<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) - January 18, 2000
MELLON FINANCIAL 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 Center
500 Grant Street
Pittsburgh, Pennsylvania 15258
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (412) 234-5000
<PAGE>
ITEM 5. OTHER EVENTS
By press release dated January 18, 2000, Mellon Financial Corporation
(the "Corporation") announced full year and fourth quarter 1999
results of operations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit Description
Number
99.1 Mellon Financial Corporation Press Release, dated January 18, 2000,
announcing results of operations.
SIGNATURES
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 FINANCIAL CORPORATION
Date: January 19, 2000 By: /s/ STEVEN G. ELLIOTT
------------------------------
Steven G. Elliott
Senior Vice Chairman and Chief
Financial Officer
<PAGE>
EXHIBIT INDEX
Number Description Method of Filing
99.1 Press Release dated Filed herewith
January 18, 2000
<PAGE>
EXHIBIT 99.1
MEDIA: ANALYSTS:
----- --------
Ronald R. Gruendl Donald J. MacLeod
(412) 234-7157 (412) 234-5601
Andrew J. Clark
(412) 234-4633
FOR IMMEDIATE RELEASE
MELLON REPORTS RECORD FULL-YEAR AND FOURTH QUARTER 1999 RESULTS
---------------------------------------------------------------
. Full-year 1999 Operating Earnings Per Share at $1.82, Up 12 Percent Over
1998
. Full-year 1999 Operating Return on Common Equity is 22.0 Percent and
Operating Return on Assets is 1.93 Percent
. Fourth Quarter 1999 Operating Earnings Per Share at 48 Cents, Up 14 Percent
Over Last Year
. Fourth Quarter 1999 Operating Return on Common Equity is 23.5 Percent and
Operating Return on Assets is 2.05 Percent
. Regular Quarterly Common Stock Dividend Declared
<TABLE>
<CAPTION>
Financial Highlights Year ended Quarter ended
---------------------- -------------------------------------
(dollar amounts in millions, except per share Dec. 31, Dec. 31, Dec. 31, Sept. 30, Dec. 31,
amounts; quarterly returns are annualized) 1999 1998 1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating results (a):
Diluted earnings per common share $ 1.82 $1.62 (b) $ .48 $ .46 $ .42 (b)
Net income applicable to common stock $ 948 $ 861 $ 245 $ 236 $ 222
Return on common equity 22.0% 20.7% 23.5% 22.3% 20.1%
Return on assets 1.93% 1.81% 2.05% 1.92% 1.76%
Cash operating results (a):
Diluted earnings per common share $ 2.04 $1.83 (b) $ .53 $ .52 $ .47 (b)
Net income applicable to common stock $1,066 $ 972 $ 274 $ 266 $ 252
Return on common equity 42.6% 40.8% 45.6% 43.7% 40.2%
Return on assets 2.25% 2.12% 2.38% 2.25% 2.07%
Reported results:
Diluted earnings per common share $ 1.85 $1.62 (b) $ .47 $ .45 $ .42 (b)
Net income applicable to common stock $ 963 $ 861 $ 240 $ 231 $ 222
Return on common equity 22.4% 20.7% 23.1% 21.8% 20.1%
Return on assets 1.96% 1.81% 2.01% 1.87% 1.76%
Fee revenue as a percentage of net interest and fee
revenue (FTE) 69% 66% 69% 69% 68%
Efficiency ratio excluding amortization of intangibles 61% 63% 59% 61% 65%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Operating and cash operating results for 1999 exclude a $77 million after-
tax net gain from divestitures, $36 million after-tax of nonrecurring
expenses and a $26 million after-tax charge for the cumulative effect of a
change in accounting principle. The fourth and third quarters of 1999 each
exclude $5 million of after-tax net losses from divestitures. Cash
operating results exclude the after-tax impact of the amortization of
goodwill and other intangibles from purchase acquisitions.
(b) Restated to reflect the two-for-one common stock split distributed on May
17, 1999.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 2
PITTSBURGH, Jan. 18, 2000--Mellon Financial Corporation (formerly Mellon Bank
Corporation) (NYSE: MEL) today announced record full-year 1999 diluted operating
earnings per common share of $1.82, an increase of 12 percent compared with
$1.62 per common share in 1998. Operating net income applicable to common stock
totaled $948 million in 1999, an increase of 10 percent compared with $861
million in 1998. Operating return on common equity and return on assets were
22.0 percent and 1.93 percent, respectively, for 1999, compared with 20.7
percent and 1.81 percent, respectively, for 1998.
Fourth quarter 1999 diluted operating earnings per common share was 48 cents, an
increase of 14 percent compared with 42 cents per common share in the fourth
quarter of 1998. Operating net income applicable to common stock totaled $245
million in the fourth quarter of 1999, an increase of 10 percent compared with
$222 million in the fourth quarter of 1998. Operating return on common equity
and return on assets were 23.5 percent and 2.05 percent, respectively, for the
fourth quarter of 1999, compared with 20.1 percent and 1.76 percent,
respectively, for the fourth quarter of 1998.
"The performance of the past quarter, which follows the completion of our
divestiture program and the sharpening of our strategic focus, clearly shows we
are in an excellent position to expand on our leadership positions in our high-
growth, high-return businesses," said Martin G. McGuinn, Mellon chairman and
chief executive officer. "Overall, our 1999 financial results will put us among
the best performing financial services companies."
The Corporation also declared a regular quarterly common dividend of 20 cents
per share. This cash dividend is payable on Feb. 15, 2000, to shareholders of
record at the close of business on Jan. 31, 2000.
