Quarterly Earnings Summary for 2006 Appendix

EX-99.2 3 dex992.htm QUARTERLY EARNINGS SUMMARY FOR 2006 APPENDIX Quarterly Earnings Summary for 2006 Appendix

Exhibit 99.2

MELLON FINANCIAL CORPORATION

Notes to Financial Trends

Notes:

During the fourth quarter of 2006, the following impacted the reporting of our business sector results:

Mellon signed an agreement to sell its venture capital group, Mellon Ventures, and applied discontinued operations accounting to this business.

A segment of our Working Capital Solutions business line was moved from the PS&IS sector to Business Exits in the Other sector based upon our intention not to renew certain contracts with agencies of the Federal government that expire in 2007.

Our asset administration business in Brazil was moved to the Mellon Asset Management sector from Business Exits in the Other sector as a result of a decision to strategically grow the business.

Accordingly, the financial statements for these sectors for all periods have been restated.

During the fourth quarter of 2006, we completed the previously announced acquisition of Walter Scott & Partners. The financial results are included in the Mellon Asset Management sector.

During the third quarter of 2006, we announced an agreement to sell our insurance premium financing business to BB&T and applied discontinued operations accounting for this business.

During the second quarter of 2006, we completed the formation of the previously announced 50:50 joint venture with WestLB AG, WestLB Mellon Asset Management. The financial results are included in the Mellon Asset Management sector.

During the first quarter of 2006, we moved the financial results of Mellon 1st Business Bank, National Association (N.A.), to the Private Wealth Management sector from the Other sector (previously the Treasury Services/Other Activity sector). This change reflects the similar nature of products and clients of Mellon 1st Business Bank with other reporting units in the Private Wealth Management sector, as well as our organizational structure, as the management of Mellon 1st Business Bank reports to the head of Private Wealth Management.

Prior period sector data may reflect immaterial reclassifications resulting from minor changes made to be consistent with current period presentation.

Summations may not equal due to rounding. As a result of this rounding convention, there may exist immaterial differences between the sector trends data versus the sector trends data subsequently filed on Form 10-K.

Discontinued Operations Accounting -

The income/(loss) and average assets from discontinued operations accounting have not been allocated to any sector.

Average Assets -

Where average deposits in a business sector are greater than average loans, average assets include an allocation of investment securities equal to the difference. Consolidated average assets include average assets of discontinued operations.

Return on Common Equity/Pretax Operating Margin -

Ratios are presented on a continuing operations basis. Quarterly return on common equity ratios are annualized.

Page 1

MELLON FINANCIAL CORPORATION

CONSOLIDATED RESULTS - 12 Quarter Trend


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	2004												2005												2006
	1st Qtr (a)			2nd Qtr (b)			3rd Qtr			4th Qtr (c)			1st Qtr (d)			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr (e)			2nd Qtr			3rd Qtr			4th Qtr (f)
Revenue:
Investment management		366			369			368			395			402			417			438			447			466			489			518			601
Performance fees		39			17			11			60			27			26			41			77			58			48			56			196

Total investment management		405			386			379			455			429			443			479			524			524			537			574			797
Distribution and service		66			67			68			68			71			74			82			90			98			108			107			102
Institutional trust and custody		138			137			132			145			150			160			172			188			194			206			207			218
Securities lending revenue		18			24			16			18			24			33			25			26			30			38			26			26
Payment solutions & investor services		145			149			133			138			134			141			122			127			121			124			119			118
Other fee revenue		233			140			114			130			332			143			145			142			161			153			140			160

Total fee and other revenue		1,005			903			842			954			1,140			994			1,025			1,097			1,128			1,166			1,173			1,421
Net interest revenue		114			121			115			120			118			128			117			121			125			117			123			114

Total revenue		1,119			1,024			957			1,074			1,258			1,122			1,142			1,218			1,253			1,283			1,296			1,535
Credit quality expense		(7	)		(2	)		(1	)		(4	)		(2	)		3			12			4			1			(3	)		(1	)		5
Amortization of intangible assets		4			5			4			6			6			7			7			7			7			7			7			23
Other operating expenses		739			743			705			794			782			807			850			896			947			951			956			1,169

Total operating expenses		743			748			709			800			788			814			857			903			954			958			963			1,192
Income from continuing operations before income taxes (benefits)		383			278			249			278			472			305			273			311			298			328			334			338
Income taxes (benefits)		135			98			80			94			172			108			87			110			105			105			116			40

Income from continuing operations		248			180			169			184			300			197			186			201			193			223			218			298
Income from discontinued operations after-tax		(3	)		(4	)		14			8			(45	)		(72	)		8			7			14			9			4			(61	)

Net income (loss)	$	245		$	176		$	183		$	192		$	255		$	125		$	194		$	208		$	207		$	232		$	222		$	237

EPS from Continuing Operations	$	0.58		$	0.43		$	0.40		$	0.43		$	0.71		$	0.47		$	0.45		$	0.48		$	0.47		$	0.54		$	0.52		$	0.72
Average loans (g)	$	7,489		$	7,491		$	7,047		$	7,205		$	6,882		$	7,339		$	7,421		$	7,133		$	6,758		$	6,625		$	6,684		$	6,884
Average assets (h)	$	33,222		$	33,377		$	33,447		$	35,951		$	36,869		$	36,436		$	37,907		$	37,988		$	37,515		$	39,104		$	41,447		$	41,362
Average deposits	$	19,227		$	19,776		$	20,295		$	22,083		$	23,035		$	22,322		$	23,566		$	23,905		$	23,569		$	24,084		$	27,905		$	26,551
Average common equity	$	3,769		$	3,753		$	3,822		$	3,983		$	4,178		$	4,087		$	4,109		$	4,114		$	4,157		$	4,182		$	4,312		$	4,673
Average Tier I preferred equity	$	1,026		$	1,011		$	1,010		$	1,047		$	1,038		$	1,037		$	1,032		$	1,024		$	1,022		$	1,015		$	1,072		$	1,403
Market value of assets under management at period end (in billions)	$	679		$	679		$	670		$	707		$	729		$	738		$	766		$	781		$	808		$	870		$	918		$	995
Market value of assets under administration or custody at period end (in billions)	$	2,824		$	2,856		$	2,978		$	3,233		$	3,293		$	3,450		$	3,777		$	3,908		$	4,125		$	4,213		$	4,380		$	4,491
Return on common equity		26	%		19	%		18	%		18	%		29	%		19	%		18	%		19	%		19	%		21	%		20	%		25	%
Pretax operating margin		34	%		27	%		26	%		26	%		38	%		27	%		24	%		26	%		24	%		26	%		26	%		22	%
Pretax operating margin (excluding items in footnotes a to f)		30	%		29	%		26	%		24	%		27	%		27	%		24	%		26	%		25	%		26	%		26	%		26	%

(a)

The first quarter of 2004 includes a pre-tax gain of $93 million from the sale of approximately 35% of the Corporation’s investment in Shinsei Bank.

Also included in the first quarter of 2004 is a pre-tax charge of $19 million associated with a writedown of two small businesses, one of which was sold in the third quarter of 2004.

(b)

The second quarter of 2004 includes a $24 million pre-tax charge relating to vacating 10 leased locations in London and moving into the new Mellon Financial Centre in London.

