-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OAQ/5ksmlqf+eghEbu+NOYFKxtHBNmLAilyGvybZpUWkFE5O314o9azW4E8s748F qz0lglTChF6JzY9fEUNInw== 0000950132-95-000401.txt : 19951019 0000950132-95-000401.hdr.sgml : 19951019 ACCESSION NUMBER: 0000950132-95-000401 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951017 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951018 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MELLON BANK CORP CENTRAL INDEX KEY: 0000064782 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 251233834 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07410 FILM NUMBER: 95581415 BUSINESS ADDRESS: STREET 1: ONE MELLON BANK CENTER STREET 2: 500 GRANT ST CITY: PITTSBURGH STATE: PA ZIP: 15258-0001 BUSINESS PHONE: 4122345000 FORMER COMPANY: FORMER CONFORMED NAME: MELLON NATIONAL CORP DATE OF NAME CHANGE: 19841014 8-K 1 FORM 8-K 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) - October 17, 1995 MELLON BANK CORPORATION (Exact name of registrant as specified in charter) Pennsylvania 1-7410 25-1233834 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) One Mellon Bank Center 500 Grant Street Pittsburgh, Pennsylvania 15258 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code - (412) 234-5000 ITEM 5. OTHER EVENT A. Mellon Bank Corporation announces third quarter results of operations. B. In a separate press release dated October 17, 1995, Mellon Bank Corporation announced that its Board of Directors authorized the repurchase of up to 8,000,000 shares of the Corporation's common stock and approved an increase in the quarterly common stock dividend to 55 cents per share. This repurchase program is in addition to the previously announced repurchase program for the limited purpose of funding the Corporation's employee benefit plans and Dividend Reinvestment and Common Stock Purchase Plan, under which approximately 1,250,000 shares of common stock remain to be purchased. All such repurchases are authorized to be made in open market and privately negotiated transactions from time to time and may occur during the monthly pricing period for purchases under the Corporation's Dividend Reinvestment and Common Stock Purchase Plan. The Corporation believes that the repurchases of common stock and the increase in the common stock dividend currently represent the best use of the Corporation's excess capital and are effective means to maximize shareholder returns over the long term. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Exhibit Number Description 99.1 Mellon Bank Corporation Press Release, dated October 17, 1995, announcing third quarter results of operations. 99.2 Mellon Bank Corporation Press Release, dated October 17, 1995, announcing its common stock repurchase program and dividend actions. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MELLON BANK CORPORATION Date: October 17, 1995 By: STEVEN G. ELLIOTT Steven G. Elliott Vice Chairman, Chief Financial Officer & Treasurer EXHIBIT INDEX Number Description Method of Filing 99.1 Press Release dated October 17, 1995 Filed herewith 99.2 Press Release dated October 17, 1995 Filed herewith EX-99.1 2 PRESS RELEASE EX-99.1 [logo of Mellon Bank Corporation] NEWS RELEASE ANALYSTS: MEDIA: -------- ------ Donald J. MacLeod Margaret Kirch Cohen Contact: (412) 234-5601 (412) 234-0850 Corporate Affairs One Mellon Bank Center Pittsburgh, PA 15258-0001 David T. Lamar (412) 234-4633 - -------------------------------------------------------------------------------- MELLON REPORTS RECORD THIRD QUARTER 1995 EARNINGS ------------------------------------------------- . Earnings Per Share Increases 13 Percent Over Prior-Year Period, Excluding Dreyfus Merger-Related Charges in 1994 . Return on Common Shareholders' Equity Reaches 18 Percent for Quarter; Return on Assets is 1.70 Percent PITTSBURGH, Oct. 17, 1995 -- Mellon Bank Corporation today reported net income applicable to common stock of $166 million, or $1.15 per common share, for the third quarter of 1995, compared with $152 million, or $1.02 per common share, in the third quarter of 1994, excluding Dreyfus merger-related charges. Annualized return on common shareholders' equity and return on assets were 18 percent and 1.70 percent, respectively, in the third quarter of 1995, compared with 16 percent and 1.74 percent, respectively, in the third quarter of 1994, excluding Dreyfus merger-related charges. Including Dreyfus merger-related charges, Mellon reported net income applicable to common stock of $63 million, or $.42 per common share, in the third quarter of 1994 and annualized return on common shareholders' equity and return on assets of 7 percent and .81 percent, respectively. "Our record third quarter earnings reflect our continued success in positioning Mellon as a leader among financial services companies," said Frank V. Cahouet, chairman, president and chief executive officer of Mellon Bank Corporation. "Mellon's mergers with The Boston Company and The Dreyfus Corporation have been key to our strategy, and we continue to experience excellent returns on capital and assets. We have set aggressive goals for the Corporation, and we are very pleased with our financial performance." -more- Mellon Reports Earnings Oct. 17, 1995 Page 2 Net interest revenue for the quarter was $392 million, up from $376 million in the prior-year period. Fee revenue was $422 million, up from $399 million in the third quarter of 1994. The increases in net interest revenue resulted primarily from a higher level of loans. The increases in fee revenue resulted primarily from higher mortgage servicing revenue