-----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, KBgsZfV9QzKrCut+M5Nfr35XaWvPvgFN9U3L9p8RUoYn7t2p0r8UMhX5eMFo78v7 xlxKX1IWgrS1N/SFwFqnNw== 0000950132-96-000224.txt : 19960418 0000950132-96-000224.hdr.sgml : 19960418 ACCESSION NUMBER: 0000950132-96-000224 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960416 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960417 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: 96547860 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 MELLON BANK 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) - April 16, 1996 MELLON BANK CORPORATION (Exact name of registrant as specified in charter) Pennsylvania 1-7410 25-1233834 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) One Mellon Bank Center 500 Grant Street Pittsburgh, Pennsylvania 15258 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code - (412) 234-5000 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Exhibit Number Description 99.1 Mellon Bank Corporation Press Release, dated April 16, 1996, regarding first quarter results of operations. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MELLON BANK CORPORATION Date: April 16, 1996 By:/s/STEVEN G. ELLIOTT Steven G. Elliott Vice Chairman, Chief Financial Officer & Treasurer EXHIBIT INDEX Number Description Method of Filing 99.1 Press Release dated April 16, 1996 Filed herewith EX-99.1 2 NEWS RELEASE EX 99-1 [LOGO OF MELLON] News Release Contact: MEDIA: ANALYSTS: Corporate Affairs Stephen K. Dishart Donald J. MacLeod One Mellon Bank Center (412) 234-0850 (412) 234-5601 Pittsburgh, PA 15258-0001 Tilda H. Walsh David T. Lamar (412) 234-5873 (412) 234-4633 - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE MELLON REPORTS RECORD FIRST QUARTER 1996 EARNINGS -------------------------------------------------
First Quarter Financial Highlights 1996 1995 Change - ------------------------------------------------------------------------ Earnings per common share (primary) $1.24 $1.08 15% Earnings per common share (fully diluted) $1.24 $1.07 16% Return on common equity* 19.7% 17.6% 210bp Return on tangible common equity* 30.1% 27.1% 300bp Return on assets* 1.76% 1.77% (1)bp Return on tangible assets* 1.99% 2.02% (3)bp - ------------------------------------------------------------------------ * Annualized
PITTSBURGH, April 16, 1996 -- Mellon Bank Corporation (NYSE:MEL) today reported record first quarter 1996 earnings per common share of $1.24 and net income applicable to common stock of $169 million, compared with $1.08 per common share and $160 million in the first quarter of 1995. Annualized return on common shareholders' equity and return on assets were 19.7 percent and 1.76 percent, respectively, in the first quarter of 1996, compared with 17.6 percent and 1.77 percent, respectively, in the first quarter of 1995. "Our outstanding earnings performance throughout 1995 provided an excellent platform for continued earnings momentum in 1996," said Frank V. Cahouet, chairman, president and chief executive officer. "Our returns on tangible common equity and assets are among the highest in the banking industry, reflecting the value of the franchise we've built." -more- Mellon Reports Earnings April 16, 1996 Page 2 Results for the first quarter of 1996 included a $28 million gain from the securitization of $650 million of home equity loans that occurred in late March. The gain was offset by $22 million of staff expense resulting from the early retirement enhancement program completed in the first quarter of 1996 and severance expense; and $6 million of expense related to the further reconfiguration of the retail delivery system. Earnings per common share in the first quarter of 1996 also reflect the common share repurchases over the last year. Average common stock and common stock equivalents used in the computation of primary earnings per share in the first quarter of 1996 totaled 136.5 million shares, compared with 148.8 million shares in the first quarter of 1995, an 8 percent decrease. Net interest revenue for the quarter was $363 million, down $26 million, or 6 percent, from $389 million in the same prior-year period. This reduction resulted primarily from the fourth quarter 1995 credit card securitization and repurchase of common shares over the last year. Fee revenue was $503 million, up $104 million, or 26 percent, from $399 million in the first quarter of 1995. The increase in fee revenue was attributable to the gain on the securitization of home equity loans, as well as to higher mutual fund management revenue and institutional trust fees. In addition, the increase in fee revenue reflects higher mortgage servicing fees and increased credit card revenue. The increase in credit card revenue resulted from the credit card securitization. Operating expense for the first quarter of 