(c)

The fourth quarter of 2004 includes a $17 million pre-tax occupancy expense reversal relating to the reduction of a sublease loss reserve following the execution of a new lease on our Pittsburgh headquarters building.

(d)

The first quarter of 2005 includes a pre-tax gain of $197 million from the sale of our remaining investment in Shinsei Bank, a $10 million pre-tax charge (included in other expense) for the early extinguishment of debt, and $5 million of additional expense ($2 million of occupancy expense and $3 million of other expenses) related to charges recorded in 2004 for the move to the new Mellon Financial Centre in London and the writedown of a small business (see footnote a).

(e)

The first quarter of 2006 includes a $19 million pre-tax charge in connection with payments, awards and benefits payable to Mellon’s former chairman and chief executive officer, pursuant to his employment agreement.

(f)

The fourth quarter of 2006 includes $26 million in severance, $16 million of impairment charges, $11 million in merger-related expenses and $6 million in additional occupancy reserves. In addition, the income from continuing operations includes $74 million of tax benefits primarily related to a reversal of deferred tax liabilities due to management’s decision to indefinitely reinvest earnings of certain foreign subsidiaries in accordance with APB opinion No. 23.

(g)

Consolidated average loans include average loans of discontinued operations of $597 million, $714 million, $506 million and $571 million for the first, second, third and fourth quarters of 2004; $397 million, $749 million, $802 million and $779 million for the first, second, third and fourth quarters of 2005; $779 million, $753 million, $832 million and $784 million for the first, second, third and fourth quarters of 2006.

(h)

Consolidated average assets include average assets of discontinued operations of $1,850 million, $1,930 million, $1,760 million and $1,783 million for the first, second, third and fourth quarters of 2004; $1,586 million, $1,616 million, $1,456 million and $1,427 million for the first, second, third and fourth quarters of 2005; $1,408 million, $1,381 million, $1,408 million and $1,320 million for the first, second, third and fourth quarters of 2006.

Page 2

MELLON FINANCIAL CORPORATION

CONTINUING OPERATIONS - 12 Quarter Trend

NONINTEREST REVENUE


(dollar amounts in millions unless otherwise noted)	2004												2005												2006
(dollar amounts in millions unless otherwise noted)	1st Qtr (a)			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr (a)			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr
Investment management	$	366		$	369		$	368		$	395		$	402		$	417		$	438		$	447		$	466		$	489		$	518		$	601
Performance fees		39			17			11			60			27			26			41			77			58			48			56			196

Total investment management		405			386			379			455			429			443			479			524			524			537			574			797
Distribution and service		66			67			68			68			71			74			82			90			98			108			107			102
Institutional trust & custody		156			161			148			163			174			193			197			214			224			244			233			244
Payment solutions & investor services		145			149			133			138			134			141			122			127			121			124			119			118
Foreign exchange trading		57			50			38			41			54			50			52			46			58			68			53			60
Financing-related and Equity Investment		127			28			26			33			230			35			31			30			34			29			24			27
Other		37			44			40			46			38			45			53			56			60			47			51			64

Total fee and other revenue		993			885			832			944			1,130			981			1,016			1,087			1,119			1,157			1,161			1,412
Gains on the sales of securities		—			8			—			—			—			—			1			—			—			—			3			—

Total noninterest revenue (non-FTE)	$	993		$	893		$	832		$	944		$	1,130		$	981		$	1,017		$	1,087		$	1,119		$	1,157		$	1,164		$	1,412
FTE impact		12			10			10			10			10			13			8			10			9			9			9			9

Total noninterest revenue (FTE)	$	1,005		$	903		$	842		$	954		$	1,140		$	994		$	1,025		$	1,097		$	1,128		$	1,166		$	1,173		$	1,421
Fee and other revenue as a percentage of fee and net interest revenue (FTE) (a)		90	%		89	%		88	%		89	%		91	%		89	%		90	%		90	%		90	%		91	%		90	%		93	%
Market value of assets under management at period end (in billions)	$	679		$	679		$	670		$	707		$	729		$	738		$	766		$	781		$	808		$	870		$	918		$	995
Market value of assets under administration or custody at period end (in billions)	$	2,824		$	2,856		$	2,978		$	3,233		$	3,293		$	3,450		$	3,777		$	3,908		$	4,125		$	4,213		$	4,380		$	4,491
*S&P 500 Index - period end*		1126			1141			1115			1212			1181			1191			1229			1248			1295			1270			1336			1418
*S&P 500 Index - daily average*		1133			1123			1104			1163			1192			1182			1224			1231			1284			1281			1288			1389

(a)

The first quarter of 2004 and 2005 includes gains from the sale of the Corporation’s investment in Shinsei Bank of $93 million and $197 million, respectively.

Excluding these gains, fee and other revenue as a percentage of fee and net interest revenue (FTE) would have totaled 89% in the first quarter of 2005 and 90% in the first quarter of 2004.

Page 3

MELLON FINANCIAL CORPORATION

CONTINUING OPERATIONS - 12 Quarter Trend

Average Balances (a)

2004

2005

2006

(dollar amounts in millions)

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Average assets:

Investment Securities:

Fixed rate

6,294

6,924

7,001

6,448

6,231

6,001

5,772

5,704

5,557

5,444

5,319

5,196

Adjustable rate

1,156

1,272

1,426

2,023

2,490

2,791

3,053

3,355

3,645

3,584

3,360

3,161

Floating rate

2,786

2,771

2,731

3,509

4,207

4,847

6,315

7,040

7,595

8,366

9,164

9,421

Obligations of states and political subdivisions

543

560

631

690

749

794

819

829

814

771

749

722

Other (b)

190

182

Total investment securities

10,969

11,709

11,857

12,743

13,745

14,504

16,029

16,982

17,666

18,221

18,659

18,568

Trading account securities

352

268

228

248

308

294

309

283

309

439

456

480

Money Market Assets

2,959

2,678

3,290

4,143

4,234

3,293

2,700

2,812

2,317

2,897

4,903

3,774

Loans, net of unearned discount

6,892

6,778

6,541

6,634

6,483

6,589

6,618

6,354

5,979

5,872

5,852

6,101

Total interest-earning assets

21,172

21,433

21,916

23,768

24,770

24,680

25,656

26,431

26,271

27,429

29,870

28,923

Total non interest-earning assets (c)

12,009

12,010

11,620

12,195

12,145

11,829

12,323

11,726

11,416

11,935

11,801

12,549

Total Assets

33,181

33,443

33,536

35,963

36,915

36,509

37,979

38,157

37,687

39,364

41,671

41,472

Average liabilities and shareholders’ equity:

Deposits in domestic offices

7,695

8,041

8,655

9,164

9,653

9,298

9,760

10,087

9,748

9,673

13,328

13,157

Deposits in foreign offices

4,865

4,760

4,664

5,598

6,256

6,004

6,395

5,926

5,547

6,049

6,589

5,987

Total interest-bearing deposits

12,560

12,801

13,319

14,762

15,909

15,302

16,155

16,013

15,295

15,722

19,917

19,144

Federal funds purchased and securities under repurchase agreements

1,476

1,478

1,155

960

978

1,627

2,135

1,763

1,765

2,394

1,376

1,560

Other funds borrowed

677

520

370

503

421

442

411

438

468

590

144

297

Long term debt

5,222

5,253

5,264

5,436

5,511

5,293

4,836

4,692

4,633

4,584

4,669

5,042

Funding of disc ops

(1,685

)

