-----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, Dse8sChIWd9kFWxL6w9687DswlerkzzXzO74NwpjwhYjNlGv9JekdgQ5ePUn/bym J0KSchKrYk6dOq4Ou7R/sA== 0000950132-99-000679.txt : 19990723 0000950132-99-000679.hdr.sgml : 19990723 ACCESSION NUMBER: 0000950132-99-000679 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990720 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990722 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: SEC FILE NUMBER: 001-07410 FILM NUMBER: 99668769 BUSINESS ADDRESS: STREET 1: ONE MELLON BANK CTR STREET 2: 500 GRANT ST CITY: PITTSBURGH STATE: PA ZIP: 15258-0001 BUSINESS PHONE: 4122345000 FORMER COMPANY: FORMER CONFORMED NAME: MELLON NATIONAL CORP DATE OF NAME CHANGE: 19841014 8-K 1 FORM 8-K CURRENT REPORT 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 20, 1999 MELLON BANK CORPORATION (Exact name of registrant as specified in charter) Pennsylvania 1-7410 25-1233834 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) One Mellon Bank Center 500 Grant Street Pittsburgh, Pennsylvania 15258 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code - (412) 234-5000 ITEM 5. OTHER EVENTS By press release dated July 20, 1999, Mellon Bank Corporation announced second quarter 1999 results of operations. On July 21, 1999, Mellon Bank (MD) National Association entered into an agreement with Sandy Spring National Bank of Maryland, a subsidiary of Sandy Spring Bancorp, Inc., providing for the sale by Mellon Bank (MD) of seven retail offices located in Montgomery and Anne Arundel counties, Maryland and Northern Virginia together with approximately $235 million in deposits and a portfolio of consumer and small business loans. The sale, which is subject to regulatory approval, is expected to be completed by the end of the third quarter. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Exhibit Description Number 99.1 Mellon Bank Corporation Press Release, dated July 20, 1999, announcing second quarter earnings. 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 BANK CORPORATION Date: July 21, 1999 By: /s/ Steven G. Elliott Steven G. Elliott Senior Vice Chairman and Chief Financial Officer EXHIBIT INDEX
Number Description Method of Filing 99.1 Press Release dated Filed herewith July 20, 1999
EX-99.1 2 PRESS RELEASE DATED JULY 20, 1999 EXHIBIT 99.1 [LOGO of Mellon APPEARS HERE] News Release Contact: MEDIA: ANALYSTS: ----- ----------------- Stephen K. Dishart Donald J. MacLeod Corporate Affairs (412) 234-0850 (412) 234-5601 One Mellon Bank Center Glenn R. Boyet David T. Lamar Pittsburgh, PA 15258-0001 (412) 236-0082 (412) 234-4633 - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE MELLON REPORTS RECORD SECOND QUARTER 1999 RESULTS ------------------------------------------------- . Quarterly Operating Earnings Per Share at 45 Cents, Up 13 Percent Over Last Year . Return on Common Equity is 21.4 Percent and Return on Assets is 1.90 Percent, Excluding a Net Gain from Divestitures and Nonrecurring Expenses . Quarterly Tangible Operating Earnings Per Share at 50 Cents, Up 11 Percent Over Last Year . Return on Tangible Common Equity is 41.1 Percent and Return on Tangible Assets is 2.23 Percent . Declares Regular Quarterly Common Stock Dividend
Financial Highlights Quarter ended Six months ended ---------------------------------- -------------------- (dollar amounts in millions, June 30, March 31, June 30, June 30, June 30, except per share amounts) 1999 1999 1998 1999 1998 - ------------------------------------------------------------------------------------------------------------- Operating results (a): Diluted earnings per common share (b) $ .45 $ .43 $ .40 $ .88 $ .79 Net income applicable to common stock $ 236 $ 231 $ 215 $ 467 $ 421 Return on common equity (annualized) 21.4% 20.9% 20.8% 21.2% 21.2% Return on assets (annualized) 1.90% 1.84% 1.79% 1.87% 1.84% Tangible operating results (a): Diluted earnings per common share (b) $ .50 $ .49 $ .45 $ .99 $ .89 Net income applicable to common stock $ 266 $ 260 $ 243 $ 526 $ 474 Return on common equity (annualized) 41.1% 40.4% 44.1% 40.8% 41.3% Return on assets (annualized) 2.23% 2.16% 2.12% 2.19% 2.14% Reported results: Diluted earnings per common share (b) $ .45 $ .48 $ .40 $ .93 $ .79 Net income applicable to common stock $ 238 $ 254 $ 215 $ 492 $ 421 Return on common equity (annualized) 21.6% 23.1% 20.8% 22.3% 21.2% Return on assets (annualized) 1.92% 2.03% 1.79% 1.97% 1.84% Fee revenue as a percentage of net interest and fee revenue (FTE) 69% 68% 66% 68% 66% Efficiency ratio excluding amortization of intangibles 62% 62% 63% 62% 63% - -------------------------------------------------------------------------------------------------------------
(a) Operating and tangible operating results for the second quarter of 1999 exclude a $38 million after-tax net gain from divestitures and $36 million of nonrecurring expenses after taxes. The first quarter of 1999 excludes a $49 million after-tax net gain from divestitures and a $26 million after- tax charge for the cumulative effect of a change in accounting principle. Tangible results exclude the after-tax impact of the amortization of goodwill and other intangibles from purchase acquisitions. (b) Earnings per common share have been restated to reflect the two-for-one common stock split distributed on May 17, 1999. ---more--- [LOGO OF Mellon APPEARS HERE] [LOGO OF Dreyfus APPEARS HERE] [LOGO OF THE BOSTON COMPANY APPEARS HERE] The Dreyfus Corporation and The Boston Company are companies of Mellon Bank Corporation. Mellon Reports Earnings July 20, 1999 Page 2 PITTSBURGH, July 20, 1999--Mellon Bank Corporation (NYSE: MEL) today reported record second quarter 1999 diluted operating earnings per common share of 45 cents, an increase of 13 percent compared with 40 cents per common share in the second quarter of 1998. Operating net income applicable to common stock totaled $236 million in the second quarter of 1999, an increase of 10 percent compared with $215 million in the second quarter of 1998. In the first quarter of 1999, diluted operating earnings per common share totaled 43 cents and operating net income applicable to common stock was $231 million. Earnings per common share amounts have been restated to reflect the two-for-one common stock split distributed on May 17, 1999. "We are pleased that our strong second quarter earnings show that we are already benefiting from the sharpening of our strategic focus on our high-growth, high- return businesses," said Martin G. McGuinn, Mellon chairman and chief executive officer. "We also made two significant announcements in the second quarter: ShareSuccess, our broad-based employee stock ownership program which directly links employee and shareholder interests, and that our mission-critical