MELLON FINANCIAL CORP, 8-K, EX-99.1, 2000-07-21

MELLON FINANCIAL CORP
8-K, EX-99.1, 2000-07-21
NATIONAL COMMERCIAL BANKS

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Exhibit 99.1

[LOGO OF MELLON BANK]

		News Release

MEDIA:	ANALYSTS:	Corporate Affairs
Ken Herz	Donald J. MacLeod	One Mellon Center
(412) 234-0850	(412) 234-5601	Pittsburgh, PA 15258-0001
Ron Sommer	Andrew J. Clark
(412) 236-0082	(412) 234-4633

FOR IMMEDIATE RELEASE
MELLON’S SECOND QUARTER 2000 RESULTS EQUAL RECORD
— Core business sectors earnings per share contribution increased 21% —

PITTSBURGH, July 18, 2000—Mellon Financial Corporation (NYSE: MEL) today announced second quarter 2000 diluted earnings per share of 50 cents, an increase of 11 percent compared with 45 cents per share, on an operating basis, in the second quarter of 1999, equaling the record reached last quarter. Earnings per share increased 11 percent despite the impact of the previously-disclosed expiration of a long-term mutual fund administration contract with a third party. Core business sectors earnings per share contribution, which excludes the revenues and related expenses from this contract as well as the impact of divestitures, and real estate workout and other activity from both periods, increased 21 percent.

Financial Highlights	Quarter ended			Six months ended
(dollar amounts in millions, except per share	June 30,	March 31,	June 30,	June 30,	June 30,
amounts; returns are annualized)	2000	2000	1999	2000	1999

Operating results (a):
Diluted earnings per share	$.50	$.50	$.45	$1.00	$.88
Net income	$247	$253	$236	$500	$467
Return on equity	26.2%	26.0%	21.4%	26.1%	21.2%
Return on assets	2.12%	2.15%	1.90%	2.14%	1.87%

Cash operating results (a):
Diluted earnings per share	$.56	$.56	$.50	$1.12	$.99
Net income	$274	$282	$266	$556	$526
Return on equity	51.4%	51.8%	41.1%	51.6%	40.8%
Return on assets	2.44%	2.50%	2.23%	2.47%	2.19%

Reported results:
Diluted earnings per share	$.50	$.50	$.45	$1.00	$.93
Net income	$247	$253	$238	$500	$492
Return on equity	26.2%	26.0%	21.6%	26.1%	22.3%
Return on assets	2.12%	2.15%	1.92%	2.14%	1.97%

Fee revenue as a percentage of net interest and
fee revenue (FTE)	69%	70%	69%	69%	68%
Trust and investment fee revenue as a percentage
of net interest and fee revenue (FTE)	50%	50%	45%	50%	44%
Efficiency ratio excluding amortization of intangibles	59%	59%	62%	59%	62%

(a)

Operating results equaled reported results in the first and second quarters of 2000. Operating and cash operating results for the second quarter of 1999 exclude a $38 million after-tax net gain from divestitures and $36 million of nonrecurring expenses after taxes. The first quarter of 1999 excludes a $49 million after-tax net gain from divestitures and a $26 million after-tax charge for the cumulative effect of a change in accounting principle. Cash operating results exclude the after-tax impact of the amortization of goodwill and other intangibles from purchase acquisitions.

—more—

Mellon Reports Earnings
July 18, 2000
Page 2

"Mellon continues to report solid quarterly operating earnings and very strong returns, demonstrating our ability to expand our leadership in high-growth businesses," said Martin G. McGuinn, Mellon chairman and chief executive officer. " Clearly, our strategy and business mix continue to produce strong results for our shareholders."

The Corporation also declared a regular quarterly common dividend of 22 cents per share. This cash dividend is payable on Aug. 15, 2000, to shareholders of record at the close of business on July 31, 2000.

Second Quarter 2000 Financial Highlights:

Return on equity increased to 26.2 percent from 21.4 percent and return on assets increased to 2.12 percent from 1.90 percent, on an operating basis, compared to a year ago.

Fee revenue increased 9 percent compared to a year ago, excluding the 1999 network services and mortgage banking divestitures as well as the May 2000 expiration of the long-term mutual fund administration contract with a third party, primarily due to a 12 percent increase in trust and investment fee revenue.

Assets under management grew to $521 billion with assets under management, administration or custody totaling $2.8 trillion at June 30, 2000. Assets managed by subsidiaries and affiliates outside the United States increased to $64 billion at June 30, 2000.
Operating expenses decreased 2 percent compared with the first quarter of 2000.
The capital ratios improved over the prior quarter-end, with the shareholders’ equity to assets ratio reaching 8.39 percent at June 30, 2000.

A new stock repurchase program was initiated covering 25 million shares of common stock. This follows the completion of an existing repurchase program that also covered 25 million shares. Since Jan. 1, 1999, the Corporation has repurchased approximately $1.5 billion worth of its common stock, reducing shares outstanding by nearly 7 percent, net of reissuances.

Moody’s Investors Service has upgraded its long-term ratings for Mellon Financial Corporation (from A2 to A1) and for Mellon Bank, N.A. (from A1 to Aa3). This now gives Mellon Bank double-A long-term deposit ratings from all the major credit rating agencies.

—more—

Mellon Reports Earnings
July 18, 2000
Page 3

Mellon Financial Corporation is a global financial services company. Headquartered in Pittsburgh, Mellon offers a comprehensive array of banking services for individuals and corporations and is one of the world’s leading providers of asset management, trust, custody and benefits consulting services. Mellon has approximately $2.8 trillion in assets under management, administration or custody, including $521 billion under management. Its asset management companies include The Dreyfus Corporation and Newton Management Limited (U.K.).

Taped comments from Steven G. Elliott, senior vice chairman and chief financial officer, regarding second quarter 2000 earnings are available by calling (412) 236-5385 from approximately 1 p.m. EDT Tuesday, July 18, 2000, through 5 p.m. EDT on Friday, July 28, 2000. Press releases and other information about Mellon Financial Corporation and its products and services are available at www.mellon.com on the Internet. For press releases by fax, call 1 800 758-5804, identification number 552187.

Note: Detailed supplemental financial information follows.

Mellon Reports Earnings
July 18, 2000
Page 4

Business Sectors

(dollar amounts in millions) Second Quarter 2000 Second Quarter 1999

Sector
Total
Revenue Income
Before
Taxes Return on
Common
Equity Total
Revenue Income
Before
Taxes Return on
Common
Equity

Managed for Growth:

Wealth Management $110 $49 53 % $97 $38 52%

Global Investment Management 271 89 38 244 84 38

Global Investment Services 273 67 34 241 56 27

    Total Growth Sectors $654 $205 $39 $582 $178 36

Managed for Return:

Regional Consumer Banking 164 58 23 168 55 21

Specialized Commercial Banking 132 65 19 122 46 16

Large Corporate Banking 145 49 15 140 53 14

    Total Return Sectors 441 172 19 430 154 17

Total Core Business Sectors $1,095 $377 26 % $1,012 $332 23%

(dollar amounts in millions) First Six Months 2000 First Six Months 1999

Sector
Total
Revenue Income
Before
Taxes Return on
Common
Equity Total
Revenue Income
Before
Taxes Return on
Common
Equity

Managed for Growth:

Wealth Management $214 $92 51 % $189 $72 50%

Global Investment Management 572 203 44 477 159 37

Global Investment Services 531 128 33 469 106 26

    Total Growth Sectors 1,317 423 41 1,135 337 35

Managed for Return:

Regional Consumer Banking 321 107 21 327 98 19

Specialized Commercial Banking 274 133 20 253 111 19

Large Corporate Banking 280 91 14 267 96 13

    Total Return Sectors 875 331 18 847 305 16

Total Core Business Sectors $2,192 $754 26 % $1,982 $642 22%

Note: In the second quarter 2000 the Corporation announced that its jumbo residential mortgage origination business was being realigned to focus primarily on existing private client relationships. The jumbo mortgage lending results are no longer included in Wealth Management. Prior periods have been restated.
The Corporation manages its business sectors utilizing growth and return strategies. The sectors managed for growth include businesses which are predominantly fee-based in nature. The Corporation invests in these businesses for future growth. The sectors managed for return, which include the more slowly growing, traditional banking businesses, are managed to drive profitability and return on equity higher, primarily focusing on improving productivity through re-engineering and effective capital management.

