, insolvency or reorganization
of the Company, the Corporation or the Bank; and (6) any other Event of Default
provided in the applicable Prospectus Supplement with respect to Senior
Securities of that series. (Section 601)
REGARDING CHASE
The Corporation's bank subsidiaries maintain deposit accounts and conduct
other banking transactions with Chase in the ordinary course of their banking
businesses. Chase is the Agent Bank and a participant in the $100 million
revolving credit facility created to provide back-up support for the
Corporation's commercial paper borrowings.
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SUBORDINATED SECURITIES
SUBORDINATION
The Subordinated Securities will be subordinate in right of payment to all
Senior Indebtedness of the Company. The Guarantees of the Subordinated
Securities will be subordinate in right of payment to all Senior Indebtedness of
the Corporation.
Upon any distribution of assets of the Company and/or the Corporation upon
any dissolution, winding up, liquidation or reorganization of the Company or the
Corporation, as the case may be, the payment of the principal of, premium, if
any, and interest, if any, on the Subordinated Securities, in the case of the
Company, and on the Guarantees thereof, in the case of the Corporation, is to be
subordinated in right of payment to the extent provided in the Subordinated
Indenture to the prior payment in full of all Senior Indebtedness of the Company
or the Corporation, as the case may be. In addition, no payment may be made of
the principal of, premium, if any, and interest on the Subordinated Securities
or the Guarantees thereof, or in respect of any redemption, retirement, purchase
or other acquisition thereof, at any time when there is a default in the payment
of the principal of, premium, if any, interest, if any, on or otherwise in
respect of any Senior Indebtedness of the Company or the Corporation, as the
case may be. (Section 1401, Section 1402) Except as described above, the
obligation of the Company and the Corporation to make payment of the principal
of, premium, if any, and interest, if any, on the Subordinated Securities or on
the Guarantees thereof, as the case may be, will not be affected. By reason of
such subordination, in the event of a distribution of assets upon any
dissolution, winding up, liquidation or reorganization of the Company and/or the
Corporation, Holders of Senior Indebtedness of the Company or the Corporation
may recover more, ratably, than Holders of the Subordinated Securities. Subject
to payment in full of all Senior Indebtedness of the Company, the rights of the
Holders of Subordinated Securities will be subrogated to the rights of the
Holders of Senior Indebtedness of the Company to receive payments or
distribution of cash, property or securities of the Company applicable to Senior
Indebtedness of the Company. Subject to payment in full of all Senior
Indebtedness of the Corporation, the rights of Holders of Subordinated
Securities under the Guarantees endorsed thereon will be subject to the rights
of Holders of Senior Indebtedness of the Corporation to receive payments or
distributions of cash, property or securities of the Corporation applicable to
Senior Indebtedness of the Corporation.
Senior Indebtedness of the Company is defined in the Subordinated Indenture
as any obligation of the Company to its creditors, whether now outstanding or
subsequently incurred, except (i) any obligation as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligation is not Senior Indebtedness and (ii) obligations
evidenced by the Securities. Senior Indebtedness of the Guarantor is defined in
the Subordinated Indenture as any obligation of the Guarantor to its creditors,
whether now outstanding or subsequently incurred, except (i) the 7 1/4%
Convertible Subordinated Capital Notes due 1999 issued under the indenture,
dated as of September 10, 1987, between the Guarantor and Bank of New York, as
trustee, and the 8 7/8% Convertible Subordinated Capital Notes due 1998, issued
under the indenture, dated as of March 1, 1989, between the Guarantor and
Continental Bank, National Association, as trustee, and all other notes or other
obligations which may be issued under such indentures, as the same may be
amended from time to time, (ii) any obligation as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligation is not Senior Indebtedness and (iii)
obligations evidenced by the Guarantees. (Section 101)
There is no limitation on the issuance of additional Senior Indebtedness of
the Company or the Corporation. The Company and the Corporation expect from time
to time to incur additional indebtedness constituting Senior Indebtedness. As of
November 30, 1992, the aggregate principal amount of Senior Indebtedness of the
Company outstanding was approximately $1 billion and the aggregate principal
amount of the Senior Indebtedness of the Corporation (including all Senior
Indebtedness of the Company guaranteed by the Corporation) outstanding was
approximately $1.2 billion.
