<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) - April 16, 1996
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 April 16, 1996, regarding
first 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: April 16, 1996 By:/s/STEVEN G. ELLIOTT
Steven G. Elliott
Vice Chairman, Chief Financial Officer
& Treasurer
<PAGE>
EXHIBIT INDEX
Number Description Method of Filing
99.1 Press Release dated April 16, 1996 Filed herewith
<PAGE>
EX 99-1
[LOGO OF MELLON] News Release
Contact: MEDIA: ANALYSTS: Corporate Affairs
Stephen K. Dishart Donald J. MacLeod One Mellon Bank Center
(412) 234-0850 (412) 234-5601 Pittsburgh, PA 15258-0001
Tilda H. Walsh David T. Lamar
(412) 234-5873 (412) 234-4633
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
MELLON REPORTS RECORD FIRST QUARTER 1996 EARNINGS
-------------------------------------------------
<TABLE>
<CAPTION>
First Quarter
Financial Highlights 1996 1995 Change
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings per common share (primary) $1.24 $1.08 15%
Earnings per common share (fully diluted) $1.24 $1.07 16%
Return on common equity* 19.7% 17.6% 210bp
Return on tangible common equity* 30.1% 27.1% 300bp
Return on assets* 1.76% 1.77% (1)bp
Return on tangible assets* 1.99% 2.02% (3)bp
- ------------------------------------------------------------------------
* Annualized
</TABLE>
PITTSBURGH, April 16, 1996 -- Mellon Bank Corporation (NYSE:MEL) today reported
record first quarter 1996 earnings per common share of $1.24 and net income
applicable to common stock of $169 million, compared with $1.08 per common share
and $160 million in the first quarter of 1995. Annualized return on common
shareholders' equity and return on assets were 19.7 percent and 1.76 percent,
respectively, in the first quarter of 1996, compared with 17.6 percent and 1.77
percent, respectively, in the first quarter of 1995.
"Our outstanding earnings performance throughout 1995 provided an excellent
platform for continued earnings momentum in 1996," said Frank V. Cahouet,
chairman, president and chief executive officer. "Our returns on tangible
common equity and assets are among the highest in the banking industry,
reflecting the value of the franchise we've built."
-more-
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 2
Results for the first quarter of 1996 included a $28 million gain from the
securitization of $650 million of home equity loans that occurred in late March.
The gain was offset by $22 million of staff expense resulting from the early
retirement enhancement program completed in the first quarter of 1996 and
severance expense; and $6 million of expense related to the further
reconfiguration of the retail delivery system. Earnings per common share in the
first quarter of 1996 also reflect the common share repurchases over the last
year. Average common stock and common stock equivalents used in the computation
of primary earnings per share in the first quarter of 1996 totaled 136.5 million
shares, compared with 148.8 million shares in the first quarter of 1995, an 8
percent decrease.
Net interest revenue for the quarter was $363 million, down $26 million, or 6
percent, from $389 million in the same prior-year period. This reduction
resulted primarily from the fourth quarter 1995 credit card securitization and
repurchase of common shares over the last year. Fee revenue was $503 million,
up $104 million, or 26 percent, from $399 million in the first quarter of 1995.
The increase in fee revenue was attributable to the gain on the securitization
of home equity loans, as well as to higher mutual fund management revenue and
institutional trust fees. In addition, the increase in fee revenue reflects
higher mortgage servicing fees and increased credit card revenue. The increase
in credit card revenue resulted from the credit card securitization.
Operating expense for the first quarter of 1996 was $560 million, up $65
million, or 13 percent, from $495 million in the first quarter of 1995. The
increase primarily resulted from higher staff expense including the retirement
enhancement program, higher amortization expense from purchased mortgage
servicing rights and the expense related to the retail delivery system
reconfiguration, offset in part by lower FDIC deposit insurance assessment
expense.
-more-
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 3
The provision for credit losses was $25 million in the first quarter of 1996,
an increase of $5 million from the prior-year period. Net credit losses were
$28 million, up $2 million from $26 million in the first quarter of 1995.
