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) – July 12, 2004

MELLON FINANCIAL CORPORATION

(Exact name of registrant as specified in charter)

Pennsylvania	1-7410	25-1233834
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
	One Mellon Center 500 Grant Street Pittsburgh, Pennsylvania	15258
	(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code – (412) 234-5000

ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE

By press release dated July12, 2004, Mellon Financial Corporation announced that it has reached a definitive agreement to acquire Paragon Asset Management Company, a privately held, Las Vegas area-based investment management firm. Terms of the agreement, expected to close in the third quarter, were not disclosed.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

Exhibit Number	Description
99.1	Mellon Financial Corporation Press Release dated July 12, 2004, regarding the matter referenced in Item 5 above.
99.2	Mellon Financial Corporation Press Release dated July 20, 2004, announcing results of operations for second quarter 2004.

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 20, 2004, the Registrant issued a press release announcing results of operations for second quarter 2004. A copy of this press release is filed as Exhibit 99.2 to this report and is incorporated herein by reference. However, the references in the press release to the Registrant’s website, www.mellon.com, shall not be deemed to include the contents of the website in the press release or in this Form 8-K. The information included herein is to be considered “filed” under the Securities Exchange Act of 1934 and is incorporated by reference into all filings made by the Registrant under the Securities Act of 1933 and the Securities Exchange Act of 1934 which state that this Current Report on Form 8-K is incorporated therein by reference.

The press release contains information which may be considered to constitute “non-GAAP financial measures” as defined in Item 10 of Regulation S-K. The Registrant’s management believes that the presentation of such information assists investors in comparing period to period changes in revenues, expenses and income and allows investors to more appropriately evaluate the impact of revenues from both taxable and tax-exempt sources.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MELLON FINANCIAL CORPORATION
Date: July 20, 2004	By:	/s/ MICHAEL A. BRYSON
		Michael A. Bryson
		Chief Financial Officer

EXHIBIT INDEX

Number	Description	Method of Filing
99.1	Press Release dated July 12, 2004	Filed herewith
99.2	Press Release dated July 20, 2004	Filed herewith

EX-99.1

Exhibit 99.1

			News Release
	Contacts:	Media – Joseph F. Ailinger Jr.	Analysts – Andy Clark
		(617) 722-7571	(412) 234-4633
		ailinger.jf@mellon.com	clark.aj@mellon.com

FOR IMMEDIATE RELEASE

MELLON TO ACQUIRE PARAGON ASSET MANAGEMENT

—Addition of Las Vegas area-based investment management firm is sixth acquisition for

Mellon’s Private Wealth Management group in four years—

BOSTON and LAS VEGAS, July 12, 2004 — Mellon Financial Corporation announced that it has reached a definitive agreement to acquire Paragon Asset Management Company, a privately held, Las Vegas area-based investment management firm, specializing in meeting the needs of high-net-worth individuals, corporations and local municipalities. Terms of the agreement, expected to close in the third quarter, were not disclosed.

“This new acquisition marks another step in our strategy to invest in fee-based businesses and complements the robust organic growth Mellon has achieved in its asset management business,” said Martin G. McGuinn, Mellon chairman and chief executive officer.

“We are honored to welcome Paragon and its clients to our organization,” said David F. Lamere, Mellon vice chairman and president of Mellon’s Private Wealth Management group. “This move is in keeping with our strategy of expanding our wealth management practice to key markets across the country. Las Vegas – one of the nation’s fastest growing economies – represents an important and very attractive market for us. From this location, we look forward to continuing to grow our presence and serving our many clients in the Southwest.”

“We believe our agreement with Mellon provides a great opportunity for our clients,” said Theodore Schlazer, principal from Paragon Asset Management. “We’ll now be able to provide a greatly expanded range of services, including strategic asset allocation expertise and fiduciary powers.”

The agreement with Paragon, which will add nearly $600 million in client assets to Mellon, is Mellon’s sixth acquisition in its Private Wealth Management group in four years and second this year. Mellon acquired Seattle-based Safeco Trust Company in April, Georgia-based The Arden Group in 2003, Ohio-based Weber Fulton & Felman in 2002, California-based Van Deventer & Hoch in 2001, and The Trust Company of Washington in 2000.

With more than $75 billion in client assets, Mellon’s Private Wealth Management group maintains more than 60 offices nationwide, including locations in California, Colorado, Connecticut, Delaware, Florida, Georgia, Maryland, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Washington and Washington, D.C.

Mellon Financial Corporation is a global financial services company. Headquartered in Pittsburgh, Mellon is one of the world’s leading providers of financial services for institutions, corporations and high net worth individuals, providing institutional asset management, mutual funds, private wealth management, asset servicing, human resources services and treasury services. Mellon has approximately $3.6 trillion in assets under management, administration or custody, including more than $675 billion under management. Its asset management companies include The Dreyfus Corporation and U.K.-based Newton Investment Management Limited. More about Mellon is available at www.mellon.com.

# # #

EX-99.2

Exhibit 99.2

			News Release
	MEDIA:	ANALYSTS:	Corporate Affairs
	Ken Herz	Steve Lackey	One Mellon Center
	(412) 234-0850	(412) 234-5601	Pittsburgh, PA 15258-0001
	Ron Sommer	Andy Clark
	(412) 236-0082	(412) 234-4633

FOR IMMEDIATE RELEASE

MELLON REPORTS SECOND QUARTER EPS OF $.42

— Results include $.04 expense for new European Headquarters,

Investment Management Fees up 15%, Institutional Trust & Custody Fees up 15% —

PITTSBURGH, July 20, 2004 - Mellon Financial Corporation (NYSE:MEL) today reported net income from continuing operations of $176 million or 42 cents per share in the second quarter of 2004. This compares to net income from continuing operations of $173 million, or 40 cents per share in the second quarter of 2003, and $244 million, or 57 cents per share, in the first quarter of 2004.

The results from the second quarter of 2004 included a $24 million pre-tax charge related to vacating 10 leased locations in London and moving into Mellon’s new European Headquarters. This charge reduced the Corporation’s earnings per share by approximately 4 cents. Excluding this charge, earnings per share from continuing operations in the second quarter of 2004 increased 15 percent over the second quarter of 2003.

The results from the first quarter of 2004 included a pre-tax gain of $93 million from the sale of approximately 35 percent of the Corporation’s indirect investment in Tokyo-based Shinsei Bank, as a result of its initial public offering. Partially offsetting the gain was a pre-tax charge of $19 million associated with a writedown of small non-strategic businesses that the Corporation intends to exit. These items added approximately 12 cents to the Corporation’s earnings per share from continuing operations in the first quarter of 2004.

“The second quarter results reflect a combination of new business wins and strong expense management, as well as an improved economic and market environment compared to the second quarter of 2003. Our management team remains focused on repositioning Human Resources & Investor Solutions. We are ahead of schedule for the $80-85 million in expense savings expected by the end of 2004. While we experienced a slight decline in the retirement business, the volume of new business wins and the sales pipeline have improved significantly in each of the past two quarters. Through the first half of 2004, Mellon’s Asset Management and Corporate & Institutional businesses combined have demonstrated 17 percent pre-tax earnings growth, and the Corporation has generated a return on equity in excess of 20 percent,” said Martin G. McGuinn, chairman and chief executive officer of Mellon Financial Corporation.

