SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date
of earliest event reported) April 22, 1998
---------------------
The Bank of New York Company, Inc.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 1-6152 13-2614959
- -----------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
48 Wall Street, New York, New York 10286
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (212) 495-1784
---------------------
- -----------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
On April 22, 1998, The Bank of New York Company, Inc.
(the "Corporation") made a merger proposal to Mellon Bank
Corporation ("Mellon") pursuant to which, among other things,
Mellon would be merged into the Corporation (the "Proposed
Merger"). Pursuant to the Proposed Merger, each outstanding share
of Mellon common stock would be converted into 1.4 shares of the
Corporation's common stock (the "Exchange Ratio").
The Proposed Merger is intended to constitute a
reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended, and to be accounted for as a pooling-of-
interests. The Proposed Merger is subject to execution of
definitive agreements and consummation of the Proposed Merger is
subject to receipt of shareholder and regulatory approvals.
A copy of a news release (the "News Release") relating
to the Proposed Merger is being filed as Exhibit (99)(a) to this
report and is incorporated herein by reference.
On April 22, 1998, the Corporation intends to hold a
meeting (the "Meeting") with analysts and others with respect to
the Proposed Merger. At the Meeting, certain financial and other
information relating to the Proposed Merger is to be presented
(the "Presentation Materials"). The News Release and the
Presentation Materials contain, among other things, certain
forward-looking statements regarding each of the Corporation,
Mellon and the combined company following the Proposed Merger,
including statements relating to financial condition, results of
operations and business of the Corporation following the
consummation of the Proposed Merger, cost savings, enhanced
revenues and accretion to reported earnings that may be realized
from the Proposed Merger, and certain restructuring charges
expected to be incurred in connection with the Proposed Merger.
Such forward-looking statements involve certain risks and
uncertainties that are subject to change based on various
important factors (some of which are beyond the Corporation's
control), including a variety of factors that may cause the
Corporation's actual results to differ materially from the
anticipated results or other expectations expressed in such
forward-looking statements. Factors, among others, that might
cause such a difference include, but are not limited to: (a) the
cost savings and accretion to cash earnings and reported earnings
that will result from the Proposed Merger; (b) the impact on
revenues of the Proposed Merger, including the potential for
enhanced revenues; (c) the restructuring charges expected to be
incurred in connection with the Proposed Merger; and (d)
statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "estimates," "intends" or
similar expressions. These forward-looking statements involve
certain risks and uncertainties. Factors that may cause actual
results to differ materially from those contemplated by such
forward-looking statements include, among others, the following
possibilities: (1) expected cost savings from the Proposed Merger
cannot be fully realized or realized within the expected time
frame; (2) revenues following the Proposed Merger are lower than
expected, or deposit attrition, operating costs or customer loss
and business disruption following the Proposed Merger are greater
than expected; (3) competitive pressures among depository and
other financial institutions increase significantly; (4) costs or
difficulties related to the integration of the businesses of the
Corporation and Mellon are greater than
2
<PAGE>
expected; (5) technological changes (including "Year 2000" data
systems compliance issues); (6) changes in the interest rate
environment reduce interest margins; (7) general economic or
business conditions, either nationally or in the states in which
the combined company will be doing business, are less favorable
than expected resulting in, among other things, a deterioration
in credit quality or a reduced demand for credit; (8) legislative
or regulatory changes adversely affect the businesses in which
the combined company would be engaged; and (9) changes in the
securities markets. Additional information with respect to
factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements is included
in the Corporation's 1997 Annual Report on Form 10-K and may be
included in subsequent reports filed by the Corporation with the
Securities and Exchange Commission.
A copy of the visual portion of the Presentation
Materials is being filed as Exhibit (99)(b) to this report,
substantially in the form intended to be presented at the
Meeting, and such materials are incorporated herein by reference.
3
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
(99)(a) The News Release.
(99)(b) The Presentation Materials.
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 hereunto duly
authorized.
Date: April 22, 1998 By: /s/ Phebe C. Miller
--------------------------
Name: Phebe C. Miller
Title: Chief Legal Officer
and Secretary
4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
(99)(a) The News Release.
(99)(b) The Presentation Materials.
5
Exhibit 99(a)
MEDIA:
Paul J. Leyden, SVP
212-495-1041
ANALYSTS:
Nicholas Silitch, SVP
212-495-1721
THE BANK OF NEW YORK COMPANY PROPOSES MERGER WITH
MELLON BANK CORPORATION
NEW YORK, April 22, 1998 - The Bank of New York
Company, Inc. (NYSE: BK) announced today that it has submitted to
the Board of Directors of Mellon Bank Corporation (NYSE: MEL) an
offer to merge The Bank of New York Company and Mellon to form a
company to be called The Mellon Bank of New York Company, Inc. In
the proposed merger, which has been unanimously approved by The
Bank of New York's Board of Directors, each outstanding Mellon
share would be converted into 1.40 shares of The Bank of New
York. Based on closing stock prices on April 21, 1998, this
exchange ratio would give Mellon shareholders a value of
approximately $90 per share, representing a premium of 28% over
Mellon's current stock price. A copy of the letter setting forth
The Bank of New York's offer is attached to this press release.