1996 was $560 million, up $65 million, or 13 percent, from $495 million in the first quarter of 1995. The increase primarily resulted from higher staff expense including the retirement enhancement program, higher amortization expense from purchased mortgage servicing rights and the expense related to the retail delivery system reconfiguration, offset in part by lower FDIC deposit insurance assessment expense. -more- Mellon Reports Earnings April 16, 1996 Page 3 The provision for credit losses was $25 million in the first quarter of 1996, an increase of $5 million from the prior-year period. Net credit losses were $28 million, up $2 million from $26 million in the first quarter of 1995. Nonperforming assets totaled $250 million at March 31, 1996, compared with $236 million at Dec. 31, 1995, and $243 million at March 31, 1995. The Corporation's nonperforming assets ratio at March 31, 1996, was .93 percent, compared with .85 percent at Dec. 31, 1995, and .91 percent at March 31, 1995. With balance sheet assets of more than $41 billion and assets under management or administration of more than $1 trillion, Mellon Bank Corporation is a major financial services company headquartered in Pittsburgh; its primary subsidiary is Mellon Bank, N.A. Mellon provides a full range of banking and investment products and services to individuals and small, midsize and large businesses and institutions. Its principal mutual fund business is The Dreyfus Corporation. ### NOTE: Detailed supplemental information follows. Mellon Reports Earnings April 16, 1996 Page 4 Tangible Operating Results - -------------------------- Except for the merger with Dreyfus, which was accounted for under the "pooling of interests" method, the Corporation has been required to account for business combinations under the "purchase" method of accounting. The purchase method results in the recording of goodwill and other identified intangibles which are amortized in future years into operating expense. Had the Corporation accounted for these business combinations under the pooling of interests method, these intangibles and their related amortization would not have been recorded. The tangible operating results are shown in the table below.
Quarter ended March 31, (in millions) 1996 1995 Change - --------------------------------------------------------------------------- Net income applicable to common stock $ 169 $ 160 $ 9 After tax impact of amortization of intangibles from purchase acquisitions 19 18 1 - --------------------------------------------------------------------------- Tangible net income applicable to common stock $ 188 $ 178 $ 10 - --------------------------------------------------------------------------- Average common equity $ 3,459 $ 3,700 $ (241) Average goodwill and other intangibles 946 1,026 80 - --------------------------------------------------------------------------- Average tangible common equity $ 2,513 $ 2,674 $ (161) Return on tangible common equity 30.1% 27.1% 300 bp - --------------------------------------------------------------------------- Average total assets $ 40,848 $ 38,886 $ 1,962 Average goodwill and other intangibles 946 1,026 80 - --------------------------------------------------------------------------- Average tangible assets $ 39,902 $ 37,860 $ 2,042 Return on tangible assets 1.99% 2.02% (3)bp - --------------------------------------------------------------------------- Average common shares and equivalents outstanding (primary)(000) 136,506 148,766 (12,260) - ---------------------------------------------------------------------------
Mellon Reports Earnings April 16, 1996 Page 5
Net Interest Revenue - -------------------- Quarter ended March 31, (in millions) 1996 1995 Change - ------------------------------------------------------------------------ Net interest revenue (FTE) $ 366 $ 392 $ (26) Net interest margin (FTE) 4.35% 4.80% (45)bp Average securities $ 5,339 $ 4,890 $ 449 Average loans $ 27,058 $ 26,670 $ 388 Average interest-earning assets $ 33,825 $ 33,106 $ 719 - ------------------------------------------------------------------------
The decrease in net interest revenue and the net interest margin in the first quarter of 1996, compared with the first quarter of 1995, resulted from the effect of the November 1995 $950 million credit card securitization and funding costs related to the repurchase of common stock. Excluding the effect of the credit card securitization and common stock repurchases, net interest revenue for the first quarter of 1996 would have been approximately $400 million. The foregone net interest revenue from the credit card securitization is substantially offset by higher servicing fee revenue and lower net credit losses. Net interest revenue in the first quarter of 1996 was favorably impacted by loan growth, higher loan fees and a