(1,797

)

(1,619

)

(1,627

)

(1,428

)

(1,611

)

(1,418

)

(1,390

)

(1,374

)

(1,343

)

(1,373

)

(1,283

)

Total interest-bearing liabilities

18,250

18,255

18,489

20,034

21,391

21,053

22,119

21,516

20,787

21,947

24,733

24,760

Total noninterest-bearing deposits

6,636

6,943

6,949

7,294

7,094

7,012

7,411

7,892

8,274

8,362

7,988

7,407

Other liabilities (c)

4,553

4,449

4,218

4,644

4,223

4,310

4,294

4,525

4,357

4,704

4,492

4,560

Total liabilities

29,439

29,647

29,656

31,972

32,708

32,375

33,824

33,933

33,418

35,013

37,213

36,727

Shareholders’ equity

3,742

3,796

3,880

3,991

4,207

4,134

4,155

4,224

4,269

4,351

4,458

4,745

Total liabilities and shareholders’ equity

33,181

33,443

33,536

35,963

36,915

36,509

37,979

38,157

37,687

39,364

41,671

41,472

(a)

Amounts and yields exclude adjustments for fair value and the related deferred tax effect required by SFAS No. 115. Prior periods calculated on a continuing operations basis even though the balance sheet, in accordance with GAAP, is not restated for discontinued operations.

(b)

Balances include Federal Reserve Stock, Preferred Stock, Loan Securitizations and other Investment Securities.

(c)

Includes assets and liabilities of discontinued operations.

Page 4

MELLON FINANCIAL CORPORATION

CONTINUING OPERATIONS - 12 Quarter Trend

Interest Yields/Rates (a)

2004

2005

2006

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Average Rates:

Investment Securities:

Fixed rate

4.46

4.32

4.20

4.22

4.34

4.31

4.30

4.39

4.41

4.37

Adjustable rate

3.26

3.23

3.17

3.37

3.57

3.71

3.81

3.93

4.21

4.27

4.31

4.45

Floating rate

1.74

1.77

2.19

2.60

3.17

3.64

4.03

4.52

5.02

5.36

5.67

Obligations of states and political subdivisions

7.35

7.26

7.10

7.02

7.13

6.97

6.80

6.69

6.88

6.70

6.59

6.52

Other (b)

Total investment securities

3.88

3.81

3.78

3.83

4.03

4.12

4.25

4.48

4.78

4.94

5.10

5.14

Trading account securities

2.50

2.09

1.91

1.96

1.75

2.24

2.21

2.16

1.86

2.19

2.32

2.41

Money market assets

2.40

2.49

2.74

2.90

2.93

2.98

3.11

3.67

3.80

4.12

4.20

4.33

Loans, net of unearned discount

4.12

4.20

4.06

4.60

4.91

6.01

5.60

5.85

6.17

6.51

6.97

7.02

Total interest-earning assets

3.73

3.75

3.69

3.86

4.05

4.45

4.70

4.97

5.15

5.28

5.39

Deposits in domestic offices

0.89

1.06

1.36

1.64

1.98

2.39

2.79

3.18

3.61

4.06

3.96

Deposits in foreign offices

1.66

1.46

1.71

2.08

2.18

2.43

2.52

3.13

3.24

3.59

3.44

3.72

Total interest-bearing deposits

1.19

1.10

1.29

1.63

1.85

2.16

2.44

2.92

3.20

3.60

3.86

3.88

Federal funds purchased and securities under repurchase agreements

0.83

0.81

1.12

1.55

2.05

2.46

3.19

3.62

3.74

4.75

4.45

4.67

Other funds borrowed

3.39

3.64

4.89

4.09

1.97

3.00

3.34

3.96

4.34

4.80

5.23

5.02

Long term debt

3.63

3.60

3.72

3.94

4.28

4.53

5.01

5.47

5.90

6.21

6.53

6.42

Funding of disc ops (c)

Total interest-bearing liabilities

1.82

1.72

1.88

2.21

2.47

2.77

3.07

3.54

3.85

4.29

4.40

4.47

Rates

Yield on total interest-earning assets

3.73

3.75

3.69

3.86

4.05

4.45

4.70

4.97

5.15

5.28

5.39

Cost of funds supporting interest-earning assets

1.57

1.47

1.59

1.86

2.11

2.36

2.64

2.89

3.04

3.44

3.64

3.83

Net interest Margin:

Taxable equivalent basis

2.16

2.28

2.10

2.00

1.94

2.09

1.81

1.93

1.71

1.64

1.56

Without taxable equivalent increments

2.08

2.21

2.02

1.93

1.86

2.01

1.74

1.86

1.65

1.58

1.51

(a)

(b)

Yields are not meaningful.

(c)

Rates are not meaningful as the reduction in interest expense represents the cost of allocated funding of the assets of discontinued operations.

Page 5

MELLON FINANCIAL CORPORATION

CONTINUING OPERATIONS - 12 Quarter Trend

OPERATING EXPENSE


	2004								2005								2006
(dollar amounts in millions)	1st Qtr (b)		2nd Qtr (c)		3rd Qtr		4th Qtr (d)		1st Qtr (e)		2nd Qtr		3rd Qtr		4th Qtr		1st Qtr (f)		2nd Qtr		3rd Qtr		4th Qtr (g)
Staff:
Compensation	$	229	$	233	$	237	$	258	$	243	$	248	$	254	$	260	$	268	$	270	$	279	$	309
Incentive (a)		100		88		83		120		105		114		124		133		170		145		160		248
Employee benefits		54		52		51		51		66		61		67		65		76		71		73		78

Total staff		383		373		371		429		414		423		445		458		514		486		512		635
Professional, legal and other purchased services		87		98		90		108		99		109		113		123		115		125		131		145
Distribution and servicing		79		80		80		80		81		90		100		106		115		126		122		140
Net occupancy		55		78		57		42		58		57		59		59		59		58		51		68
Equipment		44		42		41		41		41		43		44		46		44		44		42		49
Business development		21		22		20		23		20		24		23		28		25		28		25		36
Communications		22		21		19		20		25		18		19		21		23		22		20		20
Amortization of intangible assets		4		5		4		6		6		7		7		7		7		7		7		23
Other		48		29		27		51		44		43		47		55		52		62		53		76

Total operating expense	$	743	$	748	$	709	$	800	$	788	$	814	$	857	$	903	$	954	$	958	$	963	$	1,192
Employees at period-end		15,600		15,500		15,400		15,500		15,700		16,000		16,700		16,500		16,600		16,700		16,700		16,800

(a)

Effective Jan. 1, 2003, Mellon 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 for each of the quarters of 2004. It totaled $6 million, $6 million, $7 million and $6 million for each of the quarters of 2005. It totaled $11 million for the first quarter of 2006, including $3 million to Mellon’s former chairman and chief executive officer, pursuant to his employment agreement, $9 million for the second quarter of 2006, $8 million for both the 3rd quarter and the 4th quarter of 2006.

(b)

The first quarter of 2004 includes a pre-tax charge of $19 million associated with a writedown of two small businesses, one of which was sold in the third quarter of 2004.

(c)

The second quarter of 2004 includes a $24 million pre-tax charge ($23 million - occupancy, $1 million - other) relating to vacating 10 leased locations in London and moving into the new Mellon Financial Centre in London.