Mellon Reports Earnings
July 18, 2000
Page 5

Summary

% of
Revenue % of Income
Before Taxes % of
Revenue % of Income Before Taxes

2Q00

2Q99

2Q00

2Q99

YTD00

YTD99

YTD00

YTD99

Growth sectors
60%

57%

54%

53%

60%

57%

56%

53%

Return sectors
40%

43%

46%

47%

40%

43%

44%

47%

Total Core Business Sectors
100%

100%

100%

100%

100%

100%

100%

100%

Sectors Managed for Growth:

2Q 2000 vs. 2Q 1999 Total Revenue Operating Expense Income Before

Growth Growth Taxes Growth

Wealth Management 14% 6% 26%

Global Investment Management 11% 14% 7%

Global Investment Services 13% 11% 20%



Total Growth Sectors 12% 11% 15%



YTD 2000 vs. YTD 1999 Total Revenue Operating Expense Income Before

Growth Growth Taxes Growth

Wealth Management 13% 5% 26%

Global Investment Management 20% 16% 28%

Global Investment Services 13% 11% 21%



Total Growth Sectors 16% 12% 25%

The Corporation’s growth sectors continued to show strong growth in revenue and income before taxes for the second quarter and first six months of 2000. Revenue for the growth sectors grew 12% and 16%, respectively, for the second quarter and first six months of 2000, while income before taxes grew 15% and 25% for the same periods.

Mellon Reports Earnings
July 18, 2000
Page 6

Sectors Managed for Return:

   Pretax Operating
Margin (a) Return on
Common Equity Average
Allocated Equity

(dollar amounts in millions)
2Q00

2Q99

2Q00

2Q99

2Q00

2Q99

Regional Consumer Banking
42%

41%

23%

21%

$691

$709

Specialized Commercial Banking
57%

46%

19%

16%

$982

$881

Large Corporate Banking
37%

42%

15%

14%

$1,074

$1,256

Total Return Sectors
45%

43%

19%

17%

$2,747

$2,846

(a) Excluding amortization of intangibles and trust-preferred securities expense.

   Pretax Operating
Margin (a) Return on
Common Equity Average
Allocated Equity

(dollar amounts in millions)
YTD00

YTD99

YTD00

YTD99

YTD00

YTD99

Regional Consumer Banking
41%

38%

21%

19%

$696

$713

Specialized Commercial Banking
56%

52%

20%

19%

$971

$867

Large Corporate Banking
36%

40%

14%

13%

$1,091

$1,261

Total Return Sectors
44%

43%

18%

16%

$2,758

$2,841

(a) Excluding amortization of intangibles and trust-preferred securities expense.

The results in the second quarter and first six months of 2000 for the return sectors demonstrate the Corporation’s strategy of driving profitability and return on equity higher, primarily focusing on improving productivity through re-engineering and effective capital management. The pretax operating margin in the second quarter of 2000 was 45%, up from 43% in the second quarter of 1999. The Corporation also continues to aggressively manage capital levels in the return sectors. Average allocated equity decreased $99 million in the second quarter of 2000, and the return on common equity increased to 19%, up 200 basis points from the second quarter of 1999. The pretax operating margin for the first six months of 2000 was 44% up from 43% in the prior year period. The return on common equity of 18% for the first six months of 2000 increased 200 basis points year over year with average allocated equity down $83 million.

Earnings Per Share Contribution From Core Business Sectors

(in millions, except

per share amounts)
2Q00

2Q99

Growth

YTD00

YTD99

Growth

Net Income
$233

$203

15%

$465

$391

19%

Average Shares and

Equivalents - diluted
495.1

525.7

(6)%

498.6

$528.5

(6)%

EPS Contribution
$.47

$.39

21%

$.93

$.74

26%

Mellon Reports Earnings
July 18, 2000
Page 7

Noninterest Revenue

Quarter ended

Six months ended

(dollar amounts in millions,
June 30,

March 31,

June 30,

June 30,

June 30,

unless otherwise noted)
2000

2000

1999

2000

1999

Trust and investment fee revenue:

Investment management:

Mutual fund $167 $166 $149 $333 $293

Private asset 77 76 73 153 144

Institutional asset 66 82 62 148 125

Total investment management fee revenue 310 324 284 634 562

Administration and custody:

Institutional trust 134 121 104 255 204

Mutual fund 35 48 45 83 87

Private asset 4 4 5 8 10

Total administration and custody fee revenue 173 173 154 346 301

Benefits consulting 63 56 61 119 117

Brokerage fees 19 25 16 44 31

Total trust and investment fee revenue 565 578 515 1,143 1,011

Cash management and deposit transaction charges 83 74 78 157 150

Foreign currency and securities trading revenue 42 51 45 93 88

Financing-related revenue 43 39 49 82 98

Equity investment revenue 17 36 7 53 30

Mortgage servicing fees 2 2 51 4 103

Other 21 18 42 39 96

Total fee and other revenue 773 798 787 1,571 1,576

Net gain from divestitures - - 59 - 142

Gains on sales of securities - - - - -

Total noninterest revenue $773 $798 $846 $1,571 $1,718

Fee revenue as a percentage of net interest and

fee revenue (FTE) 69% 70% 69% 69% 68%

Trust and investment fee revenue as a

percentage of net interest and fee revenue (FTE) 50% 50% 45% 50% 44%

Assets under management at period end (in billions) $521 $511 $465

Assets under administration or custody at period

end (in billions) $2,257 $2,261 $2,061

Note: Prior to the first quarter of 2000, various items, previously reported in other fee revenue, have been reclassified to mutual fund administration and custody revenue in trust and investment fee revenue, cash management and deposit transaction charges, financing-related revenue and equity investment revenue. Second quarter 1999 and six months ended June 30, 1999, have been restated and the percentages of trust and investment fee revenue to net interest and fee revenue have been recalculated. For analytical purposes, the term "fee revenue," as utilized throughout this earnings release, is defined as total noninterest revenue less gains on the sales of securities and the net gain from divestitures.

Memo:

Gross joint venture fee revenue (a) $ 132 $ 134 $ 105 $ 266
$ 196

(a) The Corporation accounts for its interest in joint ventures under the equity method of accounting with the net results primarily recorded as either trust and investment fee revenue or other fee revenue. The gross joint venture fee revenue is not included in total noninterest revenue above.

Mellon Reports Earnings
July 18, 2000
Page 8

Fee revenue

Fee revenue of $773 million in the second quarter of 2000 was impacted by the 1999 network services and mortgage banking divestitures and the previously disclosed May 2000 expiration of a long-term mutual fund administration contract with a third party. Excluding these factors, fee revenue increased 9% in the second quarter of 2000 compared with the second quarter of 1999, primarily due to a 12% increase in trust and investment fee revenue.

Fee revenue, excluding the effect of the expiration of the long-term mutual fund administration contract with a third party, decreased 2% in the second quarter of 2000 compared with the first quarter of 2000, primarily resulting from decreases in equity investment revenue, and foreign currency and securities trading revenue, as well as lower investment management performance fees, as discussed in the next paragraph.

