<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - July 18, 1995
MELLON BANK CORPORATION
(Exact name of registrant as specified in charter)
Pennsylvania 1-7410 25-1233834
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
One Mellon Bank Center
500 Grant Street
Pittsburgh, Pennsylvania 15258
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code - (412) 234-5000
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit
Number Description
99.1 Mellon Bank Corporation Press Release, dated July 18, 1995,
regarding second quarter results of operations.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MELLON BANK CORPORATION
Date: July 19, 1995 By: STEVEN G. ELLIOTT
Steven G. Elliott
Vice Chairman, Chief Financial
Officer and Treasurer
<PAGE>
EXHIBIT INDEX
Number Description Method of Filing
99.1 Press Release dated July 18, 1995 Filed herewith
<PAGE>
EX-99.1
[LOGO of Mellon Bank Corp.] News Release
Contact: ANALYSTS: MEDIA: Corporate Affairs
Donald J. MacLeod Margaret Kirch Cohen One Mellon Bank Center
(412) 234-5601 (412) 234-0850 Pittsburgh, PA 15258-0001
- -------------------------------------------------------------------------------
MELLON REPORTS SECOND QUARTER 1995 EARNINGS
-------------------------------------------
. Earnings Per Share and Net Income Applicable to Common Stock Increased 13
Percent
. Return on Common Shareholders' Equity was 17.47 Percent for Quarter; Return on
Assets was 1.75 Percent
PITTSBURGH, July 18, 1995 -- Mellon Bank Corporation today reported second
quarter 1995 net income applicable to common stock of $162 million, or $1.09 per
common share, compared with $143 million, or $.97 per common share, in the
second quarter of 1994. Annualized return on common shareholders' equity and
return on assets were 17.47 percent and 1.75 percent, respectively, in the
second quarter of 1995, compared with 15.75 percent and 1.69 percent,
respectively, in the second quarter of 1994.
"Mellon continues to report returns that are among the best in the financial
services industry," said Frank V. Cahouet, chairman, president and chief
executive officer of Mellon Bank Corporation. "Second quarter earnings per
share increased by 13 percent over 1994, reflecting the progress we've made in
our strategy to transform Mellon into a diversified financial services company
with a bank at its core."
Net interest revenue for the quarter was $385 million, up 6 percent from $364
million in the same prior-year period, primarily as a result of a higher level
of interest-earning assets. Fee revenue was $405 million, down slightly from
$412 million in the second quarter of 1994, primarily because the Corporation
elected not to offer its seasonal tax refund anticipation loan program in 1995.
Lower mutual fund administration and custody fees, partially reflecting the 1994
sale of the Boston-based third-party mutual fund
-more-
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 2
administration business, also contributed to the decline in fee revenue.
Partially offsetting the decline in fee revenue were increases in foreign
currency and securities trading and mortgage servicing revenue.
Operating expense for the second quarter of 1995 was $500 million, down from
$508 million in the second quarter of 1994, primarily as a result of higher net
revenue from acquired property and the formation of Chemical Mellon Shareholder
Services, a stock transfer joint venture with Chemical Banking Corporation.
The provision for credit losses was $20 million in the second quarter of 1995,
unchanged from the prior-year period. Net credit losses were $46 million, up
from $14 million in the second quarter of 1994, principally reflecting higher
losses on the CornerStone/sm/ credit card product, which experienced a
significant increase in outstanding balances generated since its introduction in
the first quarter of 1994.
Nonperforming assets totaled $276 million at June 30, 1995, up from $243 million
at March 31, 1995, and $264 million at June 30, 1994. Nonperforming assets as a
percentage of total loans and net acquired property was .99 percent at June 30,
1995, compared with .91 percent at March 31, 1995, and 1.06 percent at June 30,
1994.
With balance sheet assets of approximately $40 billion and assets under
management or administration of approximately $875 billion, Mellon Bank
Corporation is a major financial services company headquartered in Pittsburgh,
providing a full range of banking and investment products and services to
individuals and small, midsize and large businesses and institutions.