and mutual fund management revenues at Dreyfus. Operating expense for the third quarter of 1995 was $506 million, down from $595 million in the third quarter of 1994. Expenses were up 1 percent, excluding $104 million in Dreyfus merger-related charges recorded in the third quarter of 1994 and net revenue from acquired property. The provision for credit losses was $30 million in the third quarter of 1995, up from $15 million in the prior-year period. Net credit losses were $39 million, up from $16 million in the third quarter of 1994, principally reflecting higher losses on the CornerStone/sm/ credit card product, which experienced a significant increase in outstanding balances generated since its introduction in the first quarter of 1994. Nonperforming assets totaled $261 million at Sept. 30, 1995, down from $276 million at June 30, 1995, and up slightly from $260 million at Sept. 30, 1994. Nonperforming assets as a percentage of total loans and net acquired property was .93 percent at Sept. 30, 1995, compared with .99 percent at both June 30, 1995, and Sept. 30, 1994. With balance sheet assets of approximately $42 billion and assets under management or administration of approximately $925 billion, Mellon Bank Corporation is a major financial services company headquartered in Pittsburgh; its primary subsidiary is Mellon Bank, N.A. Mellon provides a full range of banking and investment products and services to individuals and small, midsize and large businesses and institutions. Its principal mutual fund business is The Dreyfus Corporation. ### NOTE: DETAILED SUPPLEMENTAL INFORMATION FOLLOWS. Mellon Reports Earnings Oct. 17, 1995 Page 3
NET INTEREST REVENUE - -------------------- (taxable equivalent basis) Three months Nine months ended Sept. 30, ended Sept. 30, (dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc - -------------------------------------------------------------------------------------------- Net interest revenue $ 395 $ 380 $ 15 $ 1,174 $ 1,118 $ 56 - -------------------------------------------------------------------------------------------- Average loans $27,774 $25,084 $2,690 $27,177 $24,658 $2,519 - -------------------------------------------------------------------------------------------- Average interest-earning assets $34,361 $32,322 $2,039 $33,541 $32,055 $1,486 - -------------------------------------------------------------------------------------------- Net interest margin 4.56% 4.66% (10)bp 4.68% 4.66% 2bp - --------------------------------------------------------------------------------------------
The improvement in net interest revenue in the third quarter of 1995, compared with the third quarter of 1994, primarily resulted from higher loan levels. Average loans increased $2.7 billion, or 11%, primarily as a result of a $900 million increase in credit card loans, including $600 million related to the CornerStone/sm/ credit card product, a $700 million increase in retail loans, a $700 million increase in mortgage warehouse loans and a $500 million increase in domestic wholesale loans. The decrease in the net interest margin in the third quarter of 1995, compared with the prior-year period, primarily reflects a higher level of wholesale funding, in support of loan growth. The improvement in net interest revenue in the first nine months of 1995 principally resulted from the same factors responsible for the third quarter increase. Mellon Reports Earnings Oct. 17, 1995 Page 4 CREDIT QUALITY EXPENSE AND NET CREDIT LOSSES - --------------------------------------------
Three months Nine months ended Sept. 30, ended Sept. 30, (dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec) - ------------------------------------------------------------------------------------------------ Provision for credit losses $30 $15 $15 $ 70 $55 $15 Net revenue from acquired property (3) (12) 9 (15) (23) 8 - ------------------------------------------------------------------------------------------------ Credit quality expense $27 $ 3 $24 $ 55 $32 $23 - ------------------------------------------------------------------------------------------------ Net credit losses (recoveries)(a): Domestic: Credit card $49 $13 $36 $117 $35 $82 Other consumer credit 3 1 2 11 5 6 Commercial real estate (14) 1 (15) (19) (2) (17) Commercial and financial 2 1 1 7 6 1 - ------------------------------------------------------------------------------------------------ Total domestic 40 16 24 116 44 72 - ------------------------------------------------------------------------------------------------ International (1) -- (1) (5) 3 (8) - ------------------------------------------------------------------------------------------------ Total net credit losses $39 $16 $23 $111 $47 $64 - ------------------------------------------------------------------------------------------------ Annualized net credit losses to average loans .57% .25% 32 bp .55% .25% 30 bp - ------------------------------------------------------------------------------------------------