Second Quarter Highlights (comparisons are with the second quarter of 2003, unless noted otherwise).

• Total fee revenue in the second quarter of 2004 increased 13 percent to $962 million for the Corporation and represented 89 percent of fee and net interest revenue. The increase was primarily driven by higher investment management fees ($51 million), higher institutional trust and custody fees ($17 million), higher foreign exchange revenue ($22 million), higher equity investment revenue ($27 million) and higher securities lending revenue ($2 million).

• Assets under management totaled $679 billion at June 30, 2004, unchanged from March 31, 2004. Assets under administration or custody increased to a record level of $2.968 trillion at June 30, 2004 from $2.944 trillion at March 31, 2004.

Mellon Reports Earnings

July 20, 2004

Page 2

• Investment management fee revenue in the second quarter of 2004 was $385 million, an increase of 15 percent. The increase in investment management fees reflects improved equity markets, new business generation, higher performance fees and the favorable impact of foreign exchange rates.

• Institutional trust and custody fee revenue in the second quarter of 2004 increased 15 percent to $133 million. The increase reflects the benefit of new business and improved market conditions. Securities lending fee revenue increased 11 percent to $24 million, and foreign exchange trading revenue increased 82 percent to $50 million.

• Total operating expenses in the second quarter of 2004 were $828 million, an increase of 6 percent. Excluding the $24 million charge related to the expenses associated with consolidating 10 leased locations in the London market and the move to Mellon’s new European Headquarters, expenses increased by 3 percent. The growth in operating expenses is due principally to an $18 million increase in incentives related to the growth in the fee-based businesses, and higher employee benefits expense. Compared to the first quarter of 2004, total operating expenses declined by $3 million.

• Asset Management Group – Income before taxes increased 17 percent driven by a 12 percent increase in revenue partially offset by an 9 percent increase in expenses in support of revenue growth. The increase in revenue reflects improved equity markets, new business generation, higher performance fees and the favorable impact of foreign exchange rates, partially offset by lower net interest revenue. The pretax margin was 34 percent for the second quarter of 2004, compared with 32 percent for the second quarter of 2003 and 36 percent for the first quarter of 2004.

• Corporate & Institutional Services Group – Income before taxes increased 7 percent. Driven by new business and improved market conditions, fee revenue increased 6 percent, resulting from increased foreign exchange revenue, institutional trust and custody fees and securities lending fees, partially offset by lower human resources and investor solutions fees. Offsetting the increase in fee revenue was lower net interest revenue due to the historically low interest rate environment. Expenses declined 2 percent driven primarily by the expense reduction initiatives in the Human Resources & Investor Solutions sector. The pretax margin was 23 percent for the second quarter of 2004, compared with 22 percent for both the second quarter of 2003 and the first quarter of 2004.

• Return on common shareholders’ equity was 19 percent for the second quarter of 2004. Excluding the $24 million pre-tax charge related to vacating 10 leased locations in London and moving into Mellon’s new European Headquarters, the return on common shareholders’ equity would have been 21 percent.

The Corporation also declared a quarterly common stock dividend of 18 cents per share. This cash dividend is payable on Friday, August 13, 2004, to shareholders of record at the close of business on Friday, July 30, 2004.

Mellon Reports Earnings

July 20, 2004

Page 3

All information in this earnings release is reported on a continuing operations basis. See page 4 for summary financial data for comparable periods. Throughout this earnings release, certain measures, which are noted, exclude the $24 million London space consolidation charge recorded in the second quarter of 2004 and other items totaling a positive $74 million recorded in the first quarter of 2004. The Corporation believes these measures are useful in analyzing the financial results and trends of ongoing operations and facilitate the comparisons with other financial institutions and is the basis on which the Corporation’s management internally evaluates performance. In addition, certain amounts are presented on a fully taxable equivalent (FTE) basis. The Corporation believes that this presentation provides comparability of amounts arising from both taxable and tax-exempt sources and is consistent with industry standards. The adjustment to an FTE basis has no impact on net income.

Mellon Financial Corporation is a global financial services company. Headquartered in Pittsburgh, Mellon is one of the world’s leading providers of financial services for institutions, corporations and high net worth individuals, providing institutional asset management, mutual funds, private wealth management, asset servicing, human resources and investor solutions, and treasury services. Mellon has approximately $3.6 trillion in assets under management, administration or custody, including more than $675 billion under management. Its asset management companies include The Dreyfus Corporation and U.K.-based Newton Investment Management Limited. News and other information about Mellon is available at www.mellon.com.

Martin G. McGuinn, chairman and chief executive officer; Steven G. Elliott, senior vice chairman; and Michael A. Bryson, chief financial officer, will host a conference call and simultaneous webcast at 2:30 p.m. EDT on Tuesday, July 20, 2004. This conference call and webcast will include forward-looking information and may include other material information. Persons wishing to access the conference call and webcast may do so by dialing (877) 420-2982 (U.S.) or (847) 619-6129 (international), or by logging on to www.mellon.com. A series of graphics related to the topics to be discussed in the conference call and webcast will be available at www.mellon.com beginning at approximately 2 p.m. EDT on July 20. Replays of the conference call and webcast will be available beginning July 20 at approximately 5 p.m. EDT until Tuesday, August 3, 2004 at 5 p.m. EDT by dialing (888) 895-5637 (U.S.) or (402) 220-3731 (international). The archived version of the conference call, webcast and related graphics will also be available at www.mellon.com for the same time period.

This earnings release contains statements relating to future results of the Corporation that are considered “forward-looking statements.” These statements, which may be expressed in a variety of ways, including the use of future or present tense language, relate to, among other things, expected expense savings, future business revenue, and the intention to exit certain small non-strategic businesses. These forward-looking statements, and other forward-looking statements contained in other public disclosures of the Corporation which make reference to the cautionary factors contained in this earnings release, are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond the Corporation’s control). Actual results may differ materially from those expressed or implied as a result of these risks and uncertainties, including, but not limited to, changes in political and economic conditions; changes in the mix of assets under management; and change in the relevant benchmark to measure changes in investment management fees as well as other risks and uncertainties detailed elsewhere in this earnings release and in the Corporation’s Annual Report on Form 10-K for the year ended Dec. 31, 2003 and in subsequent reports filed by the Corporation with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. All statements speak only as of July 20, 2004, and the Corporation undertakes no obligation to update any statement to reflect events or circumstances after July 20, 2004 or to reflect the occurrence of unanticipated events.

Note:   Detailed supplemental financial information follows.