2nd Qtr. 2000

2nd Qtr. 2000

Six Mo. 2000

over

over

over

Fee revenue growth (a)
2nd Qtr. 1999

1st Qtr. 2000

Six Mo. 1999

Trust and investment fee revenue growth 12% -% 14%

Total fee revenue growth   9% (2)% 11%

(a) Excluding the effect of divestitures and the expiration of the long-term mutual fund administration contract with a third party.

Investment management fee revenue increased $26 million, or 9%, in the second quarter of 2000, compared with the second quarter of 1999. Investment management fee revenue increased $72 million, or 13%, in the first six months of 2000, compared with the first six months of 1999. The increase in the second quarter of 2000 compared to the second quarter of 1999 resulted from an $18 million, or 11%, increase in mutual fund management revenue; a $4 million, or 7%, increase in institutional asset management revenue; and a $4 million, or 5%, increase in private asset management revenue. These increases resulted from net new business and an increase in the market value of assets under management. The $16 million decrease in institutional asset management revenue in the second quarter of 2000, compared with the first quarter of 2000, primarily resulted from a $14 million lower level of investment management performance fees. The measurement period for these fees is generally annually with revenue recorded in the fourth and first quarters each year.

The average net assets of proprietary mutual funds managed in the second quarter of 2000 were $136 billion, up $10 billion, or 8%, from $126 billion in the second quarter of 1999 and down $1 billion, or less than 1%, from $137 billion in the first quarter of 2000. The increase resulted from increases in average net assets of equity funds. Proprietary equity funds averaged $56 billion in the second quarter of 2000, compared with $44 billion in the second quarter of 1999.

Administration and custody fee revenue increased $19 million, or 13%, in the second quarter of 2000 compared with the second quarter of 1999. Administration and custody fee revenue increased $45 million, or 15%, in the first six months of 2000 compared to the first six months of 1999. The increase in the second quarter of 2000 compared to the second quarter of 1999 primarily resulted from a $30 million, or 29%, increase in institutional trust and custody revenue resulting from net new business and an $8 million increase in securities lending revenue. The results of joint ventures are accounted for under the equity

Mellon Reports Earnings
July 18, 2000
Page 9
method of accounting, which reports the Corporation's share of the results of the joint ventures on a net basis, rather than reporting the revenues and expenses separately. Including the institutional trust and custody gross revenue generated by joint ventures, institutional trust and custody revenue increased $38 million, or 21%, compared with the second quarter of 1999.
The $10 million, or 23%, decrease in mutual fund administration and custody fee revenue in the second quarter of 2000 compared with the second quarter of 1999 was due to the expiration of the long-term mutual fund administration contract with a third party in May 2000. Fees from this contract totaled approximately $13 million pre-tax, or $.015 per common share, in the second quarter through May 2000, when the contract expired. Fees from this contract totaled approximately $22 million pre-tax, or $.03 per common share, in the second quarter of 1999 and approximately $24 million pre-tax, or $.03 per common share, in the first quarter of 2000.

Benefits consulting fees generated by Buck Consultants increased $2 million, or 2%, in the second quarter of 2000, compared with the second quarter of 1999. The increase primarily resulted from net new business and increased project activity with existing clients partially offset by the impact of the contribution of pre-existing business to joint ventures. The increase compared with the first quarter of 2000 primarily reflects the seasonal nature of many consulting services with the first quarter of the year generally having the lowest level of billable hours.

The $3 million, or 25%, increase in brokerage fees in the second quarter of 2000 compared to the prior-year period primarily resulted from higher trading volumes in the active equities markets. Dreyfus Brokerage Services, Inc. averaged approximately 13,200 trades per day in the second quarter of 2000, compared with approximately 16,500 trades per day in the first quarter of 2000 and approximately 9,800 trades per day in the second quarter of 1999.

Cash management and deposit transaction charges increased $5 million, or 6%, in the second quarter of 2000, compared with the prior-year period, while foreign currency and securities trading revenue decreased $3 million, or 8%, in the second quarter of 2000, compared with the prior-year period. Foreign currency and securities trading revenue decreased $9 million in the second quarter of 2000 compared with a record level in the first quarter of 2000 due to less favorable market conditions.

Financing-related and equity investment revenue totaled $60 million in the second quarter of 2000 compared with $75 million in the first quarter of 2000, and $56 million in the second quarter of 1999. Financing-related revenue primarily includes loan commitment fees; letters of credit and acceptance fees; loan securitization revenue; gains or losses on loan securitizations and sales; and gains or losses on lease residuals. Financing-related revenue decreased $6 million in the second quarter of 2000 compared with the second quarter of 1999, due in part to lower gains on loan securitizations and loan sales. Equity investment revenue, which includes gains and losses on venture capital investments, increased $10 million in the second quarter of 2000 compared with the second quarter of 1999, but decreased $19 million compared with the first quarter of 2000.

The $2 million of mortgage servicing fees in the second quarter of 2000 relates to the servicing of jumbo mortgages, which were retained by the Corporation following the 1999 divestiture of the mortgage businesses.

Other revenue decreased $21 million in the second quarter of 2000 compared with the prior-year period. The decrease primarily related to the June 1999 divestiture of the network services transaction processing

Mellon Reports Earnings
July 18, 2000
Page 10
unit as well as lower gains on the sale of assets. The network services business generated $14 million of fee revenue in the second quarter of 1999.
Fee revenue for the first six months of 2000 totaled $1.571 billion, a $5 million decrease compared with $1.576 billion for the first six months of 1999. Fee revenue for the first six months of 2000 was impacted by the divestitures of the credit card business, network services transaction processing unit and the mortgage banking businesses, as well as the expiration of the long-term mutual fund administration contract with a third party. Excluding the effect of these factors, fee revenue for the first six months of 2000 increased 11% compared with the first six months of 1999, due to a 14% increase in trust and investment fee revenue.

Net gain from divestitures

In the first quarter of 1999, the Corporation recorded an $83 million pre-tax net gain from divestitures. The after-tax impact totaled $49 million or $.10 per common share. The net gain resulted from a gain on the divestiture of the credit card business, partially offset by a loss on the commercial mortgage servicing business and a write-down to reflect the estimated sale proceeds to be received for the residential mortgage business.

In the second quarter of 1999, the Corporation recorded a $59 million pre-tax net gain from divestitures. The after-tax impact totaled $38 million, or $.07 per common share. The net gain primarily resulted from a gain on the sale of the network services transaction processing unit, partially offset by an adjustment to the first quarter 1999 write-down of the residential mortgage business to reflect the estimated sales proceeds to be received. Including the $83 million pre-tax net gain from the first quarter of 1999, the pre-tax net gain from divestitures totaled $142 million for the first half of 1999.

Net Interest Revenue

Quarter ended

Six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

(dollar amounts in millions) 2000 2000 1999 2000 1999

Net interest revenue (FTE) $352 $351 $363 $703 $734

Net interest margin (FTE) 3.86% 3.75% 3.74% 3.80% 3.76%

Average securities $6,121 $6,155 $6,652 $6,138 $6,709

Average loans $27,943 $29,283 $30,504 $28,613 $30,983

Average interest-earning assets $36,497 $37,399 $39,015 $36,948 $39,410

Net interest revenue on a fully taxable equivalent basis in the second quarter of 2000 decreased $11 million compared with the second quarter of 1999, primarily resulting from the divestiture of the mortgage banking businesses. Excluding the net interest revenue generated by the mortgage banking businesses, net interest revenue increased 1% compared with the second quarter of 1999, reflecting the positive impact of interest-free funds in a rising rate environment, primarily offset by higher funding costs related to the repurchase of common stock.

