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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File No. 1-7410
MELLON BANK CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1233834
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (412) 234-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, $0.50 Par Value New York Stock Exchange
7-1/4% Convertible Subordinated Capital Notes Due 1999 New York Stock Exchange
Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of February 28, 1999, there were 261,792,668 shares outstanding of the
registrant's voting common stock, $0.50 par value per share, of which
259,150,887 common shares having a market value of $17,525,078,733 were held by
nonaffiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in the
following parts of this Annual Report:
Mellon Bank Corporation 1999 Proxy Statement-Part III
Mellon Bank Corporation 1998 Annual Report to Shareholders-Parts I, II
and IV
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The Form 10-K filed with the Securities and Exchange Commission contains the
Exhibits listed on the Index to Exhibits beginning on page 25, including the
Financial Review and Financial Statements and Notes; Principal Locations and
Operating Entities; Directors and Senior Management Committee; and Corporate
Information Sections of the Registrant's 1998 Annual Report to Shareholders. For
a free copy of the Corporation's 1998 Annual Report to Shareholders, the Proxy
Statement for its 1999 Annual Meeting, or a copy of the Corporation's Management
Report on Internal Controls, as filed with the appropriate regulatory agencies,
please send a written request to the Secretary of the Corporation, 4826 One
Mellon Bank Center, Pittsburgh, PA 15258-0001. The Corporation's 1998 Annual
Report to Shareholders is also available on the Corporation's internet site at
www.mellon.com.
Cautionary Statement
This Annual Report on Form 10-K contains and incorporates by reference
statements relating to future results of the Corporation that are considered
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to, among other things,
the year 2000 project; the impact of the adoption of the euro; the proposed sale
of the mortgage business, credit card business and network services transaction
processing unit; credit loss reserve adequacy; simulation of changes in interest
rates; and litigation results. Actual results may differ materially from those
expressed or implied as a result of certain risks and uncertainties, including,
but not limited to, changes in political and economic conditions; interest rate
fluctuations; competitive product and pricing pressures within the Corporation's
markets; equity and fixed income market fluctuations; personal and corporate
customers' bankruptcies; inflation; acquisitions and integrations of acquired
businesses; technological change; changes in law; changes in fiscal, monetary,
regulatory and tax policies; monetary fluctuations; success in gaining
regulatory approvals when required; as well as other risks and uncertainties
detailed elsewhere in this Annual Report on Form 10-K or from time to time in
the filings of the Corporation with the Securities and Exchange Commission. Such
forward-looking statements speak only as of the date on which such statements
are made, and the Corporation undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events.
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MELLON BANK CORPORATION
Form 10-K Index
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PART I Page
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Item 1. Business
Description of Business 3
Supervision and Regulation 5
Competition 10
Employees 10
Statistical Disclosure by Bank Holding Companies 11
Item 2. Properties 16
Item 3. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 18
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 19
Item 8. Financial Statements and Supplementary Data 19
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 19
PART III
Item 10. Directors and Executive Officers of the Registrant 19
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial Owners and Management 22
Item 13. Certain Relationships and Related Transactions 22
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 22
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PART I
ITEM 1. BUSINESS
Description of Business
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Mellon Bank Corporation (the "Corporation") is a multibank holding company
incorporated under the laws of Pennsylvania in August 1971 and registered under
the Federal Bank Holding Company Act of 1956, as amended. The Corporation
provides a comprehensive range of financial products and services in domestic
and selected international markets. The Corporation's banking subsidiaries are
located in Pennsylvania, Massachusetts, Delaware, Maryland, New Jersey,
California and Florida. Other subsidiaries are located in key business centers
throughout the United States and abroad. At December 31, 1998, the Corporation
was the eighteenth largest bank holding company in the United States in terms of
assets.