(a) Excludes net credit losses on segregated assets. Credit quality expense increased in the third quarter and first nine months of 1995, compared with the prior-year periods, as a result of a higher provision for credit losses and lower gains on the sale of acquired property. The higher provision for credit losses was made in response to credit losses from the CornerStone/sm/ credit card portfolio. The $23 million increase in net credit losses compared with the third quarter of 1994 resulted from a $36 million increase in net credit card losses, including a $29 million increase related to the CornerStone/sm/ portfolio. The Corporation currently expects a modest increase in the level of CornerStone/sm/ credit losses in the fourth quarter of 1995, compared with the third quarter. At September 30, 1995, this portfolio had total outstandings of $1.0 billion, substantially unchanged from June 30, 1995. CornerStone/sm/ outstandings were $757 million at December 31, 1994 and $500 million at September 30, 1994. Net credit losses increased $64 million in the first nine months of 1995 compared with the first nine months of 1994, reflecting the higher level Mellon Reports Earnings Oct. 17, 1995 Page 5 of credit card losses. Partially offsetting credit losses were strong credit recoveries on commercial real estate and other commercial loans in the second and third quarters of 1995. NONINTEREST REVENUE - -------------------
Three months Nine months ended Sept. 30, ended Sept. 30, (in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec) - ---------------------------------------------------------------------------------------------- Fee revenue: Trust and investment management: Mutual fund: Management $ 80 $ 72 $ 8 $ 227 $ 222 $ 5 Administration/Custody 30 36 (6) 90 124 (34) Institutional trust 54 56 (2) 156 173 (17) Institutional asset management 32 34 (2) 100 108 (8) Private asset management 37 34 3 104 102 2 - ---------------------------------------------------------------------------------------------- Total trust and investment management 233 232 1 677 729 (52) Cash management and deposit transaction charges 49 49 -- 144 148 (4) Mortgage servicing 32 21 11 82 54 28 Foreign currency and securities trading 24 21 3 73 54 19 Credit card fees 21 19 2 62 51 11 Other 63 57 6 188 211 (23) - ---------------------------------------------------------------------------------------------- Total fee revenue 422 399 23 1,226 1,247 (21) Losses on sale of securities -- (15) 15 -- (5) 5 - ---------------------------------------------------------------------------------------------- Total noninterest revenue $422 $384 $ 38 $1,226 $1,242 $(16) - ----------------------------------------------------------------------------------------------
The $1 million increase in trust and investment management fees in the third quarter of 1995, compared with the prior-year period, primarily resulted from an $8 million increase in mutual fund management revenue and a $3 million increase in private asset management fees. Partially offsetting these increases was a $6 million decrease in mutual fund administration and custody fees. The higher revenue from the management of mutual funds resulted from a higher average level of mutual fund assets managed and lower fee waivers at Dreyfus. Mutual fund management revenues have grown to $80 million in the third quarter from $76 million in the second quarter and $71 million in the first quarter, paralleling the growth in these assets. Average proprietary funds managed at Dreyfus in the third quarter of 1995 were $77 billion, compared with $72 billion in the second quarter and $68 billion in the first quarter. These increases primarily resulted from higher average Mellon Reports Earnings Oct. 17, 1995 Page 6 institutional money market and cash management funds, as well as an overall increase in the market values of assets managed, reflecting the improvement in the bond and equity markets in 1995. At September 30, 1995, total mutual fund assets managed at Dreyfus were $76 billion, compared to $73 billion at June 30, 1995 and $66 billion at December 31, 1994. The increase in mortgage servicing fees, compared with the prior-year period, resulted from acquisitions of mortgage servicing rights. On August 31, 1995, the Corporation acquired Metmor Financial Inc. (Metmor), a residential and commercial mortgage banking company. Included in this acquisition was a $13 billion residential and commercial loan servicing portfolio that generated $4 million in fees in the last month of the third quarter. The Corporation expects the Metmor servicing portfolio, at current levels, to generate servicing revenue of approximately $13 million per quarter. The Corporation's total mortgage servicing portfolio was $51 billion at September 30, 1995, compared with $32 billion at September 30, 1994. The increase in foreign currency and securities trading fee revenue in the third quarter of 1995 was attributable to higher foreign exchange fees earned, primarily as a result of increased global custody and corporate customer activity. Credit card revenue increased in the third quarter of 1995, compared with the third quarter of 1994, primarily as a result of fee revenue generated by portfolio acquisitions and the Corporation's CornerStone/sm/ credit card product. The $15 million pretax, or $10 million after tax, loss on the sale of securities available for sale in the third quarter of 1994 related to the disposition of securities held by Dreyfus prior to its merger with the Mellon Reports Earnings Oct. 17, 1995 Page 7 Corporation, that did not meet the investment objectives, interest rate or credit risk characteristics required by the Corporation. The decrease in fee revenue in the first nine months of 1995, compared with the prior-year period, resulted from lower trust and investment management fees and lower other fee revenue in the first half of 1995, which more than offset the third quarter increases. The primary factor impacting the comparison of year- to-date other fee revenue was the Corporation's election not to offer its seasonal tax refund anticipation loan program in 1995 resulting in a $30 million decrease in other fee revenue.