The Bank of New York expects that the proposed merger
will be accretive to earnings per share in 2000, based on, among
other things, an estimated $800 million in annual pre-tax
synergies ($700 million of cost reductions and $100 million of
revenue enhancements). The combined company's corporate
headquarters would be in Pittsburgh and its business headquarters
would be in New York. In its proposal, The Bank of New York has
indicated that Frank V. Cahouet, Mellon's Chairman and CEO, would
be Chairman of the combined company through year-end. Thomas A.
Renyi, Chairman and CEO of The Bank of New York, would be CEO. In
addition, Martin G. McGuinn, Mellon's CEO-elect, would be
President and Christopher M. ("Kip") Condron, Mellon's
President-elect, would become a Vice Chairman.
<PAGE>
Mr. Renyi said, "This is a unique combination between
ideal partners. Our proposed combination makes compelling
business sense and would be in the best interest of both banks
and our respective shareholders, customers, employees and
communities. We have great respect for Mellon's management and
would like to stress that we are only interested in pursuing this
transaction on a consensual basis."
In connection with the offer, The Bank of New York
announced that it has suspended its stock buyback program.
The Bank of New York Company, Inc. is one of the
largest bank holding companies in the United States with total
assets of $59 billion as of March 31, 1998. The Company provides
a complete range of banking and other financial services to
businesses and individuals worldwide through its six basic
businesses: Securities Servicing and Cash Processing; Corporate
Banking; Asset Based Lending; Trust, Investment Management and
Private Banking; Retail Banking; and Financial Market Services.
2
<PAGE>
[THE BANK OF NEW YORK COMPANY, INC. LETTERHEAD]
48 Wall Street, New York, N.Y. 10286
THOMAS A. RENYI
CHAIRMAN
AND CHIEF EXECUTIVE OFFICER
April 22, 1998
Mr. Frank V. Cahouet
Chairman, President and Chief Executive Officer
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Dear Frank:
As you are keenly aware, we have had numerous discussions
in the last several years regarding a possible merger of equals
transaction. Our inability to bring these discussions to
completion has, I know, been disappointing for both of us. I
remain totally convinced, as I believe you do, that a combination
of our two companies would make compelling business sense and
would be in the best interest of both banks and our respective
shareholders, customers, employees and communities. Accordingly,
I called you on Monday of this week in order to arrange a meeting
to discuss the details of a transaction, which I verbally
outlined to you. Since you declined to meet with me, I thought it
appropriate to follow up with this letter for consideration by
your Board of Directors.
We are formally submitting for consideration an offer to
merge the two companies pursuant to which each outstanding share
of Mellon Bank Corporation would be converted into 1.4 shares of
The Bank of New York Company, Inc. This exchange ratio would give
Mellon shareholders approximately $90 per share in Bank of New
York stock, based on Bank of New York's closing market price
yesterday. This represents a premium of 28% over Mellon's closing
stock price yesterday and a premium of 34% over Mellon's average
closing stock price over the last 30 trading days. The
transaction would be accounted for as a pooling-of-interests and
would be a tax-free exchange for Mellon shareholders.
Not only would your shareholders gain a very substantial
premium representing a large share of the value generated by the
merger, but they will also have the opportunity to share in the
stock appreciation of the resulting company, which I firmly
believe will be the most dynamic major financial institution in
the country and particularly well-placed to meet the challenges
of the rapidly evolving global financial services marketplace.
The synergies that would result from a combination of our two
businesses are compelling. For example, as indicated in the
attachment, the combined company would have the number one
position in assets under custody ($5.5 trillion), would have the
second largest amount of assets under management ($350 billion)
among banks (including the number one position in mutual fund
assets), would have the highest ROA and ROE among the top 25
banks and would be the sixth largest U.S. bank measured by market
capitalization.
<PAGE>
We would add a number of current Mellon directors to our
Board of Directors so that Mellon would have substantial
representation on the combined company's board. I hope that you
would be willing to be Chairman of the Board through the end of
1998. As Chief Executive Officer of the combined company, I would
call on the enormous strengths of senior management of both
companies going forward. In particular, I would want Martin G.
McGuinn to serve as President and Director of the combined
company and, among his other responsibilities, head up the
consumer and corporate banking areas (as well as certain staff
functions), and Christopher M. Condron to be a Vice Chairman and
Director of the combined company and chief executive of the asset
management, private banking and personal trust businesses. We
would, of course, honor all existing employment and severance
agreements and would enter into appropriate employment and
incentive compensation arrangements to provide key management an
important stake in the success of the combined company.
The holding company headquarters would be in Pittsburgh and
the business headquarters would be in New York, with Board
meetings divided between the two cities. The combined company
would be named The Mellon Bank of New York Company, Inc.
We know that Mellon has a strong tradition of charitable
commitment to the Pittsburgh community and the other communities
you serve. We will maintain and expand that tradition and will
establish a charitable foundation to support our commitment.
We are committed to undertake substantial steps to minimize
the impact on employees of either company. In fact, given the
strength and breadth of the combined company, we believe the
merger will create new opportunities for employees.
I am sure you and your Board of Directors will give this
offer, which has been authorized by The Bank of New York Company
Board of Directors, careful consideration. I would be happy to
meet with you or your Board to discuss our offer and to answer
any questions you may have.
In view of the significance of our offer to both companies
and their shareholders, we intend to publicly announce this offer
later this morning. I wish to assure you, however, that we are
only interested in pursuing this transaction on a consensual
basis.
Our merger offer is, of course, subject to execution of
mutually acceptable definitive agreements. Consummation of the
merger would be subject to receipt of shareholder approvals and
customary regulatory approvals, which we are confident would be
obtained promptly.