The Corporation's principal direct subsidiaries are Mellon Bank, N.A. ("Mellon
Bank"), The Boston Company, Inc. ("TBC"), Buck Consultants, Inc. ("Buck"),
Newton Management Limited ("Newton"), and a number of companies known as Mellon
Financial Services Corporation. The Dreyfus Corporation ("Dreyfus"), one of the
nation's largest mutual fund companies, and Founders Asset Management LLC
("Founders"), are wholly owned subsidiaries of Mellon Bank. The Corporation's
banking subsidiaries engage in retail financial services, commercial banking,
trust and investment management services, residential real estate loan
financing, equipment leasing, mutual fund activities and various
securities-related activities.
Mellon Bank, which has its executive offices in Pittsburgh, Pennsylvania, became
a subsidiary of the Corporation in November 1972. With its predecessors, Mellon
Bank has been in business since 1869. Mellon Bank is comprised of six operating
regions throughout Pennsylvania and southern New Jersey. Dreyfus, headquartered
in New York, New York, serves primarily as an investment adviser, manager and
administrator of mutual funds. Founders, headquartered in Denver, Colorado, is a
manager of growth-oriented equity mutual funds and other investment portfolios.
Newton is a leading U.K.-based investment manager that provides investment
management services to institutional, private and retail clients. TBC, through
Boston Safe Deposit and Trust Company ("BSDT") and other subsidiaries, engages
in the business of institutional trust and custody, institutional asset
management, private asset management, jumbo mortgage lending and other banking
services. TBC is headquartered in Boston, Massachusetts. Buck, headquartered in
New York, New York, is a global actuarial and human resources consulting firm
providing a broad array of services in the areas of defined benefit and defined
contribution plans, health and welfare plans, communications and compensation
consulting, and outsourcing and administration of employee benefit programs.
The Corporation's banking subsidiaries operate approximately 1,200 domestic
banking locations. The deposits of the banking subsidiaries are insured by the
Federal Deposit Insurance Corporation ("FDIC") to the extent provided by law.
Other subsidiaries of the Corporation provide a broad range of bank-related
services -- including equipment leasing, commercial loan financing, stock
transfer services, cash management and numerous trust and investment management
services. The types of financial products and services offered by the
Corporation's subsidiaries are subject to change.
For analytical purposes, management has focused the Corporation into four major
business sectors: Consumer Fee Services, Consumer Banking, Business Fee Services
and Business Banking. Further information regarding the Corporation's "core"
business sectors, as well as certain "non-core" operations such as
Pending/Completed Divestitures, is presented in the Business Sectors section on
pages 28 through 31 of the Corporation's 1998 Annual Report to Shareholders,
which pages are incorporated herein by reference. A brief discussion of the
business sectors is presented on the following pages. There is considerable
interrelationship among these sectors.
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ITEM 1. BUSINESS (continued)
Description of Business (continued)
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Consumer Fee Services
Consumer Fee Services includes private asset management services, retail mutual
funds and discount brokerage services. These products and services are offered
principally through the private asset management group of Mellon Bank and BSDT,
as well as through Dreyfus, Founders, the discount brokerage operation of
Dreyfus Brokerage Services, Inc. and throughout the Corporation's retail banking
network.
Consumer Banking
Consumer Banking includes consumer lending and deposit products, business
banking and jumbo residential mortgage lending. The consumer lending, branch
banking and business banking services primarily are offered through the
Corporation's retail banking network which is primarily comprised of
approximately 440 retail outlets and approximately 740 ATMs. This network is
primarily located in the mid-Atlantic region of the United States and southern
Florida. Jumbo residential mortgage lending is offered nationally through the
private asset management representative offices.
Business Fee Services
The Business Fee Services sector serves the institutional markets by providing
institutional asset and institutional mutual fund management and administration,
institutional trust and custody, securities lending, foreign exchange, cash
management, stock transfer, benefits consulting and administrative services, and
services for defined contribution plans. The Corporation's subsidiaries provide
trust and investment management services while operating under the umbrella name
"Mellon Trust"; in addition, the subsidiaries provide institutional mutual fund
management through Dreyfus, Founders and Newton. The Corporation also owns a
number of subsidiaries that provide a variety of active and passive equity and
fixed income investment management services, including management of
international securities. Through Buck, the Corporation offers benefits
consulting and administrative services and services for defined contribution
plans. Through the Global Cash Management department, the Corporation offers a
broad range of cash management services, including remittance processing,
collections and disbursements, check processing and electronic services. The
Corporation's subsidiaries also provide services relating primarily to defined
contribution employee benefit plans under the umbrella name "Dreyfus Retirement
Services." Stock transfer services are provided in the United States through its
joint venture operating under the name of ChaseMellon Shareholder Services and
in Canada through the CIBC Mellon Trust Company.