OPERATING EXPENSE - ----------------- Three months Nine months ended Sept. 30, ended Sept. 30, (dollar amounts in millions) 1995 1994 Inc/(Dec) 1995 1994 Inc/(Dec) - ---------------------------------------------------------------------------------------------------- Staff expense $240 $237 $3 $709 $ 719 $(10) Net occupancy expense 54 50 4 153 152 1 Professional, legal and other purchased services 47 51 (4) 135 148 (13) Equipment expense 35 30 5 103 97 6 Amortization of goodwill and other intangible assets 24 23 1 72 73 (1) Amortization of mortgage servicing rights and purchased credit card relationships 17 9 8 43 31 12 FDIC assessment and regulatory examination fees 1 15 (14) 31 47 (16) Other expense 91 88 3 270 285 (15) - ---------------------------------------------------------------------------------------------------- Operating expense before the net revenue from acquired property and merger expense 509 503 6 1,516 1,552 (36) - ---------------------------------------------------------------------------------------------------- Net revenue from acquired property (3) (12) 9 (15) (23) 8 - ---------------------------------------------------------------------------------------------------- Merger expense -- 104 (104) -- 104 (104) - ---------------------------------------------------------------------------------------------------- Total operating expense $506 $595 $(89) $1,501 $1,633 $(132) - ---------------------------------------------------------------------------------------------------- Average full-time equivalent staff 24,200 24,400 (200) 24,200 24,100 100 - ---------------------------------------------------------------------------------------------------- Efficiency ratio (a) 62% 64% (2) 63% 65% (2) Efficiency ratio excluding amortization of goodwill and other intangible assets 59 61 (2) 60 62 (2) - ----------------------------------------------------------------------------------------------------
(a) Operating expense before the net revenue from acquired property and merger expense as a percentage of revenue, computed on a taxable equivalent basis, excluding securities gains (losses). Operating expense before the net revenue from acquired property and merger expense increased $6 million in the third quarter of 1995, compared with the prior-year period. This increase primarily resulted from increases in the Mellon Reports Earnings Oct. 17, 1995 Page 8 amortization of mortgage servicing rights and purchased credit card relationships and equipment expense. The increase in the amortization of mortgage servicing rights reflects the $19 billion increase in the Corporation's mortgage servicing portfolio. This portfolio has increased approximately 60% from September 30, 1994. The increase in equipment expense primarily reflects the internalization of certain data processing operations at The Boston Company as well as various equipment upgrades. This increase is partially offset by a reduction in expense for purchased data processing services. Primarily offsetting these increases was a $14 million decrease in the third quarter in the FDIC deposit insurance premium from $.23 to $.04 for every $100 of deposits, retroactive to June 1, 1995. Using the new rate, the FDIC premium will now be approximately $2 million per quarter, compared with approximately $13 million per quarter prior to the rate reduction. Partially offsetting this benefit will be lower fee and/or net interest revenue of approximately $2 million per quarter from cash management customers where the FDIC premium on deposits is passed through to these customers. The decrease in operating expense before the net revenue from acquired property and merger expense in the first nine months of 1995, compared with the first nine months of 1994, resulted from lower marketing expense related to the CornerStone/sm/ credit card, a reduction in professional, legal and other purchased services and lower staff expense, as well as a lower FDIC assessment charge. Merger expense of $104 million, or $79 million after tax, was recorded in the third quarter of 1994 to reflect expense associated with the Dreyfus merger. Mellon Reports Earnings Oct. 17, 1995 Page 9 Except for the merger with Dreyfus, which was accounted for as a pooling of interests, the Corporation historically has accounted for business combinations under the purchase method of accounting, resulting in the recording of goodwill and other identified intangibles which are amortized into operating expense in future years. Net income applicable to common stock, excluding the after-tax impact of the amortization of these intangibles, is shown in the table below:
Three months Nine months ended Sept. 30, ended Sept. 30, (in millions) 1995 1994 1995 1994 - ------------------------------------------------------------------- Net income applicable to common stock excluding the Dreyfus merger related charges $166 $152 $488 $436 After-tax impact of amortization of intangibles from purchase acquisitions 18 16 55 56 - ------------------------------------------------------------------- Total $184 $168 $543 $492 - -------------------------------------------------------------------
INCOME TAXES - ------------ The Corporation's effective tax rate for the first nine months of 1995 was 37%. It is currently anticipated that the effective tax rate will be approximately 37% in the fourth quarter of 1995.