(d)

(e)

The first quarter of 2005 includes a $10 million pre-tax charge (included in other expense) for the early extinguishment of debt and $5 million of additional expense ($2 million of occupancy expense and $3 million of other expenses) related to charges recorded in 2004 for the move to the new Mellon Financial Centre in London and the writedown of a small business (see footnote b).

(f)

(g)

The fourth quarter of 2006 includes $26 million in severance, $16 million of impairment charges, $11 million in merger-related expenses and $6 million in additional occupancy reserves.

Page 6

MELLON FINANCIAL CORPORATION

ASSETS UNDER MANAGEMENT/ ADMINISTRATION OR CUSTODY - 12 Quarter Trend


(dollar amounts in billions unless otherwise noted)	2004												2005												2006
(dollar amounts in billions unless otherwise noted)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr
Market value of assets under management at period end
Institutional	$	421		$	421		$	419		$	443		$	463		$	469		$	490		$	501		$	527		$	585		$	607		$	667
Mutual Funds		200			199			191			200			203			205			212			216			214			219			244			251
Private Client		58			59			60			64			63			64			64			64			67			66			67			77

Total market value of assets under management		679			679			670			707			729			738			766			781			808			870			918			995
Composition of assets under management at period end
Equity		36	%		36	%		37	%		39	%		37	%		37	%		37	%		37	%		37	%		35	%		35	%		41	%
Fixed Income		20	%		21	%		20	%		20	%		20	%		19	%		18	%		18	%		19	%		21	%		20	%		19	%
Money Market		24	%		22	%		21	%		21	%		19	%		20	%		20	%		20	%		19	%		20	%		21	%		19	%
Securities lending cash collateral		11	%		12	%		13	%		12	%		15	%		16	%		16	%		15	%		15	%		13	%		14	%		13	%
Overlay and alternative investments		9	%		9	%		9	%		8	%		9	%		8	%		9	%		10	%		10	%		11	%		10	%		8	%

Total		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Managed mutual funds fee revenue (millions)
Equity Funds	$	72		$	78		$	77		$	87		$	85		$	87		$	93		$	93		$	93		$	96		$	96		$	113
Money Market Funds		58			58			56			51			49			54			58			58			58			59			63			65
Fixed Income Funds		34			32			32			31			30			31			30			31			29			29			30			31
Nonproprietary		12			11			13			14			15			16			19			19			14			17			15			20

Total managed mutual funds fee revenue		176			179			178			183			179			188			200			201			194			201			204			229
Average assets of proprietary mutual funds
Equity Funds	$	48		$	51		$	50		$	53		$	54		$	54		$	57		$	57		$	59		$	60		$	60		$	65
Money Market Funds		96			96			91			87			85			90			96			100			99			101			110			120
Fixed Income Funds		25			23			23			22			22			22			21			21			21			21			21			21

Total average assets of proprietary mutual funds		169			170			164			162			161			166			174			178			179			182			191			206
Market value of assets under administration or custody at period end (a)	$	2,824		$	2,856		$	2,978		$	3,233		$	3,293		$	3,450		$	3,777		$	3,908		$	4,125		$	4,213		$	4,380		$	4,491
Total Assets
Managed	$	679		$	679		$	670		$	707		$	729		$	738		$	766		$	781		$	808		$	870		$	918		$	995
Administration/Custody (a)		2,824			2,856			2,978			3,233			3,293			3,450			3,777			3,908			4,125			4,213			4,380			4,491

Total	$	3,503		$	3,535		$	3,648		$	3,940		$	4,022		$	4,188		$	4,543		$	4,689		$	4,933		$	5,083		$	5,298		$	5,486

(a)

Excludes assets of $310 billion at June 30, 2005, $328 billion at Sept. 30, 2005, $333 billion at Dec. 31, 2005, $359 billion at March 31, 2006, $364 billion at June 30, 2006, $376 billion at Sept. 30, 2006 and $393 billion at Dec. 31, 2006 that we manage and are also under administration or custody. These assets are included in assets under management.

Page 7

MELLON FINANCIAL CORPORATION

ASSETS UNDER MANAGEMENT NET FLOWS - 12 Quarter Trend


	2004												2005											2006
(dollar amounts in billions )	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr		4th Qtr			1st Qtr			2nd Qtr			3rd Qtr		4th Qtr
Market value of assets under management at beginning of period	$	657		$	679		$	679		$	670		$	707		$	729		$	738	$	766		$	781		$	808		$	870	$	918
Net Flows
Long-term		6			—			2			8			5			(1	)		9		7			11			11			6		10
Money market		6			(6	)		(19	)		(3	)		6			—			4		4			(3	)		10			19		3
Securities lending		9			4			5			1			21			9			2		(3	)		1			(4	)		7		1

Total net inflows		21			(2	)		(12	)		6			32			8			15		8			9			17			32		14
Net Market appreciation		7			—			(3	)		30			(10	)		1			13		6			18			(2	)		16		36
Acquisitions/divestitures		(6	)		2			6			1			—			—			—		1			—			47			—		27

Market value of assets under management at end of period	$	679		$	679		$	670		$	707		$	729		$	738		$	766	$	781		$	808		$	870		$	918	$	995

Page 8

MELLON FINANCIAL CORPORATION

BUSINESS SECTORS

MELLON ASSET MANAGEMENT - 12 Quarter Trend


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	2004												2005												2006
	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr (a)
Revenue:
Investment management
Mutual funds		176			179			177			183			179			187			200			201			194			201			204			228
Institutional clients		99			97			98			115			122			129			133			136			158			170			196			246
Performance fees		39			17			11			60			27			26			41			77			58			48			56			196
Private clients		17			18			19			20			20			21			22			23			24			26			25			28

Total investment management		331			311			305			378			348			363			396			437			434			445			481			698
Distribution and service		66			67			68			68			71			74			82			90			98			108			107			102
Institutional trust and custody		16			16			15			15			15			17			15			15			17			16			16			19
Other fee revenue		3			(4	)		(1	)		5			2			(2	)		3			(2	)		9			(4	)		7			19

Total fee and other revenue		416			390			387			466			436			452			496			540			558			565			611			838
Net interest revenue (expense)		(6	)		(5	)		(6	)		(5	)		(4	)		(6	)		(6	)		(4	)		(4	)		(10	)		(10	)		(18	)

Total revenue		410			385			381			461			432			446			490			536			554			555			601			820
Amortization of intangible assets		2			2			2			3			3			4			3			3			3			3			3			8
Other operating expenses		294			285			287			347			321			335			357			372			392			396			412			537

Total operating expenses		296			287			289			350			324			339			360			375			395			399			415			545
Income from continuing operations before taxes (benefits)		114			98			92			111			108			107			130			161			159			156			186			275
Income taxes (benefits)		40			35			29			38			39			38			42			57			52			50			60			90

Net income (loss)	$	74		$	63		$	63		$	73		$	69		$	69		$	88		$	104		$	107		$	106		$	126		$	185