I look forward to hearing from you.
Sincerely,
/s/ Thomas A. Renyi
Enclosures
cc: Members of the Board of Directors
2
<PAGE>
Leadership - The Premier Securities Servicing Firm
=================================================================
Business Rank Summary Profile(a)
- -------- ---- ------------------
American Depositary Receipts #1 60% of ADR programs
Total Custody Receipts #1 $5.5 trillion
Corporate Trust #1 60,000 trusteeships
Stock Transfer(b) #1 25.6 million shareholder
accounts
Government Securities
Clearance #1 50% + market share
(a) Mellon numbers obtained from analyst presentations and SEC
filings.
(b) Includes Chase Mellon Shareholder Services numbers obtained
from industry survey.
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
<PAGE>
Leadership - Trust and Investment Management
=================================================================
- Pre-eminent in the asset management business ...
- Over $350 billion in assets under management
- #2 ranked bank asset manager
- ...with diversified products serving all key segments...
- Institutional - $186 billion in institutional assets
under management
- High net worth - $58 billion in private asset management
- Retail - $108 billion in managed mutual fund assets
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
<PAGE>
Leadership - Trust and Investment Management (cont'd)
=================================================================
... and in a league of its own versus commercial
banks
Bank Assets Under Management(a)
- ----------------------------
[Bar graph indicating:
State Street $390
BK/MEL 350
Bankers Trust 320
Citigroup 262
BankAmerica 172]
Bank Mutual Fund Assets(b)
- --------------------------
[Bar graph indicating:
BK/MEL $108.0
BankAmerica 50.4
Banc One 39.0
PNC 37.6
Chase 33.2]
* Dollars in billions.
(a) Source: Institutional Investor. Data as of December 31, 1996
adjusted to reflect more recent information if available.
(b) Source: American Banker, data as of December 31, 1997. Pro
forma for pending acquisitions.
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
<PAGE>
Leadership - Cash Processing Businesses
=================================================================
- #3 in Funds Transfer/U.S. Dollar Clearance
- 100,000+ transactions daily with average dollar
volume of $420 billion
- Top 5 in Cash Management
- Top ranked service levels
- Leader in Trade Finance
- Technology driven products
- Image processing
- Direct linkages to our customers
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
<PAGE>
Leadership - Financial Market Services
=================================================================
- Leading force in foreign exchange, FX derivatives and
interest rate swap products with 1997 revenues of over $243
million
- Through Susquehanna joint venture, leading provider of
FX and interest rate derivative products
- Customer-driven trade flow
- Cross-selling opportunities with over $5.5 trillion in
assets under custody and $350 billion in assets under
management
- Broad institutional and corporate customer base
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
<PAGE>
Leadership - Corporate Banking
=================================================================
- Opportunity to optimize Mellon's corporate banking business
- Cross-sell securities servicing; cash processing and
asset management businesses
- Leveraging Bank of New York traditional relationship
management focus
- Increasing syndication emphasis - #4 in total number of
deals underwritten as agent or co-agent in 1997
* Mellon numbers obtained from 1997 Annual Report and December
31, 1997 Gold Sheet data.
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
<PAGE>
Leadership - Commercial Finance/Leasing
=================================================================
- Major presence in factoring and other asset based lending
- #2 in U.S./#1 in Canada and the U.K.
- $3.4 billion in loans
- $30 billion in factored receivables volume from
diversified customer base
- Substantial international expansion opportunities
- Strong earnings growth over last five years
- Among largest bank owned leasing companies
- $4.6 billion in lease receivables
- Focus on small- and mid-sized leases
* Mellon numbers obtained from 1997 Annual Report.
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
<PAGE>
Leadership - Retail Banking with Attractive Demographics
=================================================================
- Diversified, efficient delivery system with 677
full-service branches and 110 supermarket branches
- Market leader in Pittsburgh, Philadelphia and New York City
suburbs
- Focused high net worth retail efforts
- Distribution platform in six of the seven wealthiest
states in the U.S.
- Mellon retail and high net worth strengths transferable to
Bank of New York franchise
THE BANK OF NEW YORK COMPANY, INC.-------------------------------
Exhibit 99(b)
THE MELLON BANK OF NEW YORK COMPANY, INC.
A Singular Value Proposition
April 22, 1998
<PAGE>
Forward Looking Estimates
=================================================================
These presentation materials contain, among other things, certain
forward-looking statements regarding each of The Bank of New York
Company, Inc. ("Bank of New York" or "BK"), Mellon Bank
Corporation ("Mellon" or "MEL") and the combined company
following the proposed merger, including statements relating to
financial condition, results of operations and business of BK
following the consummation of the proposed merger, cost savings,
enhanced revenues and accretion to reported earnings that may be
realized from the proposed merger, and certain restructuring
charges expected to be incurred in connection with the proposed
merger. Such forward-looking statements involve certain risks and
uncertainties that are subject to change based on various
important factors (some of which are beyond BK's control)
including a variety of factors that may cause BK's actual results
to differ materially from the anticipated results or other
expectations expressed in such forward-looking statements.
Factors, among others, that might cause such a difference
include, but are not limited to: (a) the cost savings and
accretion to cash earnings and reported earnings that will result
from the proposed merger; (b) the impact on revenues of the
proposed merger, including the potential for enhanced revenues;
(c) the restructuring charges expected to be incurred in
connection with the proposed merger and (d) statements preceded
by, followed by or that include the words "believes," "expects,"
"anticipates," "estimates," "intends" or similar expressions.