higher level of retail demand deposits which were partially offset by the migration of retail customers from lower cost deposit products to higher cost products. Average loans increased $388 million in the first quarter of 1996, compared with the prior-year period, as a result of an increase in substantially all loan categories, which more than offset a decrease of $775 million in jumbo residential mortgage loans and $460 million in credit card loans. The decrease in jumbo residential mortgage loans primarily resulted from loan sales while the decrease in credit card loans resulted from the securitization. The average level of retail loans will be impacted in future periods by the March 29, 1996 securitization of $650 million of home equity loans. Mellon Reports Earnings April 16, 1996 Page 6
Credit Quality Expense and Net Credit Losses - -------------------------------------------- Quarter ended March 31, (in millions) 1996 1995 Change - -------------------------------------------------------------------------------------------------- Provision for credit losses $ 25 $ 20 $ 5 Net revenue from acquired property (8) (4) 4 - -------------------------------------------------------------------------------------------------- Credit quality expense $ 17 $ 16 $ 1 - -------------------------------------------------------------------------------------------------- Net credit losses (recoveries)(a): Domestic: Credit card $ 16 $ 27 $(11) Other consumer credit 5 4 1 Commercial real estate 3 - 3 Commercial and financial 5 (3) 8 - -------------------------------------------------------------------------------------------------- Total domestic 29 28 1 International (1) (2) 1 - -------------------------------------------------------------------------------------------------- Total net credit losses $ 28 $ 26 $ 2 - -------------------------------------------------------------------------------------------------- Annualized net credit losses to average loans .41% .40% 1bp - --------------------------------------------------------------------------------------------------
(a) Excludes net credit losses on segregated assets and assets held for accelerated resolution. Credit quality expense increased $1 million in the first quarter of 1996, compared with the prior-year period, as a $5 million increase in the provision for credit losses was primarily offset by a $4 million increase in net revenue from acquired property. The $2 million increase in net credit losses compared with the first quarter of 1995 resulted from a higher level of commercial net credit losses primarily offset by lower credit card net credit losses. The reduction in credit card net credit losses resulted from the December 1995 transfer of certain CornerStone(sm) credit card loans, that have a history of delinquency, into an accelerated resolution portfolio. The net carrying value of the accelerated resolution portfolio at March 31, 1996, was $65 million, compared with $82 million at year-end 1995. The credit card securitization in the fourth quarter of 1995 was also a factor in the reduction of credit card net credit losses. Mellon Reports Earnings April 16, 1996 Page 7
Noninterest Revenue - ------------------- Quarter ended March 31, (in millions) 1996 1995 Change - ----------------------------------------------------------------- Fee revenue: Trust and investment management: Mutual fund: Management $ 83 $ 71 $ 12 Administration/Custody 27 30 (3) Institutional trust 59 51 8 Institutional asset management 34 34 - Private asset management 38 33 5 - ----------------------------------------------------------------- Total trust and investment management fees 241 219 22 Cash management and deposit transaction charges 49 47 2 Mortgage servicing fees 41 25 16 Credit card fees 33 19 14 Foreign currency and securities trading 21 24 (3) Other 118 65 53 - ----------------------------------------------------------------- Total fee revenue 503 399 104 Gains (losses) on sale of securities 1 (1) 2 - ----------------------------------------------------------------- Total noninterest revenue $ 504 $ 398 $106 - -----------------------------------------------------------------