Average loans	$	7		$	7		$	7		$	—		$	—		$	—		$	—		$	—		$	4		$	—		$	—		$	—
Average assets	$	1,979		$	1,980		$	1,995		$	2,114		$	1,976		$	1,987		$	1,994		$	1,958		$	1,990		$	2,362		$	2,518		$	3,096
Average deposits	$	6		$	11		$	17		$	17		$	19		$	8		$	10		$	14		$	13		$	8		$	27		$	21
Average common equity	$	778		$	780		$	806		$	857		$	966		$	966		$	966		$	966		$	997		$	997		$	997		$	997
Average Tier I preferred equity	$	441		$	447		$	456		$	469		$	476		$	476		$	476		$	476		$	399		$	399		$	399		$	399
Market value of assets under management at period end (in billions) (b),(c),(d)	$	568		$	565		$	550		$	585		$	587		$	587		$	612		$	629		$	653		$	711		$	751		$	824
Market value of assets under administration or custody at period end (in billions)	$	7		$	6		$	8		$	8		$	9		$	8		$	3		$	3		$	3		$	3		$	3		$	3
Return on common equity		38	%		33	%		31	%		34	%		29	%		29	%		37	%		43	%		44	%		42	%		50	%		74	%
Pretax operating margin (GAAP)		28	%		25	%		24	%		24	%		25	%		24	%		27	%		30	%		29	%		28	%		31	%		34	%
Adjusted pretax operating margin (e)		34	%		32	%		31	%		29	%		31	%		30	%		33	%		38	%		36	%		36	%		39	%		40	%
Employees at period-end		2,500			2,500			2,600			2,600			2,600			2,600			2,600			2,600			2,600			2,600			2,600			2,700

(a)

Includes $6 million of severance expense as well as $5 million of impairment related to the sale of HBV Alternative Investment Strategies.

(b)

Includes amounts subadvised for/by other sectors.

(c)

Includes assets of $47 billion at June 30, 2006, $46 billion at Sept. 30, 2006 and $47 billion at Dec. 31, 2006 managed by WestLB Mellon Asset Management (a 50:50 joint venture).

(d)

Reflects the June 30, 2006 transfer of $8 billion of securities lending cash collateral to the Asset Servicing Sector.

(e)	Pretax margin adjusted for Distribution and servicing expense netted against revenue.

Note: In the fourth quarter of 2006, our asset administration business in Brazil was moved to this sector from Business Exits in the Other sector. All periods have been restated.

Page 9

MELLON FINANCIAL CORPORATION

BUSINESS SECTORS

PRIVATE WEALTH MANAGEMENT - 12 Quarter Trend


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	2004												2005												2006
	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr *(a)*
Revenue:
Investment management		74			75			74			77			81			80			83			87			90			92			93			99
Institutional trust and custody		2			2			3			2			3			2			3			2			3			2			3			2
Other fee revenue		7			6			4			5			5			5			5			6			5			6			4			5

Total fee and other revenue		83			83			81			84			89			87			91			95			98			100			100			106
Net interest revenue (expense)		75			77			76			74			80			79			77			76			74			77			77			77

Total revenue		158			160			157			158			169			166			168			171			172			177			177			183
Credit quality expense		—			—			—			1			—			—			—			—			—			—			—			—
Amortization of intangible assets		1			1			1			2			1			1			1			1			1			1			1			1
Other operating expenses		85			87			87			91			90			91			95			99			102			104			105			111

Total operating expenses		86			88			88			93			91			92			96			100			103			105			106			112
Income from continuing operations before taxes (benefits)		72			72			69			64			78			74			72			71			69			72			71			71
Income taxes (benefits)		25			26			22			21			28			26			23			26			22			24			23			23

Net income (loss)	$	47		$	46		$	47		$	43		$	50		$	48		$	49		$	45		$	47		$	48		$	48		$	48

Average loans	$	4,228		$	4,333		$	4,345		$	4,449		$	4,506		$	4,623		$	4,651		$	4,563		$	4,615		$	4,688		$	4,669		$	4,762
Average assets	$	8,439		$	8,822		$	9,100		$	9,226		$	9,431		$	9,462		$	10,062		$	10,860		$	10,279		$	10,395		$	10,544		$	10,760
Average deposits	$	7,157		$	7,555		$	7,819		$	7,957		$	8,295		$	8,286		$	8,846		$	9,474		$	8,824		$	8,865		$	8,827		$	8,936
Average common equity	$	687		$	686		$	694		$	697		$	571		$	571		$	571		$	571		$	553		$	553		$	553		$	553
Average Tier I preferred equity	$	219		$	218		$	216		$	214		$	215		$	215		$	215		$	215		$	184		$	184		$	184		$	184
Market value of total client assets at period end (in billions) (b)	$	76		$	76		$	76		$	78		$	77		$	78		$	82		$	86		$	89		$	87		$	90		$	95
Return on common equity		27	%		27	%		27	%		24	%		35	%		34	%		34	%		32	%		34	%		35	%		34	%		35	%
Pretax operating margin		46	%		45	%		44	%		41	%		46	%		45	%		43	%		41	%		40	%		41	%		40	%		39	%
Employees at period-end		1,900			1,900			1,800			1,800			1,900			1,900			1,900			1,900			1,900			2,000			2,000			2,000

(a)

Includes $1 million of severance expense.

(b)

Includes assets under management, before amounts subadvised by/for other sectors, of $47 billion, $46 billion, $47 billion and $50 billion in the first, second, third and fourth quarters of 2004, $49 billion, $50 billion, $51 billion and $53 billion in the first, second, third and fourth quarters of 2005; and $55 billion, $54 billion, $55 billion and $59 billion in the first, second, third and fourth quarters of 2006, respectively.

Page 10

MELLON FINANCIAL CORPORATION

BUSINESS SECTORS

ASSET SERVICING - 12 Quarter Trend


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	2004												2005												2006
	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr (a)
Revenue:
Institutional trust and custody		120			118			113			127			132			141			154			171			174			187			188			196
Securities lending revenue		18			24			16			18			24			33			25			26			30			38			26			26
Other fee revenue		73			67			53			59			68			67			70			72			83			96			77			89

Total fee and other revenue		211			209			182			204			224			241			249			269			287			321			291			311
Net interest revenue (expense)		14			18			17			20			19			21			22			20			26			27			29			24

Total revenue		225			227			199			224			243			262			271			289			313			348			320			335
Amortization of intangible assets		1			2			1			1			2			2			2			3			3			3			2			14
Other operating expenses		173			168			167			183			186			198			215			235			242			258			255			278

Total operating expenses		174			170			168			184			188			200			217			238			245			261			257			292
Income from continuing operations before taxes (benefits)		51			57			31			40			55			62			54			51			68			87			63			43
Income taxes (benefits)		18			20			10			14			20			22			17			18			22			28			21			14

Net income (loss)	$	33		$	37		$	21		$	26		$	35		$	40		$	37		$	33		$	46		$	59		$	42		$	29