Net interest revenue on a fully taxable equivalent basis decreased $31 million in the first six months of 2000 compared with the prior-year period. This decrease primarily resulted from the divestitures of the

Mellon Reports Earnings
July 18, 2000
Page 11

credit card and mortgage banking businesses and higher funding costs related to the repurchase of common stock, partially offset by the positive impact of interest-free funds. Excluding the net interest revenue generated by the divested businesses, net interest revenue increased 1% compared with the first six months of 1999.

Operating Expense

Quarter ended

Six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

(dollar amounts in millions) 2000 2000 1999 2000 1999

Staff expense $390 $397 $397 $787 $788

Professional, legal and other purchased services 70 67 73 137 144

Net occupancy expense 58 64 64 122 125

Equipment expense 38 37 63 75 104

Amortization of goodwill and other intangible assets 33 37 37 70 74

Amortization of mortgage servicing assets and

purchased credit card relationships 1 1 37 2 79

Other expense 114 116 138 230 255

Operating expense before trust-preferred securities

expense and net expense (revenue) from acquired

property 704 719 809 1,423 1,569

Trust-preferred securities expense 19 20 19 39 39

Net expense (revenue) from acquired property 1 (1) (5) - (5)

Total operating expense $724 $738 $823 $1,462 $1,603

Average full-time equivalent staff 26,000 26,000 28,700 26,000 28,900

Efficiency ratio (a) 62% 62% 65% 62% 65%

Efficiency ratio excluding amortization of goodwill

and other intangible assets 59% 59% 62% 59% 62%

(a) Operating expense before trust-preferred securities expense, net expense (revenue) from acquired property and second quarter 1999 nonrecurring expenses, as a percentage of revenue, computed on a taxable equivalent basis, excluding the net gain on divestitures and gains on the sales of securities.

Operating expense before trust-preferred securities expense and net expense (revenue) from acquired property totaled $704 million in the second quarter of 2000, a decrease of $105 million compared with the second quarter of 1999, resulting from the 1999 network services and mortgage banking divestitures and the recording of $56 million of nonrecurring expenses in the second quarter of 1999. The nonrecurring expenses recorded in the second quarter of 1999 included a $30 million charitable contribution to the Mellon Financial Corporation Foundation, which was classified as other expense in the table above, and $26 million of expenses in connection with replacing obsolete computer equipment and closing facilities as part of Mellon's Third Century initiatives, a strategic planning process designed to drive long-term growth while continuing to produce high returns on capital. The Third Century expenses were recorded as $21 million of equipment expense and $5 million of net occupancy expense. Excluding the effect of these divestitures and of nonrecurring expenses, operating expense before trust-preferred securities expense and net expense (revenue) from acquired property increased 5% compared with the second quarter of 1999, reflecting higher staff expense as well as other expenses in support of business growth.

Mellon Reports Earnings
July 18, 2000
Page 12

2nd Qtr. 2000 2nd Qtr. 2000 Six mo. 2000

over over over

Operating expense growth 2nd Qtr. 1999 1st Qtr. 2000 Six mo. 1999

Operating expense growth
5%(a)

(2)%

7%(a)

(a) Excludes the effect of divestitures and second quarter 1999 nonrecurring expenses.

Operating expense before trust-preferred securities expense and net expense (revenue) from acquired property decreased $15 million, or 2%, compared with the first quarter of 2000, primarily due to lower incentive and occupancy expense.

Operating expense before trust-preferred securities expense and net expense (revenue) from acquired property totaled $1.423 billion in the first six months of 2000 compared with $1.569 billion in the first six months of 1999. Excluding the effect of the nonrecurring expenses and divestitures, operating expense before trust-preferred securities expense and net expense (revenue) from acquired property increased 7% during the first six months of 2000 compared with the prior-year period.

Income Taxes

The Corporation's effective tax rate for the second quarter of 2000 was 36.5%, unchanged from the second quarter of 1999 excluding the effect of the net gain from divestitures and nonrecurring expenses. It is currently anticipated that the effective tax rate will be approximately the same for the remainder of 2000.

Credit Quality Expense, Net Credit Losses and Reserve for Credit Losses

Quarter ended

Six months ended

June 30,

March 31,

June 30,

June 30,

June 30,

(dollar amounts in millions) 2000 2000 1999 2000 1999

Provision for credit losses $10 $10 $10 $20 $25

Net expense (revenue) from acquired property 1 (1) (5)
-
(5)

  Credit quality expense $11 $9 $5 $20 $20

Net credit (losses) recoveries:

  Credit card $ - $ - $ - $ - ($10)

  Other consumer credit (3) (3) (4) (6) (8)

  Commercial real estate - 5 - 5 -

  Commercial and financial (8) (13) (7) (21) (10)

Total net credit losses ($11) ($11) ($11) ($22) ($28)

Annualized net credit losses to average loans .15% .15% .13% .15% .18%



Reserve for credit losses at end of period $401 $402 $409

Reserve as a percentage of total loans 1.45% 1.42% 1.34%

Mellon Reports Earnings
July 18, 2000
Page 13

Nonperforming Assets

June 30,

March 31,

Dec. 31,

June 30,

(dollar amounts in millions)
2000

2000

1999

1999

Nonperforming loans:

  Consumer mortgage $32 $38 $40 $43

  Commercial real estate 8 6 6 6

  Other 167 144 96 72

    Total nonperforming loans 207 188 142 121

  Acquired property:

  Real estate acquired
13 14 15 24

  Reserve for real estate acquired
(1) (1) (1) (4)

  Net real estate acquired
12 13 14 20

  Other assets acquired
9 9 3 1

    Total acquired property 21 22 17 21

    Total nonperforming assets $228 $210 $159 $142

Nonperforming loans as a percentage of total loans .75% .67% .47% .40%

Nonperforming assets as a percentage of total loans

  and net acquired property .82% .74% .53% .46%

Nonperforming assets increased $18 million compared with March 31, 2000, and increased $86 million compared with June 30, 1999. The increase compared with March 31, 2000 primarily resulted from the addition of several loans to nonperforming status, partially offset by principal repayments and credit losses. The higher level of nonperforming assets, compared with June 30, 1999, primarily resulted from the addition to nonperforming status of commercial loans to a health care provider and its affiliated companies in the first quarter of 2000.

Mellon Reports Earnings
July 18, 2000
Page 14

Selected Capital Data

June 30,

March 31,

Dec. 31,

June 30,

(dollar amounts in millions, except per share amounts)
2000

2000

1999

1999

Total shareholders' equity $3,864 (a) $3,851 $4,016 $4,303 (a)

Total shareholders' equity to assets ratio 8.39% 8.13% 8.38% 8.77%

Tangible shareholders' equity (c) $2,228 (b) $2,190 $2,288 $2,498 (b)