Mellon Reports Earnings

July 20, 2004

Page 4

SUMMARY DATA

Mellon Financial Corporation

	Quarter ended									Six months ended
(dollar amounts in millions, except per share amounts; common shares in thousands)	June 30, 2004			March 31, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Continuing operations (a)(b):
Diluted earnings per share	$	.42		$	.57		$	.40		$	.99		$	.78
Income from continuing operations	$	176		$	244		$	173		$	420		$	339
Return on equity		18.9	%		26.0	%		19.5	%		22.4	%		19.6	%
Net income (c):
Diluted earnings per share	$	.42		$	.57		$	.41		$	.99		$	.78
Net income	$	176		$	245		$	175		$	421		$	336
Return on equity		18.9	%		26.1	%		19.7	%		22.5	%		19.4	%
Noninterest revenue	$	970		$	1,071		$	870		$	2,041		$	1,719
Net interest revenue		119			114			163			233			317
Total revenue	$	1,089		$	1,185		$	1,033		$	2,274		$	2,036
Pre-tax operating margin (FTE) (a)		25	%		31	%		25	%		28	%		25	%
Average common shares and equivalents outstanding:
Basic		419,015			421,668			431,253			420,341			431,341
Diluted		423,795			427,103			433,304			425,475			433,133
Average balances
Money market investments	$	2,703		$	2,986		$	2,765		$	2,844		$	2,943
Trading account securities		268			356			761			312			787
Securities		11,647			11,013			11,655			11,330			11,697
Total money market investments and securities		14,618			14,355			15,181			14,486			15,427
Loans		7,491			7,489			7,915			7,490			8,063
Total interest-earning assets		22,109			21,844			23,096			21,976			23,490
Total assets		33,377			33,222			34,339			33,300			34,792
Deposits		19,776			19,227			19,067			19,502			20,215
Total shareholders’ equity		3,753			3,769			3,554			3,761			3,483

(a) Second quarter 2004 results include the $24 million, or $.04 per share, charge for the consolidation and relocation of 10 leased locations in London. Excluding this charge, return on equity on a continuing operation basis would have been 20.7% and the pre-tax operating margin would have been 27%. First quarter 2004 results include the gain from the sale of approximately 35% of the Corporation’s indirect investment in Shinsei Bank and the charge associated with a writedown of small non-strategic businesses that the Corporation intends to exit. The combination of these items, which totaled $74 million pre-tax, added $.12 per share to the first quarter 2004 results. Excluding these items, return on equity on a continuing operations basis would have been 20.7% and the pre-tax operating margin would have been 27%. The return on equity on a continuing operations basis for the first six months of 2004, excluding the items mentioned above for the first and second quarters, would have been 20.7%. The Corporation believes that this supplemental information is useful in analyzing the financial results and trends of ongoing operations, facilitates the comparisons with other financial institutions and is the basis on which the Corporation’s management internally evaluates performance.

(b) Continuing operations results for the first six months of 2003 exclude the cumulative effect of a change in accounting principle.

(c) Net income amounts include results of discontinued operations.

Note:   Throughout this earnings release, all calculations are based on unrounded numbers. FTE denotes presentation on a fully taxable equivalent basis. Returns are annualized.

Mellon Reports Earnings

July 20, 2004

Page 5

Noninterest Revenue

	Quarter ended									Six months ended
(dollar amounts in millions, unless otherwise noted)		June 30, 2004			March 31, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Trust and investment fee revenue:
Investment management	$	385		$	405		$	334		$	790		$	652
Human resources & investor solutions		233			233			245			466			485
Institutional trust and custody		133			133			116			266			225
Securities lending revenue		24			18			22			42			37
Total trust and investment fee revenue		775			789			717			1,564			1,399
Cash management revenue		79			78			71			157			143
Foreign exchange revenue		50			57			28			107			66
Financing-related revenue		30			35			38			65			70
Equity investment revenue		9			98			(18	)		107			(15	)
Other revenue		19			14			13			33			24
Total fee and other revenue		962			1,071			849			2,033			1,687
Gains on sales of securities		8			—			21			8			32
Total noninterest revenue	$	970		$	1,071		$	870		$	2,041		$	1,719
Fee revenue as a percentage of fee and net interest revenue (FTE)		89	%		90	% (a)		84	%		90	% (a)		84	%
Market value of assets under management at period-end (in billions)	$	679		$	679		$	612
Market value of assets under administration or custody at period-end (in billions)	$	2,968		$	2,944		$	2,510
S&P 500 Index - period-end		1141			1126			975			1141			975
S&P 500 Index - daily average		1123			1133			938			1128			900

(a) Excluding the gain on the sale of approximately 35% of the Corporation’s indirect investment in Shinsei Bank, fee revenue as a percentage of fee and net interest revenue (FTE) would have totaled 89% in both the first quarter of 2004 and first six months of 2004.

Note:   For analytical purposes, the term “fee revenue,” as utilized throughout this earnings release, is defined as total noninterest revenue (including equity investment revenue) less gains on the sales of securities.

Fee revenue

Fee revenue of $962 million in the second quarter of 2004 increased $113 million, or 13%, from $849 million in the second quarter of 2003, primarily due to increases in trust and investment fee revenue, equity investment revenue, foreign exchange revenue and the favorable translation impact of the weaker U.S. dollar on non-U.S. revenues. The effect of foreign exchange rates accounted for $8 million of the increase in fee revenue in the second quarter of 2004 compared with the second quarter of 2003, and is primarily reflected in trust and investment fee revenue.

Fee revenue in the first quarter of 2004 included a pre-tax gain of $93 million from the sale of approximately 35% of the Corporation’s indirect investment in Shinsei Bank. This gain is included in equity investment revenue in the table above. Excluding this gain, fee revenue decreased $16 million compared to the first quarter of 2004 resulting from a $22 million seasonal decrease in performance fees (included in investment management revenue in the table above), as well as lower foreign exchange and financing-related revenue partially offset by a seasonal increase in securities lending revenue and higher other revenue. Out-of-pocket expense reimbursements

Mellon Reports Earnings

July 20, 2004

Page 6

recorded as fee revenue totaled $25 million in the second quarter 2004 compared with $21 million in the first quarter 2004 and $31 million in the second quarter 2003. Client reimbursable out-of-pocket expenses are recorded as operating expenses, as discussed on page 12.

Investment management fee revenue

Changes in market value of assets under management (in billions)		Second quarter 2004			June 30, 2003 to June 30, 2004
Market value of assets under management at beginning of period	$	679		$	612
Net inflows (outflows) (a):
Long-term		—			20
Money market		(2	)		1
Total net inflows (outflows)		(2	)		21
Net market appreciation (a)(b)		—			49
Acquisitions/divestitures		2			(3	)
Market value of assets under management at end of period	$	679		$	679

(a) Preliminary.

(b) Also includes the effect of changes in foreign exchange rates.

Investment management fee revenue - by business sector (in millions)	Quarter ended						Six months ended
	June 30, 2004		March 31, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Institutional Asset Management
Institutional and private clients	$	105	$	105	$	83	$	210	$	163
Performance fees		17		39		8		56		7
Mutual funds		42		39		31		81		59
Total		164		183		122		347		229
Mutual Funds
Mutual funds		129		129		130		258		262
Institutional and private clients		8		9		8		17		14
Total		137		138		138		275		276
Private Wealth Management
Private clients		75		74		65		149		130
Human Resources & Investor Solutions
Mutual funds (a)		9		10		9		19		17
Total investment management fee revenue	$	385	$	405	$	334	$	790	$	652

(a) Earned from mutual fund investments in employee benefit plans administered in this sector.