NONPERFORMING ASSETS(a) - ----------------------- Sept. 30, June 30, Dec. 31, Sept. 30, (dollar amounts in millions) 1995 1995 1994 1994 - ----------------------------------------------------------------------------------------- Domestic nonperforming loans: Consumer mortgage $ 62 $ 59 $ 56 $ 51 Commercial real estate 32 42 28 32 Other domestic 89 98 66 72 International nonperforming loans -- -- 1 1 - ----------------------------------------------------------------------------------------- Total nonperforming loans 183 199 151 156 - ----------------------------------------------------------------------------------------- Acquired property: Real estate acquired 99 98 116 133 Reserve for real estate acquired (21) (21) (29) (30) - ----------------------------------------------------------------------------------------- Real estate acquired, net of reserve 78 77 87 103 Other assets acquired -- -- 1 1 - ----------------------------------------------------------------------------------------- Total acquired property 78 77 88 104 - ----------------------------------------------------------------------------------------- Total nonperforming assets $261 $276 $239 $260 - ----------------------------------------------------------------------------------------- Nonperforming loans as a percentage of total loans .65% .72% .56% .60% Total nonperforming assets as a percentage of total loans and net acquired property .93% .99% .89% .99% - -----------------------------------------------------------------------------------------
(a) Excludes segregated assets. Mellon Reports Earnings Oct. 17, 1995 Page 10 Nonperforming assets decreased $15 million from June 30, 1995, as a result of a lower level of nonperforming loans. Total nonperforming loans decreased $16 million as repayments, returns to accrual status and credit losses more than offset additions. Total nonperforming assets increased $1 million compared with September 30, 1994 as an increase in nonperforming loans was substantially offset by a decrease in acquired property.
RESERVE FOR CREDIT LOSSES - ------------------------- Sept. 30, June 30, Dec. 31, Sept. 30, (dollar amounts in millions) 1995 1995 1994 1994 - ---------------------------------------------------------------------------------------------- Reserve for credit losses (a) $574 $583 $607 $611 Reserve as a percentage of total loans 2.04% 2.10% 2.27% 2.35% - ----------------------------------------------------------------------------------------------
(a) Excludes reserve for segregated assets.
SELECTED CAPITAL DATA - --------------------- (dollar amounts in millions, Sept. 30, June 30, Dec. 31, Sept. 30, except per share amounts) 1995 1995 1994 1994 - ---------------------------------------------------------------------------------------------- Common shareholders' equity $3,693 $ 3,643 $ 3,687 $3,695 Common shareholders' equity to assets ratio 8.81% 9.10% 9.54% 9.41% Tangible common shareholders' equity to assets ratio (a) 6.66% 6.78% 7.05% 6.88% Total shareholders' equity $4,128 $ 4,078 $ 4,122 $4,285 Total shareholders' equity to assets ratio 9.85% 10.19% 10.67% 10.92% Tier I capital ratio 8.80%(b) 8.98% 9.48% 10.03% Total (Tier I and Tier II) capital ratio 12.00%(b) 12.31% 12.90% 13.50% Leverage capital ratio 8.20%(b) 8.32% 8.67% 9.16% Book value per common share $26.13 $ 25.59 $ 25.06 $25.15 Closing common stock price $44.75 $41.625 $30.625 $37.50 Market capitalization $6,324 $ 5,925 $ 4,507 $5,510 - ----------------------------------------------------------------------------------------------
(a) Common shareholders' equity less goodwill and other intangibles divided by total assets less goodwill and other intangibles. (b) Estimated. The increase in the Corporation's common and total shareholders' equity at September 30, 1995, compared with June 30, 1995, primarily resulted from earnings retention offset in part by a higher level of treasury stock repurchased on the open market. The decrease in the Corporation's equity ratios from June 30, 1995, primarily resulted from asset growth. The decrease in the Corporation's common and total shareholders' equity at September 30, Mellon Reports Earnings Oct. 17, 1995 Page 11 1995, compared with September 30, 1994, resulted from the second quarter 1995 repurchase of the common stock and warrants issued in 1993 as part of the purchase price of The Boston Company and the redemption of the Corporation's $160 million Series H preferred stock. The repurchase of the common stock and warrants in the second quarter of 1995 increased earnings per common share by $.02 