Nonperforming assets totaled $250 million at March 31, 1996, compared with
$236 million at Dec. 31, 1995, and $243 million at March 31, 1995. The
Corporation's nonperforming assets ratio at March 31, 1996, was .93 percent,
compared with .85 percent at Dec. 31, 1995, and .91 percent at March 31, 1995.
With balance sheet assets of more than $41 billion and assets under
management or administration of more than $1 trillion, Mellon Bank Corporation
is a major financial services company headquartered in Pittsburgh; its primary
subsidiary is Mellon Bank, N.A. Mellon provides a full range of banking and
investment products and services to individuals and small, midsize and large
businesses and institutions. Its principal mutual fund business is The Dreyfus
Corporation.
###
NOTE: Detailed supplemental information follows.
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 4
Tangible Operating Results
- --------------------------
Except for the merger with Dreyfus, which was accounted for under the "pooling
of interests" method, the Corporation has been required to account for business
combinations under the "purchase" method of accounting. The purchase method
results in the recording of goodwill and other identified intangibles which are
amortized in future years into operating expense. Had the Corporation accounted
for these business combinations under the pooling of interests method, these
intangibles and their related amortization would not have been recorded. The
tangible operating results are shown in the table below.
<TABLE>
<CAPTION>
Quarter ended
March 31,
(in millions) 1996 1995 Change
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Net income applicable to common stock $ 169 $ 160 $ 9
After tax impact of amortization of
intangibles from purchase acquisitions 19 18 1
- ---------------------------------------------------------------------------
Tangible net income applicable to
common stock $ 188 $ 178 $ 10
- ---------------------------------------------------------------------------
Average common equity $ 3,459 $ 3,700 $ (241)
Average goodwill and other intangibles 946 1,026 80
- ---------------------------------------------------------------------------
Average tangible common equity $ 2,513 $ 2,674 $ (161)
Return on tangible common equity 30.1% 27.1% 300 bp
- ---------------------------------------------------------------------------
Average total assets $ 40,848 $ 38,886 $ 1,962
Average goodwill and other intangibles 946 1,026 80
- ---------------------------------------------------------------------------
Average tangible assets $ 39,902 $ 37,860 $ 2,042
Return on tangible assets 1.99% 2.02% (3)bp
- ---------------------------------------------------------------------------
Average common shares and equivalents
outstanding (primary)(000) 136,506 148,766 (12,260)
- ---------------------------------------------------------------------------
</TABLE>
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 5
<TABLE>
<CAPTION>
Net Interest Revenue
- --------------------
Quarter ended
March 31,
(in millions) 1996 1995 Change
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Net interest revenue (FTE) $ 366 $ 392 $ (26)
Net interest margin (FTE) 4.35% 4.80% (45)bp
Average securities $ 5,339 $ 4,890 $ 449
Average loans $ 27,058 $ 26,670 $ 388
Average interest-earning assets $ 33,825 $ 33,106 $ 719
- ------------------------------------------------------------------------
</TABLE>
The decrease in net interest revenue and the net interest margin in the first
quarter of 1996, compared with the first quarter of 1995, resulted from the
effect of the November 1995 $950 million credit card securitization and funding
costs related to the repurchase of common stock. Excluding the effect of the
credit card securitization and common stock repurchases, net interest revenue
for the first quarter of 1996 would have been approximately $400 million. The
foregone net interest revenue from the credit card securitization is
substantially offset by higher servicing fee revenue and lower net credit
losses. Net interest revenue in the first quarter of 1996 was favorably impacted
by loan growth, higher loan fees and a higher level of retail demand deposits
which were partially offset by the migration of retail customers from lower cost
deposit products to higher cost products.