During 1999, the Corporation initiated several actions to sharpen its strategic
focus on businesses with the highest growth and return potential. The most
significant of these actions were the divestitures of its credit card business
(March 1999), network services transaction processing unit (June 1999) and
mortgage businesses (completed in September 1999). These actions followed the
1998 acquisitions of Founders Asset Management (April 1998) and Newton
Management Limited (October 1998). These divestitures and acquisitions impacted
the comparison of 1999 to 1998 results. In addition, in the second quarter of
1999, the Corporation increased its quarterly common stock dividend by 11
percent to 20 cents per common share and distributed a two-for-one common stock
split on May 17, 1999. Also, during 1999 30.2 million shares of common stock
were repurchased with 14.8 million additional shares available for repurchase
under a 25 million share repurchase program announced in September 1999.
Full-Year 1999
- --------------
Fee revenue was $3.100 billion in 1999, up $179 million compared with $2.921
billion in 1998. Excluding the effect of divestitures and acquisitions and
excluding fees in 1998 from the discontinued service of electronic filing of
income tax returns, fee revenue increased 12 percent in 1999, compared with
1998, primarily due to a 15 percent increase in trust and investment fee
revenue.
Net interest revenue, on a fully taxable equivalent basis, was $1.439 billion in
1999, a decrease of $60 million compared with $1.499 billion in 1998. Excluding
the effect of the divestitures of the credit card business and mortgage
businesses, net interest revenue increased 1 percent compared with 1998. This
increase resulted from a higher level of interest-earning assets and a higher
level of compensating balances held in lieu of customers paying cash management
fees partially offset by higher funding costs related to the repurchase of
$1.068 billion of common stock.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 3
Operating expense before trust-preferred securities expense and net revenue from
acquired property totaled $2.984 billion in 1999 compared with $2.940 billion in
1998. Excluding the effect of divestitures and acquisitions and $56 million of
nonrecurring expenses recorded in the second quarter of 1999, operating expense
before trust-preferred securities expense and net revenue from acquired property
increased 3 percent compared with 1998.
Credit quality expense was $31 million in 1999, compared with $54 million in
1998. The lower expense in 1999 primarily resulted from a lower provision for
credit losses following the divestiture of the credit card business as well as
higher net revenue from acquired property. Nonperforming assets totaled $159
million at Dec. 31, 1999, compared with $169 million at Sept. 30, 1999, and $140
million at Dec. 31, 1998. The ratio of nonperforming assets to total loans and
net acquired property was .53 percent at Dec. 31, 1999, compared with .58
percent at Sept. 30, 1999, and .44 percent at Dec. 31, 1998.
Fourth Quarter 1999
- -------------------
Fee revenue for the fourth quarter of 1999 of $759 million was impacted by the
1999 divestitures of the credit card business, network services transaction
processing unit and mortgage businesses as well as the sale of the merchant card
processing business in December 1998. Excluding these factors, fee revenue
increased 13 percent in the fourth quarter of 1999 compared with the fourth
quarter of 1998. This increase was primarily due to an 18 percent increase in
trust and investment fee revenue. Excluding the effect of divestitures, fee
revenue increased 7 percent compared with the third quarter of 1999, primarily
resulting from higher trust and investment fee revenue.
Net interest revenue, on a fully taxable equivalent basis for the fourth quarter
of 1999, was $353 million, down $29 million compared with $382 million in the
fourth quarter of 1998. Excluding the effect of the divestitures of the credit
card business and mortgage businesses, net interest revenue was unchanged
compared with the fourth quarter of 1998, as higher funding costs related to the
repurchase of common stock were offset by a higher level of compensating deposit
balances and higher loan fees. Net interest revenue increased $1 million
compared with the third quarter of 1999. The net interest margin was 3.66
percent in the fourth quarter of 1999, up 3 basis points from the third quarter
of 1999.
Operating expense before trust-preferred securities expense and net revenue from
acquired property was $699 million in the fourth quarter of 1999, a decrease of
$106 million compared with $805 million in the fourth quarter of 1998.
Excluding the effect of divestitures, operating expense before trust-preferred
securities expense and net revenue from acquired property increased only 1
percent compared with the fourth quarter of 1998 and increased 7 percent
compared with the third quarter of 1999. The increase compared with the third
quarter of 1999 was primarily driven by higher incentive, professional and other
purchased services expenses.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 4
Credit quality expense was $6 million in the fourth quarter of 1999, compared
with $15 million in the fourth quarter of 1998 and $5 million in the third
quarter of 1999. The lower expense in the fourth quarter of 1999 compared with
the prior-year period primarily resulted from the divestiture of the credit card
business as well as higher net revenue from acquired property.
Mellon Financial Corporation is a global financial services company with
approximately $2.7 trillion in assets under management, administration or
custody, including over $480 billion under management. One of the world's
leading providers of wealth management and global investment management for
individual and institutional investors, as well as global investment services
for businesses and institutions, Mellon also offers a comprehensive array of
banking services for individuals and small, midsize and large businesses and
institutions in selected geographies. Its world-class asset management
companies, which include The Dreyfus Corporation in the United States and Newton
Management Limited in the United Kingdom, provide investment products in
virtually every asset class and investment style. In addition, Mellon is a top
global provider of custody, retirement and benefits consulting services through
its Mellon Trust and Buck Consultants affiliates. Headquartered in Pittsburgh,
Pennsylvania, Mellon has operations or joint ventures around the world.
Taped comments from Steven G. Elliott, Mellon senior vice chairman and chief
financial officer, regarding the Corporation's 1999 earnings are available by
calling (412) 236-5385 from the afternoon of Tuesday, Jan. 18, 2000, through 5
p.m. EST on Tuesday, Jan. 25, 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 Mellon press releases by fax, call 1 800
758-5804, identification number 552187.