###
Note: Detailed supplemental information follows.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 3
Net Interest Revenue
- --------------------
<TABLE>
<CAPTION>
(taxable equivalent basis) Three months Six months
ended June 30, ended June 30,
(dollar amounts in millions) 1995 1994 Increase 1995 1994 Increase
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest revenue $387 $367 $ 20 $779 $738 $ 41
- ---------------------------------------------------------------------------------------
Average loans $27,076 $24,251 $2,825 $26,874 $24,442 $2,432
- ---------------------------------------------------------------------------------------
Average interest-earning
assets $33,142 $31,756 $1,386 $33,124 $31,920 $1,204
- ---------------------------------------------------------------------------------------
Net interest margin 4.69% 4.63% 6 bp 4.75% 4.66% 9 bp
- ---------------------------------------------------------------------------------------
</TABLE>
The improvement in net interest revenue and the net interest margin in the
second quarter of 1995, compared with the second quarter of 1994, primarily
resulted from a higher level of interest-earning assets, as well as a higher-
yielding asset mix as lower-yielding money market assets and securities were
replaced with higher-yielding loans. Partially offsetting this improvement was
a higher level of interest bearing liabilities and a higher cost of funds.
Average loans increased $2.8 billion, or 12%, while money market assets
decreased $648 million and securities decreased $625 million. The increase in
average loans resulted primarily from a $1.1 billion increase in credit card
loans, including $800 million related to the CornerStone/sm/ credit card
product, a $900 million increase in retail loans and a $700 million increase in
domestic wholesale loans.
The improvement in net interest revenue in the first six months of 1995
principally resulted from the same factors responsible for the second quarter
increase. Partially offsetting this increase was the loss of revenue from the
Corporation's seasonal tax refund anticipation loan program that was not offered
in 1995. This program contributed 5 basis points to the net interest margin in
the first six months of 1994.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 4
Credit Quality Expense and Net Credit Losses
- --------------------------------------------
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision for credit losses $20 $20 $ - $40 $40 $ -
Net revenue from acquired property (8) (3) (5) (12) (11) (1)
- ---------------------------------------------------------------------------------------
Credit quality expense $12 $17 $(5) $28 $29 $(1)
- ---------------------------------------------------------------------------------------
Net credit losses (recoveries)(a):
Domestic:
Credit card $41 $12 $29 $68 $22 $46
Other consumer credit 4 - 4 8 4 4
Commercial real estate (5) - (5) (5) (3) (2)
Commercial and financial 8 2 6 5 5 -
- --------------------------------------------------------------------------------------
Total domestic 48 14 34 76 28 48
- --------------------------------------------------------------------------------------
International (2) - (2) (4) 3 (7)
- --------------------------------------------------------------------------------------
Total net credit losses $46 $14 $32 $72 $31 $41
- --------------------------------------------------------------------------------------
Annualized net credit losses
to average loans .67% .24% 43 bp .54% .25% 29 bp
- -------------------------------------------------------------------------------------
</TABLE>
(a) Excludes net credit losses on segregated assets.
Credit quality expense decreased in the second quarter and first half of 1995,
compared with the prior-year periods, as a result of higher net revenue from
acquired property. The provision for credit losses was unchanged for both
periods.
The increase in net credit losses compared with the second quarter of 1994
resulted from a $29 million increase in credit card losses, including
$24 million related to the CornerStone/sm/ portfolio. Credit losses from the
CornerStone/sm/ portfolio have not yet peaked. The Corporation expects modestly
higher levels of credit losses from this product in the third and fourth
quarters of 1995, compared with the second quarter. At June 30, 1995, this
portfolio had total outstandings of $985 million compared with $757 million at
December 31, 1994 and $221 million at June 30, 1994. Net credit losses
increased $41 million in the first six months of 1995 compared with the first
half of 1994, primarily reflecting the higher level of credit card losses.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 5
Noninterest Revenue
- -------------------
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fee revenue:
Trust and investment management:
Mutual fund:
Management $ 76 $ 74 $ 2 $147 $150 $ (3)
Administration/Custody 30 41 (11) 60 88 (28)
Institutional trust 51 55 (4) 102 117 (15)
Institutional asset management 34 38 (4) 68 74 (6)
Private asset management 34 34 - 67 68 (1)
- ----------------------------------------------------------------------------------------
Total trust and investment
management 225 242 (17) 444 497 (53)
Cash management and deposit
transaction charges 48 48 - 95 99 (4)
Mortgage servicing 25 17 8 50 33 17
Foreign currency and
securities trading 25 14 11 49 33 16
Credit card 22 18 4 41 32 9
Other 60 73 (13) 125 154 (29)
- ----------------------------------------------------------------------------------------
Total fee revenue 405 412 (7) 804 848 (44)
Gains on sale of securities 1 8 (7) - 10 (10)
- ----------------------------------------------------------------------------------------
Total noninterest revenue $406 $420 $(14) $804 $858 $(54)
- ----------------------------------------------------------------------------------------
</TABLE>
The decrease in trust and investment management fees in the second quarter of
1995, compared with the prior-year period, primarily resulted from a decrease in
mutual fund administration and custody fees and securities lending revenue.