systems are ready for the year 2000." The Corporation also declared a regular quarterly common dividend of 20 cents per share on a post-split basis. This cash dividend is payable on Aug. 16, 1999, to shareholders of record at the close of business on July 30, 1999. Fee revenue for the second quarter of 1999 was impacted by the March 1999 sale of the credit card business. Excluding credit card revenue from the prior periods, fee revenue, which totaled $787 million in the second quarter of 1999, increased $98 million compared with the second quarter of 1998 and $16 million compared with the first quarter of 1999. Excluding the impact on fee revenue from the sale of the credit card business and the October 1998 acquisition of Newton Management Limited, fee revenue increased 10 percent in the second quarter of 1999 compared with the second quarter of 1998. This increase was led by higher investment management revenue, up 11 percent over the prior-year period excluding the Newton acquisition. The $16 million, or 8 percent annualized, increase excluding credit card revenue, compared with the first quarter of 1999, primarily resulted from higher trust and investment management revenue. Net interest revenue on a fully taxable equivalent basis for the second quarter of 1999 was $363 million, down $11 million compared with $374 million in the prior-year period and down $8 million from $371 million in the first quarter of 1999. These decreases resulted from the sale of the credit card business. Excluding the net interest revenue generated by the credit card business in the prior periods, net interest revenue increased $4 million compared with the second quarter of 1998 and $7 million compared with the first quarter of 1999, reflecting a higher level of interest free funds. ---more--- Mellon Reports Earnings July 20, 1999 Page 3 Operating expense before trust-preferred securities expense and net revenue from acquired property for the second quarter of 1999 was $809 million, up $88 million from $721 million in the second quarter of 1998 and up $49 million from $760 million in the first quarter of 1999. These increases primarily resulted from $56 million of nonrecurring expenses recorded in the second quarter of 1999 as well as the impact of acquisitions and business growth. In the second quarter of 1999, the Corporation recorded a $30 million charitable contribution expense for a contribution to the Mellon Bank Foundation, as well as $26 million of expenses primarily related to replacing obsolete equipment and closing facilities as part of Mellon's Third Century strategic initiatives. Excluding the effect of the nonrecurring expenses, acquisitions and the credit card divestiture, operating expense before trust-preferred securities expense and net revenue from acquired property increased 2 percent compared with the second quarter of 1998 and 1 percent compared with the first quarter of 1999. Credit quality expense was $5 million in the second quarter of 1999 compared with $13 million in the second quarter of 1998 and $15 million in the first quarter of 1999. The lower expense in the second quarter of 1999 compared with the prior periods primarily resulted from a lower provision for credit losses due to the sale of the credit card business, as well as higher net revenue from acquired property. Nonperforming assets totaled $142 million at June 30, 1999, compared with $161 million at March 31, 1999, and $170 million at June 30, 1998. The ratio of nonperforming assets to total loans and net acquired property was .46 percent at June 30, 1999, compared with .53 percent at March 31, 1999, and .55 percent at June 30, 1998. A broad-based financial services company with a bank at its core, Mellon Bank Corporation ranks among the nation's largest financial services companies in market capitalization. With approximately $2.4 trillion in assets under management, administration or custody, including approximately $415 billion under management, Mellon provides a full range of banking, investment and trust products and services to individuals and small, midsize and large businesses and institutions. Its mutual fund companies, The Dreyfus Corporation and Founders Asset Management in the United States, and Newton Management Limited in the United Kingdom, place Mellon as one of the world's leading managers of mutual funds. Mellon also is a global leader in benefits consulting through its Buck Consultants, Inc. subsidiary in New York. Headquartered in Pittsburgh, Mellon's principal subsidiary is Mellon Bank, N.A. We invite you to hear taped comments from Steven G. Elliott, Mellon senior vice chairman and chief financial officer, regarding the Corporation's second quarter 1999 earnings by calling (412) 236-5385 beginning at approximately 1 p.m. EDT or 30 minutes after this press release is available on the newswire on Tuesday, July 20, 1999, through 5 p.m. EDT on Tuesday, July 27, 1999. Press releases and other information about Mellon Bank Corporation and its products and services are available at www.mellon.com on the Internet. For Mellon press releases by fax, call 1 800 758-5804, identification number 552187. # # # Mellon Reports Earnings July 20, 1999 Page 4 Noninterest Revenue - -------------------
Quarter ended Six months ended ---------------------------- ------------------ June 30, March 31, June 30, June 30, June 30, (dollar amounts in millions) 1999 1999 1998 1999 1998 - ------------------------------------------------------------------------------------ Trust and investment fee revenue: Investment management: Mutual fund $ 149 $ 144 $ 120 $ 293 $ 220 Private asset 73 71 54 144 106 Institutional asset 62 63 53 125 103 - ------------------------------------------------------------------------------------ Total investment management revenue 284 278 227 562 429 Administration and custody: Institutional trust 104 100 98 204 193 Mutual fund 38 34 34 72 67 Private asset 5 5 5 10 9 - ------------------------------------------------------------------------------------ Total administration and custody revenue 147 139 137 286 269 Benefits consulting 61 56 54 117 106 Brokerage fees 16 15 11 31 21 - ------------------------------------------------------------------------------------ Total trust and investment fee revenue 508 488 429 996 825 Cash management and deposit transaction charges 70 66 65 136 126 Mortgage servicing fees 51 52 53 103 108 Foreign currency and securities trading revenue 45 43 38 88 79 Credit card fees - 18 23 18 47 Other 113 122 104 235 225 - ------------------------------------------------------------------------------------ Total fee revenue 787 789 712 1,576 1,410 Net gain from divestitures 59 83 - 142 - Gains on sales of securities - - 1 - 1 - ------------------------------------------------------------------------------------ Total noninterest revenue $ 846 $ 872 $ 713 $1,718 $1,411 - ------------------------------------------------------------------------------------ Fee revenue as a percentage of net interest and fee revenue (FTE) 69% 68% 66% 68% 66% Trust and investment fee revenue as a percentage of net interest and fee revenue (FTE) 44% 42% 39% 43% 38% - ------------------------------------------------------------------------------------ 2nd Qtr. 1999 2nd Qtr. 1999 Six Mo. 1999 over over over 2nd Qtr. 1998 1st Qtr. 1999 Six Mo. 1998 - ------------------------------------------------------------------------------------ Fee revenue growth (a) 10% 8% (b) 11% - ------------------------------------------------------------------------------------