Average loans	$	99		$	61		$	16		$	3		$	(25	)	$	1		$	(1	)	$	(20	)	$	(1	)	$	(30	)	$	(1	)	$	—
Average assets	$	7,087		$	6,824		$	7,021		$	8,036		$	8,211		$	8,117		$	9,048		$	8,484		$	8,376		$	9,248		$	10,159		$	10,523
Average deposits	$	5,460		$	5,414		$	5,764		$	6,496		$	7,010		$	6,859		$	7,753		$	7,077		$	7,111		$	7,570		$	8,737		$	8,975
Average common equity	$	606		$	599		$	583		$	609		$	482		$	482		$	482		$	482		$	551		$	551		$	551		$	551
Average Tier I preferred equity	$	136		$	135		$	132		$	128		$	125		$	125		$	125		$	125		$	132		$	132		$	132		$	132
Market value of assets under management at period end (in billions) (b),(c)	$	64		$	68		$	73		$	74		$	95		$	104		$	106		$	103		$	104		$	108		$	115		$	116
Market value of assets under administration or custody at period end (in billions) (d)	$	2,793		$	2,826		$	2,946		$	3,199		$	3,259		$	3,416		$	3,746		$	3,874		$	4,091		$	4,180		$	4,344		$	4,453
Return on common equity		22	%		25	%		14	%		17	%		30	%		33	%		30	%		27	%		34	%		42	%		31	%		21	%
Pretax operating margin		23	%		25	%		15	%		18	%		23	%		24	%		20	%		18	%		22	%		25	%		20	%		13	%
MEMO:
Total joint venture revenue (e)	$	81		$	82		$	74		$	84		$	93		$	101		$	102		$	107		$	119		$	149		$	140		$	143
Securities on Loan (f)	$	100		$	95		$	100		$	115		$	150		$	160		$	165		$	161		$	178		$	187		$	206		$	214
Employees at period-end		3,600			3,600			3,600			3,500			3,700			3,800			4,500			4,500			4,500			4,500			4,600			4,600

(a)

Includes $11 million of impairment charges and $6 million of severance expense.

(b)

Represents the investment of securities lending cash collateral managed by the Asset Servicing Sector.

(c)

Reflects the June 30, 2006 transfer of $8 billion securities lending cash collateral from Mellon Asset Management Sector.

(d)

Excludes assets of $310 billion at June 30, 2005, $328 billion at Sept. 30, 2005, $333 billion at Dec. 31, 2005, $359 billion at Mar. 31, 2006, $364 billion at June 30, 2006, $376 billion at Sept. 30, 2006 and $393 billion at Dec. 31, 2006 that we manage and are also under administration or custody. These assets are included in the Corporation’s assets under management.

(e)

Restated to reflect the acquisition of the remaining 50% interest of Russell Mellon, previously a joint venture.

(f)

Represents the total dollar amount of securities on loan, both cash and non-cash, at period end by the Corporation.

Page 11

MELLON FINANCIAL CORPORATION

BUSINESS SECTORS

PAYMENT SOLUTIONS & INVESTOR SERVICES - 12 Quarter Trend


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	2004												2005												2006
	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr *(a)*
Revenue:
Payment solutions & investor services		135			139			124			129			123			129			111			119			115			119			113			113
Other fee revenue		2			2			3			5			7			4			4			6			5			6			5			6

Total fee and other revenue		137			141			127			134			130			133			115			125			120			125			118			119
Net interest revenue (expense)		31			30			29			32			36			33			34			38			41			43			42			44

Total revenue		168			171			156			166			166			166			149			163			161			168			160			163
Amortization of intangible assets		—			—			—			—			—			—			1			—			—			—			1			—
Other operating expenses		118			124			113			129			126			126			119			127			124			130			124			135

Total operating expenses		118			124			113			129			126			126			120			127			124			130			125			135
Income from continuing operations before taxes (benefits)		50			47			43			37			40			40			29			36			37			38			35			28
Income taxes (benefits)		18			17			14			12			15			14			9			13			12			13			12			10

Net income (loss)	$	32		$	30		$	29		$	25		$	25		$	26		$	20		$	23		$	25		$	25		$	23		$	18

Average loans	$	71		$	117		$	106		$	105		$	95		$	99		$	87		$	93		$	83		$	91		$	85		$	181
Average assets	$	6,628		$	6,862		$	6,934		$	7,693		$	7,816		$	7,145		$	6,964		$	7,169		$	7,302		$	7,105		$	6,831		$	7,333
Average deposits	$	5,885		$	6,139		$	6,186		$	6,887		$	6,751		$	6,406		$	6,210		$	6,540		$	6,738		$	6,515		$	6,211		$	6,761
Average common equity	$	308		$	287		$	288		$	292		$	315		$	315		$	315		$	315		$	266		$	266		$	266		$	266
Average Tier I preferred equity	$	64		$	64		$	64		$	63		$	75		$	75		$	75		$	75		$	64		$	64		$	64		$	64
Market value of assets under management at period end (in billions)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Market value of assets under administration or custody at period end (in billions)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Return on common equity		42	%		43	%		41	%		33	%		32	%		33	%		26	%		29	%		37	%		39	%		32	%		28	%
Pretax operating margin		30	%		29	%		28	%		22	%		24	%		24	%		20	%		22	%		23	%		23	%		21	%		17	%
Employees at period-end		3,500			3,500			3,400			3,500			3,500			3,500			3,400			3,400			3,300			3,300			3,300			3,300

(a)

Includes $6 million of severance expense.

Note: In the fourth quarter of 2006, a segment of our Working Capital Solutions business was moved from this sector to Business Exits in the Other sector based upon our intention not to renew certain contracts with the agencies of the Federal government in 2007.

Page 12

MELLON FINANCIAL CORPORATION

BUSINESS SECTORS

OTHER - 12 Quarter Trend


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	2004												2005											2006
	1st Qtr (a)			2nd Qtr (b)			3rd Qtr			4th Qtr (c)			1st Qtr (d)			2nd Qtr		3rd Qtr			4th Qtr			1st Qtr (e)			2nd Qtr			3rd Qtr			4th Qtr (f)
Revenue:
Institutional trust and custody		—			1			1			1			—			—		—			—			—			1			—			1
Payment solutions & investor services		10			10			9			9			11			12		11			8			6			5			6			5
Other fee revenue		148			69			55			56			250			69		63			60			59			49			47			41

Total fee and other revenue		158			80			65			66			261			81		74			68			65			55			53			47
Net interest revenue (expense)		—			1			(1	)		(1	)		(13	)		1		(10	)		(9	)		(12	)		(20	)		(15	)		(13	)

Total revenue		158			81			64			65			248			82		64			59			53			35			38			34
Credit quality expense		(7	)		(2	)		(1	)		(5	)		(2	)		3		12			4			1			(3	)		(1	)		5
Amortization of intangible assets		—			—			—			—			—			—		—			—			—			—			—			—
Other operating expenses		69			79			51			44			59			57		64			63			87			63			60			108

Total operating expenses		69			79			51			44			59			57		64			63			87			63			60			108
Income from continuing operations before taxes (benefits)		96			4			14			26			191			22		(12	)		(8	)		(35	)		(25	)		(21	)		(79	)
Income taxes (benefits)		34			—			5			9			70			8		(4	)		(4	)		(3	)		(10	)		—			(97	)

Net income (loss)	$	62		$	4		$	9		$	17		$	121		$	14	$	(8	)	$	(4	)	$	(32	)	$	(15	)	$	(21	)	$	18