Mutual fund administration and custody fees decreased $11 million including a
$4 million decrease in revenue related to the second quarter 1994 sale of the
Boston-based third-party mutual fund administration business. Securities
lending revenue, which is included in institutional trust revenue, decreased
$5 million. The decrease in securities lending revenue primarily resulted from
narrower margins in 1995 compared with 1994, as well as a slightly lower volume
of securities lent in the second quarter of 1995. The average level of mutual
fund assets managed at Dreyfus in the second quarter of 1995 was $72 billion, an
increase of $4 billion from the first quarter of 1995 and unchanged from the
second quarter of 1994. The increase from the first quarter of 1995 primarily
resulted from a $3 billion increase in average institutional money market funds.
At June 30, 1995, total mutual fund assets managed at Dreyfus was $73 billion,
compared to $69 billion at March 31, 1995 and $66 billion at December 31, 1994.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 6
The increase in mortgage servicing fees, compared with the prior-year period,
primarily resulted from acquisitions of mortgage servicing rights. The total
mortgage servicing portfolio was $37 billion at June 30, 1995, compared with
$28 billion at June 30, 1994.
The increase in foreign currency and securities trading fee revenue in the
second quarter of 1995 was attributable to higher foreign exchange fees earned,
primarily as a result of increased global custody and corporate customer
activity. Credit card revenue increased in the second quarter of 1995, compared
with the second quarter of 1994, primarily as a result of fee revenue generated
by portfolio acquisitions and the Corporation's CornerStone/sm/ credit card
product.
The $13 million decrease in other fee revenue in the second quarter of 1995,
compared with the prior-year period, resulted from several factors. The
Corporation elected not to offer its seasonal tax refund anticipation loan
program in 1995, resulting in a $19 million reduction in other fee revenue
compared with the second quarter of 1994. In addition, the May 1995 formation
of the stock transfer joint venture Chemical Mellon Shareholder Services (CMSS),
resulted in a $6 million reduction in other fee revenue. The Corporation
accounts for the joint venture under the equity method of accounting by
reporting its share of the net results of the joint venture as other fee
revenue, rather than reporting the revenues and expenses of CMSS separately.
These reductions were partially offset by a $10 million increase in gains from
the disposition of assets and equity securities.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 7
Gains on the sale of securities available for sale were $1 million in the second
quarter of 1995, compared with $8 million in the second quarter of 1994. The
gains in the second quarter of 1994 were recorded at Dreyfus prior to the August
1994 merger of Dreyfus with the Corporation.
The decrease in fee revenue in the first six months of 1995, compared with the
prior-year period primarily resulted from the same factors responsible for the
second quarter decrease. Also impacting the comparison of year-to-date results
were $13 million in one-time net gains recorded at Dreyfus in the first quarter
of 1994 on the sale of certain nonstrategic interests in partnerships, in
anticipation of the merger with the Corporation.
The following table summarizes the major components of the changes in fee
revenue in the second quarter and first six months of 1995 compared to the same
periods in 1994.