Business Banking
Business Banking includes large corporate and middle market lending, asset-based
lending, lease financing, commercial real estate lending, insurance premium
financing, securities underwriting and trading, and international banking. This
sector's markets generally include large domestic commercial and industrial
customers, U.S. operations of foreign companies, multinational corporations,
state and local governments and various financial institutions (including banks,
securities broker/dealers, insurance companies, finance companies and mutual
funds). The Corporation also offers corporate finance and rate risk management
products; loan underwriting and syndications; offers a variety of capital
markets products and services, including private placement and money market
transactions; and provides equipment leasing, financing and lease advisory
services. The Corporation maintains foreign offices in London, Tokyo, Hong Kong,
Toronto, and Grand Cayman, British West Indies. Through these offices, the
Corporation conducts trade finance activities, engages in correspondent banking
and provides corporate banking and capital markets services. Included in this
sector is a nationwide asset-based lending division which provides secured
lending, principally through accounts receivable and inventory financing. Real
Estate lending consists of the
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ITEM 1. BUSINESS (continued)
Description of Business (continued)
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Corporation's commercial real estate lending activities, through which it
originates financing for commercial, multi-family and other products. The
Corporation provides property and casualty insurance premium financing to small,
midsize and large companies in the United States through the AFCO Credit
Corporation and in Canada through CAFO.
Pending/Completed Divestitures
Following the Corporation's decision to sell its mortgage business, credit card
business and network services transaction processing unit, the Corporation's
core business sectors were restated to exclude these businesses as well as the
results of the merchant card processing business that was sold in December 1998
and the corporate trust business that was sold in November 1997. These five
businesses' results are now reported as "Pending/Completed Divestitures." In
addition, the Real Estate Workout sector, that had previously been reported
separately, was combined with Other Corporate Activity. The Real Estate Workout
sector has diminished in significance as the level of nonperforming real estate
assets has significantly decreased. Pending/Completed Divestitures include:
residential mortgage loan origination and servicing that had previously been
reported in Consumer Fee Services; credit card and a portion of merchant card
processing that had previously been reported in Consumer Banking; and commercial
mortgage loan origination and servicing, network services transaction
processing, a portion of merchant card processing and corporate trust that had
previously been reported in Business Fee Services.
The 1998 Annual Report to Shareholders summarizes principal locations and
operating entities on pages 14 through 16, which pages are incorporated herein
by reference. Exhibit 21.1 to this Annual Report on Form 10-K presents a list of
the primary subsidiaries of the Corporation as of December 31, 1998.
Year 2000 Project
For a discussion regarding the Corporation's year 2000 project, see pages 41 and
42 of the Corporation's 1998 Annual Report to Shareholders, which discussion is
incorporated herein by reference.
Euro Project
For a discussion regarding the impact of the adoption of the euro, see page 43
of the Corporation's 1998 Annual Report to Shareholders, which discussion is
incorporated herein by reference.
Supervision and Regulation
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The Corporation and its subsidiaries are subject to an extensive system of
banking laws and regulations that are intended primarily for the protection of
the customers and depositors of the Corporation's subsidiaries rather than
holders of the Corporation's securities. These laws and regulations govern such
areas as permissible activities, reserves, loans and investments, and rates of
interest that can be charged on loans. Similarly, the Corporation's subsidiaries
engaged in investment advisory and other securities related activities are
subject to various U.S. federal and state laws and regulations that are intended
to benefit clients of investment advisors and shareholders in mutual funds
rather than holders of the Corporation's securities. Additionally, the
Corporation and its subsidiaries are subject to general U.S. federal laws and
regulations and to the laws and regulations of the states or countries in which
they conduct their businesses. Set forth below are brief descriptions of
selected laws and regulations applicable to the Corporation and its
subsidiaries. The descriptions are not intended to be complete and are qualified
in their entirety by reference to the statutes and regulations described.