(a) Excluding credit card fees, the effect of acquisitions and fees from the electronic filing of income tax returns. (b) Presented on an annualized basis. Mellon Reports Earnings July 20, 1999 Page 5 Fee revenue Fee revenue increased $75 million, or 11%, in the second quarter of 1999 compared with the second quarter of 1998. Fee revenue in the second quarter of 1999 was impacted by the March 1999 sale of the credit card business and the October 1998 acquisition of Newton Management Limited (Newton). Excluding credit card fees from the second quarter of 1998 and fee revenue resulting from the Newton acquisition, fee revenue increased 10% compared with the prior-year period, primarily due to higher investment management revenue. Trust and investment fee revenue increased $79 million, or 19%, compared with the second quarter of 1998. This increase reflects net new business, higher transaction volumes and an increase in the market value of assets under management, as well as revenue resulting from the Newton acquisition. Excluding the revenue from this acquisition, trust and investment fee revenue increased 12% compared with the second quarter of 1998. The $57 million increase in investment management revenue in the second quarter of 1999 compared with the prior-year period resulted from a $29 million, or 25%, increase in mutual fund management revenue, a $19 million, or 34%, increase in private asset management revenue and a $9 million, or 18%, increase in institutional asset management revenue. These increases resulted from the Newton acquisition, net new business and an increase in the market value of assets under management. The average net assets of proprietary funds managed at Dreyfus/Founders/ Newton in the second quarter of 1999 were $126 billion, up $17 billion from $109 billion in the second quarter of 1998 and up $1 billion from $125 billion in the first quarter of 1999. The increase from the prior-year period primarily resulted from increases in average net assets of equity funds and institutional taxable money market funds. Proprietary equity funds averaged $44 billion in the second quarter of 1999, compared with $33 billion in the second quarter of 1998 and $42 billion in the first quarter of 1999. Administration and custody fee revenue increased $10 million, or 7%, in the second quarter of 1999 compared with the second quarter of 1998. This increase resulted from a $6 million, or 7%, increase in institutional trust and custody revenue, primarily the result of net new business and higher transaction volumes, and a $4 million, or 8%, increase in mutual fund administration revenue. The growth within institutional trust and custody revenue was tempered by the contribution of clients to the Russell/Mellon Analytical Services Inc. joint venture. The results of this joint venture are accounted for under the equity method of accounting which reports the results of the joint venture on a net basis, rather than reporting the revenues and expenses separately. Including the institutional trust and custody gross revenue generated by the Corporation's joint ventures that provide institutional trust and custody services, institutional trust and custody revenue increased $23 million, or 22%, compared with the second quarter of 1998 and $5 million, or 4%, compared with the first quarter of 1999. Mutual fund administration and custody fees are expected to be adversely impacted Mellon Reports Earnings July 20, 1999 Page 6 beginning in the second quarter of 2000 as a long-term contract with a third party expires in May 2000. Fees from this contract totaled approximately $22 million in the second quarter of 1999. Benefits consulting fees increased $7 million, or 14%, in the second quarter of 1999 compared with the prior-year period, and increased $5 million, or 11%, compared with the first quarter of 1999, primarily resulting from new business and increased project activity with existing clients. The $5 million, or 38%, increase in brokerage fees in the second quarter of 1999 compared to the prior-year period primarily resulted from higher trading volumes. Dreyfus Brokerage Services, Inc. averaged approximately 9,800 trades per day in the second quarter of 1999, compared with approximately 9,600 trades per day in the first quarter of 1999 and 5,900 trades per day in the second quarter of 1998. The $5 million, or 7%, increase in cash management fees and deposit transaction charges in the second quarter of 1999, compared with the prior-year period, primarily resulted from higher volumes. Mortgage servicing fees decreased $2 million, or 4%, in the second quarter of 1999 compared with the second quarter of 1998. This decrease primarily resulted from a lower principal balance of mortgages serviced. Foreign currency and securities trading revenue increased $7 million, or 19%, in the second quarter of 1999 compared with the prior-year period. This increase was primarily related to growth in the number of foreign exchange customers and related volumes. The absence of credit card fees in the second quarter of 1999 resulted from the divestiture of the credit card business. Other fee revenue increased $9 million, or 8%, in the second quarter of 1999, compared with the prior-year period. This increase primarily resulted from increased revenue from many fee-based services. Other fee revenue includes the fee revenue generated by the network services transaction processing unit that was sold on June 30, 1999. This business generated $14 million and $27 million of fee revenue, respectively, in the second quarter and first six months of 1999. As discussed previously, the Corporation has entered into several joint ventures, including shareholder services and global custody joint ventures. The Corporation's joint ventures generated approximately $115 million of gross fee revenue in the second quarter of 1999, compared with approximately $100 million in the first quarter of 1999 and approximately $70 million in