Summary of major components of the change
in fee revenue compared to prior-year periods
<TABLE>
<CAPTION>
Second quarter First half
(in millions) 1995 vs 1994 1995 vs 1994
- ---------------------------------------------------------------------------------
<S> <C> <C>
Tax refund anticipation loan fees $(19) $(29)
Mutual fund administration and custody fees
The Boston Company (including $4 million and
$12 million relating to divestitures) (10) (23)
Dreyfus (1) (5)
Securities lending revenue (5) (15)
Impact of CMSS joint venture (6) (6)
Foreign currency and securities trading revenue 11 16
Gains on disposition of assets, equity
securities and partnerships 10 (4)
Mortgage servicing revenue 8 17
Other 5 5
- ---------------------------------------------------------------------------------
Total change in fee revenue $ (7) $(44)
- ---------------------------------------------------------------------------------
</TABLE>
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 8
Operating Expense
- -----------------
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Staff expense $229 $237 $(8) $469 $ 482 $(13)
Net occupancy expense 48 52 (4) 99 102 (3)
Professional, legal and
other purchased services 50 51 (1) 88 97 (9)
Equipment expense 34 30 4 68 67 1
Amortization of goodwill
and other intangible assets 24 23 1 48 50 (2)
FDIC assessment and regulatory
examination fees 15 16 (1) 30 32 (2)
Amortization of mortgage
servicing rights and purchased
credit card relationships 13 10 3 26 22 4
Other expense 95 92 3 179 197 (18)
- ---------------------------------------------------------------------------------------------
Operating expense before the net
revenue from acquired property 508 511 (3) 1,007 1,049 (42)
- ---------------------------------------------------------------------------------------------
Net revenue from acquired property (8) (3) (5) (12) (11) (1)
- ---------------------------------------------------------------------------------------------
Total operating expense $500 $508 $(8) $ 995 $1,038 $(43)
- ---------------------------------------------------------------------------------------------
Average full-time equivalent
staff 24,100 24,000 100 24,200 23,900 300
- ---------------------------------------------------------------------------------------------
Efficiency ratio (a) 64% 65% (1) 63% 66% (3)
Efficiency ratio excluding
amortization of goodwill and
other intangible assets 61 63 (2) 60 63 (3)
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Operating expense before the net revenue from acquired property as a
percentage of revenue, computed on a taxable equivalent basis, excluding
securities gains (losses).
Operating expense before the net revenue from acquired property decreased
$3 million in the second quarter of 1995, compared with the prior-year period.
The formation of the CMSS joint venture resulted in a $3 million reduction in
staff expense and a $1 million reduction in other expense categories. The
reduction in staff expense also reflected lower incentive accruals and lower
pension expense.
The decrease in operating expense before the net revenue from acquired property
in the first half of 1995, compared with the first half of 1994, resulted from
the same items responsible for the second quarter decrease as well as lower
marketing expense related to the CornerStone/sm/ credit card. In addition, the
reduction in professional, legal and other purchased services resulted from the
internalization of data processing operations at The Boston Company and lower
consulting expense.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 9
Except for the merger with Dreyfus, which was accounted for as a pooling of
interests, the Corporation historically has accounted for business combinations
under the purchase method of accounting, resulting in the recording of goodwill
and other identified intangibles which are amortized into operating expense in
future years. Net income applicable to common stock, excluding the after-tax
impact of the amortization of these intangibles, is shown in the table below:
<TABLE>
<CAPTION>
Three months Six months
ended June 30, ended June 30,
(in millions) 1995 1994 1995 1994
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income applicable
to common stock $162 $143 $322 $284
After-tax impact of
amortization of intangibles
from purchase acquisitions 19 19 37 40
- --------------------------------------------------------------
Total $181 $162 $359 $324
- --------------------------------------------------------------
</TABLE>
Income Taxes
- ------------
The Corporation's effective tax rate for the first half of 1995 was 37%,
compared with 38.5% for the first six months of 1994. It is currently
anticipated that the effective tax rate will be approximately 37% for the
remainder of 1995.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 10
Nonperforming Assets(a)
- --------------------
<TABLE>
<CAPTION>
June 30, March 31, Dec. 31, June 30,
(dollar amounts in millions) 1995 1995 1994 1994
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Domestic nonperforming loans:
Consumer mortgage $ 59 $ 58 $ 56 $ 61
Commercial real estate 42 37 28 35
Other domestic 98 61 66 53
International nonperforming loans - - 1 6
- ----------------------------------------------------------------------------------------
Total nonperforming loans 199 156 151 155
- ----------------------------------------------------------------------------------------
Acquired property:
Real estate acquired 98 112 116 139
Reserve for real estate acquired (21) (26) (29) (31)
- ----------------------------------------------------------------------------------------
Real estate acquired, net of reserve 77 86 87 108
Other assets acquired - 1 1 1
- ----------------------------------------------------------------------------------------
Total acquired property 77 87 88 109
- ----------------------------------------------------------------------------------------
Total nonperforming assets $276 $243 $239 $264
- ----------------------------------------------------------------------------------------
Nonperforming loans as a percentage of
total loans .72% .58% .56% .63%
Total nonperforming assets as a
percentage of total loans and net
acquired property .99% .91% .89% 1.06%
- ----------------------------------------------------------------------------------------
</TABLE>
(a) Excludes segregated assets.