in the third quarter. It is anticipated that this transaction will enhance earnings per common share by approximately $.05 for the full year 1995. This transaction increased the third quarter return on common shareholders' equity by approximately 80 basis points, reduced the September 30, 1995 book value per share by $.80 and reduced the capital ratios by 50 to 60 basis points. On July 18, 1995, the Corporation's board of directors authorized the repurchase of up to 2.5 million shares of the Corporation's common stock to be used to meet the Corporation's current and near-term common stock requirements for its stock- based benefit plans and its dividend reinvestment plan. In 1994, the Corporation authorized similar repurchases of up to 3 million shares. As of September 30, 1995, the Corporation has repurchased approximately 4.3 million shares under both programs and has reissued 2.2 million of the repurchased shares. SUMMARY DATA Mellon Bank Corporation (and its subsidiaries)
(dollar amounts in millions, Three months ended Nine months ended except per share amounts; Sept. 30, Sept. 30, common shares in thousands) ------------------------ --------------------- 1995 1994 1995 1994 ----- ---- ---- ---- Selected key data (a) - ----------------- Primary net income per common share $ 1.15 $ .42 $ 3.32 $ 2.35 Return on common shareholders' equity 17.98% 6.76% 17.67% 12.77% Return on assets 1.70% .81% 1.74% 1.39% Yield on interest-earning assets, on a taxable equivalent basis 8.43% 7.32% 8.48% 6.94% Cost of funds supporting interest- earning assets 3.87% 2.66% 3.80% 2.28% Results excluding certain items (a)(b) - ------------------------------- Primary net income per common share $ 1.15 $ 1.02 $ 3.32 $ 2.95 Return on common shareholders' equity 17.98% 16.10% 17.67% 15.99% Return on assets 1.70% 1.74% 1.74% 1.70% Average balances for the period (c) - ------------------------------- Money market investments $ 1,286 $ 1,466 $ 1,228 $ 1,806 Trading account securities 363 351 300 413 Securities 4,938 5,421 4,836 5,178 Loans 27,774 25,084 27,177 24,658 Total interest-earning assets 34,361 32,322 33,541 32,055 Total assets 40,955 38,016 39,745 37,875 Deposits 28,417 26,963 27,615 27,244 Total interest-bearing liabilities 28,159 25,601 27,486 25,128 Common shareholders' equity 3,648 3,755 3,691 3,672 Total shareholders' equity 4,083 4,346 4,126 4,264 Computation of primary net income per common share - ---------------------------------------------------- Net income applicable to common stock $ 166 $ 64(d) $ 488 $ 351(d) ======== ======== ======== ======== Average common shares outstanding 141,897 145,591 144,740 144,355 Average common shares issuable upon conversion of Series D preferred stock - 1,692 - 2,263 Other common stock equivalents, net of shares assumed repurchased 2,072 2,610 2,176 2,630 -------- -------- -------- -------- Total stock and stock equivalents 143,969 149,893 146,916 149,248 ======== ======== ======== ======== Primary net income per common share (e) $ 1.15 $ .42 $ 3.32 $ 2.35 ======== ======== ======== ======== - -----------------------
(a) Percentages are annualized where applicable. All amounts are based on unrounded numbers. (b) Results for the third quarter and first nine months of 1994 exclude $79 million after tax of merger expenses and $10 million after tax of losses on the disposition of securities available for sale previously owned by Dreyfus. (c) Computed on a daily average basis. (d) After adding back Series D preferred stock dividends. (e) Based on unrounded numbers. CONDENSED CONSOLIDATED INCOME STATEMENT Mellon Bank Corporation
Three months ended Nine months ended (in millions, except per Sept. 30, Sept. 30, share amounts) ------------------ ----------------- 1995 1994 1995 1994 ---- ---- ---- ---- Interest revenue - ---------------- Interest and fees on loans (loan fees of $20, $18, $55, and $65) $ 623 $491 $1,815 $1,371 Interest-bearing deposits with banks 10 8 25 26 Federal funds sold and securities under resale agreements 8 7 27 21 Other money market investments - 1 1 4 Trading account securities 6 6 15 19 Securities 80 80 235 213 ----- ---- ------ ------ Total interest revenue 727 593 2,118 1,654 Interest expense - ---------------- Interest on deposits 227 145 652 363 Federal funds purchased and securities under repurchase agreements 32 23 94 46 Other short-term borrowings 44 22 117 55 Notes and debentures 32 27 89 83 ----- ---- ------ ------ Total interest expense 335 217 952 547 ----- ---- ------ ------ Net interest revenue 392 376 1,166 1,107 Provision for credit losses 30 15 