Noninterest revenue increased $106 million, or 26%, in the first quarter of 1996, compared with the prior-year period. The $22 million increase in trust and investment management fees in the first quarter of 1996, compared with the prior-year period, primarily resulted from a $12 million, or 17%, increase in mutual fund management revenue and an $8 million, or 14%, increase in institutional trust fees. The higher revenue from the management of mutual funds resulted from a higher average level of mutual fund assets managed and lower fee waivers at Dreyfus. Average proprietary funds managed at Dreyfus in the first quarter of 1996 were $81 billion, compared with $68 billion in the first quarter of 1995. This increase primarily resulted from higher average institutional money market funds and equity funds. The increase in institutional trust revenue resulted from new business, including the 1995 acquisition of two corporate trust businesses. Mellon Reports Earnings April 16, 1996 Page 8 The increase in mortgage servicing fees in the first quarter of 1996, compared with the prior-year period, resulted from the acquisition of mortgage servicing rights including the third quarter 1995 acquisition of Metmor Financial, Inc. Credit card revenue increased in the first quarter of 1996, compared with the first quarter of 1995, as a result of servicing fee revenue from the securitized credit card receivables. The decrease in foreign currency and securities trading fee revenue in the first quarter of 1996, compared to the prior-year period, was attributable to lower foreign exchange fees earned, partially offset by higher securities trading account fee revenue. Other fee revenue increased $53 million in the first quarter of 1996, compared with the prior-year period. This increase primarily resulted from the $28 million gain on the home equity loan securitization, a $14 million increase in gains on disposition of assets and sales of equity securities, and a $10 million increase in fees relating to the electronic filing of income tax returns. Mellon Reports Earnings April 16, 1996 Page 9
Operating Expense - ----------------- Quarter ended March 31, (dollar amounts in millions) 1996 1995 Change - ----------------------------------------------------------------------------- Staff expense $ 277 $ 240 $ 37 Net occupancy expense 56 51 5 Professional, legal and other purchased services 47 38 9 Equipment expense 35 34 1 Amortization of mortgage servicing rights and purchased credit card relationships 28 13 15 Amortization of goodwill and other intangible assets 25 24 1 FDIC assessment and regulatory examination fees 1 15 (14) Other expense 99 84 15 - ----------------------------------------------------------------------------- Operating expense before the net revenue from acquired property 568 499 69 - ----------------------------------------------------------------------------- Net revenue from acquired property (8) (4) (4) - ----------------------------------------------------------------------------- Total operating expense $ 560 $ 495 $ 65 - ----------------------------------------------------------------------------- Average full-time equivalent staff 24,600 24,300 300 - ----------------------------------------------------------------------------- Efficiency ratio (a) 65% 63% 2 Efficiency ratio excluding amortization of goodwill and other intangible assets 62 60 2 - -----------------------------------------------------------------------------
(a) Operating expense before the net revenue from acquired property as a percentage of revenue, computed on a taxable equivalent basis, excluding gains (losses) on the sale of securities. Operating expense increased $65 million, or 13%, in the first quarter of 1996, compared with the prior-year period. This increase resulted primarily from increases in staff expense, the amortization of mortgage servicing rights and expense resulting from the ongoing strategic initiatives to reconfigure the retail delivery system. These increases were partially offset by lower FDIC deposit insurance assessment expense. Excluding expense resulting from the early retirement enhancement program, severance and the reconfiguration of the retail delivery system, operating expense increased 8%, compared with the first quarter of 1995. The increase in staff expense resulted primarily from an $18 million charge for the Corporation's retirement enhancement program, $4 million of severance accruals and an $8 million increase in incentive expense. The early retirement enhancement program, which was offered during the first quarter and concluded on March 31, 1996, enhanced the pensions and health insurance Mellon Reports Earnings April 16, 1996 Page 10 of 495 eligible associates electing early retirement, effective April 1, 1996. The increase in the amortization of mortgage servicing rights reflects the increase in the Corporation's mortgage servicing portfolio from March 31, 1995. The $5 million increase in net occupancy expense resulted from expense related to the reconfiguration of the retail delivery system. The increase in professional, legal and other purchased services and other expense reflects business growth as well as expenses resulting from efforts to reengineer lines of business and improve customer service. Partially offsetting these increases was a decrease in the FDIC deposit insurance assessment which resulted from the elimination of this assessment in the first half of 1996 for healthy institutions.