These forward-looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking
statements include, among others, the following possibilities;
(1) expected cost savings from the proposed merger cannot be
fully realized or realized within the expected time frame; (2)
revenues following the proposed merger are lower than expected,
or deposit attrition, operating costs or customer loss and
business disruption following the proposed merger are greater
than expected; (3) competitive pressures among depository and
other financial institutions increase significantly; (4) costs or
difficulties related to the integration of the businesses of BK
and MEL are greater than expected; (5) technological changes
(including "YEAR 2000" data systems compliance issues); (6)
changes in the interest rate environment reduce interest margins;
(7) general economic or business conditions, either nationally or
in the states in which the combined company will be doing
business, are less favorable than expected resulting in, among
other things, a deterioration in credit quality or a reduced
demand for credit; (8) legislative or regulatory changes
adversely affect the businesses in which the combined company
would be engaged; and (9) changes in the securities markets.
Additional information with respect to factors that may cause
actual results to differ materially from those contemplated by
such forward-looking statements is included in BK's 1997 Annual
Report on Form 10-K and may be included in subsequent reports
filed by BK with the Securities and Exchange Commission.
THE BANK OF NEW YORK COMPANY, INC.------------------------------2
<PAGE>
A Compelling Combination...
=================================================================
- Provides a platform to accelerate inherently strong revenue
growth
- Consolidation of "scaleable" businesses offers significant
opportunity to improve margins
- A management team with proven large scale integration
experience
- Compatible business philosophies: "profitability over size"
THE BANK OF NEW YORK COMPANY, INC.------------------------------3
<PAGE>
Accelerating Fee Revenue Growth
=================================================================
- Expanded customer base + complementary capabilities =
cross-sell opportunities
Bank of New York Mellon
---------------------- ----------------------
- Securities servicing Corporate
- Capital markets -----> and
- International Institutional
capabilities Customers
---------------------- ----------------------
---------------------- ----------------------
Corporate, - Asset management
Institutional and <----- - Cash management
Retail - Retail banking
Customers products
---------------------- ----------------------
- Complementary securities servicing products
- Unequaled breadth of value-added securities services
- ESI, B-Trade (electronic trading); Stanwich Benefits,
Buck Consulting (benefits consulting); FMC, Russell
Mellon (performance analytics); Inform (intranet
delivery); Securities Information Warehouse (database);
Susquehanna (FX and derivatives)
THE BANK OF NEW YORK COMPANY, INC.------------------------------4
<PAGE>
Consolidation of "Scaleable" Businesses
=================================================================
- Improved operating margins
- Efficiency through systems integration
- Expanded throughput volume reduces cost per transaction
- Seizing the offensive in technology
- Improved service levels; lower delivery cost
- Reduced unit cost for new technologies
THE BANK OF NEW YORK COMPANY, INC.------------------------------5
<PAGE>
Strong Management - Compatible Philosophies
=================================================================
- Proven track record in large scale acquisition integration
- Large and complex acquisition and systems conversion
experience
- 33 acquisitions successfully completed since 1/1/95
- Complementary skills and capabilities
- Bank of New York - securities processing, cash
processing, corporate lending, capital markets, FX
trading and derivatives and asset-based lending
- Mellon - asset management, retail/middle market
banking and leasing
- Compatible business philosophies
- Non-traditional - higher growth market segments
- Focus on profitability, not asset size
- Shareholder value via exceptional ROE's and EPS growth
THE BANK OF NEW YORK COMPANY, INC.------------------------------6
<PAGE>
Proposed Transaction Summary
=================================================================
Consideration: 1.40 BK shares for each MEL share
Fixed exchange ratio, no collars
Approximately $90.00 per MEL share based
on BK closing price on 4/21/98 of $64.06
28% premium to MEL's closing price on
4/21/98
Transaction Value: $24 billion
Pro Forma Market Cap: $50 billion
Structure: Pooling-of-interests
Tax-free exchange
Expected Closing: 4th Quarter 1998
THE BANK OF NEW YORK COMPANY, INC.------------------------------7
<PAGE>
Proposed Transaction Summary (cont'd)
=================================================================
Board of Directors: A number of MEL directors will be
invited to join the Board of the new
company
Senior Management Through 12/31/98:
Chairman: Frank V. Cahouet
CEO: Thomas A. Renyi
President: Martin G. McGuinn
Vice Chairmen: Christopher M. Condron
and Alan R. Griffith
Senior Executive
Vice President: Deno D. Papageorge
Senior Management Effective 1/1/99:
Chairman & CEO: Thomas A. Renyi
President: Martin G. McGuinn
Vice Chairmen: Christopher M. Condron
and Alan R. Griffith
Senior Executive
Vice President: Deno D. Papageorge
Name: The Mellon Bank of New York Company, Inc.