70 55 ----- ---- ------ ------ Net interest revenue after provision for credit losses 362 361 1,096 1,052 Noninterest revenue - ------------------- Trust and investment management fees 233 232 677 729 Cash management and deposit transaction charges 49 49 144 148 Mortgage servicing fees 32 21 82 54 Foreign currency and securities trading 24 21 73 54 Credit card fees 21 19 62 51 Other 63 57 188 211 ----- ---- ------ ------- Total fee revenue 422 399 1,226 1,247 Losses on sale of securities - (15) - (5) ----- ---- ------ ------- Total noninterest revenue 422 384 1,226 1,242 Operating expense - ----------------- Staff expense 240 237 709 719 Net occupancy expense 54 50 153 152 Professional, legal and other purchased services 47 51 135 148 Equipment expense 35 30 103 97 Amortization of goodwill and other intangible assets 24 23 72 73 Other expense 109 112 344 363 Net revenue from acquired property (3) (12) (15) (23) Merger expense - 104 - 104 ----- ---- ------ ------ Total operating expense 506 595 1,501 1,633 ----- ---- ------ ------ Income before income taxes 278 150 821 661 Provision for income taxes 103 72 304 269 ----- ---- ------ ------ Net income 175 78 517 392 Dividends on preferred stock 9 15 29 45 ----- ---- ------ ------ Net income applicable to common stock $ 166 $ 63 $ 488 $ 347 ===== ==== ====== ====== Primary net income per common share $1.15 $.42 $ 3.32 $ 2.35 ===== ==== ====== ====== Fully diluted net income per common share $1.14 $.42 $ 3.30 $ 2.35 ===== ==== ====== ======
CONDENSED CONSOLIDATED BALANCE SHEET Mellon Bank Corporation
(dollar amounts in millions) Sept. 30, Dec. 31, Sept. 30, 1995 1994 1994 --------- --------- --------- Assets - ------ Cash and due from banks $ 2,515 $ 2,285 $ 2,222 Money market investments 1,370 860 1,025 Trading account securities 302 71 310 Securities: Available for sale 2,276 1,881 2,847 Investment (approximate fair value of $3,211, $3,033 and $3,130) 3,189 3,244 3,301 Loans, net of unearned discount of $56, $62 and $72 28,073 26,733 26,012 Reserve for credit losses (574) (607) (611) Premises and equipment 550 558 546 Acquired property, net of reserves of $21, $29 and $30 78 88 104 Goodwill and other intangibles 968 1,036 1,067 Mortgage servicing rights and purchased credit card relationships 637 352 323 Other assets 2,523 2,143 2,105 ------- ------- ------- Total assets $41,907 $38,644 $39,251 ======= ======= ======= Liabilities - ----------- Deposits in domestic offices $23,934 $24,100 $23,972 Deposits in foreign offices 5,377 3,470 3,160 Short-term borrowings 4,775 3,472 4,515 Other liabilities 1,791 1,912 1,747 Notes and debentures (with original maturities over one year) 1,902 1,568 1,572 ------- ------- ------- Total liabilities 37,779 34,522 34,966 Shareholders' equity - -------------------- Preferred stock 435 435 590 Common shareholders' equity: Common stock - $.50 par value Authorized - 200,000,000 shares Issued - 147,165,480; 147,165,480 and 146,934,696 shares 74 74 73 Additional paid-in capital 1,846 1,851 1,844 Retained earnings 2,039 1,780 1,773 Warrants - 37 37 Net unrealized loss on assets available for sale (net of taxes) (17) (55) (32) Treasury stock of 5,856,254; - and - shares at cost (249) - - ------- ------- ------- Total common shareholders' equity 3,693 3,687 3,695 ------- ------- ------- Total shareholders' equity 4,128 4,122 4,285 ------- ------- ------- Total liabilities and shareholders' equity $41,907 $38,644 $39,251 ======= ======= =======
EX-99.2 3 PRESS RELEASE EX-99.2 ANALYSTS: -------- Donald J. MacLeod David T. Lamar (412) 234-5601 (412) 234-4633 MEDIA: ----- Margaret Kirch Cohen (412) 234-0850 FOR IMMEDIATE RELEASE MELLON ANNOUNCES COMMON STOCK REPURCHASE OF 8 MILLION - ----------------------------------------------------- SHARES; INCREASES COMMON DIVIDEND 10 PERCENT - -------------------------------------------- PITTSBURGH, Oct. 17, 1995 -- At its regular meeting, the board of directors of Mellon Bank Corporation (NYSE:MEL) today authorized the repurchase of up to 8 million shares of its common stock. Mellon said it will make the repurchases from time to time in the open market or through privately negotiated transactions and, subject to market conditions, expects to complete the repurchase by March 31, 1996. In addition to the share repurchase, the board of directors has approved a 10 percent increase in the quarterly cash dividend to 55 cents per common share. The dividend is payable on Nov. 15, l995, to shareholders of record on Oct. 31, l995. Mellon said this is its fourth common stock dividend increase in two years, with