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements relate
to, among other things, anticipated fees and earnings per common share from a
long-term contract with a third party. Reference is made to the Corporation's
filings on Forms 10-K and 10-Q with the Securities and Exchange Commission for
factors that could cause actual results to differ materially from those
anticipated, including without limitation the levels of the third party's funds
under management.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 5
Noninterest Revenue
- -------------------
<TABLE>
<CAPTION>
Year ended Quarter ended
-------------------- --------------------------------
Dec. 31, Dec. 31, Dec. 31, Sept. 30, Dec. 31,
(dollar amounts in millions) 1999 1998 1999 1999 1998
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trust and investment fee revenue:
Investment management:
Mutual fund $ 602 $ 478 $ 157 $ 152 $ 136
Private asset 292 225 75 73 63
Institutional asset 271 212 81 65 58
- ----------------------------------------------------------------------------------------------------------
Total investment management revenue 1,165 915 313 290 257
Administration and custody:
Institutional trust 396 388 96 96 100
Mutual fund 152 133 41 39 32
Private asset 19 19 4 5 5
- ----------------------------------------------------------------------------------------------------------
Total administration and custody revenue 567 540 141 140 137
Benefits consulting 250 223 67 66 59
Brokerage fees 62 44 18 13 12
- ----------------------------------------------------------------------------------------------------------
Total trust and investment fee revenue 2,044 1,722 539 509 465
Cash management and deposit transaction charges 274 262 68 70 70
Foreign currency and securities trading revenue 173 165 43 42 47
Mortgage servicing fees 153 200 2 48 48
Credit card fees 18 92 - - 22
Other 438 480 107 96 147
- ----------------------------------------------------------------------------------------------------------
Total fee revenue 3,100 2,921 759 765 799
Net gain (loss) from divestitures 127 - (7) (8) -
Gains on sales of securities - 1 - - -
- ----------------------------------------------------------------------------------------------------------
Total noninterest revenue $3,227 $2,922 $ 752 $ 757 $ 799
- ----------------------------------------------------------------------------------------------------------
Fee revenue as a percentage of net interest and
fee revenue (FTE) 69% 66% 69% 69% 68%
Trust and investment fee revenue as a percentage
of net interest and fee revenue (FTE) 45% 39% 48% 45% 39%
- ----------------------------------------------------------------------------------------------------------
Memo:
Gross joint venture fee revenue (a) $ 431 $ 256 $ 129 $ 106 $ 71
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) The Corporation accounts for its interest in joint ventures under the equity
method of accounting with the net results primarily recorded as other fee
revenue, as well as trust and investment fee revenue. The gross joint
venture fee revenue is not included in total noninterest revenue above.
Fee revenue
Fee revenue of $759 million in the fourth quarter of 1999 was impacted by the
divestitures of the credit card business in March 1999, the network services
transaction processing unit in June 1999, the mortgage businesses that were
completed in the third quarter of 1999 as well as the sale of the merchant card
processing business in December 1998. Excluding these factors, fee revenue
increased 13% in the fourth quarter of 1999 compared with the fourth quarter of
1998, primarily due to an 18% increase in trust and investment fee revenue.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 6
Excluding the effect of divestitures, fee revenue increased 7% in the fourth
quarter of 1999 compared with the third quarter of 1999, primarily resulting
from a 6% increase in trust and investment fee revenue.
<TABLE>
<CAPTION>
Full-year 1999 4th Qtr. 1999 4th Qtr. 1999
over over over
Full-year 1998 4th Qtr. 1998 3rd Qtr. 1999
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust and investment fee revenue growth (a) 15% 18% 6%
Total fee revenue growth (a)(b) 12% 13% 7%
- -------------------------------------------------------------------------------------------------
</TABLE>
(a) Excluding the effect of acquisitions and divestitures.
(b) Also excludes fees in 1998 from the discontinued service of electronic
filing of income tax returns.
Investment management revenue increased $56 million, or 22%, compared with the
fourth quarter of 1998. This increase resulted from a $21 million, or 15%,
increase in mutual fund management revenue, a $12 million, or 20%, increase in
private asset management revenue and a $23 million, or 39%, increase in
institutional asset management revenue. These increases resulted from net new
business and an increase in the market value of assets under management.
The average net assets of proprietary funds managed in the fourth quarter of
1999 were $129 billion, up $11 billion from $118 billion in the fourth quarter
of 1998 and up $5 billion from $124 billion in the third quarter of 1999. The
increases primarily resulted from increases in average net assets of equity
funds. Proprietary equity funds averaged $49 billion in the fourth quarter of
1999, compared with $37 billion in the fourth quarter of 1998 and $45 billion in
the third quarter of 1999.
Administration and custody fee revenue increased $4 million, or 4%, in the
fourth quarter of 1999 compared with the fourth quarter of 1998. Institutional
trust and custody revenue was tempered primarily by the contribution of pre-
existing business to the Russell/Mellon Analytical Services Inc. and the CIBC
Mellon Global Securities Services joint ventures. The results of joint ventures
are accounted for under the equity 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 the Corporation's
joint ventures that provide such services, institutional trust and custody
revenue increased $22 million, or 20%, compared with the fourth quarter of 1998.
Mutual fund administration and custody fees are expected to be impacted
beginning in the second quarter of 2000 as a long-term contract with a third
party expires near the end of May 2000. Fees from this contract totaled
approximately $21 million to $22 million pre-tax in each quarter of 1999.
Earnings per common share from this contract was approximately $.11 for the
full-year 1999 and approximately $.03 for the fourth quarter of 1999. Fees and
earnings per common share from this contract are expected to total approximately
$22 million pre-tax, or about $.03 in the first quarter of 2000 and
approximately $12 million pre-tax, or approximately $.015 in the second quarter
of 2000, when the contract expires.
Benefits consulting fees generated by Buck Consultants, Inc. increased $8
million, or 11%, in the fourth quarter of 1999, compared with the fourth quarter
of 1998, primarily resulting from net new business and
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 7
increased project activity with existing clients. The $6 million, or 52%,
increase in brokerage fees in the fourth quarter of 1999 compared to the prior-
year period primarily resulted from higher trading volumes. Dreyfus Brokerage
Services, Inc. averaged approximately 12,000 trades per day in the fourth
quarter of 1999, compared with approximately 8,500 trades per day in the third
quarter of 1999 and approximately 8,300 trades per day in the fourth quarter of
1998.