Average loans	$	2,487		$	2,259		$	2,067		$	2,077		$	1,909		$	1,867	$	1,882		$	1,718		$	1,278		$	1,123		$	1,099		$	1,157
Average assets	$	7,239		$	6,959		$	6,637		$	7,099		$	7,849		$	8,109	$	8,383		$	8,090		$	8,160		$	8,613		$	9,987		$	8,330
Average deposits	$	719		$	657		$	509		$	726		$	960		$	763	$	747		$	800		$	883		$	1,126		$	4,103		$	1,858
Average common equity	$	1,390		$	1,401		$	1,451		$	1,528		$	1,844		$	1,753	$	1,775		$	1,780		$	1,790		$	1,815		$	1,945		$	2,306
Average Tier I preferred equity	$	166		$	147		$	142		$	173		$	147		$	146	$	141		$	133		$	243		$	236		$	293		$	624
Market value of assets under management at period end (in billions)	$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—		$	—
Market value of assets under administration or custody at period end (in billions)	$	—		$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—		$	—
Return on common equity		n/m			n/m			n/m			n/m			n/m			n/m		n/m			n/m			n/m			n/m			n/m			n/m
Pretax operating margin		n/m			n/m			n/m			n/m			n/m			n/m		n/m			n/m			n/m			n/m			n/m			n/m
Employees at period-end (g)		4,100			4,000			4,000			4,100			4,000			4,200		4,300			4,100			4,300			4,300			4,200			4,200

(a)

The first quarter of 2004 includes a pre-tax gain of $93 million from the sale of approximately 35% of the Corporation’s investment in Shinsei Bank.

Also included in the first quarter of 2004 is a pre-tax charge of $19 million associated with a writedown of two small businesses, one of which was sold in the third quarter of 2004.

(b)

The second quarter of 2004 includes a $24 million pre-tax charge relating to vacating 10 leased locations in London and moving into the new Mellon Financial Centre in London.

(c)

(d)

The first quarter of 2005 includes a pre-tax gain of $197 million from the sale of our remaining investment in Shinsei Bank, a $10 million pre-tax charge (included in other expense) for the early extinguishment of debt and $5 million of additional expense ($2 million of occupancy expense and $3 million of other expenses) related to charges recorded in 2004 for the move to the new Mellon Financial Centre in London and the writedown of a small business (see footnote a).

(e)

(f)

Includes $7 million in severance, $11 million in merger-related expenses and $6 million in occupancy expenses as well as $74 million of tax benefits primarily related to a reversal of deferred tax liabilities due to management’s decision to indefinitely reinvest earnings of certain foreign subsidiaries in accordance with APB opinion No. 23.

(g)

Primarily relates to employees in Technology, Finance and Human Resources supporting the business sectors; the cost of these employees are fully allocated to the business sectors.

Note: In the fourth quarter of 2006: Mellon signed an agreement to sell its venture capital group, Mellon Ventures, and applied discontinued operations accounting to this business, previously reported in this sector; a segment of our Working Capital Solutions business was moved from the Payment Solutions & Investor Services sector to Business Exits in this sector; our asset administration business in Brazil was moved from this sector to Mellon Asset Management sector. All periods have been restated.

n/m - not meaningful

Page 13

MELLON FINANCIAL CORPORATION

BUSINESS SECTORS


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	Mellon Asset Management									Private Wealth Management									Asset Servicing
	2006			2005			2004			2006			2005			2004			2006			2005			2004
Revenue:
Investment management		1,700			1,373			1,198			374			331			300			—			—			—
Performance fees		358			171			127			—			—			—			—			—			—

Total investment management		2,058			1,544			1,325			374			331			300			—			—			—
Distribution and service fees		415			317			269			—			—			—			—			—			—
Institutional trust and custody		68			62			62			10			10			9			745			598			478
Securities lending revenue		—			—			—			—			—			—			120			108			76
Payment solutions & investor services		—			—			—			—			—			—			—			—			—
Other fee revenue		31			1			3			20			21			22			345			277			252

Total fee and other revenue		2,572			1,924			1,659			404			362			331			1,210			983			806
Net interest revenue (expense)		(42	)		(20	)		(22	)		305			312			302			106			82			69

Total revenue		2,530			1,904			1,637			709			674			633			1,316			1,065			875
Credit quality expense		—			—			—			—			—			1			—			—			—
Amortization of intangible assets		17			13			9			4			4			5			22			9			5
Other operating expenses		1,737			1,385			1,213			422			375			350			1,033			834			691

Total operating expenses		1,754			1,398			1,222			426			379			355			1,055			843			696
Income from continuing operations before taxes (benefits)		776			506			415			283			295			277			261			222			179
Income taxes (benefits)		252			176			142			92			103			94			85			77			62

Income from continuing operations		524			330			273			191			192			183			176			145			117
Income from discontinued operations after-tax		—			—			—			—			—			—			—			—			—

Net income (loss)	$	524		$	330		$	273		$	191		$	192		$	183		$	176		$	145		$	117

Average loans	$	1		$	—		$	5		$	4,684		$	4,586		$	4,339		$	(8	)	$	(11	)	$	45
Average assets	$	2,494		$	1,979		$	2,017		$	10,496		$	9,958		$	8,898		$	9,584		$	8,467		$	7,244
Average deposits	$	17		$	13		$	13		$	8,864		$	8,729		$	7,624		$	8,105		$	7,176		$	5,785
Average common equity	$	997		$	966		$	805		$	553		$	571		$	691		$	551		$	482		$	599
Average Tier I preferred equity	$	399		$	476		$	453		$	184		$	215		$	217		$	132		$	125		$	133
Market value of assets under management at period end (in billions)	$	824		$	629		$	585		$	55		$	49		$	48		$	116		$	103		$	74
Market value of assets under administration or custody at period end (in billions)	$	3		$	3		$	8		$	35		$	31		$	26		$	4,453		$	3,874		$	3,199
Return on common equity		53	%		34	%		34	%		34	%		34	%		26	%		32	%		30	%		20	%
Pretax operating margin		31	%		27	%		25	%		40	%		44	%		44	%		20	%		21	%		20	%
Employees at period-end		2,700			2,600			2,600			2,000			1,900			1,800			4,600			4,500			3,500

Note: See pages 9-13 for revenue/expense items impacting respective sector results.

Page 14

MELLON FINANCIAL CORPORATION

BUSINESS SECTORS


(dollar amounts in millions unless otherwise noted; presented on an FTE basis)	Payment Solutions & Investor Services									Other									Consolidated Results
	2006			2005			2004			2006			2005			2004			2006			2005			2004
Revenue:
Investment management		—			—			—			—			—			—			2,074			1,704			1,498
Performance fees		—			—			—			—			—			—			358			171			127

Total investment management		—			—			—			—			—			—			2,432			1,875			1,625
Distribution and service		—			—			—			—			—			—			415			317			269
Institutional trust and custody		—			—			—			2			—			3			825			670			552
Securities lending revenue		—			—			—			—			—			—			120			108			76
Payment solutions & investor services		460			482			527			22			42			38			482			524			565
Other fee revenue		22			21			12			196			442			328			614			762			617

Total fee and other revenue (a)		482			503			539			220			484			369			4,888			4,256			3,704
Net interest revenue (expense) (b)		170			141			122			(60	)		(31	)		(1	)		479			484			470

Total revenue (c)		652			644			661			160			453			368			5,367			4,740			4,174
Credit quality expense		—			—			—			2			17			(15	)		2			17			(14	)
Amortization of intangible assets		1			1			—			—			—			—			44			27			19
Other operating expenses		513			498			484			318			243			243			4,023			3,335			2,981