the second quarter of 1998. The net results of the Corporation's interest in these ventures are primarily recorded as other fee revenue in addition to trust and investment revenue, as previously discussed. Fee revenue, excluding credit card revenue, increased $16 million, or 2%, or at an annualized rate of 8%, compared with the first quarter of 1999. This increase resulted from growth in trust and investment fee revenue. Compared with the first quarter of 1999, trust and investment fee revenue increased 4%, or at an annualized rate of 17%. Mellon Reports Earnings July 20, 1999 Page 7 Fee revenue totaled $1.576 billion in the first six months of 1999, a $166 million increase compared with $1.410 billion in the first six months of 1998. This increase primarily resulted from the same factors responsible for the second quarter of 1999 increase as compared to the second quarter of 1998 as well as fee revenue resulting from the acquisition of Founders Asset Management, LLC in April of 1998. This increase was partially offset by the elimination of fees from the electronic filing of income tax returns, a service which was discontinued at the end of 1998. Excluding credit card fees, fee revenue resulting from acquisitions and fees from the electronic filing of income tax returns in the first six months of 1998, fee revenue increased 11% compared with the first six months of 1998. Net gain from divestitures In January 1999, the Corporation announced its intentions to sell its credit card business, mortgage businesses and network services transaction processing unit. In the second quarter of 1999, the Corporation recorded a $59 million pre-tax net gain from completed and pending divestitures. The after-tax gain from these transactions totaled $38 million, or $.07 per common share. The net gain primarily resulted from a gain on the sale of the network services transaction processing unit, which was completed on June 30, 1999, partially offset by an adjustment to the write-down that was recorded in the first quarter of 1999 to reflect the currently estimated sales proceeds to be received for the residential mortgage business. Including the $83 million pre-tax net gain from the first quarter of 1999, the pre-tax net gain from completed and pending divestitures totaled $142 million for the first half of 1999. The commercial mortgage transaction, which is closing on a portfolio-by-portfolio basis, is expected to be completed during the third quarter of 1999. The Corporation currently expects to complete the sale of the residential mortgage business by the end of the third quarter of 1999. Net Interest Revenue - --------------------
Quarter ended Six months ended ------------------------------ ------------------ June 30, March 31, June 30, June 30, June 30, (dollar amounts in millions) 1999 1999 1998 1999 1998 - ------------------------------------------------------------------------------------ Net interest revenue (FTE) $363 $371 $374 $734 $741 Net interest margin (FTE) 3.74% 3.78% 3.97% 3.76% 4.02% Average securities $ 6,652 $ 6,767 $ 5,596 $ 6,709 $ 5,450 Average loans $30,504 $31,467 $30,302 $30,983 $29,848 Average interest-earning assets $39,015 $39,811 $37,734 $39,410 $37,192 - ------------------------------------------------------------------------------------
Net interest revenue on a fully taxable equivalent basis in the second quarter of 1999 decreased $11 million compared with the second quarter of 1998 and $8 million compared with the first quarter of 1999. These decreases resulted from the sale of the credit card business. Excluding the net interest revenue generated by the credit card business in the prior periods, net interest revenue increased $4 million compared with Mellon Reports Earnings July 20, 1999 Page 8 the second quarter of 1998 and $7 million compared with the first quarter of 1999, reflecting a higher level of interest free funds. Net interest revenue decreased $7 million in the first six months of 1999 compared with the prior-year period. This decrease resulted from the sale of the credit card business, partially offset by a higher level of interest-free funds. Excluding the net interest revenue generated by the credit card business in the first quarter of 1999 and first half of 1998, net interest revenue increased $6 million compared with the first six months of 1998. Operating Expense - -----------------
Quarter ended Six months ended ------------------------------ ------------------ June 30, March 31, June 30, June 30, June 30, (dollar amounts in millions) 1999 1999 1998 1999 1998 - ------------------------------------------------------------------------------------ Staff expense $ 397 $ 391 $ 355 $ 788 $ 712 Professional, legal and other purchased services 73 71 67 144 128 Net occupancy expense 64 61 59 125 115 Equipment expense 63 41 41 104 80 Amortization of mortgage servicing assets and purchased credit card relationships 37 42 44 79 89 Amortization of goodwill and other intangible assets 37 37 35 74 65 Other expense 138 117 120 255 229 - ------------------------------------------------------------------------------------ Operating expense before trust-preferred securities expense and net revenue from acquired property 809 760 721 1,569 1,418 Trust-preferred securities expense 19 20 19 39 39 Net revenue from acquired property (5) - (2) (5) (3) - ------------------------------------------------------------------------------------ Total operating expense $ 823 $ 780 $ 738 $1,603 $1,454 - ------------------------------------------------------------------------------------ Average full-time equivalent staff 28,700 29,100 28,600 28,900 28,200 - ------------------------------------------------------------------------------------ Efficiency ratio (a) 65% 65% 66% 65% 66% Efficiency ratio excluding amortization of goodwill and other intangible assets 62% 62% 63% 62% 63% - ------------------------------------------------------------------------------------ 2nd Qtr. 1999 2nd Qtr. 1999 Six Mo. 1999 over over over 2nd Qtr. 1998 1st Qtr. 1999 Six Mo. 1998 - ------------------------------------------------------------------------------------ Operating expense growth (b) 2% 3% (c) 3% - ------------------------------------------------------------------------------------