The $2 million, or 3%, decrease in cash management fees and deposit transaction
charges in the fourth quarter of 1999, compared with the prior-year period,
primarily resulted from customers holding higher levels of compensating balances
on deposit in lieu of paying fees as well as lower deposit transaction charges.
The $2 million of mortgage servicing fees in the fourth quarter of 1999 relates
to the servicing of jumbo mortgages. This servicing was retained by the
Corporation following the divestiture of the mortgage businesses.
Foreign currency and securities trading revenue decreased $4 million, or 8%, in
the fourth quarter of 1999 compared with the record level achieved in the prior-
year period. Foreign currency and securities trading revenue increased $1
million in the fourth quarter of 1999 compared with the third quarter of 1999.
Other fee revenue decreased $40 million, or 28%, in the fourth quarter of 1999
compared with the prior-year period. The decrease primarily related to the
inclusion, in the fourth quarter of 1998, of a $35 million gain on the sale of
the merchant card processing business, and from the June 1999 divestiture of the
network services transaction processing unit. The network services transaction
processing unit generated $13 million of fee revenue in the fourth quarter of
1998.
Fee revenue in the full-year 1999 totaled $3.100 billion, up $179 million
compared with $2.921 billion for the full-year 1998. The comparison to the
full-year 1998 was impacted by the 1999 credit card, network services and
mortgage banking divestitures, the 1998 sale of merchant card processing, the
1998 Newton and Founders acquisitions, and the elimination of fees from the
electronic filing of income tax returns, a service that was discontinued at the
end of 1998. Excluding these factors, fee revenue increased 12% compared with
the full-year 1998, primarily due to a 15% increase in trust and investment fee
revenue.
Net gain (loss) from divestitures
In the fourth quarter of 1999, the Corporation recorded a $7 million pre-tax net
loss from divestitures. The fourth quarter 1999 after-tax net loss from these
transactions totaled $5 million, or approximately $.01 per common share. The net
loss primarily resulted from a final adjustment to the previous write-downs
recorded for the residential mortgage servicing business. This loss was
partially offset by an additional gain from the network services sale as more
customers converted to the purchaser. Including the $134 million pre-tax net
gain reported in the first nine months of 1999, the pre-tax net gain from
divestitures totaled $127 million for the full-year 1999.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 8
Net Interest Revenue
- --------------------
<TABLE>
<CAPTION>
Year ended Quarter ended
-------------------- --------------------------------
Dec. 31, Dec. 31, Dec. 31, Sept. 30, Dec. 31,
(dollar amounts in millions) 1999 1998 1999 1999 1998
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net interest revenue (FTE) $ 1,439 $ 1,499 $ 353 $ 352 $ 382
Net interest margin (FTE) 3.70% 3.96% 3.66% 3.63% 3.86%
Average securities $ 6,513 $ 5,701 $ 6,275 $ 6,364 $ 6,141
Average loans $30,320 $30,411 $29,159 $30,177 $31,503
Average interest-earning assets $38,820 $37,907 $38,073 $38,407 $39,427
- -----------------------------------------------------------------------------------------
</TABLE>
Net interest revenue on a fully taxable equivalent basis in the fourth quarter
of 1999 decreased $29 million compared with the fourth quarter of 1998. This
decrease primarily resulted from the divestitures of the credit card and
mortgage businesses. Excluding the net interest revenue generated by these
businesses, net interest revenue was unchanged compared with the fourth quarter
of 1998, as higher funding costs related to the repurchase of common stock were
offset by a higher level of compensating balances held in lieu of customers
paying cash management fees, and higher loan fees.
Net interest revenue increased $1 million in the fourth quarter of 1999 compared
with the third quarter of 1999. The loss of net interest revenue due to the
divestiture of the mortgage businesses and the higher funding costs related to
the repurchase of common stock was offset by a higher level of interest-free
funds, due in part to higher compensating balances held in lieu of customers
paying cash management fees, and higher loan fees.
Net interest revenue decreased $60 million in the full-year 1999 compared with
the full-year 1998. Excluding the net interest revenue generated by the credit
card and mortgage businesses, net interest revenue increased 1% compared with
the full-year 1998, reflecting a higher level of interest-earning assets and a
higher level of compensating balances held in lieu of customers paying cash
management fees partially offset by higher funding costs related to the
repurchase of $1.068 billion of common stock.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 9
Operating Expense
- -----------------
<TABLE>
<CAPTION>
Year ended Quarter ended
-------------------- --------------------------------
Dec. 31, Dec. 31, Dec. 31, Sept. 30, Dec. 31,
(dollar amounts in millions) 1999 1998 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense $ 1,559 $ 1,456 $ 384 $ 387 $ 386
Professional, legal and other purchased services 280 297 73 63 97
Net occupancy expense 243 237 57 61 63
Equipment expense 186 181 42 40 59
Amortization of goodwill and other intangible assets 148 137 37 37 37
Amortization of mortgage servicing assets and
purchased credit card relationships 113 179 1 33 47
Other expense 455 453 105 95 116
- ---------------------------------------------------------------------------------------------------------------
Operating expense before trust-preferred securities
expense and net revenue from acquired property 2,984 2,940 699 716 805
Trust-preferred securities expense 79 79 20 20 20
Net revenue from acquired property (14) (6) (4) (5) -
- ---------------------------------------------------------------------------------------------------------------
Total operating expense $ 3,049 $ 3,013 $ 715 $ 731 $ 825
- ---------------------------------------------------------------------------------------------------------------
Average full-time equivalent staff 28,000 28,300 25,800 28,300 28,500
- ---------------------------------------------------------------------------------------------------------------
Efficiency ratio (a) 64% 66% 62% 64% 68%
Efficiency ratio excluding amortization of goodwill
and other intangible assets 61% 63% 59% 61% 65%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Operating expense before trust-preferred securities expense, net 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 (loss) on divestitures and gains on the sales of securities.