Headquarters: Corporate - Pittsburgh, PA
Business - New York, NY
THE BANK OF NEW YORK COMPANY, INC.------------------------------8
<PAGE>
Value Creation - Attractive Economics
=================================================================
- Merger immediately enhances shareholder value
- 5% accretive in 2000
- IRR in excess of 15%
- Substantial excess capital generation
- Strategy consistent with long-term financial goals
- Top tier financial performance
- Highest ROE and ROA among top 25 banks
- Projected 60%+ non-interest income/revenues
- Bank of New York management's efficient bottom line culture
expanded to Mellon operations
- $700 million expense savings and $100 million revenue
enhancements
THE BANK OF NEW YORK COMPANY, INC.------------------------------9
<PAGE>
Value Creation - Accretive to BK GAAP and Cash EPS
=================================================================
(Dollars in Millions, Except Per Share Data)
1999E 2000E
----- -----
BK Projected Net Income $1,321 $1,444
MEL Projected Net Income 966 1,072
------ ------
Pro Forma Combined Net Income (a) 2,287 2,516
Adjustments (After-Tax):
Expense Savings 210 420
Revenue Enhancements 30 60
Other (b) 85 132
------ ------
Adjusted Pro Forma Earnings $2,612 $3,128
====== ======
Pro Forma Reported EPS (c) $3.35 $4.01
Pro Forma Cash EPS (c) 3.61 4.27
- -----------------------------------------------------------------
% Change in Reported EPS (3)% 5%
% Change in Cash EPS (2)% 5%
- -----------------------------------------------------------------
(a) Source for 1999 earnings estimates is First Call. 2000
earnings estimates represent the 1999 First Call estimate
grown at the First Call long-term growth rate of 11.0%.
Estimates are for illustrative purposes only and are not
intended to be projections.
(b) Reflects impact of suspension of BK's share buyback and the
reinvestment of proceeds from re-issued shares at 6.0%
after-tax.
(c) Based on 781 million pro forma shares outstanding in all
annual periods.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------10
<PAGE>
MEL Shareholder Value Dramatically Enhanced
=================================================================
- Premium to MEL Market
- Closing Price - 4/21/98: 28%
- 30-Day Average Price: 34%
- 52-Week High: 22%
- Earnings Per Share Impact to MEL
- 1999 GAAP Impact: 31%
- 2000 GAAP Impact: 41%
- Over $5 billion of value created for Mellon shareholders
THE BANK OF NEW YORK COMPANY, INC.-----------------------------11
<PAGE>
Value Creation - Expense Reductions
=================================================================
(Dollars in Millions)
- 50% of the annual expense savings will be realized in 1999
and 100% in 2000.
Total Annual
Savings
------------
Securities Servicing/Processing $193
Banking Units 202
Systems & Technology 97
Staff & Other 208
----
Total Pre-Tax $700
----
Total After-Tax $420
====
- -----------------------------------------------------------------
As a percent of MEL's
operating expenses(a) 28%
- -----------------------------------------------------------------
(a) Measured as a percentage of Mellon's reported operating
expenses in the first quarter of 1998 excluding amortization
of intangibles.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------12
<PAGE>
Value Creation - Efficiency Ratio
=================================================================
1997
Efficiency
Rank Institution Ratio(a)
---- ----------- ----------
1 U.S. Bancorp 48.87%
2 Summit Bancorp 50.28
----------------------------------------
3 Bank of New York 50.53
----------------------------------------
4 Comerica 50.91
5 Wachovia 53.13
6 SouthTrust 56.05
7 Fleet Financial 56.56
8 Republic New York 57.11
9 NationsBank 57.21
10 First Union 57.95
11 KeyCorp 58.74
12 BankBoston 58.93
13 National City 59.14
14 SunTrust Banks 59.32
15 Chase Manhattan 59.35
16 Banc One 59.56
17 PNC Bank 61.04
18 UnionBanCal 61.27
19 Norwest 62.26
20 Wells Fargo 62.50
21 Citicorp 62.71
----------------------------------------
22 Mellon 66.16
----------------------------------------
23 JP Morgan 73.19
24 State Street 73.60
25 Bankers Trust 81.49
* Source: Keefe, Bruyette and Woods Inc. research, excludes
pending merger targets.
(a) Excludes OREO expenses.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------13
<PAGE>
Value Creation - Revenue Enhancements
=================================================================
- 50% of the annual revenue enhancements are realized in 1999
and 100% in 2000.
Total
Annual
Revenue
Enchancements
-------------
Securities Servicing/Cash Processing $ 55
Asset Management 25
Commercial Banking/
Capital Markets 15
Reduction from Overlapping
Commitments (5)
Retail Banking 10
----
Total Pre-Tax $100
----
Total After-Tax $ 60
====
THE BANK OF NEW YORK COMPANY, INC.-----------------------------14
<PAGE>
Merger Related Charges
=================================================================
(Dollars in Millions)
Total
One-Time
Charges
--------
Personnel - Severance/
Retention $495
Real Estate 90
Systems Integration 190
Other 50
----
Total Pre-Tax $825
----
Total After-Tax $495
====
THE BANK OF NEW YORK COMPANY, INC.-----------------------------15
<PAGE>
Leadership - Superior Growth Prospects for Core Businesses
=================================================================
- Core securities services, processing and asset management
businesses will continue to exhibit superior growth:
- Demographic shifts - significant increase in "peak
investor" 40 to 60 year olds and intergenerational
wealth transfer
- Global pension reform
- Increased cross border investing
- Growing demand for equities
- Continued privatization of government owned assets
THE BANK OF NEW YORK COMPANY, INC.-----------------------------16
<PAGE>
Leadership - The Premier Securities Servicing Firm
=================================================================
Business Rank Summary Profile(a)
- -------- ---- ------------------
American Depositary Receipts #1 60% of ADR programs
Total Custody Receipts #1 $5.5 trillion
Corporate Trust #1 60,000 trusteeships
Stock Transfer(b) #1 25.6 million shareholder
accounts
Government Securities
Clearance #1 50% + market share
(a) Mellon numbers obtained from analyst presentations and SEC
filings.