Nonperforming Assets(a) - ----------------------- March 31, Dec. 31, March 31, (in millions) 1996 1995 1995 - ----------------------------------------------------------------------------- Domestic nonperforming loans: Consumer mortgage $ 53 $ 61 $ 58 Commercial real estate 53 39 37 Other domestic 71 67 61 - ----------------------------------------------------------------------------- Total nonperforming loans 177 167 156 Acquired property: Real estate acquired 86 87 112 Reserve for real estate acquired (13) (18) (26) - ----------------------------------------------------------------------------- Real estate acquired, net of reserve 73 69 86 Other assets acquired - - 1 - ----------------------------------------------------------------------------- Total acquired property 73 69 87 - ----------------------------------------------------------------------------- Total nonperforming assets $ 250 $ 236 $ 243 - ----------------------------------------------------------------------------- Nonperforming loans as a percentage of total loans .66% .60% .58% Nonperforming assets as a percentage of total loans and net acquired property .93% .85% .91% - -----------------------------------------------------------------------------
(a) Excludes segregated assets. The $14 million increase in nonperforming assets from December 31, 1995, resulted primarily from a $10 million increase in nonperforming loans. This increase resulted from additions of commercial real estate loans to nonaccrual status partially offset by credit losses, returns to accrual status and repayments. Mellon Reports Earnings April 16, 1996 Page 11 Total nonperforming assets increased $7 million compared with March 31, 1995, as an increase in nonperforming loans was partially offset by a decrease in acquired property.
Reserve for Credit Losses - ------------------------- March 31, Dec. 31, March 31, (in millions) 1996 1995 1995 - ---------------------------------------------------------------------------- Reserve for credit losses (a) $ 468 $ 471 $ 601 Reserve as a percentage of total loans 1.74% 1.70% 2.25% - ----------------------------------------------------------------------------
(a) Excludes reserve for segregated assets. The $133 million decrease in the reserve for credit losses from March 31, 1995, primarily resulted from credit losses taken on the CornerStone(sm) credit card loans during 1995, including the loans that were transferred to the accelerated resolution portfolio in the fourth quarter.
Selected Capital Data - --------------------- (in millions, except March 31, Dec. 31, March 31, per share amounts) 1996 1995 1995 - -------------------------------------------------------------------- Common shareholders' equity $3,384 $3,590 $3,755 Common shareholders' equity to assets ratio 8.14% 8.83% 9.48% Tangible common shareholders' equity $2,450 $2,632 $2,740 Tangible common shareholders' equity to assets ratio (a) 6.03% 6.63% 7.10% Total shareholders' equity $3,819 $4,025 $4,190 Total shareholders' equity to assets ratio 9.19% 9.90% 10.57% Tier I capital ratio 7.70%(b) 8.14% 9.49% Total (Tier I and Tier II) capital ratio 12.20%(b)(c) 11.29% 12.86% Leverage capital ratio 7.50%(b) 7.80% 8.84% Book value per common share $25.55 $26.17 $25.63 Closing common stock price $55.25 $53.75 $40.75 Market capitalization $7,317 $7,374 $5,969 - --------------------------------------------------------------------