(a) Operating expense before trust-preferred securities expense, net revenue from acquired property and second quarter 1999 nonrecurring expenses, as a percentage of revenue, computed on a taxable equivalent basis, excluding the net gain on divestitures and the sale of securities. (b) Operating expense before trust-preferred securities expense and net revenue from acquired property excluding nonrecurring expenses and the effect of acquisitions and the credit card divestiture. (c) Presented on an annualized basis. Mellon Reports Earnings July 20, 1999 Page 9 Operating expense before trust-preferred securities expense and net revenue from acquired property was $809 million in the second quarter of 1999, including $56 million of nonrecurring expenses. In the second quarter of 1999, the Corporation recorded a $30 million charitable contribution expense for a contribution to the Mellon Bank Foundation. This expense was classified as other expense. In addition, the Corporation recorded $26 million of expenses in connection with replacing obsolete computer equipment and closing facilities as part of Mellon's Third Century initiatives, a strategic planning process designed to drive long-term growth in the Corporation while continuing to produce high returns on capital. The Third Century expenses were recorded as $21 million of equipment expense and $5 million of net occupancy expense. Excluding these expenses, the effect of acquisitions and expenses related to the credit card business, operating expense before trust-preferred securities expense and net revenue from acquired property increased 2% compared with the second quarter of 1998 and increased 1% compared with the first quarter of 1999. Operating expense before trust-preferred securities expense and net revenue from acquired property increased $151 million in the first six months of 1999 compared with the prior-year period. This increase resulted from the same factors responsible for the second quarter of 1999 increase as compared with the second quarter of 1998. Excluding the effect of the nonrecurring expenses, acquisitions and expenses related to the credit card business, operating expense before trust-preferred securities expense and net revenue from acquired property increased 3% compared with the prior-year period. Income Taxes - ------------ The Corporation's effective tax rate for the second quarter of 1999 was 36.4% compared with 35.3% for the second quarter of 1998. Excluding the effect of divestitures and nonrecurring expenses, the effective tax rate was 36.5% for the second quarter of 1999. It is currently anticipated that the effective tax rate, excluding the effect of divestitures and nonrecurring expenses, will remain at approximately 36.5% for the remainder of 1999. Mellon Reports Earnings July 20, 1999 Page 10 Credit Quality Expense, Net Credit Losses and Reserve for Credit Losses - -----------------------------------------------------------------------
Quarter ended Six months ended ------------------------------ -------------------- June 30, March 31, June 30, June 30, June 30, (dollar amounts in millions) 1999 1999 1998 1999 1998 - ----------------------------------------------------------------------------------- Provision for credit losses $ 10 $ 15 $ 15 $ 25 $ 30 Net revenue from acquired property (5) - (2) (5) (3) - ----------------------------------------------------------------------------------- Credit quality expense $ 5 $ 15 $ 13 $ 20 $ 27 - ----------------------------------------------------------------------------------- Net credit (losses) recoveries: Credit card $ - $ (10) $ (10) $ (10) $ (19) Other consumer credit (4) (4) (1) (8) (4) Commercial real estate - - - - (4) Commercial and financial (7) (3) (2) (10) (4) - ----------------------------------------------------------------------------------- Total net credit losses $ (11) $ (17) $ (13) $ (28) $ (31) - ----------------------------------------------------------------------------------- Annualized net credit losses to average loans .13% .22% .17% .18% .21% - ----------------------------------------------------------------------------------- Reserve for credit losses at end of period $409 $410 $498 Reserve as a percentage of total loans 1.34% 1.34% 1.62% - --------------------------------------------------------------
Credit quality expense and total net credit losses for the second quarter of 1999 were lower compared with both the second quarter of 1998 and the first quarter of 1999. The reduction resulted from the sale of the credit card business as well as higher net revenue from acquired property. The $89 million decrease in the reserve for credit losses at June 30, 1999, compared with June 30, 1998, also was due to the sale of the credit card business in March 1999. In conjunction with this sale, $84 million that had been associated with the credit card portfolio was removed from the reserve for credit losses. Mellon Reports Earnings July 20, 1999 Page 11
Nonperforming Assets - -------------------- June 30, March 31, Dec. 31, June 30, (dollar amounts in millions) 1999 1999 1998 1998 - ------------------------------------------------------------------------------------ Domestic nonperforming loans: Consumer mortgage $ 43 $ 44 $ 44 $ 55 Commercial real estate 6 6 6 18 Other domestic 72 77 53 34 - ------------------------------------------------------------------------------------ Total nonperforming loans 121 127 103 107 Acquired property: Real estate acquired 24 37 40 69 Reserve for real estate acquired (4) (5) (5) (9) - ----------------------------------------------------------------------------------- Net real estate acquired 20 32 35 60 Other assets acquired 1 2 2 3 - ------------------------------------------------------------------------------------ Total acquired property 21 34 37 63 - ------------------------------------------------------------------------------------ Total nonperforming assets $142 $161 $140 $170 - ------------------------------------------------------------------------------------ Nonperforming loans as a percentage of total loans .40% .41% .32% .35% Nonperforming assets as a percentage of total loans and net acquired property .46% .53% .44% .55% - ------------------------------------------------------------------------------------
Nonperforming assets decreased $19 million compared with March 31, 1999, and $28 million compared with June 30, 1998. These decreases primarily resulted from sales of acquired property. Mellon Reports Earnings July 20, 1999 Page 12
Selected Capital Data - --------------------- (dollar amounts in millions, June 30, March 31, Dec. 31, June 30, except per share amounts) 1999 1999 1998 1998 - ------------------------------------------------------------------------------------ Total shareholders' equity $ 4,303 $ 4,502 $ 4,521 $ 4,234 Total shareholders' equity to assets ratio 8.77% 9.12% 8.90% 8.92% Tangible shareholders' equity (a) $ 2,498 $ 2,659 $ 2,641 $ 2,378 Tangible shareholders' equity to assets ratio (b) 5.29% 5.60% 5.41% 5.22% Tier I capital ratio 6.9(c) 6.89 6.53 6.51 Total (Tier I plus Tier II) capital ratio 11.2(c) 11.22 10.80 10.83 Leverage capital ratio 6.7(c) 6.60 6.73 6.65 Book value per common share (d) $ 8.37 $ 8.64 $ 8.63 $ 8.12 Tangible book value per common share (d) $ 4.86 $ 5.11 $ 5.04 $ 4.56 Closing common stock price (d) $ 36.38 $ 35.19 $ 34.38 $ 34.84 Market capitalization $18,704 $18,335 $18,007 $18,168 Common shares outstanding (000)(d) 514,211 521,064 523,846 521,416 - ------------------------------------------------------------------------------------