LIMITATION UPON DISPOSITION OF VOTING STOCK AND CERTAIN TRANSACTIONS
The Subordinated Indenture contains a covenant by the Corporation that, so
long as any of the Subordinated Securities are outstanding, but subject to the
provisions of Article Nine (Consolidation, Merger and Sale), the Corporation
will not sell, assign, transfer, grant a security interest in or otherwise
dispose of any
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shares of, securities convertible into or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of the Company, nor will it
permit the Company (or any successor thereto) (a) to issue, except to the
Corporation, any shares of, securities convertible into or options, warrants or
rights to subscribe for or purchase shares of, Voting Stock of the Company, (b)
to merge or consolidate with another Person, other than the Corporation, or (c)
to sell, assign, transfer, grant a security interest in or otherwise dispose of
or lease all or substantially all of the assets of the Company. (Section 1107)
Unless otherwise indicated in the applicable Pricing Supplement, neither
the Subordinated Indenture nor the Subordinated Securities contains covenants
specifically designed to protect Holders in the event of a highly leveraged
transaction involving the Company, the Corporation or the Bank.
EVENTS OF DEFAULT AND LIMITED RIGHTS OF ACCELERATION
The Subordinated Indenture defines an Event of Default as being only
certain events involving the bankruptcy, insolvency or reorganization of the
Corporation or the Bank. (Section 601) The rights of Continental, as Trustee,
and the Holders upon the occurrence of an Event of Default are described in
"Description of Debt Securities and Guarantees--Events of Default". The
Subordinated Indenture does not define an Event of Default as including or
provide for any right of acceleration of the payment of principal of the
Subordinated Securities upon, a bankruptcy, insolvency or reorganization of the
Company alone or a default in the payment of principal or interest or in the
performance of any covenant or agreement in the Subordinated Securities or the
Subordinated Indenture. Currently, neither the Company nor the Corporation are
in default in the payment of principal, premium or interest on any outstanding
subordinated indebtedness. The Subordinated Indenture defines a Default as being
(1) the failure to pay interest on any Subordinated Securities when due, whether
or not such payment is prohibited by the subordination provisions of the
Subordinated Indenture, continued for 30 days, (2) the failure to pay principal
on any Subordinated Securities when due, whether or not such payment is
prohibited by the subordination provisions of the Subordinated Indenture, or (3)
the failure to perform any other covenant of the Corporation, or a breach by the
Corporation of a warranty in the Subordinated Indenture, continued for 60 days
after written notice is given as provided in the Subordinated Indenture. If an
Event of Default or a Default shall occur and be continuing, the Trustee may,
subject to certain limitations and conditions, seek to enforce payment of such
principal or accrued interest or the performance of such covenant or agreement
through appropriate judicial proceedings against the Company or the Corporation.
(Section 603)
REGARDING CONTINENTAL
The Corporation's bank subsidiaries maintain deposit accounts and conduct
other banking transactions with Continental in the ordinary course of their
banking businesses. Continental is also trustee under an indenture, dated as of
March 1, 1989, relating to $162,000,000 of the Corporation's 8 7/8% Subordinated
Capital Notes due 1998. This indebtedness of the Corporation ranks pari passu
with the Corporation's obligations under its Guarantee of the Subordinated
Securities.
CERTAIN TAX CONSIDERATIONS
The Company will be required to withhold the Pennsylvania Corporate Loans
Tax from interest payments on Debt Securities held by or for those subject to
such tax, principally individuals and partnerships resident in Pennsylvania and
resident trustees of Pennsylvania trusts. The tax, at the current rate of four
mills on each dollar of nominal value ($4.00 per $1,000), will be withheld, at
any time when it is applicable, from any interest payment to taxable holders at
the annual rate of $4.00 per $1,000 principal amount of the Debt Securities. The
Debt Securities will be exempt, under current law, from personal property taxes
imposed by political subdivisions in Pennsylvania.
See the accompanying Prospectus Supplement for additional information
concerning certain tax considerations relating to specific series of Offered
Debt Securities. Holders of Debt Securities should consult their tax advisors as
to the applicability to the Debt Securities and interest, if any, payable
thereon of Federal, state and local taxes.
17
<PAGE> 24
PLAN OF DISTRIBUTION
The Company may offer and sell Debt Securities to or through underwriters,
acting as principals for their own accounts or as agents. The Company also may
sell Debt Securities to purchasers directly or through agents. The Prospectus
Supplement sets forth the terms of the offering of the Offered Debt Securities
including the names of any underwriters, agents or dealers, the purchase price
of the Offered Debt Securities and the proceeds to the Company from the sale,
any underwriting discounts and other items constituting underwriters'
compensation and any discounts and commissions allowed or reallowed or paid to
dealers or agents. Any initial public offering price and any discounts or
commissions allowed or reallowed or paid to dealers or agents may be changed
from time to time.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Company also may offer and
sell Debt Securities in exchange for one or more of its outstanding issues of
debt or convertible debt securities.