Nonperforming assets increased $33 million from March 31, 1995 and $12 million
compared with June 30, 1994, as a result of a higher level of nonperforming
loans. Total nonperforming loans increased $43 million from March 31, 1995 and
$44 million compared with June 30, 1994. The increase resulted primarily from
the addition of a commercial loan to an engineering/construction company. Total
acquired property decreased $10 million and $32 million, respectively, compared
with March 31, 1995 and June 30, 1994. These reductions primarily resulted from
asset sales.
Reserve for Credit Losses
- -------------------------
<TABLE>
<CAPTION>
June 30, March 31, Dec. 31, June 30,
(dollar amounts in millions) 1995 1995 1994 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reserve for credit losses (a) $583 $601 $607 $609
Reserve as a percentage of
total loans 2.10% 2.25% 2.27% 2.46%
- -----------------------------------------------------------------------------------------
</TABLE>
(a) Excludes reserve for segregated assets.
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 11
Selected Capital Data
- ---------------------
<TABLE>
<CAPTION>
(dollar amounts in millions, June 30, March 31, Dec. 31, June 30,
except per share amounts) 1995 1995 1994 1994
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common shareholders' equity $ 3,643 $ 3,755 $ 3,687 $ 3,716
Common shareholders' equity
to assets ratio 9.10% 9.48% 9.54% 9.80%
Tangible common shareholders'
equity to assets ratio (a) 6.78% 7.10% 7.05% 7.33%
Total shareholders' equity $ 4,078 $ 4,190 $ 4,122 $ 4,308
Total shareholders' equity
to assets ratio 10.19% 10.57% 10.67% 11.37%
Tier I capital ratio 9.0%(b) 9.49% 9.48% 10.27%
Total (Tier I and Tier II)
capital ratio 12.3%(b) 12.86% 12.90% 13.74%
Leverage capital ratio 8.3%(b) 8.84% 8.67% 9.54%
Book value per common share $ 25.59 $ 25.63 $ 25.06 $ 25.35(c)
Closing common stock price $41.625 $ 40.75 $30.625 $ 37.50
Market capitalization $ 5,925 $ 5,969 $ 4,507 $ 5,400
- ------------------------------------------------------------------------------
</TABLE>
(a) Common shareholders' equity less goodwill, core deposit and other
identified intangibles divided by total assets less goodwill, core deposit
and other identified intangibles.
(b) Estimated.
(c) The June 30, 1994 book value per common share assumed full conversion
of the Series D preferred stock to common stock. Accordingly, this
included the additional paid-in capital on the Series D preferred stock
because this paid-in capital had no liquidation preference over the common
stock. The Series D preferred stock was converted to common stock in August
1994.
The decrease in the Corporation's common and total shareholders' equity at June
30, 1995, compared with March 31, 1995 and June 30, 1994, resulted from the
repurchase of common stock and warrants issued in 1993 as part of the purchase
price of The Boston Company, partially offset by earnings retention. In June
1995 the Corporation purchased the common shares and warrants in a private
transaction for $213 million. In addition, the remaining decrease in total
shareholders' equity, compared with June 30, 1994, resulted from the redemption
of the Corporation's $160 million Series H preferred stock.
The repurchase of the common stock and warrants increased earnings per common
share by less than $.01 in the second quarter. It is anticipated that this
transaction will enhance earnings per common share by approximately $.05 for the
full year 1995 and will enhance the quarterly return on common
<PAGE>
Mellon Reports Earnings
July 18, 1995
Page 12
shareholders' equity by approximately 80 basis points. This transaction reduced
the June 30, 1995 book value per share by $.80 and the capital ratios by 50 to
60 basis points.