(a) Includes $64 million, $62 million, $60 million and $- million, respectively, of minority interest, primarily related to Newton. In addition, includes $368 million, $371 million, $373 million and $300 million, respectively, of tax benefits related to tax deductible goodwill and other intangibles. (b) Shareholders' equity plus minority interest less goodwill and other intangibles recorded in connection with purchase acquisitions divided by total assets less goodwill and other intangibles. Beginning December 31, 1998, the amount of goodwill and other intangibles subtracted from shareholders' equity and total assets is net of any tax benefit. Prior period amounts and ratios were restated. (c) Estimated. (d) Prior period amounts have been restated to reflect the two-for-one common stock split distributed on May 17, 1999. On April 20, 1999, the Corporation announced a two-for-one split of its common stock. The additional shares resulting from the split were distributed on May 17, 1999, to shareholders of record at the close of business on May 3, 1999. The increase in shareholders' equity at June 30, 1999, compared with June 30, 1998, primarily reflects earnings retention partially offset by common stock repurchases. The decrease in shareholders' equity compared with March 31, 1999, resulted from common stock repurchases partially offset by earnings retention. During the second quarter of 1999, 8 million shares of common stock were repurchased, bringing year-to-date repurchases to 13.4 million shares and leaving 6.6 million shares available for repurchase as authorized by the board of directors in January 1999. Mellon Reports Earnings July 20, 1999 Page 13 SUMMARY DATA Mellon Bank Corporation
Quarter ended Six months ended (dollar amounts in millions, June 30, June 30, except per share amounts; ------------------------ ----------------------- common shares in thousands) 1999 1998 1999 1998 - ---------------------------------- ----------- ---------- ----------- --------- Selected key data Diluted earnings per common share: Operating $.45 (a) $.40 $.88 (a) $.79 Tangible operating (b) .50 (a) .45 .99 (a) .89 Reported .45 .40 .93 .79 Net income applicable to common stock: Operating $236 (a) $215 $467 (a) $421 Tangible operating (b) 266 (a) 243 526 (a) 474 Reported 238 215 492 421 Return on common equity (annualized): Operating 21.4% (a) 20.8% 21.2% (a) 21.2% Tangible operating (b) 41.1 (a) 44.1 40.8 (a) 41.3 Reported 21.6 20.8 22.3 21.2 Return on assets (annualized): Operating 1.90% (a) 1.79% 1.87% (a) 1.84% Tangible operating (b) 2.23 (a) 2.12 2.19 (a) 2.14 Reported 1.92 1.79 1.97 1.84 Shareholders' equity to assets: Reported 8.77% 8.92% 8.77% 8.92% Tangible (b) 5.29 5.22 5.29 5.22 - -------------------------------------------------------------------------------------- Fee revenue as a percentage of net interest and fee revenue (FTE) 69% 66% 68% 66% Efficiency ratio excluding amortization of intangibles 62% (c) 63% 62% (c) 63% Average common shares and equivalents outstanding: Basic 518,273 520,990 520,846 518,226 Diluted 525,712 531,696 528,516 529,036 - --------------------------------------------------------------------------------------
- continued - Mellon Reports Earnings July 20, 1999 Page 14 SUMMARY DATA Mellon Bank Corporation (continued)
Quarter ended Six months ended June 30, June 30, --------------------- --------------------- (dollar amounts in millions) 1999 1998 1999 1998 - ---------------------------- ------- ------- ------- ------- Average balances for the period - ------------------------------- Money market investments $ 1,445 $ 1,597 $ 1,365 $ 1,654 Trading account securities 414 239 353 240 Securities 6,652 5,596 6,709 5,450 Loans 30,504 30,302 30,983 29,848 Total interest-earning assets 39,015 37,734 39,410 37,192 Total assets 49,766 47,965 50,219 47,102 Total tangible assets (b) 47,878 46,057 48,314 45,419 Deposits 33,358 33,548 33,721 33,139 Total interest-bearing liabilities 31,634 31,145 32,226 30,251 Total shareholders' equity 4,417 4,126 4,442 4,050 Tangible common shareholders' equity (b) 2,591 2,218 2,600 2,317 - -----------------------------------------------------------------------------------
(a) For the quarter ended June 30, 1999, operating and tangible operating results exclude a $38 million after-tax net gain from divestitures and $36 million of nonrecurring expenses after taxes. The first quarter of 1999 excludes a $49 million after-tax net gain from divestitures and a $26 million after-tax charge for the cumulative effect of a change in accounting principle. (b) Excludes the after-tax impact of the amortization of goodwill and other intangibles from purchase acquisitions. In addition, beginning December 31, 1998, the amount of goodwill and other identified intangibles subtracted from common equity and total assets is net of any tax benefit. Prior-period ratios and amounts were restated. (c) Also excludes $56 million of nonrecurring expenses recorded in the second quarter of 1999. Note: All calculations are based on unrounded numbers. In addition, per common share amounts and average shares outstanding have been restated to reflect the two-for-one common stock split distributed on May 17, 1999. Mellon Reports Earnings July 20, 1999 Page 15 CONDENSED CONSOLIDATED INCOME STATEMENT Mellon Bank Corporation
Quarter ended Six months ended June 30, June 30, (in millions, except ------------------ ------------------ per share amounts) 1999 1998 1999 1998 - ------------------------------------ ------- ------- ------- ------- Interest revenue - ---------------- Interest and fees on loans (loan fees of $15, $17, $31 and $34) $ 555 $ 606 $1,135 $1,183 Interest-bearing deposits with banks 9 6 18 15 Federal funds sold and securities under resale agreements 5 12 14 25 Other money market investments - 3 1 4 Trading account securities 5 3 9 7 Securities 106 93 214 183 ----- ----- ------ ------ Total interest revenue 680 723 1,391 1,417 Interest expense - ---------------- Interest on deposits 207 240 428 469 Federal funds purchased and securities under repurchase agreements 23 30 60 54 Other short-term borrowings 34 30 63 58 Notes and debentures 55 52 110 100 ----- ----- ------ ------ Total interest expense 319 352 661 681 ----- ----- ------ ------ Net interest revenue 361 371 730 736 Provision for credit losses 10 15 25 30 ----- ----- ------ ------ Net interest revenue after provision for credit losses 351 356 705 706 