Operating expense before trust-preferred securities expense and net revenue from
acquired property totaled $699 million, a decrease of $106 million compared with
the fourth quarter of 1998. Fourth quarter 1999 expenses were impacted by the
1999 credit card, network services and mortgage banking divestitures as well as
the 1998 sale of merchant card processing. Excluding these factors, operating
expense before trust-preferred securities expense and net revenue from acquired
property increased only 1% compared with the fourth quarter of 1998.
<TABLE>
<CAPTION>
Full-year 1999 4th Qtr. 1999 4th Qtr. 1999
over over over
Full-year 1998 4th Qtr. 1998 3rd Qtr. 1999
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating expense growth (a) 3% 1% 7%
- ---------------------------------------------------------------------------------
</TABLE>
(a) Operating expense before trust-preferred securities expense and net revenue
from acquired property excluding the effect of acquisitions and divestitures
and excluding second quarter 1999 nonrecurring expenses.
Operating expense before trust-preferred securities expense and net revenue from
acquired property decreased $17 million compared with the third quarter of 1999.
Excluding the impact of the divestiture of the mortgage businesses, operating
expense before trust-preferred securities expense and net revenue from acquired
property increased 7% compared with the third quarter of 1999, primarily driven
by higher incentive, professional and other purchased services expenses.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 10
Operating expense before trust-preferred securities expense and net revenue from
acquired property totaled $2.984 billion compared with $2.940 billion in the
full-year 1998. Excluding the effect of the divestitures and acquisitions and
$56 million of nonrecurring expenses recorded in the second quarter of 1999,
operating expense before trust-preferred securities expense and net revenue from
acquired property increased 3% compared with the full-year 1998.
Income Taxes
- ------------
The Corporation's effective tax rate for 1999 was 36.7%, compared with 35.1% for
1998. The effective tax rate, excluding the effect of the net gain on
divestitures and nonrecurring expenses, was 36.5% for 1999, and it is currently
anticipated that the effective tax rate will be substantially the same in 2000.
Credit Quality Expense, Net Credit Losses and Reserve for Credit Losses
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended Quarter ended
-------------------- --------------------------------
Dec. 31, Dec. 31, Dec. 31, Sept. 30, Dec. 31,
(dollar amounts in millions) 1999 1998 1999 1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Provision for credit losses $ 45 $ 60 $ 10 $ 10 $ 15
Net revenue from acquired property (14) (6) (4) (5) -
- -------------------------------------------------------------------------------------------------------
Credit quality expense $ 31 $ 54 $ 6 $ 5 $ 15
- -------------------------------------------------------------------------------------------------------
Net credit (losses) recoveries:
Credit card $ (10) $ (40) $ - $ - $ (11)
Other consumer credit (12) (12) (2) (2) (4)
Commercial real estate 2 (3) 2 - (1)
Commercial and financial (30) (8) (12) (8) (1)
- -------------------------------------------------------------------------------------------------------
Total net credit losses $ (50) $ (63) $ (12) $ (10) $ (17)
- -------------------------------------------------------------------------------------------------------
Annualized net credit losses to average loans .17% .21% .16% .14% .22%
- -------------------------------------------------------------------------------------------------------
Reserve for credit losses at end of period $ 403 $ 496 $ 403 $ 405 $ 496
Reserve as a percentage of total loans 1.33% 1.54% 1.33% 1.39% 1.54%
- -------------------------------------------------------------------------------------------------------
</TABLE>
The decrease in credit quality expense in both the fourth quarter of 1999 and
the full-year 1999 compared with the fourth quarter of 1998 and full-year 1998
primarily resulted from a lower provision for credit losses following the
divestiture of the credit card business as well as higher net revenue from
acquired property.
The $93 million decrease in the reserve for credit losses at Dec. 31, 1999,
compared with Dec. 31, 1998, was primarily due to the divestiture of the credit
card and mortgage businesses. In conjunction with these divestitures, $88
million that had been associated with the credit card and residential mortgage
portfolios was released from the reserve for credit losses.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 11
Nonperforming Assets
- --------------------
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(dollar amounts in millions) 1999 1999 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic nonperforming loans:
Consumer mortgage $ 40 $ 47 $ 43 $ 44 $ 44
Commercial real estate 6 6 6 6 6
Other domestic 96 101 72 77 53
- ---------------------------------------------------------------------------------------------------------------
Total nonperforming loans 142 154 121 127 103
Acquired property:
Real estate acquired 15 15 24 37 40
Reserve for real estate acquired (1) (3) (4) (5) (5)
- ---------------------------------------------------------------------------------------------------------------
Net real estate acquired 14 12 20 32 35
Other assets acquired 3 3 1 2 2
- ---------------------------------------------------------------------------------------------------------------
Total acquired property 17 15 21 34 37
- ---------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 159 $ 169 $ 142 $ 161 $ 140
- ---------------------------------------------------------------------------------------------------------------
Nonperforming loans as a percentage of total loans .47% .53% .40% .41% .32%
Nonperforming assets as a percentage of total loans
and net acquired property .53% .58% .46% .53% .44%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Nonperforming assets decreased $10 million compared with Sept. 30, 1999, and
increased $19 million compared with Dec. 31, 1998. The decrease compared with
Sept. 30, 1999 primarily resulted from charge-offs of nonperforming commercial
loans. The higher level of nonperforming assets, compared with Dec. 31, 1998,
primarily resulted from the addition of two commercial loans, one each during
the first and third quarters of 1999. This increase was partially offset by
sales of acquired property.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 12
Selected Capital Data
- ---------------------
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, Dec. 31,
(dollar amounts in millions, except per share amounts) 1999 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total shareholders' equity $ 4,016 (a) $ 4,219 $ 4,303 $ 4,521 (a)
Total shareholders' equity to assets ratio 8.38% 9.00% 8.77% 8.90%
Tangible shareholders' equity (c) $ 2,288 (b) $ 2,454 $ 2,498 $ 2,641 (b)
Tangible shareholders' equity to assets ratio (d) 4.96% 5.45% 5.29% 5.41%
Tier I capital ratio 6.6% (e) 7.12% 6.87% 6.53%
Total (Tier I plus Tier II) capital ratio 10.7 (e) 11.58 11.18 10.80
Leverage capital ratio 6.7 (e) 6.82 6.70 6.73
Book value per common share $ 8.02 $ 8.29 $ 8.37 $ 8.63
Tangible book value per common share $ 4.57 $ 4.83 $ 4.86 $ 5.04
Closing common stock price $ 34.06 $ 33.63 $ 36.38 $ 34.38
Market capitalization $ 17,052 $ 17,103 $ 18,704 $ 18,007
Common shares outstanding (000) 500,623 508,650 514,211 523,846
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Average total shareholders' equity for the full-years 1999 and 1998, were
$4.309 billion and $4.190 billion, respectively.