Mellon Reports Earnings

July 20, 2004

Page 7

S&P 500 Index	Quarter ended			June 30, 2004 compared with
	June 30, 2004	March 31, 2004	June 30, 2003	March 31, 2004				June 30, 2003
				Index		Percentage		Index	Percentage
Period-end	1141	1126	975	15		1.3	%	166	17.1	%
Daily average	1123	1133	938	(10	)	(0.8	)%	185	19.7	%

Investment management revenue in the second quarter of 2004 increased $51 million, or 15%, compared with the second quarter of 2003 and decreased $20 million, or 5% (unannualized), compared with the first quarter 2004. The increase compared with the second quarter of 2003 resulted from improved equity markets, net inflows, a $9 million increase in performance fees and the effect of foreign exchange rates. The decrease compared with the first quarter 2004 resulted from a $22 million decrease in performance fees. Performance fees are earned by investment managers when the investment performance of their products exceeds various benchmarks and tend to be highest for the Corporation in the fourth quarter, followed by the first quarter.

The largest category of investment management fees is from mutual funds. Managed mutual fund fees totaled $180 million in the second quarter of 2004, an increase of $10 million, or 6%, compared with the second quarter of 2003 and an increase of $2 million, or less than 1%, compared with the first quarter of 2004. The increase compared with the second quarter of 2003 primarily resulted from the positive effect of improved equity markets which more than offset the effect of a lower average level of managed money market and bond and fixed income funds.

Managed mutual funds fee revenue (a)	Quarter ended						Six months ended
(in millions)		June 30, 2004		March 31, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Equity funds	$	79	$	74	$	55	$	153	$	106
Money market funds		59		58		68		117		141
Bond and fixed-income funds		31		34		39		65		74
Nonproprietary		11		12		8		23		17
Total managed mutual funds	$	180	$	178	$	170	$	358	$	338

(a) Net of mutual fund fees waived and fund expense reimbursements of $11 million, $10 million, $10 million, $21 million and $20 million, respectively.

Mutual fund management fees are based upon the daily average net assets of each fund. The average net assets of proprietary mutual funds managed decreased $5 billion in the second quarter of 2004 compared with the second quarter of 2003 primarily resulting from outflows of institutional money market funds partially offset by equity market appreciation.

Average assets of proprietary mutual funds	Quarter ended
(in billions)		June 30, 2004		March 31, 2004		June 30, 2003
Equity funds	$	51	$	48	$	37
Money market funds		96		96		112
Bond and fixed-income funds		23		25		26
Total average proprietary mutual fund assets managed	$	170	$	169	$	175

Mellon Reports Earnings

July 20, 2004

Page 8

As shown in the following table, the market value of assets under management was $679 billion at June 30, 2004, a $67 billion, or 11%, increase from $612 billion at June 30, 2003, and unchanged from March 31, 2004. The $679 billion of assets managed were comprised as follows: 36% equities; 22% money market; 21% fixed-income; 12% securities lending cash collateral; and 9% overlay and global fixed-income products.

Market value of assets under management at period-end
(in billions)		June 30, 2004		March 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
Mutual funds managed:
Equity funds	$	52	$	49	$	47	$	41	$	38
Money market funds		94		96		99		105		117
Bond and fixed-income funds		23		24		25		26		27
Nonproprietary		30		31		26		24		21
Total mutual funds managed		199		200		197		196		203
Institutional and private client assets under management (a)		480		479		460		429		409
Total market value of assets under management	$	679	$	679	$	657	$	625	$	612
S&P 500 Index - period-end		1141		1126		1112		996		975
S&P 500 Index - daily average		1123		1133		1056		1000		938

(a) Includes assets managed at Pareto Partners of $41 billion, $40 billion, $40 billion, $37 billion and $35 billion, respectively. The Corporation has a 30% equity interest in Pareto Partners, which is accounted for under the equity method of accounting.

Human resources & investor solutions (HR&IS) fee revenue

HR&IS fee revenue generated from consulting, outsourcing and investor services totaled $233 million in the second quarter of 2004, a decrease of $12 million, or 5%, from the second quarter of 2003, reflecting lower out-of-pocket expense reimbursements, lower consulting revenue primarily in the retirement business, and lower client volumes. HR&IS fee revenue was unchanged from the first quarter of 2004 as higher out-of-pocket expense reimbursements were offset by lower consulting revenue in the retirement business and lower client volumes.

Institutional trust and custody revenue

Institutional trust and custody fees are dependent on a number of factors, including the level of assets administered and under custody, the volume of transactions in the accounts, and the types and frequency of ancillary services provided, such as performance analytics. Institutional trust and custody revenue increased $17 million, or 15%, in the second quarter of 2004 compared with the second quarter of 2003 and was unchanged compared to the first quarter of 2004. The increase primarily resulted from net new business and improved market conditions.

As shown in the following table, assets under administration or custody totaled $2.968 trillion at June 30, 2004, an increase of $458 billion, or 18%, compared with $2.510 trillion at June 30, 2003 and an increase of $24 billion, or less than 1% (unannualized), compared with $2.944 trillion at March 31, 2004. The increases compared with the prior periods resulted from net new business, market appreciation and the effect of foreign exchange rates.

Mellon Reports Earnings

July 20, 2004

Page 9

Market value of assets under administration or custody at period-end
(in billions)		June 30, 2004		March 31, 2004		Dec. 31, 2003		Sept. 30, 2003		June 30, 2003
Market value of assets under administration or custody (a)	$	2,968	$	2,944	$	2,845	$	2,611	$	2,510
S&P 500 Index - period-end		1141		1126		1112		996		975

(a) Includes assets under administration or custody by CIBC Mellon Global Securities Services, a joint venture between the Corporation and the Canadian Imperial Bank of Commerce, of $428 billion, $442 billion, $439 billion, $390 billion and $382 billion, respectively, and, by ABN AMRO Mellon Global Securities Services B.V., a joint venture between the Corporation and ABN AMRO, of $320 billion, $312 billion, $299 billion, $272 billion and $262 billion, respectively.

Securities lending revenue

Securities lending revenue totaled $24 million in the second quarter of 2004 compared with $22 million in the second quarter of 2003 and $18 million in the first quarter of 2004. The increase compared with the second quarter of 2003 primarily resulted from higher domestic volumes partially offset by narrower domestic and international margins in the historically low interest rate environment. The increase compared with the first quarter of 2004 primarily resulted from higher seasonal international volumes and margins, which more than offset narrower domestic margins. The average level of securities on loan totaled $90 billion in the second quarter of 2004 compared with $67 billion in the second quarter of 2003 and $83 billion in the first quarter of 2004.

Cash management revenue

Cash management fee revenue of $79 million in the second quarter of 2004 increased $8 million compared with the second quarter of 2003 and increased $1 million compared with the first quarter of 2004. The increase compared with the second quarter of 2003 resulted from a change in the manner in which the Corporation was paid for certain cash management and merchant card services by the Department of the Treasury, a major cash management customer, beginning in mid-July 2003. This revenue, which totaled $11 million in the second quarter of 2004, previously would have been recorded as net interest revenue, because it was paid via compensating balance earnings. The decrease in cash management fee revenue, excluding the impact of this classification change, compared to the second quarter of 2003 was primarily due to lower processing revenues.

Foreign exchange revenue

Foreign exchange revenue totaled $50 million in the second quarter of 2004, a $22 million, or 82%, increase compared with the second quarter of 2003 and a $7 million, or 12% (unannualized), decrease compared with the first quarter of 2004. The increase compared with the prior year period resulted in part from costs in the second quarter of 2003 associated with hedging specific customer-driven options contracts during a period of market volatility. The increase over the prior year period also related to higher client trading volumes in the second quarter of 2004. The decrease compared with the first quarter of 2004 primarily resulted from slightly lower client volumes and lower volatility in key currencies.