In the fourth quarter of 1994, the Corporation's board of directors authorized
the repurchase of up to 3 million shares of the Corporation's common stock to be
used to meet its common stock requirements for its stock based benefit plans and
dividend reinvestment plan. Since year-end 1994, the Corporation has
repurchased approximately 2.7 million shares under this program. At June 30,
1995, approximately 1.1 million of these shares remain in treasury stock.
<PAGE>
SUMMARY DATA
Mellon Bank Corporation (and its subsidiaries)
<TABLE>
<CAPTION>
Three months ended Six months ended
(dollar amounts in millions, June 30, June 30,
except per share amounts; ------------------- -------------------
common shares in thousands) 1995 1994(a) 1995 1994(a)
------- ------- ------- -------
<S> <C> <C> <C> <C>
Selected key data (b)
- -----------------
Primary net income per common share $ 1.09 $ .97 $ 2.17 $ 1.93
Return on common shareholders' equity 17.47% 15.75% 17.51% 15.93%
Return on assets 1.75% 1.69% 1.76% 1.68%
Yield on interest-earning assets,
on a taxable equivalent basis 8.58% 6.85% 8.51% 6.75%
Cost of funds supporting interest-
earning assets 3.89% 2.22% 3.76% 2.09%
Average balances for the period (c)
- -------------------------------
Money market investments $ 1,165 $ 1,813 $ 1,197 $ 1,979
Trading account securities 220 386 268 444
Securities 4,681 5,306 4,785 5,055
Loans 27,076 24,251 26,874 24,442
Total interest-earning assets 33,142 31,756 33,124 31,920
Total assets 39,370 37,497 39,130 37,803
Deposits 27,100 26,989 27,208 27,387
Total interest-bearing liabilities 27,236 24,922 27,144 24,887
Common shareholders' equity 3,726 3,667 3,713 3,630
Total shareholders' equity 4,161 4,260 4,148 4,223
Computation of primary net income per common share
- --------------------------------------------------
Net income applicable to
common stock $ 162 $ 144(d) $ 322 $ 286(d)
======= ======= ======= =======
Average common shares outstanding 145,465 143,860 146,185 143,727
Average common shares issuable upon
conversion of Series D preferred stock - 2,552 - 2,552
Other common stock equivalents, net of
shares assumed repurchased 2,590 2,693 2,213 2,539
------- ------- ------- -------
Total stock and stock equivalents 148,055 149,105 148,398 148,818
======= ======= ======= =======
Primary net income per common share (e) $ 1.09 $ .97 $ 2.17 $ 1.93
======= ======= ======= =======
</TABLE>
- -----------------------
(a) Restated to reflect the merger with Dreyfus which was accounted for as a
pooling of interests.
(b) Percentages are annualized where applicable. All amounts are based on
unrounded numbers.
(c) Computed on a daily average basis.
(d) After adding back Series D preferred stock dividends.
(e) Based on unrounded numbers.