Changes in applicable law or regulation may have a material effect on the
business of the Corporation.
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ITEM 1. BUSINESS (continued)
Supervision and Regulation (continued)
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The Corporation, as a bank holding company, is regulated under the Bank Holding
Company Act of 1956, as amended (the "Act"), and is subject to the supervision
of the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"). Generally, the Act limits the business of bank holding companies to
banking, managing or controlling banks, performing certain servicing activities
for subsidiaries, and engaging in such other activities as the Federal Reserve
Board may determine to be closely related to banking and a proper incident
thereto. Certain of the Corporation's subsidiaries are themselves bank holding
companies under the Act. As a result of its Mellon Bank, F.S.B. subsidiary, the
Corporation is also regulated under the Home Owners' Loan Act of 1933 as a
savings and loan holding company. In late February 1999, the Corporation applied
to the Office of Thrift Supervison ("OTS") for permission to dissolve Mellon
Bank, F.S.B.
The Corporation's national banking subsidiaries are subject to primary
supervision, regulation and examination by the Office of the Comptroller of the
Currency (the "OCC"); BSDT is subject to supervision, regulation and examination
by the Federal Reserve Board and the Commonwealth of Massachusetts Department of
Banking; and Mellon Bank, F.S.B. is subject to supervision, regulation and
examination by the OTS. Mellon Securities Trust Company, The Dreyfus Trust
Company and Mellon Trust of New York are New York trust companies and are
supervised by the New York State Department of Banking. Mellon Trust of
California is a California trust company and is supervised by the State of
California Department of Financial Institutions. Mellon 1st Business Bank is a
state non-member bank and is subject to supervision, regulation and examination
by the FDIC and the State of California Department of Financial Institutions.
The Corporation's nonbank subsidiaries engaged in securities related activities
are regulated by the Securities and Exchange Commission (the "SEC"). Dreyfus
Investment Services Corporation and Dreyfus Brokerage Services, Inc. conduct
brokerage operations, and Mellon Financial Markets, Inc. engages in securities
activities permitted to bank holding company subsidiaries under Section 20 of
the Glass-Steagall Act. Dreyfus Service Corporation, a subsidiary of Dreyfus,
acts as a broker/dealer for the sale of shares of mutual funds, including the
Dreyfus/Founders family of mutual funds. Dreyfus Brokerage Services, Inc., a
subsidiary of Mellon Bank, is a self-clearing deep discount broker providing
services to individual investors nationwide. Founders, Dreyfus Investment
Services Corporation, Mellon Financial Markets, Inc., Dreyfus Service
Corporation and Dreyfus Brokerage Services, Inc. are registered broker/dealers
and members of the National Association of Securities Dealers, Inc., a
securities industry self-regulatory organization.
Certain subsidiaries of the Corporation are registered investment advisers under
the Investment Advisers Act of 1940 and, as such, are supervised by the SEC.
They are also subject to various U.S. federal and state laws and regulations and
to the laws of any countries in which they do business. These laws and
regulations generally grant supervisory agencies broad administrative powers,
including the power to limit or restrict the carrying on of business for failure
to comply with such laws and regulations. The possible sanctions which may be
imposed for violations of these laws and regulations include the suspension of
individual employees, limitations on engaging in business for specific periods,
the revocation of the registration as an investment adviser, censures and fines.
Each investment company (as defined in the Investment Company Act of 1940) which
is advised by a subsidiary of the Corporation, including the Dreyfus/Founders
family of mutual funds, is registered with the SEC, and the shares of most are
qualified for sale in all states in the United States and the District of
Columbia, except for investment companies that offer products only to residents
of a particular state or of a foreign country and except for certain investment
companies which are exempt from such registration or qualification.