Average loans increased $388 million in the first quarter of 1996, compared with
the prior-year period, as a result of an increase in substantially all loan
categories, which more than offset a decrease of $775 million in jumbo
residential mortgage loans and $460 million in credit card loans. The decrease
in jumbo residential mortgage loans primarily resulted from loan sales while the
decrease in credit card loans resulted from the securitization. The average
level of retail loans will be impacted in future periods by the March 29, 1996
securitization of $650 million of home equity loans.
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 6
<TABLE>
<CAPTION>
Credit Quality Expense and Net Credit Losses
- --------------------------------------------
Quarter ended
March 31,
(in millions) 1996 1995 Change
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for credit losses $ 25 $ 20 $ 5
Net revenue from acquired property (8) (4) 4
- --------------------------------------------------------------------------------------------------
Credit quality expense $ 17 $ 16 $ 1
- --------------------------------------------------------------------------------------------------
Net credit losses (recoveries)(a):
Domestic:
Credit card $ 16 $ 27 $(11)
Other consumer credit 5 4 1
Commercial real estate 3 - 3
Commercial and financial 5 (3) 8
- --------------------------------------------------------------------------------------------------
Total domestic 29 28 1
International (1) (2) 1
- --------------------------------------------------------------------------------------------------
Total net credit losses $ 28 $ 26 $ 2
- --------------------------------------------------------------------------------------------------
Annualized net credit losses
to average loans .41% .40% 1bp
- --------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes net credit losses on segregated assets and assets held for
accelerated resolution.
Credit quality expense increased $1 million in the first quarter of 1996,
compared with the prior-year period, as a $5 million increase in the provision
for credit losses was primarily offset by a $4 million increase in net revenue
from acquired property.
The $2 million increase in net credit losses compared with the first quarter of
1995 resulted from a higher level of commercial net credit losses primarily
offset by lower credit card net credit losses. The reduction in credit card net
credit losses resulted from the December 1995 transfer of certain
CornerStone(sm) credit card loans, that have a history of delinquency, into an
accelerated resolution portfolio. The net carrying value of the accelerated
resolution portfolio at March 31, 1996, was $65 million, compared with $82
million at year-end 1995. The credit card securitization in the fourth quarter
of 1995 was also a factor in the reduction of credit card net credit losses.
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 7
<TABLE>
<CAPTION>
Noninterest Revenue
- -------------------
Quarter ended
March 31,
(in millions) 1996 1995 Change
- -----------------------------------------------------------------
<S> <C> <C> <C>
Fee revenue:
Trust and investment management:
Mutual fund:
Management $ 83 $ 71 $ 12
Administration/Custody 27 30 (3)
Institutional trust 59 51 8
Institutional asset management 34 34 -
Private asset management 38 33 5
- -----------------------------------------------------------------
Total trust and investment
management fees 241 219 22
Cash management and deposit
transaction charges 49 47 2
Mortgage servicing fees 41 25 16
Credit card fees 33 19 14
Foreign currency and securities trading 21 24 (3)
Other 118 65 53
- -----------------------------------------------------------------
Total fee revenue 503 399 104
Gains (losses) on sale of securities 1 (1) 2
- -----------------------------------------------------------------
Total noninterest revenue $ 504 $ 398 $106
- -----------------------------------------------------------------
</TABLE>
Noninterest revenue increased $106 million, or 26%, in the first quarter of
1996, compared with the prior-year period.
The $22 million increase in trust and investment management fees in the first
quarter of 1996, compared with the prior-year period, primarily resulted from a
$12 million, or 17%, increase in mutual fund management revenue and an $8
million, or 14%, increase in institutional trust fees. The higher revenue from
the management of mutual funds resulted from a higher average level of mutual
fund assets managed and lower fee waivers at Dreyfus. Average proprietary funds
managed at Dreyfus in the first quarter of 1996 were $81 billion, compared with
$68 billion in the first quarter of 1995. This increase primarily resulted from
higher average institutional money market funds and equity funds. The increase
in institutional trust revenue resulted from new business, including the 1995
acquisition of two corporate trust businesses.