(b) Includes Chase Mellon Shareholder Services numbers obtained
from industry survey.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------17
<PAGE>
Leadership - Trust and Investment Management
=================================================================
- Pre-eminent in the asset management business ...
- Over $350 billion in assets under management
- #2 ranked bank asset manager
...with diversified products serving all key segments...
- Institutional - $186 billion in institutional assets
under management
- High net worth - $58 billion in private asset management
- Retail - $108 billion in managed mutual fund assets
THE BANK OF NEW YORK COMPANY, INC.-----------------------------18
<PAGE>
Leadership - Trust and Investment Management (cont'd)
=================================================================
... and in a league of its own versus commercial
banks
Bank Assets Under Management(a)
- ----------------------------
[Bar graph indicating:
State Street $390
BK/MEL 350
Bankers Trust 320
Citigroup 262
BankAmerica 172]
Bank Mutual Fund Assets(b)
- --------------------------
[Bar graph indicating:
BK/MEL $108.0
BankAmerica 50.4
Banc One 39.0
PNC 37.6
Chase 33.2]
* Dollars in billions.
(a) Source: Institutional Investor. Data as of December 31, 1996
adjusted to reflect more recent information if available.
(b) Source: American Banker, data as of December 31, 1997. Pro
forma for pending acquisitions.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------19
<PAGE>
Leadership - Cash Processing Businesses
=================================================================
- #3 in Funds Transfer/U.S. Dollar Clearance
- 100,000+ transactions daily with average dollar
volume of $420 billion
- Top 5 in Cash Management
- Top ranked service levels
- Leader in Trade Finance
- Technology driven products
- Image processing
- Direct linkages to our customers
THE BANK OF NEW YORK COMPANY, INC.-----------------------------20
<PAGE>
Leadership - Financial Market Services
=================================================================
- Leading force in foreign exchange, FX derivatives and
interest rate swap products with 1997 revenues of over $243
million
- Through Susquehanna joint venture, leading provider of
FX and interest rate derivative products
- Customer-driven trade flow
- Cross-selling opportunities with over $5.5 trillion in
assets under custody and $350 billion in assets under
management
- Broad institutional and corporate customer base
THE BANK OF NEW YORK COMPANY, INC.-----------------------------21
<PAGE>
Fiduciary/Processing Mix - Growing Proportion of Fee Revenues
=================================================================
1997
- ----
[Pie chart showing Bank of New York percentage:
Fiduciary/Processing Fee Revenue 35%
Other Fee Income Revenue 17
Net Interest Income 47]
[Pie chart showing Mellon percentage:
Fiduciary/Processing Fee Revenue 37%
Other Fee Income Revenue 25
Net Interest Income 38]
[An arrow from each pie chart pointing toward the combined
pro forma pie chart described below]
Pro Forma
- ---------
[Pie chart showing pro forma combined percentage:
Fiduciary/Processing Fee Revenue 36%
Other Fee Income Revenue 21
Net Interest Income 43]
[An arrow from the pro forma pie chart pointing toward the
combined 1999E pie chart described below]
[Pie chart showing 1999E percentage:
Fiduciary/Processing Fee Revenue 41%
Other Fee Income Revenue 20
Net Interest Income 39]
Source: Bank of New York and Mellon 1997 Annual Reports.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------22
<PAGE>
Leadership - Corporate Banking
=================================================================
- Opportunity to optimize Mellon's corporate banking business
- Cross-sell securities servicing; cash processing and
asset management businesses
- Leveraging Bank of New York traditional relationship
management focus
- Increasing syndication emphasis - #4 in total number of
deals underwritten as agent or co-agent in 1997
* Mellon numbers obtained from 1997 Annual Report and December
31, 1997 Gold Sheet data.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------23
<PAGE>
Leadership - Commercial Finance/Leasing
=================================================================
- Major presence in factoring and other asset based lending
- #2 in U.S./#1 in Canada and the U.K.
- $3.4 billion in loans
- $30 billion in factored receivables volume from
diversified customer base
- Substantial international expansion opportunities
- Strong earnings growth over the last five years
- Among largest bank owned leasing companies
- $4.6 billion in lease receivables
- Focus on small- and mid-sized leases
* Mellon numbers obtained from 1997 Annual Report.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------24
<PAGE>
Leadership - Retail Banking with Attractive Demographics
=================================================================
- Diversified, efficient delivery system with 677
full-service branches and 110 supermarket branches
- Market leader in Pittsburgh, Philadelphia and New York City
suburbs
- Focused high net worth retail efforts
- Distribution platform in six of the seven wealthiest
states in the U.S.
- Mellon retail and high net worth strengths transferable to
Bank of New York franchise
THE BANK OF NEW YORK COMPANY, INC.-----------------------------25
<PAGE>
Top Tier Financial Performance
=================================================================
Full Year 1997 - Data as Originally Reported
Rank
Pro Among
Forma Top
Com- 25 U.S.
BK(a) MEL(a) bined(b) Banks(c)
----- ------ -------- --------
Return on
Common Equity 22.13% 21.47% 21.76% #1
Return on Assets 1.86% 1.80% 1.83% #1
Non-Interest
Income/Revenues 53% 62% 57% #4
(a) Source: Bank of New York and Mellon 1997 Annual Reports.
Does not include Mellon's pending acquisitions.