Tangible shareholders' equity to assets ratio (d) 5.03% 4.80% 4.96% 5.29%

Tier I capital ratio 6.7% (e) 6.49% 6.60% 6.87%

Total (Tier I plus Tier II) capital ratio 10.9% (e) 10.61% 10.76% 11.18%

Leverage capital ratio 6.7% (e) 6.61% 6.72% 6.70%

Book value per common share $7.91 $7.84 $8.02 $8.37

Tangible book value per common share $4.56 $4.46 $4.57 $4.86

Closing common stock price $36.44 $29.50 $34.06 $36.38

Market capitalization $17,788 $14,491 $17,052 $18,704

Common shares outstanding (000) 488,171 491,210 500,623 514,211

(a) Average total shareholders' equity for the first six months of 2000 and 1999 were $3.849 billion and $4.442 billion.
(b) Average tangible shareholders' equity for the first six months of 2000 and 1999 were $2.170 billion and $2.600 billion.
(c) Includes $77 million, $74 million, $67 million and $64 million, respectively, of minority interest, primarily related to Newton. In addition, includes $319 million, $323 million, $345 million and $368 million, respectively, of tax benefits related to tax deductible goodwill and other intangibles.
(d) Shareholders' equity plus minority interest less goodwill and other intangibles recorded in connection with purchase acquisitions divided by total assets less goodwill and other intangibles. The amount of goodwill and other intangibles subtracted from shareholders' equity and total assets is net of any tax benefit.
(e) Estimated.
Shareholders' equity at June 30, 2000, compared with the prior periods, primarily reflects common stock repurchases partially offset by earnings retention. During the second quarter of 2000, approximately 5.5 million shares of common stock were repurchased, bringing year-to-date repurchases to approximately 16.3 million shares. The 16.3 million shares repurchased in the first half of 2000 had a total purchase price of $523 million for an average share price of $32.10 per share. Of the 5.5 million shares repurchased during the second quarter of 2000, 4 million shares completed the 25 million share repurchase program that was authorized by the board of directors in September 1999. In May 2000, the board of directors authorized an additional repurchase program of up to 25 million shares of common stock to be used for general corporate purposes. Common shares outstanding at June 30, 2000 were 6.8% lower than at Dec. 31, 1998, reflecting a 35.7 million reduction over the last six quarters, net of shares reissued primarily for employee benefit plan purposes.
Average common stock and stock equivalents used in the computation of diluted earnings per share were approximately 30 million shares lower than in the second quarter of 1999, due to the repurchases. The Corporation's average level of treasury stock was approximately $975 million higher in the second quarter of 2000 compared with the second quarter of 1999. After giving effect to funding the higher level of treasury stock, valued at a short-term funding rate, the lower share count increased diluted earnings per share by approximately 3%, while ongoing business growth increased diluted earnings per share by approximately 8%, compared to second quarter 1999 operating results.

Mellon Reports Earnings
July 18, 2000
Page 15

SUMMARY DATA
Mellon Financial Corporation
Five Quarter Trend

Quarter ended

(dollar amounts in millions,
except per share amounts;
June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

common shares in thousands) 2000 2000 1999 1999 1999

Selected key data

Diluted earnings per share:

Operating (a) $.50 $.50 $.48 $.46 $.45

Cash operating (a)(b) .56 .56 .53 .52 .50

Reported .50 .50 .47 .45 .45

Net income:

Operating (a) $247 $253 $245 $236 $236

Cash operating (a)(b) 274 282 274 266 266

Reported 247 253 240 231 238

Return on equity (annualized):

Operating (a) 26.2% 26.0% 23.5% 22.3% 21.4%

Cash operating (a)(b) 51.4 51.8 45.6 43.7 41.1

Reported 26.2 26.0 23.1 21.8 21.6

Return on assets (annualized):

Operating (a) 2.12% 2.15% 2.05% 1.92% 1.90%

Cash operating (a)(b) 2.44 2.50 2.38 2.25 2.23

Reported 2.12 2.15 2.01 1.87 1.92

Shareholders' equity to assets:

Reported 8.39% 8.13% 8.38% 9.00% 8.77%

Tangible (b) 5.03 4.80 4.96 5.45 5.29

Fee revenue as a percentage of net interest and

fee revenue (FTE) 69% 70% 69% 69% 69%

Trust and investment fee revenue as a percentage

of net interest and fee revenue (FTE) 50% 50% 49% 46% 45%

Efficiency ratio excluding amortization of intangibles 59% 59% 59% 61% 62% (c)

Avererage common shares and equivalent outstanding:

Basic
489,480
(d)
496,740 505,891 511,777 518,273
(d)

Diluted
495,103
(d)
502,082 512,496 518,605 525,712
(d)

- continued -

Mellon Reports Earnings
July 18, 2000
Page 16

SUMMARY DATA
Mellon Financial Corporation
Five Quarter Trend
(continued)

Quarter ended

June 30, March 31, Dec. 31, Sept. 30, June 30,

(dollar amounts in millions) 2000 2000 1999 1999 1999

Average balances for the quarter

Money market investments $2,219 $1,713
$2,267
$1,463 $1,445

Trading account securities 214 248
372
403 414

Securities 6,121 6,155
6,275
6,364 6,652

Loans 27,943 29,283
29,159
30,177 30,504

Total interest-earning assets 36,497 37,399
38,073
38,407 39,015

Total assets 46,978 (e) 47,205 47,451 48,871 49,766 (e)

Total tangible assets (b) 45,257 (f) 45,419 45,640 47,012 47,878 (f)

Deposits 32,762 32,220 32,540 33,462 33,358

Total interest-bearing liabilities 30,376 31,045 31,221 31,349 31,634

Total shareholders' equity 3,793 3,905 4,133 4,212 4,417

Tangible shareholders' equity (b) 2,147 2,190 2,388 2,417 2,591

(a) Operating results equaled reported results in the second and first quarters of 2000. The fourth and third quarters of 1999 operating and cash operating results each exclude a $5 million after-tax net loss from divestitures. The second quarter of 1999 excludes a $38 million after-tax net gain from divestitures and $36 million of nonrecurring expenses after taxes.

(b) Excludes the after-tax impact of the amortization of goodwill and other intangibles from purchase acquisitions. In addition, the amount of goodwill and other identified intangibles subtracted from common equity and total assets is net of any tax benefit.

(c) Also excludes $56 million pre-tax of nonrecurring expenses.

(d) The basic average common shares and equivalents outstanding for the six months ended June 30, 2000, and June 30, 1999 were 493,110,000 and 520,846,000, respectively. The diluted average common shares and equivalents outstanding for the six months ended June 30, 2000, and June 30, 1999 were 498,559,000 and 528,516,000, respectively.

(e) Average total assets for the six months ended June 30, 2000, and June 30, 1999, were $47.092 billion and $50.219 billion, respectively.

(f) Average total tangible assets for the six months ended June 30, 2000, and June 30, 1999, were $45.340 billion and $48.314 billion, respectively.

Note: All calculations are based on unrounded numbers. FTE denotes presentation on a fully taxable equivalent basis.

Mellon Reports Earnings
July 18, 2000
Page 17

CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Financial Corporation

Quarter ended Six months ended

June 30, June 30,

(in millions, except per share amounts) 2000 1999 2000 1999

Interest revenue

Interest and fees on loans (loan fees of $15, $15,

$29 and $31)
$563

$555

$1,128

$1,135

Federal funds sold and securities under resale agreements 17 5 30 14

Interest-bearing deposits with banks 15 9 25 18

Other money market investments 1
-
2 1

Trading account securities 4 5 8
9

Securities 104 106 207 214

Total interest revenue 704 680 1,400 1,391

Interest expense

Interest on deposits 244 207 477 428

Federal funds purchased and securities under

repurchase agreements 25 23 48 60

Other short-term borrowings 27 34 61 63

Notes and debentures 57 55 115 110

Total interest expense 353 319 701 661

Net interest revenue 351 361 699 730

Provision for credit losses 10 10 20 25

Net interest revenue after provision for credit losses 341 351 679 705

Noninterest revenue

Trust and investment fee revenue 565 515 1,143 1,011

Cash management and deposit transaction charges 83 78 157 150

Foreign currency and securities trading revenue 42 45 93 88

Financing-related revenue 43 49 82 98

Equity investment revenue 17 7 53 30

Mortgage servicing fees 2 51 4 103

Other 21 42 39 96

Total fee and other revenue 773 787 1,571 1,576

Net gain from divestitures - 59 - 142

Gains on sales of securities - - - -

Total noninterest revenue 773 846 1,571 1,718

Operating expense

Staff expense 390 397 787 788

Professional, legal and other purchased services 70 73 137 144

Net occupancy expense 58 64 122 125

Equipment expense 38 63 75 104

Amortization of goodwill and other intangible assets 33 37 70 74

Amortization of mortgage servicing assets and purchased

credit card relationships 1 37 2 79

Other expense 114 138 230 255

Trust-preferred securities expense 19 19 39 39

Net expense (revenue) from acquired property 1 (5) - (5)