Certain of the Corporation's public finance activities are regulated by the
Municipal Securities Rulemaking Board. Mellon Bank and certain of the
Corporation's other subsidiaries are registered with the Commodity Futures
Trading Commission (the "CFTC") as commodity pool operators or commodity trading
advisors and, as such, are subject to CFTC regulation.
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ITEM 1. BUSINESS (continued)
Supervision and Regulation (continued)
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Interstate Banking
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Interstate Act"), which became effective on September 29, 1995, bank
holding companies are permitted to acquire banks located in any state regardless
of the state law in effect at the time. The Interstate Act also provides for the
nationwide interstate branching of banks. Under the Interstate Act, both
national and state-chartered banks are permitted to merge across state lines
(and thereby create interstate branches) commencing June 1, 1997. States were
permitted to "opt-out" of the interstate branching authority by taking action
prior to the commencement date. States could also "opt-in" early (i.e., prior to
June 1, 1997) to the interstate branching provisions. Pennsylvania chose to
"opt-in" early, effective July 6, 1995, thereby enabling Pennsylvania banks,
including national banks having their main office in Pennsylvania, to merge with
out-of-state banks to create interstate branches inside or outside Pennsylvania.
In addition, Pennsylvania has permitted de novo branching into and out of
Pennsylvania as long as the law of the other state involved is reciprocal in
this regard.
Dividend Restrictions
The Corporation is a legal entity separate and distinct from its banking and
other subsidiaries. Its principal source of funds to pay dividends on its common
and preferred stock and debt service on its debt is dividends from its
subsidiaries. Various federal and state statutes and regulations limit the
amount of dividends that may be paid to the Corporation by its banking
subsidiaries without regulatory approval. The Corporation's principal banking
subsidiary, Mellon Bank, N.A., is a national bank. A national bank must obtain
the prior approval of the OCC to pay a dividend if the total of all dividends
declared by the bank in any calendar year would exceed the bank's net income for
that year combined with its retained net income for the preceding two calendar
years, less any required transfers to surplus or to fund the retirement of any
preferred stock. The Corporation's state-chartered banking subsidiaries also are
subject to dividend restrictions under applicable state law.
If, in the opinion of the applicable federal regulatory agency, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
Bank, could include the payment of dividends), the regulator may require, after
notice and hearing, that such bank cease and desist from such practice. The OCC
has indicated that the payment of dividends would constitute an unsafe and
unsound practice if the payment would deplete a depository institution's capital
base to an inadequate level. Under the Federal Deposit Insurance Act (the "FDI
Act"), an insured depository institution may not pay any dividend if the
institution is undercapitalized or if the payment of the dividend would cause
the institution to become undercapitalized. In addition, the federal bank
regulatory agencies have issued policy statements which provide that depository
institutions and their holding companies should generally pay dividends only out
of current operating earnings.
The ability of the Corporation's banking subsidiaries to pay dividends to the
Corporation may also be affected by various minimum capital requirements for
banking organizations, as described below. In addition, the right of the
Corporation to participate in the assets or earnings of a subsidiary are subject
to the prior claims of creditors of the subsidiary.
Transactions with Affiliates
There are certain restrictions on the ability of the Corporation and certain of
its non-bank affiliates to borrow from, and engage in other transactions with,
its banking subsidiaries and on the ability of such banking subsidiaries to pay
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ITEM 1. BUSINESS (continued)
Supervision and Regulation (continued)
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dividends to the Corporation. These restrictions are discussed in note 22 of the
Notes to Financial Statements on pages 95 and 96 of the Corporation's 1998
Annual Report to Shareholders. This note is incorporated herein by reference.