(b) Assumes adjustments required for pooling accounting. Does
not reflect impact of transaction adjustments (i.e., cost
savings, revenue enhancements or restructuring charge).
(c) Source: SNL Securities. As measured by total assets at
December 31, 1997. Excludes pending merger and acquisition
targets.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------26
<PAGE>
Superior Track Record in Building Shareholder Value
=================================================================
Relative Stock Price Performance
S&P
Regional
Bank of Bank
New York(a) Index (a)
----------- ---------
1-Year Total Return 83% 61%
3-Year Total Return 63 45
5-Year Total Return 41 27
10-Year Total Return 29 20
[Line graph showing Bank of New York
stock price compared to S&P Regional
Bank Index between 4/22/94 and 4/20/98.
Over the period, Bank of New York stock
price grows approximately 500% as com-
pared to slightly less than 300% for the
S&P Regional Bank Index.]
(a) Source: INCELL. Data through April 21, 1998. Includes the
reinvestment of dividends.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------27
<PAGE>
A Compelling Combination. . .
=================================================================
- Provides a platform to accelerate inherently strong revenue
growth
- Consolidation of "scaleable" businesses offers significant
opportunity to improve margins
- A management team with proven large scale integration
experience
- Compatible business philosophies: "profitability over size"
THE BANK OF NEW YORK COMPANY, INC.-----------------------------28
<PAGE>
...Based on Unique Franchise
=================================================================
- Dominant market share in high growth markets
- Accelerated shift favoring high return businesses
- Strengthens breadth of product lines
- Cements technological leadership
THE BANK OF NEW YORK COMPANY, INC.-----------------------------29
<PAGE>
THE MELLON BANK OF NEW YORK COMPANY, INC.
A Singular Value Proposition -
Driven by Superior Profitability and Growth
30
<PAGE>
=================================================================
Appendix
=================================================================
31
<PAGE>
Revenue Mix - Fee Income by Business Segment
========================================================================
For the Year Ended December 31, 1997
BK(a) MEL(b) Pro Forma
------------ ------------ ------------
Per- Per- Per-
Total cent Total cent Total cent
----- ---- ----- ---- ----- ----
Securities Servicing/
Processing $1,029 50% $ 584 25% $1,613 36%
Investment Management
Revenue 181 9 727 31 908 20
Cash Management/
Deposit Accounts 354 17 242 10 596 13
Foreign Exchange &
Other Trading 125 6 118 5 243 5
Mortgage Servicing 0 0 213 9 213 5
Information Service
Fees 0 0 42 2 42 1
Other 371 18 449 19 820 18
------ --- ------ --- ------ ---
$2,060 100% $2,375 100% $4,435 100%
====== === ====== === ====== ===
- ------------------------------------------------------------------------
Fee/Income Revenue 53% 62% 57%
- ------------------------------------------------------------------------
* Source: Bank of New York and Mellon 1997 Annual Reports.
(a) Before gain on sale of Credit Card portfolio.
(b) Before gain on sale of Corporate Trust Business.
THE BANK OF NEW YORK COMPANY, INC.------------------------------------32
<PAGE>
Balance Sheet
=================================================================
December 31, 1997
(Dollars in Millions)
Pooling
Adjust- Pro
BK Mellon ments(a) Forma
------- ------- ------- --------
Net Loans $34,486 $28,667 $ 63,153
Securities 9,244 4,924 $ (609) 13,559
Other Assets 16,231 11,301 27,532
------- ------- ------- --------
Total Assets $59,961 $44,892 $ (609) $104,244
======= ======= ======= ========
Deposits $41,357 $31,305 $ 72,662
Funds Purchased 2,329 1,997 4,326
Long Term Debt 1,809 2,573 4,382
Other Liabilities 8,464 4,181 (213) 12,432
Capital Securities 1,000 991 1,991
------- ------- ------- --------
Total Liabilities 54,959 41,047 (213) 95,793
------- ------- ------- --------
Preferred Stock 1 193 194
Common Equity 5,001 3,652 (396) 8,257
------- ------- ------- --------
Total Equity 5,002 3,845 (396) 8,451
------- ------- ------- --------
Total Liabilities
and Equity $59,961 $44,892 $ (609) $104,244
======= ======= ======= ========
Source: Bank of New York and Mellon 1997 Annual Reports. Does not
include Mellon's pending acquisitions.
(a) Reflects the elimination of Mellon shares owned by Bank of
New York.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------33
<PAGE>
Loan Composition
===========================================================================
December 31, 1997
(Dollars in Millions)
BK MEL Pro Forma
------------- ------------- -------------
Per- Per- Per-
Total cent Total cent Total cent
----- ---- ----- ---- ----- ----
Commercial Real Estate $ 2,877 8% $ 1,509 5% $ 4,386 7%
Commercial-Domestic 20,148 54 10,826 37 30,974 47
Foreign 7,776 21 1,566 5 9,342 14
Lease Financing 1,953 5 2,639 10 4,592 7
------- --- ------- --- ------- ---
Total Commercial 32,754 88 16,540 57 49,294 75
------- --- ------- --- ------- ---
Residential Mortgage
and Home Equity 3,618 10 8,505 29 12,123 18
Other Consumer 670 2 4,097 14 4,767 7
------- --- ------- --- ------- ---
Total Consumer 4,288 12 12,602 43 16,890 25
Total Loans $37,042 100% $29,142 100% $66,184 100%
======= === ======= === ======= ===
Source: Bank of New York and Mellon 1997 Annual Reports. Does not
include Mellon's pending acquisitions.