total increases of 117 percent. "Our strategic goal is to maximize shareholder returns over the long term," said Mellon Chairman, President and Chief Executive Officer Frank V. Cahouet. "We believe that buying back our common stock and increasing our common dividend is consistent with that strategy and currently represents the best use of our excess capital." Upon completion of the 8 million common share repurchase announced today, Mellon will have reduced through repurchases its common shares outstanding and common share equivalents by about 16 million shares, representing approximately $750 million of common equity. Mellon will have reduced through repurchases its common and preferred equity by approximately $910 million since its August 1994 merger with The Dreyfus Corporation. -more- Mellon Announces Stock Repurchase, Dividend Increase Page 2 Oct. 17, 1995 Effect of 8 Million Share Repurchase - ------------------------------------ Mellon said it expects the 8 million share repurchase to increase annualized earnings per share by approximately 17 cents and annual return on common equity by approximately 1.7 percent. If the transaction had been completed as of July 1, 1995, annualized return on common equity for the third quarter would have increased from 18 percent to 19.7 percent. After giving effect to the share repurchase, Mellon's capital ratios will be reduced by approximately 1 percent. Based upon its capital at Sept. 30, 1995, its common equity ratio will be reduced from 8.8 percent to approximately 7.8 percent, and its tangible common equity ratio will be reduced from 6.7 percent to approximately 5.7 percent. The Corporation's capital ratios will remain well in excess of the FDIC's well-capitalized thresholds. The Corporation's pro forma book value at Sept. 30, 1995, would be about $24.70, down from $26.13. The 8 million share repurchase will reduce the cash requirement for the Corporation's annual common dividend by approximately $18 million. Previously Announced Share Repurchases for Stock-Based Benefit Plans/ - --------------------------------------------------------------------- Other 1995 Equity Reductions - ---------------------------- In the fourth quarter of 1994, Mellon's board of directors authorized the repurchase of up to 3 million shares for its stock-based employee benefit plans and its dividend reinvestment plan. In July 1995, Mellon's board increased the authorization by 2.5 million shares to a total of 5.5 million shares. As of Sept. 30, 1995, the Corporation had repurchased approximately 4.3 million shares under both programs and had reissued 2.2 million of these shares to meet the requirements of its stock based benefit plans and dividend reinvestment plan. Subject to market conditions, the Corporation expects to complete the repurchase of the remaining 1.2 million shares under this authorization in the fourth quarter of 1995. -more- Mellon Announces Stock Repurchase, Dividend Increase Page 3 Oct. 17, 1995 In March 1995, Mellon completed the redemption of its $160 million Series H preferred stock. In June 1995 the Corporation purchased 3.75 million shares of Mellon common stock and warrants for an additional 4.5 million shares of common stock from American Express, for a total of $213 million. The shares and warrants were issued in connection with Mellon's 1993 acquisition of The Boston Company. Preferred Stock Dividend - ------------------------ In addition to its increased common dividend, the board of directors of Mellon Bank Corporation today also declared quarterly dividends on Mellon Series I preferred stock (NYSE: MEL Pr I) at the annual rate of $2.40 per share; Mellon Series J preferred stock (NYSE: MEL Pr J) at the annual rate of $2.125 per share; and Mellon Series K preferred stock (NYSE: MEL Pr K) at the annual rate of $2.05 per share. Dividends on the Series I preferred stock, Series J preferred stock and Series K preferred stock also are payable on Nov. 15, l995, to shareholders of record at the close of business on Oct. 31, l995. With balance sheet assets of approximately $42 billion and assets under management or administration of approximately $925 billion, Mellon Bank Corporation is a major financial services company headquartered in Pittsburgh; its primary subsidiary is Mellon Bank, N.A. The Corporation provides a full range of banking and investment products and services to individuals and small, midsize and large businesses and institutions. Mellon's principal mutual fund business is The Dreyfus Corporation. # # # -----END PRIVACY-ENHANCED MESSAGE-----