Unsafe and Unsound Practices
The OCC has authority under the Financial Institutions Supervisory Act to
prohibit national banks from engaging in any activity which, in the OCC's
opinion, constitutes an unsafe or unsound practice in conducting their
businesses. The Federal Reserve Board has similar authority with respect to the
Corporation, BSDT and the Corporation's non-bank subsidiaries, including Mellon
Securities Trust Company, a member of the Federal Reserve System. The FDIC has
similar authority with respect to Mellon 1st Business Bank, and the OTS has
similar authority with respect to Mellon Bank, F.S.B.
Deposit Insurance
Substantially all of the deposits of the banking subsidiaries of the Corporation
are insured up to applicable limits by the Bank Insurance Fund ("BIF") of the
FDIC and are subject to deposit insurance assessments to maintain the BIF. The
FDIC utilizes a risk-based assessment system which imposes insurance premiums
based upon a matrix that takes into account a bank's capital level and
supervisory rating. Such premiums now range from 0 cents for each $100 of
domestic deposits for the healthiest institutions to 27 cents for each $100 of
domestic deposits for the weakest institutions. In addition, the Deposit
Insurance Fund Act of 1996 authorizes the Financing Corporation ("FICO") to
impose assessments on BIF assessable deposits in order to service the interest
on FICO's bond obligations. The FICO current annual assessment on these deposits
is approximately 1.2 cents for each $100 of domestic deposits.
Liability of Commonly Controlled Institutions
The FDI Act contains a "cross-guarantee" provision that could result in any
insured depository institution owned by the Corporation being assessed for
losses incurred by the FDIC in connection with assistance provided to, or the
failure of, any other depository institution owned by the Corporation. Also,
under Federal Reserve Board policy, the Corporation is expected to act as a
source of financial and managerial strength to each of its banking subsidiaries
and to commit resources to support each such bank in circumstances where such
bank might not be in a financial position to support itself.
Regulatory Capital
The Federal Reserve Board, the OCC and FDIC have substantially similar
risk-based and leverage capital guidelines for banking organizations. The
guidelines are intended to ensure that banking organizations have adequate
capital given the risk levels of their assets and off-balance sheet financial
instruments.
The risk-based capital ratio is determined by classifying assets and certain
off-balance sheet financial instruments into weighted categories, with higher
levels of capital being required for those categories perceived as representing
greater risk. Under the capital guidelines, a banking organization's total
capital is divided into tiers. "Tier I capital" consists of common equity,
excluding unrealized gains or losses, net of tax, on assets classified as
available for sale; qualifying noncumulative perpetual preferred stock; a
limited amount of qualifying cumulative perpetual preferred stock; and minority
interests in the equity accounts of consolidated subsidiaries, less certain
items such as goodwill and certain other intangible assets. The remainder (Tier
II and Tier III capital) consists of hybrid capital instruments, perpetual debt,
mandatory convertible debt securities, a limited amount of subordinated debt,
preferred stock that does not qualify as Tier I capital, and a limited amount of
the allowance for credit losses.
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ITEM 1. BUSINESS (continued)
Supervision and Regulation (continued)
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Under the Federal Reserve Board's risk-based capital guidelines for bank holding
companies, the required minimum ratio of Total capital (the sum of Tier I, Tier
II and Tier III) to risk-adjusted assets (including certain off-balance sheet
items, such as stand-by letters of credit) is currently 8%. The required minimum
ratio of Tier I capital to risk-adjusted assets is 4%. At December 31, 1998, the
Corporation's Total capital and Tier I capital to risk adjusted assets ratios
were 10.80% and 6.53%, respectively.
The Federal Reserve Board also requires bank holding companies to comply with
minimum leverage ratio guidelines. The leverage ratio is the ratio of a bank
holding company's Tier I capital to its total consolidated quarterly average
assets (as defined for regulatory purposes), net of the loan loss reserve,
goodwill and certain other intangible assets. The guidelines require a minimum
leverage ratio of 3% for bank holding companies that meet certain specified
criteria, including having the highest supervisory rating. All other bank
holding companies are required to maintain a minimum leverage ratio of 4%. The
Federal Reserve Board has not advised the Corporation of any specific leverage
ratio applicable to it. At December 31, 1998, the Corporation's leverage ratio
was 6.73%.