(a) Common shareholders' equity less goodwill and other intangibles divided by total assets less goodwill and other intangibles. (b) Estimated. (c) The increase from December 31, 1995, resulted from $550 million of subordinated debt issued in the first quarter of 1996. Mellon Reports Earnings April 16, 1996 Page 12 The decrease in the Corporation's common and total shareholders' equity at March 31, 1996, compared with December 31, 1995 and March 31, 1995, resulted from repurchases of common stock offset in part by earnings retention. In addition, asset growth resulted in a decrease in the Corporation's capital ratios compared with the prior-year periods. In February 1996, the board of directors of the Corporation authorized the repurchase of up to 3.5 million additional shares of common stock to be used to meet current and near-term requirements for its stock-based benefit plans and dividend reinvestment plan. At March 31, 1996, the Corporation had repurchased .9 million shares under this authorization. In addition, in February 1996 the Corporation completed the 8 million share repurchase program authorized by the board of directors in the fourth quarter of 1995. Since the beginning of 1995, the Corporation has repurchased 18.3 million common shares, prior to any reissuances, as well as warrants to purchase 4.5 million shares of common stock. Average common stock and stock equivalents used in the computation of primary earnings per share in the first quarter of 1996 totaled 136.5 million shares, compared with 148.8 million shares in the first quarter of 1995, an 8% decrease. At March 31, 1996, common stock and stock equivalents totaled 134.3 million shares. SUMMARY DATA Mellon Bank Corporation
(dollar amounts in millions, Quarter ended ----------------------------------------------------- except per share amounts; March 31, Dec. 31, Sept. 30, June 30, March 31, common shares in thousands) 1996 1995 1995 1995 1995 ----------------------------------------------------- Selected key data - ----------------- Net income per common share (primary) $ 1.24 $ 1.18 $ 1.15 $ 1.09 $ 1.08 Net income per common share (fully diluted) $ 1.24 $ 1.16 $ 1.14 $ 1.09 $ 1.07 Net income applicable to common stock $ 169 $ 164 $ 166 $ 162 $ 160 Tangible net income applicable to common stock (a) $ 188 $ 182 $ 184 $ 181 $ 178 Return on common shareholders' equity (b) 19.7% 18.1% 18.0% 17.5% 17.6% Return on tangible common shareholders' equity (a)(b) 30.1% 27.4% 27.4% 26.6% 27.1% Return on assets (b) 1.76% 1.68% 1.70% 1.75% 1.77% Return on tangible assets (a)(b) 1.99% 1.90% 1.92% 1.99% 2.02% Common equity to assets (b) 8.14% 8.83% 8.81% 9.10% 9.48% Tangible common equity to assets (b) 6.03% 6.63% 6.66% 6.78% 7.10% Average balances for the period - ------------------------------- Money market investments $ 1,290 $ 1,206 $ 1,286 $ 1,165 $ 1,230 Trading account securities 138 283 363 220 316 Securities 5,339 5,178 4,938 4,681 4,890 Loans 27,058 27,747 27,774 27,076 26,670 Total interest-earning assets 33,825 34,414 34,361 33,142 33,106 Total assets 40,848 41,141 40,955 39,370 38,886 Total tangible assets 39,902 40,183 39,970 38,366 37,860 Deposits 29,274 28,946 28,417 27,100 27,318 Total interest-bearing liabilities 27,986 28,629 28,159 27,236 27,050 Common shareholders' equity 3,459 3,610 3,648 3,726 3,700 Tangible common shareholders' equity 2,513 2,652 2,663 2,722 2,674 Total shareholders' equity 3,894 4,045 4,083 4,161 4,135
Computation of net income per common share (primary) - ------------------------------------------------------ Quarter ended March 31, ------------------- 1996 1995 -------- -------- Net income applicable to common stock $ 169 $ 160 ======== ======== Average common shares outstanding 134,670 146,913 Other common stock equivalents, net of shares assumed repurchased: Stock options 1,836 1,444 Warrants - 409 -------- -------- Total stock and stock equivalents (c) 136,506 148,766 ======== ======== Net income per common share $ 1.24 $ 1.08 ======== ========
- ----------------------- (a) Tangible net income applicable to common stock, return on tangible common shareholders' equity and return on tangible assets, exclude the after tax impact of the amortization of goodwill and other identified intangibles resulting from accounting for business combinations under the purchase method of accounting. (b) Annualized. All amounts are based on unrounded numbers. (c) Fully diluted stock and stock equivalents were 136,721 and 149,963 for the first quarter of 1996 and 1995, respectively. CONDENSED CONSOLIDATED INCOME STATEMENT Mellon Bank Corporation