THE BANK OF NEW YORK COMPANY, INC.---------------------------------------34
<PAGE>
Deposit Composition
===========================================================================
Average Balance for the Year Ended December 31, 1997
(Dollars in Millions)
BK MEL Pro Forma
------------- ------------- -------------
Per- Per- Per-
Total cent Total cent Total cent
----- ---- ----- ---- ----- ----
Non-Interest Bearing $ 9,572 24% $ 8,587 28% $18,159 26%
Interest Bearing:
Money Market &
Other Savings 12,247 31 10,278 33 22,525 32
Certificates
<$100,000 2,514 6 7,166 24 9,680 14
Certificates
>$100,000 675 2 1,787 6 2,462 3
Foreign Offices 14,902 37 2,641 9 17,543 25
------- --- ------- --- ------- ---
Total Interest
Bearing 30,338 76 21,872 72 52,210 74
------- --- ------- --- ------- ---
Total Deposits $39,910 100% $30,459 100% $70,369 100%
======= === ======= === ======= ===
Source: Bank of New York and Mellon 1997 Annual Reports. Does not
include Mellon's pending acquisitions.
THE BANK OF NEW YORK COMPANY, INC.---------------------------------------35
<PAGE>
Credit Quality
=================================================================
At or for the Year Ended December 31, 1997
(Dollars in Millions)
BK MEL Pro Forma
-------- ------- ---------
Total Loans (Gross) $35,127 $29,142 $64,269
Nonperforming Loans 193 133 326
Nonperforming Assets 208 181 389
Loan Loss Reserve 641 475 1,116
NPLs/Loans (gross) 0.55% 0.46% 0.51%
NPA/Loans + OREO 0.59 0.62 0.60
NCOs/Avg. Loans 0.97 0.72 0.86
Reserves/Loans 1.82% 1.63% 1.74%
Reserves/NPLs 332.12 357.14 342.33
Reserves/NPAs 308.17 262.43 286.89
Source: Bank of New York and Mellon 1997 Annual Reports. Does not
include Mellon's pending acquisitions.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------36
<PAGE>
Industry Leader in Profitability
=================================================================
Return on Assets
----------------
1. Bank of New York 1.86%
- ------------------------------------
- -- BK/MEL 1.83
- ------------------------------------
2. Mellon Bank 1.80
3. Norwest 1.63
4. Fleet Financial 1.59
5. National City 1.59
6. Comerica 1.52
7. PNC Bank 1.49
8. UnionBanCal 1.39
9. BankBoston 1.35
10. KeyCorp 1.33
Return on Common Equity
-----------------------
1. Bank of New York 22.1%
- ------------------------------------
- -- BK/MEL 21.8
- ------------------------------------
2. Mellon Bank 21.5
3. Comerica 21.3
4. Norwest 21.0
5. State Street 20.6
6. BankBoston 20.1
7. PNC Bank 20.0
8. Fleet Financial 19.5
9. KeyCorp 18.9
10. Chase Manhattan 18.7
* Financial information for the year ended December 31, 1997.
Reflects the impact of eliminating Mellon shares owned by
Bank of New York.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------37
<PAGE>
Enhanced Size and Scale
=================================================================
Market Capitalization
---------------------
1. Citigroup $148.2
2. BankAmerica (PF) 136.4
3. Banc One (PF) 69.3
4. First Union 59.8
5. Chase Manhattan 56.9
- ------------------------------------
- -- BK/MEL 50.0
- ------------------------------------
6. Wells Fargo 32.3
7. U.S. Bancorp 31.6
8. Norwest 31.3
9. Fleet Financial 26.0
10. J.P. Morgan 24.7
Assets
------
1. Citigroup $697.5
2. BankAmerica (PF) 567.9
3. Chase Manhattan 365.5
4. J.P. Morgan 262.2
5. Banc One (PF) 239.5
6. First Union 206.2
7. Bankers Trust New York 140.1
- ------------------------------------
- -- BK/MEL 104.2
- ------------------------------------
8. Wells Fargo 97.5
9. Norwest 88.5
10. Fleet Financial 85.5
Projected 1998 Net Income
-------------------------
1. BankAmerica (PF) $8.2
2. Citigroup 7.7
3. Banc One (PF) 4.2
4. Chase Manhattan 4.1
5. First Union 2.5
- ------------------------------------
- -- BK/MEL 2.0
- ------------------------------------
6. J.P. Morgan & Co. 1.6
7. U.S. Bancorp 1.5
8. Norwest 1.5
9. Fleet Financial 1.5
10. Wells Fargo 1.3
Common Equity
-------------
1. BankAmerica (PF) $43.9
2. Citigroup 38.7
3. Chase Manhattan 20.0
4. Banc One (PF) 19.0
5. First Union 15.3
6. Wells Fargo 12.6
7. J.P. Morgan 10.7
- ------------------------------------
- -- BK/MEL 8.3
- ------------------------------------
8. Fleet Financial 7.3
9. National City 7.0
10. Norwest 6.8
* Financial information as of Decmber 31, 1997 and pro forma
for pending transactions. Market information based on April
21, 1998 closing prices. Reflects the impact of eliminating
Mellon shares owned by Bank of New York. Does not include
transaction related adjustments.
THE BANK OF NEW YORK COMPANY, INC.-----------------------------38