The Federal Reserve Board's capital guidelines provide that banking
organizations experiencing internal growth or making acquisitions are expected
to maintain strong capital positions substantially above the minimum supervisory
levels, without significant reliance on intangible assets. Also, the guidelines
indicate that the Federal Reserve Board will consider a "tangible Tier I
leverage ratio" in evaluating proposals for expansion or new activities. The
tangible Tier I leverage ratio is the ratio of a banking organization's Tier I
capital (excluding intangibles) to total assets (excluding intangibles).
The Corporation's banking subsidiaries are subject to risk-based and leverage
capital guidelines substantially similar to those imposed by the Federal Reserve
Board on bank holding companies.
Prompt Corrective Action
The FDI Act requires federal banking regulators to take prompt corrective action
with respect to depository institutions that do not meet minimum capital
requirements. The FDI Act identifies the following capital tiers for financial
institutions: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized.
Rules adopted by the federal banking agencies provide that an institution is
deemed to be: "well capitalized" if the institution has a Total risk-based
capital ratio of 10.0% or greater, a Tier I risk-based ratio of 6.0% or greater,
and a leverage ratio of 5.0% or greater, and the institution is not subject to
an order, written agreement, capital directive, or prompt corrective action
directive to meet and maintain a specific level for any capital measure;
"adequately capitalized" if the institution has a Total risk-based capital ratio
of 8.0% or greater, a Tier I risk-based capital ratio of 4.0% or greater, and a
leverage ratio of 4.0% or greater (or a leverage ratio of 3.0% or greater if the
institution is rated composite 1 in its most recent report of examination,
subject to appropriate Federal banking agency guidelines), and the institution
does not meet the definition of a well capitalized institution;
"undercapitalized" if the institution has a Total risk-based capital ratio that
is less than 8.0%, a Tier I risk-based capital ratio that is less than 4.0% or a
leverage ratio that is less than 4.0% (or a leverage ratio that is less than
3.0% if the institution is rated composite 1 in its most recent report of
examination, subject to appropriate Federal banking agency guidelines) and the
institution does not meet the definition of a significantly undercapitalized or
critically undercapitalized institution; "significantly undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 6.0%, a Tier
I risk-based capital ratio that is less than 3.0%, or a leverage ratio that is
less than 3.0% and the institution does not meet the definition of a critically
undercapitalized institution; and "critically undercapitalized" if the
institution has a ratio of tangible equity to total assets that is equal to or
less than 2.0%. The FDI Act imposes progressively more restrictive constraints
on operations, management and capital distributions, depending on the capital
category in which an institution is classified.
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ITEM 1. BUSINESS (continued)
Supervision and Regulation (continued)
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At December 31, 1998, all of the Corporation's banking subsidiaries were well
capitalized based on the ratios and guidelines noted previously. A bank's
capital category, however, is determined solely for the purpose of applying the
prompt corrective action rules and may not constitute an accurate representation
of the bank's overall financial condition or prospects.
The appropriate federal banking agency may, under certain circumstances,
reclassify a well capitalized insured depository institution as adequately
capitalized. The appropriate agency is also permitted to require an adequately
capitalized or undercapitalized institution to comply with the supervisory
provisions as if the institution were in the next lower category (but not treat
a significantly undercapitalized institution as critically undercapitalized)
based on supervisory information other than the capital levels of the
institution. The statute provides that an institution may be reclassified if the
appropriate federal banking agency determines (after notice and opportunity for
hearing) that the institution is in an unsafe or unsound condition or deems the
institution to be engaging in an unsafe or unsound practice.
Depositor Preference
Legislation enacted in August 1993 provides that depositors and certain claims
for administrative expenses and employee compensation against an insured
depository institution would be afforded a priority over other general unsecured
claims against such an institution in the "liquidation or other resolution" of
such an institution by any receiver.
Legislative Initiatives
During recent years, regulatory guidelines have been adopted, and legislation
has been proposed in Congress, to address concerns regarding retail sales by
banks of various nondeposit investment products, including mutual funds.