Quarter ended (in millions, except per March 31, share amounts) ----------------------- 1996 1995 ----- ----- Interest revenue - ---------------- Interest and fees on loans (loan fees of $24 and $16) $ 566 $ 583 Interest-bearing deposits with banks 9 7 Federal funds sold and securities under resale agreements 6 11 Other money market investments 2 - Trading account securities 2 6 Securities 88 78 ----- ----- Total interest revenue 673 685 Interest expense - ---------------- Interest on deposits 218 205 Federal funds purchased and securities under repurchase agreements 27 29 Other short-term borrowings 37 34 Notes and debentures 28 28 ----- ----- Total interest expense 310 296 ----- ----- Net interest revenue 363 389 Provision for credit losses 25 20 ----- ----- Net interest revenue after provision for credit losses 338 369 Noninterest revenue - ------------------- Trust and investment management fees 241 219 Cash management and deposit transaction charges 49 47 Mortgage servicing fees 41 25 Credit card fees 33 19 Foreign currency and securities trading 21 24 Other 118 65 ----- ----- Total fee revenue 503 399 Gains (losses) on sale of securities 1 (1) ----- ----- Total noninterest revenue 504 398 Operating expense - ----------------- Staff expense 277 240 Net occupancy expense 56 51 Professional, legal and other purchased services 47 38 Equipment expense 35 34 Amortization of mortgage servicing rights and purchased credit card relationships 28 13 Amortization of goodwill and other intangible assets 25 24 Other expense 100 99 Net revenue from acquired property (8) (4) ----- ----- Total operating expense 560 495 ----- ----- Income before income taxes 282 272 Provision for income taxes 103 102 ----- ----- Net income 179 170 Dividends on preferred stock 10 10 ----- ----- Net income applicable to common stock $ 169 $ 160 ===== ===== Net income per common share (primary) $1.24 $1.08 ===== ===== Net income per common share (fully diluted) $1.24 $1.07 ===== =====
CONDENSED CONSOLIDATED BALANCE SHEET Mellon Bank Corporation
(dollar amounts in millions) March 31, Dec. 31, March 31, 1996 1995 1995 ---------- --------- ---------- Assets - ------ Cash and due from banks $ 2,749 $ 2,342 $ 2,130 Money market investments 1,535 860 948 Trading account securities 168 62 233 Securities: Available for sale 3,164 2,913 2,112 Investment (approximate fair value of $2,608, $2,554 and $3,103) 2,628 2,519 3,198 Loans, net of unearned discount of $57, $44 and $63 26,857 27,690 26,696 Reserve for credit losses (468) (471) (601) Premises and equipment 555 556 552 Acquired property, net of reserves of $13, $18 and $26 73 69 87 Goodwill and other intangibles 934 958 1,014 Mortgage servicing rights and purchased credit card relationships 701 682 375 Other assets 2,686 2,466 2,875 ------- ------- ------- Total assets $41,582 $40,646 $39,619 ======= ======= ======= Liabilities - ----------- Deposits in domestic offices $26,572 $24,870 $23,279 Deposits in foreign offices 3,326 4,391 3,726 Short-term borrowings 4,163 4,317 4,660 Other liabilities 1,730 1,600 2,172 Notes and debentures (with original maturities over one year) 1,972 1,443 1,592 ------- ------- ------- Total liabilities 37,763 36,621 35,429 Shareholders' equity - -------------------- Preferred stock 435 435 435 Common shareholders' equity: Common stock - $.50 par value Authorized - 200,000,000 shares Issued - 147,165,480 shares 74 74 74 Additional paid-in capital 1,854 1,850 1,856 Retained earnings 2,207 2,118 1,867 Warrants - - 37 Net unrealized gain (loss) on assets available for sale, net of tax (23) 18 (53) Treasury stock of 14,722,287; 9,978,407 and 678,826 shares at cost (728) (470) (26) ------- ------- ------- Total common shareholders' equity 3,384 3,590 3,755 ------- ------- ------- Total shareholders' equity 3,819 4,025 4,190 ------- ------- ------- Total liabilities and shareholders' equity $41,582 $40,646 $39,619 ======= ======= =======
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