(b) Average tangible common shareholders' equity for the full-years 1999 and
1998, were $2.503 billion and $2.382 billion, respectively.
(c) Includes $67 million, $64 million, $64 million and $60 million,
respectively, of minority interest, primarily related to Newton. In
addition, includes $345 million, $353 million, $368 million and $373
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.
The decrease in shareholders' equity at Dec. 31, 1999, compared with the prior
periods primarily reflects common stock repurchases partially offset by earnings
retention. During the fourth quarter of 1999, 10.2 million shares of common
stock were repurchased, bringing year-to-date repurchases to 30.2 million shares
with a total purchase price of $1.068 billion for an average share price of
$35.33 per share. The repurchase of 20 million of these shares was related to a
share repurchase program authorized by the board of directors in January 1999.
The remaining 10.2 million shares were repurchased under a 25 million share
repurchase program authorized by the board of directors in September 1999, with
14.8 million additional shares remaining available for repurchase.
Certain capital ratios were lower at Dec. 31, 1999, compared with the prior year
end reflecting the impact of the stock repurchases offset in part by earnings
retention and lower asset levels following the divestitures. In addition, the
Corporation estimates that the balance sheet at year-end 1999 included
approximately $1 billion of customer driven liquidity in excess of typical
levels, which negatively impacted the period-end capital ratios by approximately
10 basis points.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 13
SUMMARY DATA
Mellon Financial Corporation
Five Quarter Trend
<TABLE>
<CAPTION>
(dollar amounts in millions, Quarter ended
-----------------------------------------------------------------
except per share amounts; Dec. 31, Sept. 30, June 30, March 31, Dec. 31
common shares in thousands) 1999 1999 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected key data
- -----------------
Diluted earnings per common share:
Operating (a) $ .48 $ .46 $ .45 $ .43 $ .42
Cash operating (a)(b) .53 .52 .50 .49 .47
Reported .47 .45 .45 .48 .42
Net income applicable to common stock:
Operating (a) $ 245 $ 236 $ 236 $ 231 $ 222
Cash operating (a)(b) 274 266 266 260 252
Reported 240 231 238 254 222
Return on common equity (annualized):
Operating (a) 23.5% 22.3% 21.4% 20.9% 20.1%
Cash operating (a)(b) 45.6 43.7 41.1 40.4 40.2
Reported 23.1 21.8 21.6 23.1 20.1
Return on assets (annualized):
Operating (a) 2.05% 1.92% 1.90% 1.84% 1.76%
Cash operating (a)(b) 2.38 2.25 2.23 2.16 2.07
Reported 2.01 1.87 1.92 2.03 1.76
Shareholders' equity to assets:
Reported 8.38% 9.00% 8.77% 9.12% 8.90%
Tangible (b) 4.96 5.45 5.29 5.60 5.41
- ---------------------------------------------------------------------------------------------------------------------------
Fee revenue as a percentage of net interest and
fee revenue (FTE) 69% 69% 69% 68% 68%
Efficiency ratio excluding amortization of intangibles 59% 61% 62% (c) 62% 65%
Average common shares and equivalents outstanding:
Basic 505,891 (d) 511,777 518,273 523,448 523,082 (d)
Diluted 512,496 (d) 518,605 525,712 531,288 531,496 (d)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- continued -
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 14
SUMMARY DATA
Mellon Financial Corporation
Five Quarter Trend
(continued)
<TABLE>
<CAPTION>
Quarter ended
------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(dollar amounts in millions) 1999 1999 1999 1999 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average balances for the quarter
- --------------------------------
Money market investments $ 2,267 $ 1,463 $ 1,445 $ 1,286 $ 1,525
Trading account securities 372 403 414 291 258
Securities 6,275 6,364 6,652 6,767 6,141
Loans 29,159 30,177 30,504 31,467 31,503
Total interest-earning assets 38,073 38,407 39,015 39,811 39,427
Total assets 47,451 (e) 48,871 49,766 50,677 50,110 (e)
Total tangible assets (b) 45,640 (f) 47,012 47,878 48,755 48,153 (f)
Deposits 32,540 33,462 33,358 34,087 34,492
Total interest-bearing liabilities 31,221 31,349 31,634 32,825 32,406
Total shareholders' equity 4,133 4,212 4,417 4,469 4,391
Tangible shareholders' equity (b) 2,388 2,417 2,591 2,608 2,487
- --------------------------------------------------------------------------------------------------
</TABLE>
(a) For the fourth quarter of 1999, operating and cash operating results exclude
a $5 million after-tax net loss from divestitures. The third quarter of
1999 excludes 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. 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.