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 8
The increase in mortgage servicing fees in the first quarter of 1996, compared
with the prior-year period, resulted from the acquisition of mortgage servicing
rights including the third quarter 1995 acquisition of Metmor Financial, Inc.
Credit card revenue increased in the first quarter of 1996, compared with the
first quarter of 1995, as a result of servicing fee revenue from the securitized
credit card receivables. The decrease in foreign currency and securities trading
fee revenue in the first quarter of 1996, compared to the prior-year period, was
attributable to lower foreign exchange fees earned, partially offset by higher
securities trading account fee revenue.
Other fee revenue increased $53 million in the first quarter of 1996, compared
with the prior-year period. This increase primarily resulted from the $28
million gain on the home equity loan securitization, a $14 million increase in
gains on disposition of assets and sales of equity securities, and a $10 million
increase in fees relating to the electronic filing of income tax returns.
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 9
<TABLE>
<CAPTION>
Operating Expense
- -----------------
Quarter ended
March 31,
(dollar amounts in millions) 1996 1995 Change
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Staff expense $ 277 $ 240 $ 37
Net occupancy expense 56 51 5
Professional, legal and other purchased services 47 38 9
Equipment expense 35 34 1
Amortization of mortgage servicing rights
and purchased credit card relationships 28 13 15
Amortization of goodwill
and other intangible assets 25 24 1
FDIC assessment and regulatory examination fees 1 15 (14)
Other expense 99 84 15
- -----------------------------------------------------------------------------
Operating expense before the net revenue
from acquired property 568 499 69
- -----------------------------------------------------------------------------
Net revenue from acquired property (8) (4) (4)
- -----------------------------------------------------------------------------
Total operating expense $ 560 $ 495 $ 65
- -----------------------------------------------------------------------------
Average full-time equivalent staff 24,600 24,300 300
- -----------------------------------------------------------------------------
Efficiency ratio (a) 65% 63% 2
Efficiency ratio excluding amortization
of goodwill and other intangible assets 62 60 2
- -----------------------------------------------------------------------------
</TABLE>
(a) Operating expense before the net revenue from acquired property as a
percentage of revenue, computed on a taxable equivalent basis, excluding
gains (losses) on the sale of securities.
Operating expense increased $65 million, or 13%, in the first quarter of 1996,
compared with the prior-year period. This increase resulted primarily from
increases in staff expense, the amortization of mortgage servicing rights and
expense resulting from the ongoing strategic initiatives to reconfigure the
retail delivery system. These increases were partially offset by lower FDIC
deposit insurance assessment expense. Excluding expense resulting from the early
retirement enhancement program, severance and the reconfiguration of the retail
delivery system, operating expense increased 8%, compared with the first quarter
of 1995.
The increase in staff expense resulted primarily from an $18 million charge for
the Corporation's retirement enhancement program, $4 million of severance
accruals and an $8 million increase in incentive expense. The early retirement
enhancement program, which was offered during the first quarter and concluded on
March 31, 1996, enhanced the pensions and health insurance
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 10
of 495 eligible associates electing early retirement, effective April 1, 1996.
The increase in the amortization of mortgage servicing rights reflects the
increase in the Corporation's mortgage servicing portfolio from March 31, 1995.
The $5 million increase in net occupancy expense resulted from expense related
to the reconfiguration of the retail delivery system. The increase in
professional, legal and other purchased services and other expense reflects
business growth as well as expenses resulting from efforts to reengineer lines
of business and improve customer service. Partially offsetting these increases
was a decrease in the FDIC deposit insurance assessment which resulted from the
elimination of this assessment in the first half of 1996 for healthy
institutions.