Financing-related revenue

Financing-related revenue primarily includes loan commitment fees; letters of credit and acceptance fees; gains or losses on securitizations, loan sales and lease residuals; and returns from corporate-owned life insurance. Financing-related revenue totaled $30 million in the second quarter of 2004, a decrease of $8 million compared with the second quarter of 2003 and a decrease of $5 million compared with the first quarter of 2004, primarily reflecting lower death benefits and yields on corporate-owned life insurance.

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July 20, 2004

Page 10

Equity investment revenue

Equity investment revenue, which includes realized and unrealized gains and losses on venture capital and non-venture capital investments, totaled $9 million in the second quarter of 2004 compared with a loss of $18 million in the second quarter 2003 and revenue of $98 million in the first quarter of 2004. The first quarter of 2004 included the $93 million gain on the sale of a portion of the Shinsei Bank non-venture capital indirect investment. The Corporation’s remaining book value of this investment is $49 million. Excluding the Shinsei gain, equity investment revenue totaled $5 million in the first quarter of 2004. Net gains from venture capital activities totaled $8 million in the second quarter of 2004, a net loss of $13 million in the second quarter of 2003 and a net gain of $1 million in the first quarter of 2004.

Other revenue

Other revenue totaled $19 million in the second quarter of 2004, compared with $13 million in the second quarter of 2003 and $14 million in the first quarter of 2004. The increase compared with the prior year period primarily resulted from higher merchant card revenue, as the revenue earned from the Department of the Treasury was recorded as net interest revenue prior to mid-July 2003. The increase compared with the first quarter of 2004 resulted from several factors, including higher gains on the sale of assets and higher merchant card revenue.

Year-to-date 2004 compared with year-to-date 2003

Fee revenue for the first six months of 2004 totaled $2.033 billion, an increase of $346 million, or 20%, from $1.687 billion in the first six months of 2003. Excluding the $93 million gain from the sale of the indirect investment in Shinsei Bank, fee revenue increased 15% compared with the first six months of 2003, primarily due to increases in trust and investment fee revenue, equity investment revenue, foreign exchange revenue and the favorable translation impact of the weaker U.S. dollar on non-U.S. revenues. The effect of foreign exchange rates accounted for $21 million of the increase in fee revenue in the first six months of 2004, compared with the first six months of 2003, and is primarily reflected in trust and investment fee revenue. Trust and investment fee revenue increased $165 million, or 12%, primarily due to improved equity markets, higher performance fees and higher institutional trust and custody revenue.

Gains on sales of securities

The gains on the sales of securities of $8 million in the second quarter of 2004 primarily resulted from the sale of $106 million of preferred stock received as consideration for the disposition of commercial loans and commitments in late 2001.

Gross joint venture fee revenue (supplemental information)

The Corporation accounts for its interests in joint ventures under the equity method of accounting, with its share of the equity income from all joint ventures of $10 million, $10 million and $9 million, in the second quarter of 2004, second quarter of 2003 and first quarter of 2004, respectively, recorded primarily as trust and investment fee revenue. The Corporation’s portions of gross joint venture fee revenue and expenses are not included in the Corporation’s reported fee revenue and operating expense. The following table presents, for informational purposes, the components of gross joint venture fee revenue and the trend of revenue growth for the Corporation’s 50% owned joint ventures that are part of the Asset Servicing sector.

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July 20, 2004

Page 11

Gross joint venture fee revenue (a)	Quarter ended						Six months ended
(in millions, preliminary)		June 30, 2004		March 31, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Trust and investment	$	83	$	76	$	77	$	159	$	142
Foreign exchange		9		12		8		21		13
Total gross joint venture fee revenue	$	92	$	88	$	85	$	180	$	155

(a) The 50% owned joint ventures are ABN AMRO Mellon Global Securities Services B.V., CIBC Mellon Global Securities Services Company, CIBC Mellon Trust Company and Russell/Mellon Analytical Services, which are part of the Asset Servicing sector.

Net Interest Revenue

	Quarter ended									Six months ended
(dollar amounts in millions)		June 30, 2004			March 31, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Net interest revenue (FTE)	$	123		$	118		$	167		$	241		$	325
Net interest margin (FTE)		2.24	%		2.17	%		2.97	%(a)		2.20	%		2.86	%(a)
Average money market investments	$	2,703		$	2,986		$	2,765		$	2,844		$	2,943
Average trading account securities		268			356			761			312			787
Average securities		11,647			11,013			11,655			11,330			11,697
Average loans		7,491			7,489			7,915			7,490			8,063
Average interest-earning assets	$	22,109		$	21,844		$	23,096		$	21,976		$	23,490

(a) Calculated on a continuing operations basis even though the prior-period balance sheet is not restated for discontinued operations in accordance with generally accepted accounting principles.

Note:   FTE denotes presentation on a fully taxable equivalent basis.

Net interest revenue on a fully taxable equivalent basis decreased $44 million in the second quarter of 2004 compared with the second quarter of 2003 and increased $5 million compared with the first quarter of 2004. The decrease compared with the second quarter of 2003 resulted in part from the mid-July 2003 change in the manner in which the Department of the Treasury is paying for certain cash management and merchant card services, as well as the continued reduction in loans. The revenue from the Department of the Treasury, which totaled $17 million in the second quarter of 2004, was recorded as cash management fee revenue ($11 million) and other revenue ($6 million). Excluding the revenue earned from the Department of the Treasury, net interest revenue would have been $144 million for the quarter ended June 30, 2003. The increase compared with the first quarter of 2004 included recognition of $3 million of interest previously applied to principal, upon repayment of a loan to a California-based electric and natural gas utility company that had been on nonperforming status as discussed on page 16, as well as a higher level of average securities.

Net interest revenue on a fully taxable equivalent basis decreased $84 million in the first six months of 2004 compared with the prior year period, primarily due to the same factors that resulted in the decrease in the second quarter of 2004 compared with the second quarter of 2003, as well as a lower level of higher coupon mortgage-backed securities.

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July 20, 2004

Page 12

Operating Expense

	Quarter ended						Six months ended
(dollar amounts in millions)		June 30, 2004		March 31, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Staff expense:
Compensation	$	319	$	316	$	323	$	635	$	649
Incentive (a)		94		105		76		199		140
Employee benefits		68		74		58		142		117
Total staff expense	$	481	$	495	$	457	$	976	$	906
Professional, legal and other purchased services		110		104		108		214		200
Net occupancy expense		93		68		65		161		129
Equipment expense		53		54		50		107		104
Business development		26		25		25		51		50
Communications expense		27		28		29		55		56
Amortization of other intangible assets		4		5		4		9		9
Other expense		34		52		40		86		78
Total operating expense	$	828	$	831	$	778	$	1,659	$	1,532
Employees at period-end		20,300		20,500		21,700		20,300		21,700

(a) Effective Jan. 1, 2003, the Corporation began recording an expense for the estimated fair value of stock options using the prospective method under transitional guidance provided in the Statement of Financial Accounting Standards (SFAS) No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.” Stock option expense totaled approximately $4 million in both the second quarter of 2004 and first quarter of 2004, and less than $1 million in both the second quarter of 2003 and first six months of 2003.