Noninterest revenue - ------------------- Trust and investment fee revenue 508 429 996 825 Cash management and deposit transaction charges 70 65 136 126 Mortgage servicing fees 51 53 103 108 Foreign currency and securities trading revenue 45 38 88 79 Credit card fees - 23 18 47 Other 113 104 235 225 ----- ----- ------ ------ Total fee revenue 787 712 1,576 1,410 Net gain from divestitures 59 - 142 - Gains on sales of securities - 1 - 1 ----- ----- ------ ------ Total noninterest revenue 846 713 1,718 1,411 Operating expense - ----------------- Staff expense 397 355 788 712 Professional, legal and other purchased services 73 67 144 128 Net occupancy expense 64 59 125 115 Equipment expense 63 41 104 80 Amortization of mortgage servicing assets and purchased credit card relationships 37 44 79 89 Amortization of goodwill and other intangible assets 37 35 74 65 Other expense 138 120 255 229 Trust-preferred securities expense 19 19 39 39 Net revenue from acquired property (5) (2) (5) (3) ----- ----- ------ ------ Total operating expense 823 738 1,603 1,454 ----- ----- ------ ------
- continued - Mellon Reports Earnings July 20, 1999 Page 16 CONDENSED CONSOLIDATED INCOME STATEMENT Mellon Bank Corporation (continued)
Quarter ended Six months ended (in millions, except June 30, June 30, ------------------ ------------------ per share amounts) 1999 1998 1999 1998 - ------------------------- ------- ------- ------- ------- Income before income taxes and cumulative effect of accounting change 374 331 820 663 Provision for income taxes 136 116 302 233 ----- ----- ----- ----- Income before cumulative effect of accounting change 238 215 518 430 Cumulative effect of accounting change - - (26) - ----- ----- ----- ----- Net income 238 215 492 430 Dividends on preferred stock - - - 9 ----- ----- ----- ----- Net income applicable to common stock $ 238 $ 215 $ 492 $ 421 ===== ===== ===== ===== Earnings per share (a) - ------------------ Basic net income per common share: Income before cumulative effect of accounting change $ .45 $ .41 $ .99 $ .81 Cumulative effect of accounting change - - (.05) - ----- ----- ----- ----- Net income $ .45 $ .41 $ .94 $ .81 ===== ===== ===== ===== Diluted net income per common share: Income before cumulative effect of accounting change $ .45 $ .40 $ .98 $ .79 Cumulative effect of accounting change - - (.05) - ----- ----- ----- ----- Net income $ .45 $ .40 $ .93 $ .79 ===== ===== ===== =====
- ----------------------- (a) Per common share amounts have been restated to reflect the two-for-one common stock split distributed on May 17, 1999. Mellon Reports Earnings July 20, 1999 Page 17 CONDENSED CONSOLIDATED BALANCE SHEET Mellon Bank Corporation
June 30, March 31, Dec. 31, June 30, (dollar amounts in millions) 1999 1999 1998 1998 - ---------------------------- -------- --------- -------- --------- Assets - ------ Cash and due from banks $ 3,140 $ 3,011 $ 2,926 $ 2,993 Money market investments 1,075 939 798 882 Trading account securities 318 242 193 126 Securities available for sale 5,241 5,451 5,373 3,957 Investment securities (approximate fair value of $1,332, $1,443, $1,634 and $1,899) 1,330 1,421 1,602 1,861 Loans, net of unearned discount of $70, $57, $54 and $68 30,544 30,554 32,093 30,654 Reserve for credit losses (409) (410) (496) (498) ------- ------ ------ ------ Net loans 30,135 30,144 31,597 30,156 Premises and equipment 552 561 569 559 Acquired property, net of reserves of $4, $5, $5 and $9 21 34 37 63 Goodwill and other intangibles 2,237 2,276 2,313 2,156 Mortgage servicing assets and purchased credit card relationships 1,069 1,098 1,132 1,010 Other assets 3,970 4,207 4,237 3,685 ------- ------- ------- ------- Total assets $49,088 $49,384 $50,777 $47,448 ======= ======= ======= ======= Liabilities - ----------- Deposits in domestic offices $29,574 $30,419 $31,269 $30,230 Deposits in foreign offices 3,401 2,929 3,114 2,967 Short-term borrowings 4,765 4,023 4,942 3,901 Other liabilities 2,751 3,117 2,637 2,122 Notes and debentures (with original maturities over one year) 3,303 3,403 3,303 3,003 ------- ------- ------- ------- Total liabilities 43,794 43,891 45,265 42,223 Trust-preferred securities - -------------------------- Guaranteed preferred beneficial interests in Corporation's junior subordinated deferrable interest debentures 991 991 991 991 Shareholders' equity - -------------------- Common stock - $.50 par value Authorized - 800,000,000 shares Issued - 588,661,920 (a); 294,330,960; 294,330,960; and 294,330,960 shares 294 147 147 147 Additional paid-in capital 1,765 1,907 1,887 1,879 Retained earnings 3,587 3,468 3,353 3,124 Accumulated unrealized (loss) gain, net of tax (90) (15) 25 19 Treasury stock of 74,450,718 (a); 33,798,582; 32,407,960; and 33,623,356 shares at cost (1,253) (1,005) (891) (935) ------- ------- ------- ------- Total shareholders' equity 4,303 4,502 4,521 4,234 ------- ------- ------- ------- Total liabilities, trust- preferred securities and shareholders' equity $49,088 $49,384 $50,777 $47,448 ======= ======= ======= =======
- ----------------------- (a) Reflects the two-for-one common stock split distributed on May 17, 1999. Mellon Reports Earnings July 20, 1999 Page 18 SUMMARY DATA Mellon Bank Corporation Five Quarter Trend
(dollar amounts in millions, Quarter ended -------------------------------------------------------------- except per share amounts; June 30, March 31, Dec. 31, Sept. 30, June 30, common shares in thousands) 1999 1999 1998 1998 1998 - ------------------------------------------------------------------------------------------- Selected key data - ----------------- Diluted earnings per common share: Operating $.45 (a) $.43 (a) $.42 $.41 $.40 Tangible operating (b) .50 (a) .49 (a) .47 .47 .45 Reported .45 .48 .42 .41 .40 Net income applicable to common stock: Operating $236 (a) $231 (a) $222 $218 $215 Tangible operating (b) 266 (a) 260 (a) 252 246 243 Reported 238 254 222 218 215 Return on common equity (annualized): Operating 21.4% (a) 20.9% (a) 20.1% 20.3% 20.8% Tangible operating (b) 41.1 (a) 40.4 (a) 40.2 40.2 44.1 Reported 21.6 23.1 20.1 20.3 20.8 Return on assets (annualized): Operating 1.90% (a) 1.84% (a) 1.76% 1.81% 1.79% Tangible operating (b) 2.23 (a) 2.16 (a) 2.07 2.11 2.12 Reported 1.92 2.03 1.76 1.81 1.79 Shareholders' equity to assets: Reported 8.77% 9.12% 8.90% 9.03% 8.92% Tangible (b) 5.29 5.60 5.41 5.47 5.22 - -------------------------------------------------------------------------------------------- Fee revenue as a percentage of net interest and fee revenue (FTE) 69% 68% 68% 66% 66% Efficiency ratio excluding amortization of intangibles 62% (c) 62% 65% 62% 63% Average common shares and equivalents outstanding: Basic 518,273 523,448 523,082 522,156 520,990 Diluted 525,712 531,288 531,496 531,548 531,696 - --------------------------------------------------------------------------------------------