<TABLE>
<CAPTION>
Nonperforming Assets(a)
- -----------------------
March 31, Dec. 31, March 31,
(in millions) 1996 1995 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic nonperforming loans:
Consumer mortgage $ 53 $ 61 $ 58
Commercial real estate 53 39 37
Other domestic 71 67 61
- -----------------------------------------------------------------------------
Total nonperforming loans 177 167 156
Acquired property:
Real estate acquired 86 87 112
Reserve for real estate acquired (13) (18) (26)
- -----------------------------------------------------------------------------
Real estate acquired, net of reserve 73 69 86
Other assets acquired - - 1
- -----------------------------------------------------------------------------
Total acquired property 73 69 87
- -----------------------------------------------------------------------------
Total nonperforming assets $ 250 $ 236 $ 243
- -----------------------------------------------------------------------------
Nonperforming loans as a percentage of
total loans .66% .60% .58%
Nonperforming assets as a
percentage of total loans and net
acquired property .93% .85% .91%
- -----------------------------------------------------------------------------
</TABLE>
(a) Excludes segregated assets.
The $14 million increase in nonperforming assets from December 31, 1995,
resulted primarily from a $10 million increase in nonperforming loans. This
increase resulted from additions of commercial real estate loans to nonaccrual
status partially offset by credit losses, returns to accrual status and
repayments.
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 11
Total nonperforming assets increased $7 million compared with March 31, 1995, as
an increase in nonperforming loans was partially offset by a decrease in
acquired property.
<TABLE>
<CAPTION>
Reserve for Credit Losses
- -------------------------
March 31, Dec. 31, March 31,
(in millions) 1996 1995 1995
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Reserve for credit losses (a) $ 468 $ 471 $ 601
Reserve as a percentage of total loans 1.74% 1.70% 2.25%
- ----------------------------------------------------------------------------
</TABLE>
(a) Excludes reserve for segregated assets.
The $133 million decrease in the reserve for credit losses from March 31, 1995,
primarily resulted from credit losses taken on the CornerStone(sm) credit card
loans during 1995, including the loans that were transferred to the accelerated
resolution portfolio in the fourth quarter.
<TABLE>
<CAPTION>
Selected Capital Data
- ---------------------
(in millions, except March 31, Dec. 31, March 31,
per share amounts) 1996 1995 1995
- --------------------------------------------------------------------
<S> <C> <C> <C>
Common shareholders' equity $3,384 $3,590 $3,755
Common shareholders' equity
to assets ratio 8.14% 8.83% 9.48%
Tangible common shareholders'
equity $2,450 $2,632 $2,740
Tangible common shareholders'
equity to assets ratio (a) 6.03% 6.63% 7.10%
Total shareholders' equity $3,819 $4,025 $4,190
Total shareholders' equity
to assets ratio 9.19% 9.90% 10.57%
Tier I capital ratio 7.70%(b) 8.14% 9.49%
Total (Tier I and Tier II)
capital ratio 12.20%(b)(c) 11.29% 12.86%
Leverage capital ratio 7.50%(b) 7.80% 8.84%
Book value per common share $25.55 $26.17 $25.63
Closing common stock price $55.25 $53.75 $40.75
Market capitalization $7,317 $7,374 $5,969
- --------------------------------------------------------------------
</TABLE>
(a) Common shareholders' equity less goodwill and other intangibles divided by
total assets less goodwill and other intangibles.
(b) Estimated.
(c) The increase from December 31, 1995, resulted from $550 million of
subordinated debt issued in the first quarter of 1996.
<PAGE>
Mellon Reports Earnings
April 16, 1996
Page 12
The decrease in the Corporation's common and total shareholders' equity at March
31, 1996, compared with December 31, 1995 and March 31, 1995, resulted from
repurchases of common stock offset in part by earnings retention. In addition,
asset growth resulted in a decrease in the Corporation's capital ratios compared
with the prior-year periods.
In February 1996, the board of directors of the Corporation authorized the
repurchase of up to 3.5 million additional shares of common stock to be used to
meet current and near-term requirements for its stock-based benefit plans and
dividend reinvestment plan. At March 31, 1996, the Corporation had repurchased
.9 million shares under this authorization. In addition, in February 1996 the
Corporation completed the 8 million share repurchase program authorized by the
board of directors in the fourth quarter of 1995. Since the beginning of 1995,
the Corporation has repurchased 18.3 million common shares, prior to any
reissuances, as well as warrants to purchase 4.5 million shares of common stock.