Second quarter 2004 compared with second quarter 2003

Summary - Operating expense increased $50 million, or 6%, compared with the second quarter of 2003. The second quarter of 2004 includes a $24 million charge related to vacating 10 leased locations in London and moving into the Corporation’s new European Headquarters. Nearly all of the charge was recorded as occupancy expense in the table above. Excluding this charge, operating expense increased 3%. The effect of foreign exchange rates also accounted for $8 million of the increase in total operating expense, including $4 million in staff expense.

Staff expense - Staff expense in the second quarter of 2004 totaled $481 million, an increase of $24 million, or 5%, compared with the second quarter of 2003, due to higher incentive expense primarily resulting from fee-based business growth and a $4 million increase in stock option expense, and higher employee benefits expense due to pensions. These increases were partially offset by lower compensation expense despite the negative impact of the weaker dollar. Employee benefits expense included $3 million of pension expense in the second quarter of 2004 compared with a $7 million pension credit in the second quarter of 2003. Severance expense, included in compensation expense, totaled $1 million in the second quarter of 2004 compared with $7 million in the second quarter of 2003.

Other expenses - Other expenses in the second quarter of 2004 totaled $347 million, a $26 million, or 8%, increase compared with the second quarter of 2003 reflecting the $24 million space consolidation charge in London. Excluding this charge, other expenses were virtually unchanged, as increases in support of business growth were partially offset by lower client reimbursable out-of-pocket expenses which totaled $25 million in the second quarter of 2004 compared with $31 million in the second quarter of 2003, and lower operational error charges recorded in other expense.

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July 20, 2004

Page 13

Second quarter 2004 compared with first quarter 2004

Operating expense decreased $3 million in the second quarter of 2004 compared with the first quarter of 2004, reflecting a $14 million, or 2% (unannualized), decrease in staff expense partially offset by higher client reimbursable out-of-pocket expenses which totaled $25 million in the second quarter of 2004 compared with $21 million in the first quarter of 2004. In addition, the second quarter of 2004 included the $24 million London space consolidation charge discussed previously, while the first quarter of 2004 included a charge of $19 million, included in other expense in the table above, associated with the writedown of small non-strategic businesses that the Corporation intends to exit. The decrease in staff expense primarily resulted from lower incentive expense resulting primarily from a lower level of performance fees, and lower employee benefits expense reflecting lower payroll taxes. Severance expense totaled $1 million in the second quarter of 2004 compared with $1 million in the first quarter of 2004.

Year-to-date 2004 compared with year-to-date 2003

Operating expense totaled $1.659 billion in the first six months of 2004, an increase of 8% compared with the prior-year period and included the $24 million and $19 million charges discussed above. Excluding these charges, operating expense increased $84 million, or 5%, primarily due to higher incentive and employee benefits expense. The effect of foreign exchange rates also accounted for $20 million of the increase in total operating expense, including $10 million in staff expense.

Income Taxes

The Corporation’s effective tax rate on income from continuing operations was approximately 32.5% for the second quarter of 2004, compared with approximately 31.5% for the second quarter of 2003.

Business Sectors

Refer to the Corporation’s 2003 Financial Annual Report for a discussion of the lines of business that have been aggregated into the six core business sectors and the Other Activity sector. Effective January 2004, the Corporation reclassified the results of the small non-strategic businesses that the Corporation intends to exit to the Other Activity sector. In the first quarter of 2004, the Corporation revised prospectively its capital allocations to the core business sectors to better reflect the economic capital required by these businesses. The increase in allocated capital was approximately $100 million. The Corporation also revised prospectively expense allocations to the core business sectors to better reflect how these businesses are managed. The impact on any single sector was not material and in the aggregate was unchanged.

Mellon Reports Earnings

July 20, 2004

Page 14

Business Sectors - Quarterly data (dollar amounts in millions, presented on an FTE basis)
Sector	Total Revenue						Income Before Taxes								Pre-tax Operating Margin
	2Q04		1Q04		2Q03		2Q04			1Q04		2Q03			2Q04		1Q04		2Q03
Asset Management:
Institutional Asset Management	$	185	$	211	$	142	$	50		$	67	$	27		27	%	31	%	19	%
Mutual Funds		121		120		121		44			43		42		36		36		35
Private Wealth Management		135		134		132		56			57		59		41		43		45
Total Asset Management Group		441		465		395		150			167		128		34		36		32
Corporate & Institutional Services:
Asset Servicing		200		196		171		57			51		43		29		26		25
Human Resources & Investor Solutions		245		246		251		15			16		(3	)	6		7		(1	)
Treasury Services		173		175		198		71			71		94		41		41		47
Total Corporate & Institutional Services Group		618		617		620		143			138		134		23		22		22
Total Core Business Sectors	$	1,059	$	1,082	$	1,015	$	293		$	305	$	262		28	%	28	%	26	%
Other Activity		44		119		34		(18	)		72		6		N/M		N/M		N/M
Consolidated Results	$	1,103	$	1,201	$	1,049	$	275		$	377	$	268		25	%	31	%	25	%

N/M — Not meaningful for this disclosure.

Business Sectors - Year-to-date data (dollar amounts in millions, presented on an FTE basis)
Sector	Total Revenue				Income Before Taxes					Pre-tax Operating Margin
	YTD04		YTD03		YTD04		YTD03			YTD04		YTD03
Asset Management:
Institutional Asset Management	$	396	$	264	$	117	$	35		29	%	13	%
Mutual Funds		241		243		87		87		36		36
Private Wealth Management		269		263		113		122		42		46
Total Asset Management Group		906		770		317		244		35		32
Corporate & Institutional Services:
Asset Servicing		396		340		108		84		27		25
Human Resources & Investor Solutions		491		495		31		(2	)	6		—
Treasury Services		348		396		142		182		41		46
Total Corporate & Institutional Services Group		1,235		1,231		281		264		23		21
Total Core Business Sectors	$	2,141	$	2,001	$	598	$	508		28	%	25	%
Other Activity		163		64		54		18		N/M		N/M
Consolidated Results	$	2,304	$	2,065	$	652	$	526		28	%	25	%

N/M — Not meaningful for this disclosure.

Mellon Reports Earnings

July 20, 2004

Page 15

Asset Management Group

The Corporation’s Asset Management Group consists of those lines of business which offer investment management and wealth management services to large corporations, institutional customers and high net worth individuals.

Income before taxes for the Asset Management Group for the second quarter of 2004 compared with the second quarter of 2003 increased 17%, as a 12% increase in revenue more than offset a 9% increase in expenses. The increase in revenue primarily resulted from higher revenue in the Institutional Asset Management sector, primarily due to the impact of improved equity markets, net new business, a $9 million increase in performance fees and the effect of foreign exchange rates. Equity market levels, as represented by the S&P 500 Index, increased 17% on a period-end basis and 20% on an average basis compared with the quarter ended June 30, 2003. The increase in expenses primarily resulted from higher incentive expense and the effect of foreign exchange rates.