<PAGE>
CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Bank Corporation
<TABLE>
<CAPTION>
Three months ended Six months ended
(in millions, except per June 30, June 30,
share amounts) ------------------ -------------------
1995 1994(a) 1995 1994(a)
----- ----- ------ -----
<S> <C> <C> <C> <C>
Interest revenue
- ----------------
Interest and fees on loans (loan fees
of $19, $17, $35, and $47) $ 609 $444 $1,192 $ 880
Interest-bearing deposits with banks 8 9 15 18
Federal funds sold and securities
under resale agreements 8 7 19 14
Other money market investments 1 1 1 3
Trading account securities 3 6 9 13
Securities 77 72 155 133
----- ----- ------ ------
Total interest revenue 706 539 1,391 1,061
Interest expense
- ----------------
Interest on deposits 220 117 425 218
Federal funds purchased and securities
under repurchase agreements 33 13 62 23
Other short-term borrowings 39 17 73 33
Notes and debentures 29 28 57 56
----- ----- ------ ------
Total interest expense 321 175 617 330
----- ----- ------ ------
Net interest revenue 385 364 774 731
Provision for credit losses 20 20 40 40
----- ----- ------ ------
Net interest revenue after provision
for credit losses 365 344 734 691
Noninterest revenue
- -------------------
Trust and investment management fees 225 242 444 497
Cash management and deposit
transaction charges 48 48 95 99
Mortgage servicing fees 25 17 50 33
Foreign currency and securities trading 25 14 49 33
Credit card fees 22 18 41 32
Other 60 73 125 154
----- ----- ------ ------
Total fee revenue 405 412 804 848
Gains on sale of securities 1 8 - 10
----- ----- ------ ------
Total noninterest revenue 406 420 804 858
Operating expense
- -----------------
Staff expense 229 237 469 482
Net occupancy expense 48 52 99 102
Professional, legal and other
purchased services 50 51 88 97
Equipment expense 34 30 68 67
Amortization of goodwill and
other intangible assets 24 23 48 50
Other expense 123 118 235 251
Net revenue from acquired property (8) (3) (12) (11)
----- ----- ------ ------
Total operating expense 500 508 995 1,038
----- ----- ------ ------
Income before income taxes 271 256 543 511
Provision for income taxes 99 98 201 197
----- ----- ------ ------
Net income 172 158 342 314
Dividends on preferred stock 10 15 20 30
----- ----- ------ ------
Net income applicable to common stock $ 162 $143 $ 322 $ 284
===== ===== ====== ======
Primary net income per common share $1.09 $.97 $ 2.17 $ 1.93
===== ===== ====== ======
Fully diluted net income per common share $1.09 $.97 $ 2.16 $ 1.93
===== ===== ====== ======
</TABLE>
- --------------------
(a) Restated to reflect the merger with Dreyfus which was accounted for as a
pooling of interests.
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET
Mellon Bank Corporation
<TABLE>
<CAPTION>
(dollar amounts in millions) June 30, Dec. 31, June 30,
1995 1994 1994(a)
-------- -------- --------
<S> <C> <C> <C>
Assets
- ------
Cash and due from banks $ 2,218 $ 2,285 $ 1,710
Money market investments 833 860 1,277
Trading account securities 267 71 365
Securities:
Available for sale 1,953 1,881 3,120
Investment (approximate fair value
of $3,136, $3,033 and $3,210) 3,133 3,244 3,342
Loans, net of unearned discount of
$58, $62 and $70 27,765 26,733 24,731
Reserve for credit losses (583) (607) (609)
Premises and equipment 554 558 524
Acquired property, net of reserves of
$21, $29 and $31 77 88 109
Goodwill and other intangibles 997 1,036 1,010
Mortgage servicing rights and purchased
credit card relationships 432 352 259
Other assets 2,370 2,143 2,070
------- ------- -------
Total assets $40,016 $38,644 $37,908
======= ======= =======
Liabilities
- -----------
Deposits in domestic offices $23,559 $24,100 $24,341
Deposits in foreign offices 3,248 3,470 1,867
Short-term borrowings 5,648 3,472 3,951
Other liabilities 1,615 1,912 1,520
Notes and debentures (with original maturities
over one year) 1,868 1,568 1,921
------- ------- -------
Total liabilities 35,938 34,522 33,600
Shareholders' equity
- --------------------
Preferred stock 435 435 592
Common shareholders' equity:
Common stock - $.50 par value
Authorized - 200,000,000 shares
Issued - 147,165,480 (b); 147,165,480 (b)
and 103,508,752 shares 74 74 52
Additional paid-in capital 1,843 1,851 2,045
Retained earnings 1,950 1,780 1,821
Warrants - 37 37
Net unrealized loss on assets
available for sale (net of taxes) (21) (55) (43)
Treasury stock of 4,812,259 (b); - and 7,501,068
shares at cost (203) - (196)
------- ------- -------
Total common shareholders' equity 3,643 3,687 3,716
------- ------- -------
Total shareholders' equity 4,078 4,122 4,308
------- ------- -------
Total liabilities and shareholders' equity $40,016 $38,644 $37,908
======= ======= =======
</TABLE>
- ---------------------
(a) Restated to reflect the merger with Dreyfus which was accounted for as a
pooling of interests.
(b) Reflects the three-for-two common stock split distributed on November 15,
1994.