Total operating expenses		514			499			484			318			243			243			4,067			3,362			3,000
Income from continuing operations before taxes (benefits)		138			145			177			(160	)		193			140			1,298			1,361			1,188
Income taxes (benefits) (c)		47			51			61			(110	)		70			48			366			477			407

Income (loss) from continuing operations before cumulative effect of accounting change		91			94			116			(50	)		123			92			932			884			781
Income from discontinued operations after-tax		—			—			—			—			—			—			(34	)		(102	)		15

Net income (loss)	$	91		$	94		$	116		$	(50	)	$	123		$	92		$	898		$	782		$	796

Average loans (d)	$	110		$	93		$	100		$	1,164		$	1,843		$	2,222		$	6,738		$	7,194		$	7,307
Average assets (e)	$	7,142		$	7,271		$	7,031		$	8,777		$	8,108		$	6,983		$	39,872		$	37,304		$	34,003
Average deposits	$	6,556		$	6,476		$	6,276		$	2,000		$	816		$	652		$	25,542		$	23,210		$	20,350
Average common equity	$	266		$	315		$	294		$	1,965		$	1,787		$	1,443		$	4,332		$	4,121		$	3,832
Average Tier I preferred equity	$	64		$	75		$	64		$	350		$	142		$	157		$	1,129		$	1,033		$	1,024
Market value of assets under management at period end (in billions)	$	—		$	—		$	—		$	—		$	—		$	—		$	995		$	781		$	707
Market value of assets under administration or custody at period end (in billions)	$	—		$	—		$	—		$	—		$	—		$	—		$	4,491		$	3,908		$	3,233
Return on common equity		34	%		30	%		44	%		n/m			n/m			n/m			22	%		21	%		20	%
Pretax operating margin		21	%		23	%		28	%		n/m			n/m			n/m			24	%		29	%		28	%
Pretax operating margin (f)																				26	%		28	%		27	%
Employees at period-end		3,300			3,400			3,500			4,200			4,100			4,100			16,800			16,500			15,500

(a)

Consolidated results include FTE impact of $36 million, $41 million and $42 million for 2006, 2005 and 2004, respectively.

(b)

Consolidated results include FTE impact of $16 million, $18 million and $17 million for 2006, 2005 and 2004, respectively.

(c)

Consolidated results include FTE impact of $52 million, $59 million and $59 million for 2006, 2005 and 2004, respectively.

(d)

Consolidated average loans include average loans from discontinued operations of $787 million, $683 million and $596 million for 2006, 2005 and 2004, respectively.

(e)

Consolidated average assets include average assets of discontinued operations of $1,379 million, $1,521 million and $1,830 million for 2006, 2005 and 2004, respectively.

(f)

Excludes footnote items listed on Consolidated Results -12 Quarter Trend page.

Note: See pages 9-13 for revenue/expense items impacting respective sector results.

n/m - not meaningful

Page 15

MELLON FINANCIAL CORPORATION

CONTINUING OPERATIONS - 12 Quarter Trend

NONPERFORMING ASSETS


	2004												2005												2006
(dollar amounts in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr
Nonperforming loans:
Commercial and financial	$	48		$	11		$	17		$	10		$	9		$	7		$	7		$	1		$	1		$	—		$	1		$	—
Personal		2			3			3			4			4			4			3			2			2			2			2			1
Commercial real estate		1			—			—			—			—			—			—			—			—			—			—			—
Lease finance assets		—			—			—			15			15			15			27			13			10			12			1			1

Total nonperforming loans		51			14			20			29			28			26			37			16			13			14			4			2
Total acquired property		—			1			1			—			—			—			—			—			3			—			—			2

Total nonperforming assets	$	51		$	15		$	21		$	29		$	28		$	26		$	37		$	16		$	16		$	14		$	4		$	4

Nonperforming loans as a percentage of total loans		0.68	%		0.20	%		0.30	%		0.43	%		0.39	%		0.34	%		0.48	%		0.24	%		0.19	%		0.20	%		0.07	%		0.04	%
Nonperforming assets as a percentage of Tier I capital plus the reserve for loan losses		1.99	%		0.56	%		0.82	%		1.08	%		0.98	%		0.87	%		1.23	%		0.53	%		0.51	%		0.44	%		0.12	%		0.12	%(a)

(a)

Preliminary

Page 16

MELLON FINANCIAL CORPORATION

CONTINUING OPERATIONS - 12 Quarter Trend

PROVISION AND RESERVE FOR CREDIT EXPOSURE


	2004												2005												2006
(dollar amounts in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr
Reserve Activity:
Loan losses		103			94			96			98			98			87			87			80			63			60			58			55
Unfunded commitments		75			77			73			71			67			77			81			77			78			82			81			80

Reserve at beginning of period	$	178		$	171		$	169		$	169		$	165		$	164		$	168		$	157		$	141		$	142		$	139		$	135
Total credit losses		—			(2	)		(1	)		(1	)		(1	)		—			(24	)		(14	)		—			(1	)		—			—
Total recoveries		—			2			1			2			1			1			1			1			—			1			—			—

Sub-total - net credit recoveries (losses)	$	—		$	—		$	—		$	1		$	—		$	1		$	(23	)	$	(13	)	$	—		$	—		$	—		$	—
Credit losses on loans transferred to held for sale		—			—			—			—			—			—			—			—			—			—			—			—

Total net credit recoveries (losses)	$	—		$	—		$	—		$	1		$	—		$	1		$	(23	)	$	(13	)	$	—		$	—		$	—		$	—
Impact of disposals and acquisitions		—			—			—			—			—			—			—			—			—			—			—			—
Securitizations		—			(2	)		—			(1	)		—			—			—			—			—			—			—			—
Loss on sale of commitments		—			—			—			—			—			—			—			—			—			—			—			—
Provision for credit losses		(7	)		(2	)		(1	)		(4	)		(2	)		3			12			4			1			(3	)		(1	)		5
Reclass of provision to discontinued operations		—			2			1			—			1			—			—			—			—			—			—			—
Reserves transferred to assets of discontinued operations		—			—			—			—			—			—			—			—			—			—			(3	)		—
Reserves transferred to held for sale		—			—			—			—			—			—			—			(7	)		—			—			—			—

Reserve at end of period	$	171		$	169		$	169		$	165		$	164		$	168		$	157		$	141		$	142		$	139		$	135		$	140
Reserve for loan losses	$	94		$	96		$	98		$	98		$	87		$	87		$	80		$	63		$	60		$	58		$	55		$	56
Reserve for unfunded commitments		77			73			71			67			77			81			77			78			82			81			80			84

Reserve at end of period	$	171		$	169		$	169		$	165		$	164		$	168		$	157		$	141		$	142		$	139		$	135		$	140
Reserve for loan losses as a percentage of total loans (a)		1.27	%		1.39	%		1.40	%		1.45	%		1.23	%		1.15	%		1.05	%		0.96	%		0.91	%		0.84	%		0.93	%		0.94	%
Reserve for unfunded commitments as a percentage of unfunded commitments (a)		0.46	%		0.47	%		0.47	%		0.47	%		0.54	%		0.58	%		0.55	%		0.58	%		0.62	%		0.61	%		0.60	%		0.62	%
Annualized net credit losses to average loans		—	%		—	%		—	%		-0.03	%		—	%		—	%		1.23	%		0.77	%		—	%		—	%		—	%		—	%

(a)

At period end.

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