Total operating expense 724 823 1,462 1,603

- continued -

Mellon Reports Earnings
July 18, 2000
Page 18

CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Financial Corporation
(continued)

Quarter ended
June 30, Six months ended
June 30,

(in millions, except per share amounts) 2000 1999 2000 1999

Income before income taxes and cumulative effect

of accounting change
$390

$374

$788

$820

Provision for income taxes
143

136

288

302

    Income before cumulative effect of accounting change

247

238

500

518

Cumulative effect of accounting change
-

-

-

(26)

Net Income

$247

238

500

492

Earnings per share

Basic net income per share:

Income before cumulative effect of accounting change $.50 $.45 $1.01 $.99

Cumulative effect of accounting change
-

-

-
(.05)

Net income $.50 $.45 $1.01 $.94

Diluted net income per share:

Income before cumulative effect of accounting change $.50 $.45 $1.00 $.98

Cumulative effect of accounting change
-

-

-
(0.05)

Net income $.50 $.45 $1.00 $.93

Mellon Reports Earnings
July 18, 2000
Page 19

CONDENSED CONSOLIDATED BALANCE SHEET
Mellon Financial Corporation

(dollar amounts in millions)

June 30,
2000

March 31,
2000

Dec. 31,
1999

June 30,
1999

Assets

Cash and due from banks $3,580 $2,958 $3,410 $3,140

Money market investments 1,435 2,870 1,358 1,075

Trading account securities 151 139 144 318

Securities available for sale 5,160 5,055 5,159 5,241

Investment securities (approximate fair value of $1,094,

$1,140, $1,183 and $1,332) 1,110 1,153 1,197 1,330

Loans, net of unearned discount of $73, $71, $79 and $70 27,667 28,285 30,248 30,544

Reserve for credit losses (401) (402) (403) (409)

Net loans 27,266 27,883 29,845 30,135

Premises and equipment 572 572 562 552

Goodwill and other intangibles 2,032 2,058 2,140 2,237

Mortgage servicing assets 22 17 16 1,069

Other assets 4,701 4,676 4,115 3,991

Total assets $46,029 $47,381 $47,946 $49,088

Liabilities

Deposits in domestic offices $29,626 $30,735 $30,128 $29,574

Deposits in foreign offices 2,992 2,611 3,293 3,401

Short-term borrowings 2,456 2,936 3,650 4,765

Other liabilities 2,563 2,817 2,430 2,751

Notes and debentures (with original maturities over one year) 3,537 3,440 3,438 3,303

Total liabilities 41,174 42,539 42,939 43,794

Trust-preferred securities

Guaranteed preferred beneficial interests in

Corporation's junior subordinated deferrable interest debentures 991 991 991 991

Shareholders' equity

Common stock - $.50 par value

  Authorized - 800,000,000 shares

  Issued - 588,661,920 shares
294 294 294 294

Additional paid-in capital 1,806 1,793 1,788 1,765

Retained earnings 4,043 3,938 3,808 3,587

Accumulated unrealized (loss), net of tax (146) (151) (135) (90)

Treasury stock of 100,490,756; 97,452,373; 88,038,848;

and 74,450,718 shares at cost (2,133) (2,023) (1,739) (1,253)

Total shareholders' equity 3,864 3,851 4,016 4,303

Total liabilities, trust-preferred securities and

shareholders' equity $46,029 $47,381 $47,946 $49,088

Mellon Reports Earnings
July 18, 2000
Page 20

CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Financial Corporation
Five Quarter Trend

Quarter Ended

June 30,
2000 March 31,
2000 Dec. 31,
1999 Sept. 30,
1999 June 30,
1999

(in millions, except per share amounts)

Interest revenue

Interest and fees on loans (loan fees of

$15, $14, $14, $14 and $15) $563 $565 $550 $553 $555

Federal funds sold and securities under resale

agreements 17 13 18 9 5

Interest-bearing deposits with banks 15 10 12 9 9

Other money market investments 1 1 1 1 -

Trading account securities 4 4 5 5 5

Securities 104 103 103 102 106

    Total interest revenue
704 696 689 679 680

Interest expense

Interest on deposits 244 233 225 218 207

Federal funds purchased and securities under

repurchase agreements 25 23 20 22 23

Other short-term borrowings 27 34 34 34 34

Notes and debentures 57 58 59 56 55

    Total interest expense 353 348 338 330 319

    Net interest revenue 351 348 351 349 361

Provision for credit losses 10 10 10 10 10

    Net interest revenue after provision for

      credit losses 341 338 341 339 351

Noninterest revenue

Trust and investment fee revenue 565 578 546 517 515

Cash management and deposit transaction charges 83 74 76 78 78

Foreign currency and securities trading revenue 42 51 43 42 45

Financing-related revenue 43 39 56 39 49

Equity investment revenue 17 36 16 17 7

Mortgage servicing fees 2 2 2 48 51

Other 21 18 20 24 42

    Total fee and other revenue 773 798 759 765 787

Net gain (loss) from divestitures - - (7) (8) 59

Gains on sales of securities - - - - -

    Total noninterest revenue
773 798 752 757 846

Operating expense

Staff expense 390 397 384 387 397

Professional, legal and other purchased services 70 67 73 63 73

Net occupancy expense 58 64 57 61 64

Equipment expense 38 37 42 40 63

Amortization of goodwill and other intangible assets 33 37 37 37 37

Amortization of mortgage servicing assets

and purchased credit card relationships 1 1 1 33 37

Other expense 114 116 105 95 138

Trust-preferred securities expense 19 20 20 20 19

Net expense (revenue) from acquired property 1 (1) (4) (5) (5)

    Total operating expense 724 738 715 731 823

    Income before income taxes 390 398 378 365 374

Provision for income taxes 143 145 138 134 136

    Net income $247 $253 $240 $231 $238

Basic net income per share $.50 $.51 $.47 $.46 $.45

Diluted net income per share $.50 $.50 $.47 $.45 $.45

Business Sectors


(dollar amounts in millions)	Second Quarter 2000				Second Quarter 1999

Sector	Total Revenue	Income Before Taxes	Return on Common Equity		Total Revenue	Income Before Taxes	Return on Common Equity



Managed for Growth:
Wealth Management	$110	$49	53	%	$97	$38	52%
Global Investment Management	271	89	38		244	84	38
Global Investment Services	273	67	34		241	56	27

Total Growth Sectors	$654	$205	$39		$582	$178	36
Managed for Return:
Regional Consumer Banking	164	58	23		168	55	21
Specialized Commercial Banking	132	65	19		122	46	16
Large Corporate Banking	145	49	15		140	53	14

Total Return Sectors	441	172	19		430	154	17

Total Core Business Sectors	$1,095	$377	26	%	$1,012	$332	23%


(dollar amounts in millions)	First Six Months 2000				First Six Months 1999

Sector	Total Revenue	Income Before Taxes	Return on Common Equity		Total Revenue	Income Before Taxes	Return on Common Equity



Managed for Growth:
Wealth Management	$214	$92	51	%	$189	$72	50%
Global Investment Management	572	203	44		477	159	37
Global Investment Services	531	128	33		469	106	26

Total Growth Sectors	1,317	423	41		1,135	337	35
Managed for Return:
Regional Consumer Banking	321	107	21		327	98	19
Specialized Commercial Banking	274	133	20		253	111	19
Large Corporate Banking	280	91	14		267	96	13