(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 of nonrecurring expenses.
(d) The basic average common shares and equivalents outstanding for the full-
years 1999 and 1998 were 514,791,000 and 520,440,000, respectively. The
diluted average common shares and equivalents outstanding for the full-years
1999 and 1998 were 521,986,000 and 530,414,000, respectively.
(e) Average total assets for the full-years 1999 and 1998 were $49.184 billion
and $48.071 billion, respectively.
(f) Average total tangible assets for the full-years 1999 and 1998 were $47.314
billion and $46.267 billion, respectively.
Note: All calculations are based on unrounded numbers.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 15
CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Financial Corporation
<TABLE>
<CAPTION>
Year ended Quarter ended
Dec. 31, Dec. 31,
---------------- ---------------
(in millions, except per share amounts) 1999 1998 1999 1998
- --------------------------------------- ------- ------- ------- ------
<S> <C> <C> <C> <C>
Interest revenue
- ----------------
Interest and fees on loans (loan fees of $59, $73,
$14 and $18) $2,238 $2,413 $ 550 $ 614
Federal funds sold and securities under resale agreements 41 49 18 12
Interest-bearing deposits with banks 39 33 12 10
Other money market investments 3 6 1 1
Trading account securities 19 15 5 4
Securities 419 376 103 98
------ ------ ------ -----
Total interest revenue 2,759 2,892 689 739
Interest expense
- ----------------
Interest on deposits 871 960 225 243
Federal funds purchased and securities under
repurchase agreements 102 123 20 34
Other short-term borrowings 131 114 34 29
Notes and debentures 225 204 59 53
------ ------ ------ -----
Total interest expense 1,329 1,401 338 359
------ ------ ------ -----
Net interest revenue 1,430 1,491 351 380
Provision for credit losses 45 60 10 15
------ ------ ------ -----
Net interest revenue after provision for credit losses 1,385 1,431 341 365
Noninterest revenue
- -------------------
Trust and investment fee revenue 2,044 1,722 539 465
Cash management and deposit transaction charges 274 262 68 70
Foreign currency and securities trading revenue 173 165 43 47
Mortgage servicing fees 153 200 2 48
Credit card fees 18 92 - 22
Other 438 480 107 147
------ ------ ------ -----
Total fee revenue 3,100 2,921 759 799
Net gain (loss) from divestitures 127 - (7) -
Gains on sales of securities - 1 - -
------ ------ ------ -----
Total noninterest revenue 3,227 2,922 752 799
Operating expense
- -----------------
Staff expense 1,559 1,456 384 386
Professional, legal and other purchased services 280 297 73 97
Net occupancy expense 243 237 57 63
Equipment expense 186 181 42 59
Amortization of goodwill and other intangible assets 148 137 37 37
Amortization of mortgage servicing assets and purchased
credit card relationships 113 179 1 47
Other expense 455 453 105 116
Trust-preferred securities expense 79 79 20 20
Net revenue from acquired property (14) (6) (4) -
------ ------ ------ -----
Total operating expense 3,049 3,013 715 825
------ ------ ------ -----
</TABLE>
- continued -
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 16
CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Financial Corporation
(continued)
<TABLE>
<CAPTION>
Year ended Quarter ended
Dec. 31, Dec. 31,
---------------- ---------------
(in millions, except per share amounts) 1999 1998 1999 1998
- --------------------------------------- ------- ------- ------- ------
<S> <C> <C> <C> <C>
Income before income taxes and cumulative effect
of accounting change 1,563 1,340 378 339
Provision for income taxes 574 470 138 117
------ ------ ----- -----
Income before cumulative effect of accounting change 989 870 240 222
Cumulative effect of accounting change (26) - - -
------ ------ ----- -----
Net income 963 870 240 222
Dividends on preferred stock - 9 - -
------ ------ ----- -----
Net income applicable to common stock $ 963 $ 861 $ 240 $ 222
====== ====== ===== =====
Earnings per share
- ------------------
Basic net income per common share:
Income before cumulative effect of accounting change $ 1.92 $ 1.65 (a) $ .47 $ .42 (a)
Cumulative effect of accounting change (.05) - - -
------ ------ ----- -----
Net income $ 1.87 $ 1.65 (a) $ .47 $ .42 (a)
====== ====== ===== =====
Diluted net income per common share:
Income before cumulative effect of accounting change $ 1.90 $ 1.62 (a) $ .47 $ .42 (a)
Cumulative effect of accounting change (.05) - - -
------ ------ ----- -----
Net income $ 1.85 $ 1.62 (a) $ .47 $ .42 (a)
====== ====== ===== =====
</TABLE>
__________________
(a) Restated to reflect the two-for-one common stock split distributed on May
17, 1999.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 17
CONDENSED CONSOLIDATED BALANCE SHEET
Mellon Financial Corporation
<TABLE>
<CAPTION>
Dec. 31, Sept. 30, June 30, Dec. 31,
(dollar amounts in millions) 1999 1999 1999 1998
- ---------------------------- -------- --------- -------- --------
<S> <C> <C> <C> <C>
Assets
- ------
Cash and due from banks $ 3,410 $ 3,340 $ 3,140 $ 2,926
Money market investments 1,358 1,252 1,075 798
Trading account securities 144 288 318 193
Securities available for sale 5,159 5,209 5,241 5,373
Investment securities (approximate fair value of $1,183,
$1,246, $1,332 and $1,634) 1,197 1,251 1,330 1,602
Loans, net of unearned discount of $79, $77, $70 and $54 30,248 29,156 30,544 32,093
Reserve for credit losses (403) (405) (409) (496)
------- ------- ------- -------
Net loans 29,845 28,751 30,135 31,597
Premises and equipment 562 537 552 569
Acquired property, net of reserves of $1, $3, $4 and $5 17 15 21 37
Goodwill and other intangibles 2,140 2,182 2,237 2,313
Mortgage servicing assets and purchased credit card relationships 16 17 1,069 1,132
Other assets 4,098 4,019 3,970 4,237
------- ------- ------- -------
Total assets $47,946 $46,861 $49,088 $50,777
======= ======= ======= =======
Liabilities
- -----------
Deposits in domestic offices $30,128 $28,928 $29,574 $31,269
Deposits in foreign offices 3,293 3,101 3,401 3,114
Short-term borrowings 3,650 3,570 4,765 4,942
Other liabilities 2,430 2,354 2,751 2,637
Notes and debentures (with original maturities over one year) 3,438 3,698 3,303 3,303
------- ------- ------- -------
Total liabilities 42,939 41,651 43,794 45,265
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; 588,661,920; 588,661,920 (a);
and 294,330,960 shares 294 294 294 147
Additional paid-in capital 1,788 1,773 1,765 1,887
Retained earnings 3,808 3,698 3,587 3,353
Accumulated unrealized (loss) gain, net of tax (135) (105) (90) 25
Treasury stock of 88,038,848; 80,011,896; 74,450,718 (a);
and 32,407,960 shares at cost (1,739) (1,441) (1,253) (891)
------- ------- ------- -------
Total shareholders' equity 4,016 4,219 4,303 4,521
------- ------- ------- -------
Total liabilities, trust-preferred securities and
shareholders' equity $47,946 $46,861 $49,088 $50,777
======= ======= ======= =======
</TABLE>
_______________________
(a) Reflects the two-for-one common stock split distributed on May 17, 1999.