Results for the Asset Management Group for the second quarter of 2004 compared with the first quarter of 2004 reflect a 10% decrease (unannualized) in income before taxes, as revenue decreased 5% (unannualized) while expenses decreased 3% (unannualized). The decrease in revenue was due primarily to a $22 million seasonal decrease in performance fees and lower trading gains, partially offset by improved investment management revenue from net new business in the Institutional Asset Management sector. Equity market levels, as represented by the S&P 500 Index, increased 1% (unannualized) on a period-end basis and decreased 1% (unannualized) on an average basis compared with the quarter ended March 31, 2004. The Group’s expense decrease primarily resulted from lower incentive expense in the Institutional Asset Management sector primarily related to seasonal performance fees.

Corporate & Institutional Services Group

The Corporation’s Corporate & Institutional Services Group consists of those lines of business which offer trust and custody and related services, as well as services for investment managers; human resources consulting, outsourcing and investor services; and treasury-related services to large corporations, institutions and government and other not-for-profit entities.

Results for the Corporate & Institutional Services Group for the second quarter of 2004 compared with the second quarter of 2003 reflect a 7% increase in income before taxes, as a 2% decrease in expenses more than offset the impact of a less than 1% decrease in revenue. Higher revenue in the Asset Servicing sector was more than offset by lower revenue in the Treasury Services and HR&IS sectors. The increased revenue in the Asset Servicing sector was primarily due to foreign exchange revenue and higher institutional trust and custody revenue from net new business and improved market conditions. Revenue decreased 12% in the Treasury Services sector primarily due to lower net interest revenue from a lower level of average loans. HR&IS revenue decreased 2%, primarily from lower out-of-pocket expense reimbursements, lower consulting revenue primarily in the retirement business, and lower client volumes. Operating expenses for the Group as a whole were down compared with the second quarter of 2003, primarily due to a 9% decrease in expenses in the HR&IS sector, partially offset by higher expenses in the Asset Servicing sector. The lower expenses in the HR&IS sector resulted from the favorable impact of expense initiatives started in the third quarter of 2003. The higher expenses in the Asset Servicing sector were in support of new business growth and development around enhancements to existing products.

Mellon Reports Earnings

July 20, 2004

Page 16

Results for the Corporate & Institutional Services Group compared with the first quarter of 2004 reflect a 3% increase (unannualized) in income before taxes, due to revenue growth in the Asset Servicing sector. Revenue for the Group increased $1 million, or less than 1% (unannualized), compared with the first quarter of 2004. The higher revenue in the Asset Servicing sector primarily resulted from higher securities lending revenue and net interest revenue. The Group’s expenses decreased 1% (unannualized) compared with the first quarter of 2004 primarily due to lower expenses in the Asset Servicing sector.

Other Activity

Other Activity includes business exits and other activity not fully allocated for management reporting purposes to the core business sectors as more fully described in the Corporation’s 2003 Financial Annual Report.

Included in Other Activity in the second quarter of 2004 is the $24 million London space consolidation charge, as well as the $8 million gain from the sale of securities and net gains of $8 million from venture capital activities. In the first quarter of 2004, Other Activity included the $93 million gain from the sale of approximately 35% of the Corporation’s indirect investment in Shinsei Bank, the $19 million charge associated with the writedown of small non-strategic businesses that the Corporation intends to exit and a $7 million negative provision for credit losses. Included in Other Activity in the second quarter of 2003 is $21 million of gains from the sale of mortgage-backed securities and the net loss from venture capital activities of $13 million.

Nonperforming Assets

(dollar amounts in millions)		June 30, 2004			March 31, 2004			Dec. 31, 2003			June 30, 2003
Nonperforming loans:
Commercial and financial	$	12		$	48		$	49		$	57
Personal		2			2			2			3
Commercial real estate		—			1			—			—
Total nonperforming loans		14			51			51			60
Total acquired property		1			—			1			1
Total nonperforming assets	$	15		$	51		$	52		$	61
Nonperforming loans as a percentage of total loans		.20	%		.68	%		.69	%		.77	%
Nonperforming assets as a percentage of Tier I capital plus the reserve for loan losses		.55	%(a)		1.99	%		2.09	%		2.51	%

(a) Preliminary.

Total nonperforming assets totaled $15 million, a $36 million decrease from March 31, 2004, primarily due to a California-based electric and natural gas utility company that emerged from Chapter 11 bankruptcy protection in April 2004 and fully repaid all borrowings. The $14 million balance of total nonperforming loans at June 30, 2004 was comprised of $7 million to a cable television operator and $7 million of various smaller loans.

Mellon Reports Earnings

July 20, 2004

Page 17

Provision and Reserve for Credit Exposure

	Quarter ended									Six months ended
(dollar amounts in millions)		June 30, 2004			March 31, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Reserve for loan losses:
Balance at beginning of period	$	94		$	103		$	114		$	103		$	127
Net credit losses (a)		—			—			(2	)		—			(4	)
Net change in reserves from transfers and other activity		(2	)		—			—			(2	)		—
Provision for loan losses		4			(9	)		1			(5	)		(10	)
Balance at end of period	$	96		$	94		$	113		$	96		$	113
Reserve for unfunded commitments:
Balance at beginning of period	$	77		$	75		$	64		$	75		$	52
Loss on sale of commitments		—			—			—			—			(3	)
Net change in reserves from transfers and other activity		—			—			—			—			—
Provision for unfunded commitments		(4	)		2			2			(2	)		17
Balance at end of period	$	73		$	77		$	66		$	73		$	66
Total reserve for credit exposure	$	169		$	171		$	179		$	169		$	179
Reserve for loan losses:
As a percentage of total loans (b)		1.39	%		1.27	%		1.46	%
As a percentage of nonperforming loans (b)		685	%		186	%		189	%
Annualized net credit losses to average loans		—	%		—	%		.11	%		—	%		.10	%

(a) Includes credit losses resulting from loan sales. Substantially all of the net credit losses/recoveries relate to commercial and financial loans.

(b) At period-end.

There was no net provision for credit losses in the second quarter of 2004, compared with a positive provision of $3 million in the second quarter of 2003 and a negative provision of $7 million in the first quarter of 2004.

Mellon Reports Earnings

July 20, 2004

Page 18

Selected Capital Data

(dollar amounts in millions, except per share amounts; common shares in thousands)		June 30, 2004			March 31, 2004			Dec. 31, 2003			June 30, 2003
Total shareholders’ equity	$	3,749		$	3,866		$	3,702		$	3,624
Total shareholders’ equity to assets ratio		10.68	%		11.41	%		10.89	%		9.31	%
Tangible shareholders’ equity	$	1,949		$	2,073		$	1,913		$	1,908
Tangible shareholders’ equity to assets ratio (a)		5.86	%		6.46	%		5.94	%		5.13	%
Tier I capital ratio (b)		9.3	% (c)		8.69	%		8.55	%		7.87	%
Total (Tier I plus Tier II) capital ratio (b)		14.5	% (c)		13.65	%		13.46	%		12.42	%
Leverage capital ratio (b)		8.2	% (c)		8.06	%		7.92	%		7.24	%
Book value per common share	$	8.84		$	9.11		$	8.67		$	8.42
Tangible book value per common share	$	4.60		$	4.88		$	4.48		$	4.43
Closing common stock price per share	$	29.33		$	31.29		$	32.11		$	27.75
Market capitalization	$	12,436		$	13,282		$	13,712		$	11,950
Common shares outstanding		424,003			424,491			427,032			430,616

(a) Shareholders’ equity plus minority interest and less goodwill and intangible assets divided by total assets less goodwill and intangible assets. Minority interest totaled $10 million, $12 million, $13 million and $13 million, respectively. The amount of goodwill and intangible assets subtracted from shareholders’ equity and total assets is net of the tax benefit. Tax benefits related to tax deductible goodwill and intangible assets totaled $494 million, $493 million, $492 million and $451 million, respectively.