- continued - Mellon Reports Earnings July 20, 1999 Page 19 SUMMARY DATA Mellon Bank Corporation Five Quarter Trend (continued)
Quarter ended -------------------------------------------------------- June 30, March 31, Dec. 31, Sept. 30, June 30, (dollar amounts in millions) 1999 1999 1998 1998 1998 - -------------------------------------------------------------------------------------- Average balances for the period - ------------------------------- Money market investments $ 1,445 $ 1,286 $ 1,525 $ 1,351 $ 1,597 Trading account securities 414 291 258 266 239 Securities 6,652 6,767 6,141 5,754 5,596 Loans 30,504 31,467 31,503 30,426 30,302 Total interest-earning assets 39,015 39,811 39,427 37,797 37,734 Total assets 49,766 50,677 50,110 47,937 47,965 Total tangible assets (b) 47,878 48,755 48,153 46,096 46,057 Deposits 33,358 34,087 34,492 33,399 33,548 Total interest-bearing liabilities 31,634 32,825 32,406 31,104 31,145 Total shareholders' equity 4,417 4,469 4,391 4,265 4,126 Tangible shareholders' equity (b) 2,591 2,608 2,487 2,424 2,218 - --------------------------------------------------------------------------------------
(a) For the quarter ended June 30, 1999, operating and tangible operating results exclude a $38 million after-tax net gain from divestitures and $36 million of nonrecurring expenses after taxes. The first quarter of 1999 excludes a $49 million after-tax net gain from divestitures and a $26 million after-tax charge for the cumulative effect of a change in accounting principle. (b) Excludes the after-tax impact of the amortization of goodwill and other intangibles from purchase acquisitions. In addition, beginning December 31, 1998, the amount of goodwill and other identified intangibles subtracted from common equity and total assets is net of any tax benefit. Prior-period ratios and amounts were restated. (c) Also excludes $56 million of nonrecurring expenses recorded in the second quarter of 1999. Note: All calculations are based on unrounded numbers. In addition, per common share amounts and average shares outstanding have been restated to reflect the two-for-one common stock split distributed on May 17, 1999. Mellon Reports Earnings July 20, 1999 Page 20 CONDENSED CONSOLIDATED INCOME STATEMENT Mellon Bank Corporation Five Quarter Trend
Quarter ended --------------------------------------------------- (in millions, except per June 30, March 31, Dec. 31, Sept. 30, June 30, share amounts) 1999 1999 1998 1998 1998 - ------------------------------------ --------- --------- -------- --------- -------- Interest revenue - ---------------- Interest and fees on loans (loan fees of $15, $16, $18, $21 and $17) $ 555 $ 580 $ 614 $ 616 $ 606 Interest-bearing deposits with banks 9 9 10 8 6 Federal funds sold and securities under resale agreements 5 9 12 12 12 Other money market investments - 1 1 1 3 Trading account securities 5 4 4 4 3 Securities 106 108 98 95 93 --------- --------- -------- --------- -------- Total interest revenue 680 711 739 736 723 Interest expense - ---------------- Interest on deposits 207 221 243 248 240 Federal funds purchased and securities under repurchase agreements 23 37 34 35 30 Other short-term borrowings 34 29 29 27 30 Notes and debentures 55 55 53 51 52 --------- --------- -------- --------- -------- Total interest expense 319 342 359 361 352 --------- --------- -------- --------- -------- Net interest revenue 361 369 380 375 371 Provision for credit losses 10 15 15 15 15 --------- --------- -------- --------- -------- Net interest revenue after provision for credit losses 351 354 365 360 356 Noninterest revenue - ------------------- Trust and investment fee revenue 508 488 465 432 429 Cash management and deposit transaction charges 70 66 70 66 65 Mortgage servicing fees 51 52 48 44 53 Foreign currency and securities trading revenue 45 43 47 39 38 Credit card fees - 18 22 23 23 Other 113 122 147 108 104 --------- --------- -------- --------- -------- Total fee revenue 787 789 799 712 712 Net gain from divestitures 59 83 - - - Gains on sales of securities - - - - 1 --------- --------- -------- --------- -------- Total noninterest revenue 846 872 799 712 713 Operating expense - ----------------- Staff expense 397 391 386 358 355 Professional, legal and other purchased services 73 71 97 72 67 Net occupancy expense 64 61 63 59 59 Equipment expense 63 41 59 42 41 Amortization of mortgage servicing assets and purchased credit card relationships 37 42 47 43 44 Amortization of goodwill and other intangible assets 37 37 37 35 35 Other expense 138 117 116 108 120 Trust-preferred securities expense 19 20 20 20 19 Net revenue from acquired property (5) - - (3) (2) --------- --------- -------- --------- -------- Total operating expense 823 780 825 734 738 --------- --------- -------- --------- --------
- continued - Mellon Reports Earnings July 20, 1999 Page 21 CONDENSED CONSOLIDATED INCOME STATEMENT Mellon Bank Corporation Five Quarter Trend (continued)
Quarter ended -------------------------------------------------- (in millions, except per June 30, March 31, Dec. 31, Sept. 30, June 30, share amounts) 1999 1999 1998 1998 1998 - -------------------------- -------- --------- -------- --------- -------- Income before income taxes and cumulative effect of accounting change 374 446 339 338 331 Provision for income taxes 136 166 117 120 116 -------- --------- -------- --------- -------- Income before cumulative effect of accounting change 238 280 222 218 215 Cumulative effect of accounting change - (26) - - - -------- --------- -------- --------- -------- Net income 238 254 222 218 215 Dividends on preferred stock - - - - - -------- --------- -------- --------- -------- Net income applicable to common stock $ 238 $ 254 $ 222 $ 218 $ 215 ======== ========= ======== ========= ======== Earnings per share (a) - ------------------ Basic net income per common share: Income before cumulative effect of accounting change $ .45 $ .54 $ .42 $ .42 $ .41 Cumulative effect of accounting change - (.05) - - - ======== ========= ======== ========= ======== Net income $ .45 $ .49 $ .42 $ .42 $ .41 ======== ========= ======== ========= ======== Diluted net income per common share: Income before cumulative effect of accounting change $ .45 $ .53 $ .42 $ .41 $ .40 Cumulative effect of accounting change - (.05) - - - ======== ========= ======== ========= ======== Net income $ .45 $ .48 $ .42 $ .41 $ .40 ======== ========= ======== ========= ========
________________________ (a) Per common share amounts have been restated to reflect the two-for-one common stock split distributed on May 17, 1999. -----END PRIVACY-ENHANCED MESSAGE-----