Average common stock and stock equivalents used in the computation of primary
earnings per share in the first quarter of 1996 totaled 136.5 million shares,
compared with 148.8 million shares in the first quarter of 1995, an 8% decrease.
At March 31, 1996, common stock and stock equivalents totaled 134.3 million
shares.
<PAGE>
SUMMARY DATA
Mellon Bank Corporation
<TABLE>
<CAPTION>
(dollar amounts in millions, Quarter ended
-----------------------------------------------------
except per share amounts; March 31, Dec. 31, Sept. 30, June 30, March 31,
common shares in thousands) 1996 1995 1995 1995 1995
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected key data
- -----------------
Net income per common share
(primary) $ 1.24 $ 1.18 $ 1.15 $ 1.09 $ 1.08
Net income per common share
(fully diluted) $ 1.24 $ 1.16 $ 1.14 $ 1.09 $ 1.07
Net income applicable to
common stock $ 169 $ 164 $ 166 $ 162 $ 160
Tangible net income applicable to
common stock (a) $ 188 $ 182 $ 184 $ 181 $ 178
Return on common shareholders'
equity (b) 19.7% 18.1% 18.0% 17.5% 17.6%
Return on tangible common
shareholders' equity (a)(b) 30.1% 27.4% 27.4% 26.6% 27.1%
Return on assets (b) 1.76% 1.68% 1.70% 1.75% 1.77%
Return on tangible assets (a)(b) 1.99% 1.90% 1.92% 1.99% 2.02%
Common equity to assets (b) 8.14% 8.83% 8.81% 9.10% 9.48%
Tangible common equity to assets (b) 6.03% 6.63% 6.66% 6.78% 7.10%
Average balances for the period
- -------------------------------
Money market investments $ 1,290 $ 1,206 $ 1,286 $ 1,165 $ 1,230
Trading account securities 138 283 363 220 316
Securities 5,339 5,178 4,938 4,681 4,890
Loans 27,058 27,747 27,774 27,076 26,670
Total interest-earning assets 33,825 34,414 34,361 33,142 33,106
Total assets 40,848 41,141 40,955 39,370 38,886
Total tangible assets 39,902 40,183 39,970 38,366 37,860
Deposits 29,274 28,946 28,417 27,100 27,318
Total interest-bearing liabilities 27,986 28,629 28,159 27,236 27,050
Common shareholders' equity 3,459 3,610 3,648 3,726 3,700
Tangible common shareholders' equity 2,513 2,652 2,663 2,722 2,674
Total shareholders' equity 3,894 4,045 4,083 4,161 4,135
</TABLE>
<TABLE>
<CAPTION>
Computation of net income per common share (primary)
- ------------------------------------------------------ Quarter ended
March 31,
-------------------
1996 1995
-------- --------
<S> <C> <C>
Net income applicable to common stock $ 169 $ 160
======== ========
Average common shares outstanding 134,670 146,913
Other common stock equivalents, net of
shares assumed repurchased:
Stock options 1,836 1,444
Warrants - 409
-------- --------
Total stock and stock equivalents (c) 136,506 148,766
======== ========
Net income per common share $ 1.24 $ 1.08
======== ========
</TABLE>
- -----------------------
(a) Tangible net income applicable to common stock, return on tangible common
shareholders' equity and return on tangible assets, exclude the after tax
impact of the amortization of goodwill and other identified intangibles
resulting from accounting for business combinations under the purchase
method of accounting.
(b) Annualized. All amounts are based on unrounded numbers.
(c) Fully diluted stock and stock equivalents were 136,721 and 149,963 for the
first quarter of 1996 and 1995, respectively.