(b) Includes discontinued operations.

(c) Preliminary.

The Corporation’s lower shareholders’ and tangible shareholders’ equity to assets capital ratios at June 30, 2004 compared with March 31, 2004 reflect accumulated unrealized losses, primarily in the securities available for sale portfolio, and the impact of a larger period-end balance sheet, partially offset by earnings retention. The accumulated unrealized loss, net of tax, in the securities available for sale portfolio totaled $108 million at June 30, 2004 compared with an unrealized net gain of $73 million at March 31, 2004, which reduced the tangible shareholders’ equity to assets ratio by approximately 50 basis points. The Corporation’s period-end balance sheet was $1.7 billion higher than the average balance sheet during the second quarter of 2004, due to a quarter-end liquidity surge. The tangible shareholders’ equity to assets ratio, computed by using average tangible assets for the quarter, was 6.22% at June 30, 2004.

The higher risk-based capital ratios, which exclude the accumulated unrealized losses on securities available for sale, improved due to a lower level of risk-adjusted assets, and earnings retention. The Tier I and Total capital ratios reflect the impact of the guarantee provided to the ABN AMRO Mellon custody joint venture for securities lending activity, which at June 30, 2004 resulted in lower Tier I and Total capital ratios of approximately 110 basis points and 170 basis points, respectively.

During the second quarter of 2004, 1.5 million shares of common stock were repurchased at a purchase price of $44 million for an average share price of $29.54, which more than offset reissuances of 1.1 million common shares, primarily for employee benefit plan purposes. Share repurchases in the first six months of 2004 totaled 6.1 million common shares at a purchase price of $193 million for an average share price of $31.86, which more than offset reissuances of 3.2 million common shares, primarily for employee benefit plan purposes. At June 30, 2004, an additional 11.8 million common shares were available for repurchase under a repurchase program authorized by the Board of Directors in October 2002.

Mellon Reports Earnings

July 20, 2004

Page 19

CONDENSED CONSOLIDATED INCOME STATEMENT

Mellon Financial Corporation

	Quarter ended								Six months ended
(in millions, except per share amounts)		June 30, 2004		March 31, 2004			June 30, 2003			June 30, 2004			June 30, 2003
Noninterest revenue
Trust and investment fee revenue	$	775	$	789		$	717		$	1,564		$	1,399
Cash management revenue		79		78			71			157			143
Foreign exchange revenue		50		57			28			107			66
Financing-related revenue		30		35			38			65			70
Equity investment revenue		9		98			(18	)		107			(15	)
Other revenue		19		14			13			33			24
Total fee and other revenue		962		1,071			849			2,033			1,687
Gains on sales of securities		8		—			21			8			32
Total noninterest revenue		970		1,071			870			2,041			1,719
Net interest revenue
Interest revenue		199		194			256			393			503
Interest expense		80		80			93			160			186
Net interest revenue		119		114			163			233			317
Provision for credit losses		—		(7	)		3			(7	)		7
Net interest revenue after provision for credit losses		119		121			160			240			310
Operating expense
Staff expense		481		495			457			976			906
Professional, legal and other purchased services		110		104			108			214			200
Net occupancy expense		93		68			65			161			129
Equipment expense		53		54			50			107			104
Business development		26		25			25			51			50
Communications expense		27		28			29			55			56
Amortization of intangible assets		4		5			4			9			9
Other expense		34		52			40			86			78
Total operating expense		828		831			778			1,659			1,532
Income
Income from continuing operations before income taxes and cumulative effect of accounting change		261		361			252			622			497
Provision for income taxes		85		117			79			202			158
Income from continuing operations before cumulative effect of accounting change		176		244			173			420			339
Cumulative effect of accounting change, net of tax		—		—			—			—			(7	)
Income from continuing operations		176		244			173			420			332
Discontinued operations:
Income from operations after-tax		—		—			—			—			1
Net gain on disposals after-tax		—		1			2			1			3
Income from discontinued operations (net of applicable tax expense of $-, $1, $1, $1 and $2)		—		1			2			1			4
Net income	$	176	$	245		$	175		$	421		$	336
Earnings per share
Basic:
Income from continuing operations before cumulative effect of accounting change	$	.42	$	.58		$	.40		$	1.00		$	.79
Cumulative effect of accounting change		—		—			—			—			(.02	)
Continuing operations	$	.42	$	.58		$	.40		$	1.00		$	.77
Net income	$	.42	$	.58		$	.41		$	1.00		$	.78
Diluted:
Income from continuing operations before cumulative effect of accounting change	$	.42	$	.57		$	.40		$	.99		$	.78
Cumulative effect of accounting change		—		—			—			—			(.01	)
Continuing operations	$	.42	$	.57		$	.40		$	.99		$	.77
Net income	$	.42	$	.57		$	.41		$	.99		$	.78

Mellon Reports Earnings

July 20, 2004

Page 20

CONDENSED CONSOLIDATED BALANCE SHEET

Mellon Financial Corporation

(dollar amounts in millions)		June 30, 2004			Dec. 31, 2003			June 30, 2003
Assets
Cash and due from banks	$	3,172		$	2,602		$	3,026
Money market investments		4,725			3,694			5,739
Trading account securities		219			266			707
Securities available for sale		11,331			10,690			12,538
Investment securities (approximate fair value of $251, $308, and $431)		244			297			415
Loans		6,963			7,467			7,692
Reserve for loan losses		(96	)		(103	)		(113	)
Net loans		6,867			7,364			7,579
Premises and equipment		678			668			696
Goodwill		2,200			2,194			2,074
Other intangibles		104			100			106
Assets of discontinued operations		—			187			—
Other assets		5,554			5,921			6,064
Total assets	$	35,094		$	33,983		$	38,944
Liabilities
Deposits	$	22,502		$	20,843		$	24,495
Short-term borrowings		1,086			1,084			1,823
Other liabilities		2,494			2,936			3,624
Notes and debentures (with original maturities over one year)		4,221			4,209			4,320
Junior subordinated debentures		1,042			1,057			—
Trust-preferred securities		—			—			1,058
Liabilities of discontinued operations		—			152			—
Total liabilities		31,345			30,281			35,320
Shareholders’ equity
Common stock - $.50 par value Authorized - 800,000,000 shares, Issued – 588,661,920 shares		294			294			294
Additional paid-in capital		1,917			1,901			1,890
Retained earnings		6,179			5,934			5,705
Accumulated unrealized gain (loss), net of tax		(90	)		26			80
Treasury stock of 164,658,700; 161,629,563 and 158,046,228 shares at cost		(4,551	)		(4,453	)		(4,345	)
Total shareholders’ equity		3,749			3,702			3,624
Total liabilities and shareholders’ equity	$	35,094		$	33,983		$	38,944