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 18
CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Financial Corporation
Five Quarter Trend
<TABLE>
<CAPTION>
Quarter ended
------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(in millions, except per share amounts) 1999 1999 1999 1999 1998
- --------------------------------------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Interest revenue
- ----------------
Interest and fees on loans (loan fees of
$14, $14, $15, $16 and $18) $ 550 $ 553 $ 555 $ 580 $ 614
Federal funds sold and securities under resale
agreements 18 9 5 9 12
Interest-bearing deposits with banks 12 9 9 9 10
Other money market investments 1 1 - 1 1
Trading account securities 5 5 5 4 4
Securities 103 102 106 108 98
----- ----- ----- ----- -----
Total interest revenue 689 679 680 711 739
Interest expense
- ----------------
Interest on deposits 225 218 207 221 243
Federal funds purchased and securities under
repurchase agreements 20 22 23 37 34
Other short-term borrowings 34 34 34 29 29
Notes and debentures 59 56 55 55 53
----- ----- ----- ----- -----
Total interest expense 338 330 319 342 359
----- ----- ----- ----- -----
Net interest revenue 351 349 361 369 380
Provision for credit losses 10 10 10 15 15
----- ----- ----- ----- -----
Net interest revenue after provision for
credit losses 341 339 351 354 365
Noninterest revenue
- -------------------
Trust and investment fee revenue 539 509 508 488 465
Cash management and deposit transaction charges 68 70 70 66 70
Foreign currency and securities trading revenue 43 42 45 43 47
Mortgage servicing fees 2 48 51 52 48
Credit card fees - - - 18 22
Other 107 96 113 122 147
----- ----- ----- ----- -----
Total fee revenue 759 765 787 789 799
Net gain (loss) from divestitures (7) (8) 59 83 -
Gains on sales of securities - - - - -
----- ----- ----- ----- -----
Total noninterest revenue 752 757 846 872 799
Operating expense
- -----------------
Staff expense 384 387 397 391 386
Professional, legal and other purchased services 73 63 73 71 97
Net occupancy expense 57 61 64 61 63
Equipment expense 42 40 63 41 59
Amortization of goodwill and other intangible assets 37 37 37 37 37
Amortization of mortgage servicing assets
and purchased credit card relationships 1 33 37 42 47
Other expense 105 95 138 117 116
Trust-preferred securities expense 20 20 19 20 20
Net revenue from acquired property (4) (5) (5) - -
----- ----- ----- ----- -----
Total operating expense 715 731 823 780 825
----- ----- ----- ----- -----
</TABLE>
- continued -
<PAGE>
Mellon Reports Earnings
Jan. 18, 2000
Page 19
CONDENSED CONSOLIDATED INCOME STATEMENT
Mellon Financial Corporation
Five Quarter Trend
(continued)
<TABLE>
<CAPTION>
Quarter ended
---------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31, Dec. 31,
(in millions, except per share amounts) 1999 1999 1999 1999 1998
- --------------------------------------- -------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Income before income taxes and
cumulative effect of accounting change 378 365 374 446 339
Provision for income taxes 138 134 136 166 117
----- ----- ----- ----- -----
Income before cumulative effect of
accounting change 240 231 238 280 222
Cumulative effect of accounting change - - - (26) -
----- ----- ----- ----- -----
Net income 240 231 238 254 222
Dividends on preferred stock - - - - -
----- ----- ----- ----- -----
Net income applicable to common stock $ 240 $ 231 $ 238 $ 254 $ 222
===== ===== ===== ===== =====
Earnings per share
- ------------------
Basic net income per common share:
Income before cumulative effect
of accounting change $ .47 $ .46 $ .45 $ .54 $ .42 (a)
Cumulative effect of accounting change - - - (.05) -
----- ----- ----- ----- -----
Net income $ .47 $ .46 $ .45 $ .49 $ .42 (a)
===== ===== ===== ===== =====
Diluted net income per common share:
Income before cumulative effect
of accounting change $ .47 $ .45 $ .45 $ .53 $ .42 (a)
Cumulative effect of accounting change - - - (.05) -
----- ----- ----- ----- -----
Net income $ .47 $ .45 $ .45 $ .48 $ .42 (a)
===== ===== ===== ===== =====
</TABLE>
________________
(a) Restated to reflect the two-for-one common stock split distributed on May
17, 1999.