<PAGE>
CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Bank Corporation
<TABLE>
<CAPTION>
Quarter ended
(in millions, except per March 31,
share amounts) -----------------------
1996 1995
----- -----
<S> <C> <C>
Interest revenue
- ----------------
Interest and fees on loans (loan fees of $24 and $16) $ 566 $ 583
Interest-bearing deposits with banks 9 7
Federal funds sold and securities under resale agreements 6 11
Other money market investments 2 -
Trading account securities 2 6
Securities 88 78
----- -----
Total interest revenue 673 685
Interest expense
- ----------------
Interest on deposits 218 205
Federal funds purchased and securities
under repurchase agreements 27 29
Other short-term borrowings 37 34
Notes and debentures 28 28
----- -----
Total interest expense 310 296
----- -----
Net interest revenue 363 389
Provision for credit losses 25 20
----- -----
Net interest revenue after provision for credit losses 338 369
Noninterest revenue
- -------------------
Trust and investment management fees 241 219
Cash management and deposit transaction charges 49 47
Mortgage servicing fees 41 25
Credit card fees 33 19
Foreign currency and securities trading 21 24
Other 118 65
----- -----
Total fee revenue 503 399
Gains (losses) on sale of securities 1 (1)
----- -----
Total noninterest revenue 504 398
Operating expense
- -----------------
Staff expense 277 240
Net occupancy expense 56 51
Professional, legal and other purchased services 47 38
Equipment expense 35 34
Amortization of mortgage servicing rights and purchased
credit card relationships 28 13
Amortization of goodwill and other intangible assets 25 24
Other expense 100 99
Net revenue from acquired property (8) (4)
----- -----
Total operating expense 560 495
----- -----
Income before income taxes 282 272
Provision for income taxes 103 102
----- -----
Net income 179 170
Dividends on preferred stock 10 10
----- -----
Net income applicable to common stock $ 169 $ 160
===== =====
Net income per common share (primary) $1.24 $1.08
===== =====
Net income per common share (fully diluted) $1.24 $1.07
===== =====
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET
Mellon Bank Corporation
<TABLE>
<CAPTION>
(dollar amounts in millions) March 31, Dec. 31, March 31,
1996 1995 1995
---------- --------- ----------
<S> <C> <C> <C>
Assets
- ------
Cash and due from banks $ 2,749 $ 2,342 $ 2,130
Money market investments 1,535 860 948
Trading account securities 168 62 233
Securities:
Available for sale 3,164 2,913 2,112
Investment (approximate fair value
of $2,608, $2,554 and $3,103) 2,628 2,519 3,198
Loans, net of unearned discount of
$57, $44 and $63 26,857 27,690 26,696
Reserve for credit losses (468) (471) (601)
Premises and equipment 555 556 552
Acquired property, net of reserves of
$13, $18 and $26 73 69 87
Goodwill and other intangibles 934 958 1,014
Mortgage servicing rights and purchased
credit card relationships 701 682 375
Other assets 2,686 2,466 2,875
------- ------- -------
Total assets $41,582 $40,646 $39,619
======= ======= =======
Liabilities
- -----------
Deposits in domestic offices $26,572 $24,870 $23,279
Deposits in foreign offices 3,326 4,391 3,726
Short-term borrowings 4,163 4,317 4,660
Other liabilities 1,730 1,600 2,172
Notes and debentures (with original
maturities over one year) 1,972 1,443 1,592
------- ------- -------
Total liabilities 37,763 36,621 35,429
Shareholders' equity
- --------------------
Preferred stock 435 435 435
Common shareholders' equity:
Common stock - $.50 par value
Authorized - 200,000,000 shares
Issued - 147,165,480 shares 74 74 74
Additional paid-in capital 1,854 1,850 1,856
Retained earnings 2,207 2,118 1,867
Warrants - - 37
Net unrealized gain (loss) on assets
available for sale, net of tax (23) 18 (53)
Treasury stock of 14,722,287; 9,978,407
and 678,826 shares at cost (728) (470) (26)
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Total common shareholders' equity 3,384 3,590 3,755
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Total shareholders' equity 3,819 4,025 4,190
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Total liabilities and shareholders'
equity $41,582 $40,646 $39,619
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