Total Return Sectors	875	331	18		847	305	16

Total Core Business Sectors	$2,192	$754	26	%	$1,982	$642	22%


Summary
	% of Revenue		% of Income Before Taxes		% of Revenue		% of Income Before Taxes

	2Q00	2Q99	2Q00	2Q99	YTD00	YTD99	YTD00	YTD99

Growth sectors	60%	57%	54%	53%	60%	57%	56%	53%
Return sectors	40%	43%	46%	47%	40%	43%	44%	47%

Total Core Business Sectors	100%	100%	100%	100%	100%	100%	100%	100%


Sectors Managed for Growth:


2Q 2000 vs. 2Q 1999			Total Revenue		Operating Expense		Income Before
			Growth		Growth		Taxes Growth

Wealth Management			14%		6%		26%
Global Investment Management			11%		14%		7%
Global Investment Services			13%		11%		20%

Total Growth Sectors			12%		11%		15%



YTD 2000 vs. YTD 1999			Total Revenue		Operating Expense		Income Before
			Growth		Growth		Taxes Growth

Wealth Management			13%		5%		26%
Global Investment Management			20%		16%		28%
Global Investment Services			13%		11%		21%

Total Growth Sectors			16%		12%		25%

Sectors Managed for Return:

	Pretax Operating Margin (a)		Return on Common Equity		Average Allocated Equity





(dollar amounts in millions)	2Q00	2Q99	2Q00	2Q99	2Q00	2Q99

Regional Consumer Banking	42%	41%	23%	21%	$691	$709
Specialized Commercial Banking	57%	46%	19%	16%	$982	$881
Large Corporate Banking	37%	42%	15%	14%	$1,074	$1,256


Total Return Sectors	45%	43%	19%	17%	$2,747	$2,846

(a) Excluding amortization of intangibles and trust-preferred securities expense.


	Pretax Operating Margin (a)		Return on Common Equity		Average Allocated Equity





(dollar amounts in millions)	YTD00	YTD99	YTD00	YTD99	YTD00	YTD99

Regional Consumer Banking	41%	38%	21%	19%	$696	$713
Specialized Commercial Banking	56%	52%	20%	19%	$971	$867
Large Corporate Banking	36%	40%	14%	13%	$1,091	$1,261

Total Return Sectors	44%	43%	18%	16%	$2,758	$2,841

(a) Excluding amortization of intangibles and trust-preferred securities expense.

Earnings Per Share Contribution From Core Business Sectors


(in millions, except
per share amounts)	2Q00	2Q99	Growth	YTD00	YTD99	Growth

Net Income	$233	$203	15%	$465	$391	19%
Average Shares and
Equivalents - diluted	495.1	525.7	(6)%	498.6	$528.5	(6)%
EPS Contribution	$.47	$.39	21%	$.93	$.74	26%

Noninterest Revenue
	Quarter ended			Six months ended
(dollar amounts in millions,	June 30,	March 31,	June 30,	June 30,	June 30,
unless otherwise noted)	2000	2000	1999	2000	1999

Trust and investment fee revenue:
Investment management:
Mutual fund	$167	$166	$149	$333	$293
Private asset	77	76	73	153	144
Institutional asset	66	82	62	148	125

Total investment management fee revenue	310	324	284	634	562
Administration and custody:
Institutional trust	134	121	104	255	204
Mutual fund	35	48	45	83	87
Private asset	4	4	5	8	10

Total administration and custody fee revenue	173	173	154	346	301
Benefits consulting	63	56	61	119	117
Brokerage fees	19	25	16	44	31

Total trust and investment fee revenue	565	578	515	1,143	1,011
Cash management and deposit transaction charges	83	74	78	157	150
Foreign currency and securities trading revenue	42	51	45	93	88
Financing-related revenue	43	39	49	82	98
Equity investment revenue	17	36	7	53	30
Mortgage servicing fees	2	2	51	4	103
Other	21	18	42	39	96

Total fee and other revenue	773	798	787	1,571	1,576
Net gain from divestitures	-	-	59	-	142
Gains on sales of securities	-	-	-	-	-

Total noninterest revenue	$773	$798	$846	$1,571	$1,718


Fee revenue as a percentage of net interest and
fee revenue (FTE)	69%	70%	69%	69%	68%
Trust and investment fee revenue as a
percentage of net interest and fee revenue (FTE)	50%	50%	45%	50%	44%

Assets under management at period end (in billions)	$521	$511	$465
Assets under administration or custody at period
end (in billions)	$2,257	$2,261	$2,061

Note: Prior to the first quarter of 2000, various items, previously reported in other fee revenue, have been reclassified to mutual fund administration and custody revenue in trust and investment fee revenue, cash management and deposit transaction charges, financing-related revenue and equity investment revenue. Second quarter 1999 and six months ended June 30, 1999, have been restated and the percentages of trust and investment fee revenue to net interest and fee revenue have been recalculated. For analytical purposes, the term "fee revenue," as utilized throughout this earnings release, is defined as total noninterest revenue less gains on the sales of securities and the net gain from divestitures.

Memo:

Gross joint venture fee revenue (a)	$ 132	$ 134	$ 105	$ 266	$ 196

(a) The Corporation accounts for its interest in joint ventures under the equity method of accounting with the net results primarily recorded as either trust and investment fee revenue or other fee revenue. The gross joint venture fee revenue is not included in total noninterest revenue above.

	2nd Qtr. 2000	2nd Qtr. 2000	Six Mo. 2000
	over	over	over
Fee revenue growth (a)	2nd Qtr. 1999	1st Qtr. 2000	Six Mo. 1999


Trust and investment fee revenue growth	12%	-%	14%
Total fee revenue growth	9%	(2)%	11%

Net Interest Revenue
	Quarter ended			Six months ended
	June 30,	March 31,	June 30,	June 30,	June 30,
(dollar amounts in millions)	2000	2000	1999	2000	1999


Net interest revenue (FTE)	$352	$351	$363	$703	$734
Net interest margin (FTE)	3.86%	3.75%	3.74%	3.80%	3.76%

Average securities	$6,121	$6,155	$6,652	$6,138	$6,709
Average loans	$27,943	$29,283	$30,504	$28,613	$30,983
Average interest-earning assets	$36,497	$37,399	$39,015	$36,948	$39,410

Credit Quality Expense, Net Credit Losses and Reserve for Credit Losses

	Quarter ended			Six months ended
	June 30,	March 31,	June 30,	June 30,	June 30,
(dollar amounts in millions)	2000	2000	1999	2000	1999

Provision for credit losses	$10	$10	$10	$20	$25
Net expense (revenue) from acquired property	1	(1)	(5)	-	(5)

Credit quality expense	$11	$9	$5	$20	$20

Net credit (losses) recoveries:
Credit card	$ -	$ -	$ -	$ -	($10)
Other consumer credit	(3)	(3)	(4)	(6)	(8)
Commercial real estate	-	5	-	5	-
Commercial and financial	(8)	(13)	(7)	(21)	(10)

Total net credit losses	($11)	($11)	($11)	($22)	($28)


Annualized net credit losses to average loans	.15%	.15%	.13%	.15%	.18%


Reserve for credit losses at end of period	$401	$402	$409
Reserve as a percentage of total loans	1.45%	1.42%	1.34%

Nonperforming Assets

	June 30,	March 31,	Dec. 31,	June 30,
(dollar amounts in millions)	2000	2000	1999	1999

Nonperforming loans:
Consumer mortgage	$32	$38	$40	$43
Commercial real estate	8	6	6	6
Other	167	144	96	72