In connection with the sale of Debt Securities, underwriters may be deemed
to have received compensation from the Company in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of
Debt Securities for whom they may act as agent. Underwriters may sell Debt
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Underwriters, dealers and agents participating in the distribution of Debt
Securities may be deemed to be underwriters, and any discounts or commissions
received by them and any profit realized by them on resale of the Debt
Securities may be deemed to be underwriting discounts and commissions, under the
Securities Act. Under agreements which may be entered into by the Company and
the Corporation, underwriters, dealers and agents who participate in the
distribution of Debt Securities may be entitled to indemnification by the
Company and the Corporation against certain liabilities, including liabilities
under the Securities Act, or to contribution in respect thereof.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Offered Debt Securities from the Company at
the public offering price set forth in such Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a future date.
Each such contract will be for an amount not less than, and the aggregate
principal amount of Debt Securities sold pursuant to such contracts shall be for
an amount not less nor more than, the respective amounts stated in the
Prospectus Supplement. Institutions with which such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but in
all cases such institutions must be approved by the Company. The obligations of
any purchaser under any such contract will not be subject to any conditions
except that (i) the purchase of the Offered Debt Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject and (ii) if the Debt Securities are also being sold to
underwriters, such underwriters shall have purchased the Debt Securities not
sold for delayed delivery. The underwriters and such other persons will not have
any responsibility in respect of the validity or performance of such contracts.
Certain of the underwriters, dealers or agents may be customers of
(including borrowers from), engage in transactions with, and perform services
for, the Company, the Corporation, the Corporation's bank subsidiaries or one or
more of their affiliates in the ordinary course of business.
VALIDITY OF DEBT SECURITIES AND GUARANTEES
The validity of the Offered Debt Securities and related Guarantees will be
passed upon for the Company and the Corporation by James M. Gockley, Esq.,
Assistant General Counsel and Secretary of the Corporation, One Mellon Bank
Center, Pittsburgh, Pennsylvania 15258. Information set forth under "Certain Tax
Considerations" has been passed upon by Michael K. Hughey, Esq., Senior Vice
President and Director of Taxes of the Bank. As of October 31, 1992, Mr. Hughey
was the beneficial owner of 1,100 shares of Common
18
<PAGE> 25
Stock and options covering an additional 9,091 shares of Common Stock. Unless
otherwise indicated in the Prospectus Supplement relating thereto, if the Debt
Securities are being distributed in an underwritten offering, the validity of
the Debt Securities and related Guarantees will be passed upon for the
underwriters by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004,
who will rely upon the opinion of Mr. Gockley as to matters of Pennsylvania law.
Sullivan & Cromwell from time to time performs legal services for the
Corporation.
EXPERTS
The consolidated financial statements of the Corporation and its
subsidiaries included in the Corporation's 1991 Annual Report to Shareholders,
which is incorporated by reference into the Corporation's Annual Report on Form
10-K for the year ended December 31, 1991, have been incorporated herein by
reference in reliance upon the report of KPMG Peat Marwick, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of The Boston Company, Inc. and its
subsidiaries as of December 31, 1991 and 1990 and for the years then ended,
which are included in the Corporation's Current Report on Form 8-K dated
September 14, 1992 (filed on October 19, 1992), have been incorporated herein by
reference in reliance upon the report of Ernst & Young, independent auditors,
incorporated by reference herein, given upon the authority of said firm as
experts in accounting and auditing.
19
<PAGE> 26
===============================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE CORPORATION OR THE UNDERWRITERS.
NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE
CORPORATION SINCE SUCH DATE.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Mellon Bank Corporation................. S-2
Mellon Financial Company................ S-2
Recent Developments..................... S-2
Use of Proceeds......................... S-3
Description of Notes and Guarantees..... S-3
Book-Entry System....................... S-4
Underwriting............................ S-6
Validity of Notes and Guarantees........ S-6
PROSPECTUS
Statement of Available Information...... 2
Incorporation of Certain Documents by
Reference............................. 2
Mellon Bank Corporation................. 3
Mellon Financial Company................ 3
Use of Proceeds......................... 3
Certain Regulatory Considerations....... 4
Mellon Bank Corporation Consolidated
Summary Financial Data................ 7
Description of Debt Securities
and Guarantees........................ 9
Senior Securities....................... 15
Subordinated Securities................. 16
Certain Tax Considerations.............. 17
Plan of Distribution.................... 18
Validity of Debt Securities
and Guarantees........................ 18
Experts................................. 19
</TABLE>
===============================================================================
===============================================================================
$200,000,000
MELLON FINANCIAL COMPANY
(a wholly owned subsidiary of
Mellon Bank Corporation)
6.30% SENIOR NOTES
DUE JUNE 1, 2000
Unconditionally Guaranteed as to
Payment of Principal and Interest by
MELLON BANK CORPORATION
---------------------------
PROSPECTUS SUPPLEMENT
June 14, 1995
---------------------------
LEHMAN BROTHERS
NATIONSBANC CAPITAL MARKETS, INC.
===============================================================================