Total nonperforming loans	207	188	142	121
Acquired property:
Real estate acquired	13	14	15	24
Reserve for real estate acquired	(1)	(1)	(1)	(4)

Net real estate acquired	12	13	14	20
Other assets acquired	9	9	3	1

Total acquired property	21	22	17	21

Total nonperforming assets	$228	$210	$159	$142


Nonperforming loans as a percentage of total loans	.75%	.67%	.47%	.40%
Nonperforming assets as a percentage of total loans
and net acquired property	.82%	.74%	.53%	.46%

Selected Capital Data

	June 30,		March 31,	Dec. 31,	June 30,
(dollar amounts in millions, except per share amounts)	2000		2000	1999	1999


Total shareholders' equity	$3,864	(a)	$3,851	$4,016	$4,303	(a)
Total shareholders' equity to assets ratio	8.39%		8.13%	8.38%	8.77%

Tangible shareholders' equity (c)	$2,228	(b)	$2,190	$2,288	$2,498	(b)
Tangible shareholders' equity to assets ratio (d)	5.03%		4.80%	4.96%	5.29%

Tier I capital ratio	6.7%	(e)	6.49%	6.60%	6.87%
Total (Tier I plus Tier II) capital ratio	10.9%	(e)	10.61%	10.76%	11.18%
Leverage capital ratio	6.7%	(e)	6.61%	6.72%	6.70%

Book value per common share	$7.91		$7.84	$8.02	$8.37
Tangible book value per common share	$4.56		$4.46	$4.57	$4.86

Closing common stock price	$36.44		$29.50	$34.06	$36.38
Market capitalization	$17,788		$14,491	$17,052	$18,704
Common shares outstanding (000)	488,171		491,210	500,623	514,211

	Quarter ended
(dollar amounts in millions, except per share amounts;	June 30,		March 31,	Dec. 31,	Sept. 30,	June 30,
common shares in thousands)	2000		2000	1999	1999	1999


Selected key data

Diluted earnings per share:
Operating (a)	$.50		$.50	$.48	$.46	$.45
Cash operating (a)(b)	.56		.56	.53	.52	.50
Reported	.50		.50	.47	.45	.45

Net income:
Operating (a)	$247		$253	$245	$236	$236
Cash operating (a)(b)	274		282	274	266	266
Reported	247		253	240	231	238

Return on equity (annualized):
Operating (a)	26.2%		26.0%	23.5%	22.3%	21.4%
Cash operating (a)(b)	51.4		51.8	45.6	43.7	41.1
Reported	26.2		26.0	23.1	21.8	21.6

Return on assets (annualized):
Operating (a)	2.12%		2.15%	2.05%	1.92%	1.90%
Cash operating (a)(b)	2.44		2.50	2.38	2.25	2.23
Reported	2.12		2.15	2.01	1.87	1.92

Shareholders' equity to assets:
Reported	8.39%		8.13%	8.38%	9.00%	8.77%
Tangible (b)	5.03		4.80	4.96	5.45	5.29



Fee revenue as a percentage of net interest and
fee revenue (FTE)	69%		70%	69%	69%	69%
Trust and investment fee revenue as a percentage
of net interest and fee revenue (FTE)	50%		50%	49%	46%	45%
Efficiency ratio excluding amortization of intangibles	59%		59%	59%	61%	62%	(c)

Avererage common shares and equivalent outstanding:
Basic	489,480	(d)	496,740	505,891	511,777	518,273	(d)
Diluted	495,103	(d)	502,082	512,496	518,605	525,712	(d)

(a)		Operating results equaled reported results in the second and first quarters of 2000. The fourth and third quarters of 1999 operating and cash operating results each exclude a $5 million after-tax net loss from divestitures. The second quarter of 1999 excludes a $38 million after-tax net gain from divestitures and $36 million of nonrecurring expenses after taxes.
(b)		Excludes the after-tax impact of the amortization of goodwill and other intangibles from purchase acquisitions. In addition, the amount of goodwill and other identified intangibles subtracted from common equity and total assets is net of any tax benefit.
(c)		Also excludes $56 million pre-tax of nonrecurring expenses.
(d)		The basic average common shares and equivalents outstanding for the six months ended June 30, 2000, and June 30, 1999 were 493,110,000 and 520,846,000, respectively. The diluted average common shares and equivalents outstanding for the six months ended June 30, 2000, and June 30, 1999 were 498,559,000 and 528,516,000, respectively.
(e)		Average total assets for the six months ended June 30, 2000, and June 30, 1999, were $47.092 billion and $50.219 billion, respectively.
(f)		Average total tangible assets for the six months ended June 30, 2000, and June 30, 1999, were $45.340 billion and $48.314 billion, respectively.

	Quarter ended June 30,		Six months ended June 30,

(in millions, except per share amounts)	2000	1999		2000	1999

Income before income taxes and cumulative effect
of accounting change	$390	$374		$788	$820
Provision for income taxes	143	136		288	302

Income before cumulative effect of accounting change	247	238		500	518
Cumulative effect of accounting change	-	-		-	(26)

Net Income	$247	238		500	492

Earnings per share

Basic net income per share:

Income before cumulative effect of accounting change	$.50	$.45		$1.01	$.99
Cumulative effect of accounting change	-	-		-	(.05)

Net income	$.50	$.45		$1.01	$.94

Diluted net income per share:

Income before cumulative effect of accounting change	$.50	$.45		$1.00	$.98
Cumulative effect of accounting change	-	-		-	(0.05)

Net income	$.50	$.45		$1.00	$.93

(dollar amounts in millions)	June 30, 2000	March 31, 2000	Dec. 31, 1999	June 30, 1999

Assets
Cash and due from banks	$3,580	$2,958	$3,410	$3,140
Money market investments	1,435	2,870	1,358	1,075
Trading account securities	151	139	144	318
Securities available for sale	5,160	5,055	5,159	5,241
Investment securities (approximate fair value of $1,094,
$1,140, $1,183 and $1,332)	1,110	1,153	1,197	1,330
Loans, net of unearned discount of $73, $71, $79 and $70	27,667	28,285	30,248	30,544
Reserve for credit losses	(401)	(402)	(403)	(409)

Net loans	27,266	27,883	29,845	30,135
Premises and equipment	572	572	562	552
Goodwill and other intangibles	2,032	2,058	2,140	2,237
Mortgage servicing assets	22	17	16	1,069
Other assets	4,701	4,676	4,115	3,991

Total assets	$46,029	$47,381	$47,946	$49,088


Liabilities
Deposits in domestic offices	$29,626	$30,735	$30,128	$29,574
Deposits in foreign offices	2,992	2,611	3,293	3,401
Short-term borrowings	2,456	2,936	3,650	4,765
Other liabilities	2,563	2,817	2,430	2,751
Notes and debentures (with original maturities over one year)	3,537	3,440	3,438	3,303

Total liabilities	41,174	42,539	42,939	43,794

Trust-preferred securities
Guaranteed preferred beneficial interests in
Corporation's junior subordinated deferrable interest debentures	991	991	991	991

Shareholders' equity
Common stock - $.50 par value
Authorized - 800,000,000 shares
Issued - 588,661,920 shares	294	294	294	294
Additional paid-in capital	1,806	1,793	1,788	1,765
Retained earnings	4,043	3,938	3,808	3,587
Accumulated unrealized (loss), net of tax	(146)	(151)	(135)	(90)
Treasury stock of 100,490,756; 97,452,373; 88,038,848;
and 74,450,718 shares at cost	(2,133)	(2,023)	(1,739)	(1,253)

Total shareholders' equity	3,864	3,851	4,016	4,303
Total liabilities, trust-preferred securities and
shareholders' equity	$46,029	$47,381	$47,946	$49,088