Legislative and regulatory attention to these matters is likely to continue, and
may intensify, in the future. Although existing statutory and regulatory
requirements in this regard have not had a significant effect on the
Corporation's business, there can be no assurance that future requirements will
not have such an effect. Various other legislative initiatives, including
proposals to restructure the banking regulatory system and the separation of
banking from certain securities and other commercial activities, are from time
to time introduced in Congress. The Corporation cannot determine the ultimate
effect that any such potential legislation, if enacted, would have upon its
financial condition or operations.
Competition
- -----------
The Corporation and its subsidiaries continue to be subject to intense
competition in all aspects and areas of their businesses from bank holding
companies and banks; other domestic and foreign depository institutions, such as
savings and loan associations, savings banks and credit unions; and other
service providers, such as finance, mortgage and leasing companies, brokerage
firms, credit card companies, benefits consultants, mutual funds, investment
banking companies, investment management firms and insurance companies. The
Corporation also competes with nonfinancial institutions, including retail
stores and manufacturers of consumer products that maintain their own credit
programs, as well as governmental agencies that make available loans to certain
borrowers. Also, in the Business Fee Services sector, the Corporation competes
with a wide range of technologically capable service providers, such as data
processing and outsourcing firms. Many of the Corporation's competitors, with
the particular exception of bank holding companies, banks and thrift
institutions, are not subject to regulation as extensive as that described under
the "Supervision and Regulation" section and, as a result, may have a
competitive advantage over the Corporation in certain respects.
Employees
- ---------
The Corporation and its subsidiaries had an average of approximately 28,500
full-time equivalent employees in the fourth quarter of 1998.
10
12
Statistical Disclosure by Bank Holding Companies
The Securities Act of 1933 Industry Guide 3 and the Securities Exchange Act of
1934 Industry Guide 3 ("Guide 3"), requires that the following statistical
disclosures be made in Annual Reports on Form 10-K filed by bank holding
companies.
I. Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates
and Interest Differential
Information required by this section of Guide 3 is presented in the Rate/Volume
Variance Analysis below. Required information is also presented in the Financial
Section of the Corporation's 1998 Annual Report to Shareholders in the
Consolidated Balance Sheet -Average Balances and Interest Yields/Rates on pages
38 and 39, and in Net Interest Revenue, on page 37, which are incorporated
herein by reference.
RATE/VOLUME VARIANCE ANALYSIS
- ------------------------------------------------------------------------------------------------------------------------------
Year ended December 31,
1998 over (under) 1997 1997 over (under) 1996
--------------------------------- --------------------------------
Due to change in Due to change in
----------------- Net ------------------ Net
(in millions) Rate Volume change Rate Volume change
- ------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in interest
revenue from interest-earning assets:
Federal funds sold and securities
under resale agreements $ 6 $ 13 $ 19 $ - $ - $ -
Interest-bearing deposits with banks - 7 7 (2) (8) (10)
Other money market investments - - - 1 (2) (1)
Trading account securities 2 5 7 - 1 1
Securities:
U.S. Treasury and agency securities (4) 2 (2) 13 (38) (25)
Obligations of states and political
subdivisions - 1 1 - - -
Other (1) 1 - (1) (3) (4)
Loans (includes loan fees) (63) 207 144 (32) 46 14
- -----------------------------------------------------------------------------------------------------------------------------
Total (60) 236 176 (21) (4) (25)
Increase (decrease) in interest
expense on interest-bearing liabilities:
Deposits in domestic offices:
Demand - 3 3 1 (12) (11)
Money market and other savings accounts (1) 39 38 (3) 9 6
Retail savings certificates (3) 21 18 8 32 40
Other time deposits (2) 18 16 4 1 5
Deposits in foreign offices 1 6 7 (9) (56) (65)
Federal funds purchased and securities
under repurchase agreements 1 45 46 3 (20) (17)
Other short-term borrowings 3 6 9 (5) (11) (16)
Notes and debentures (with original
maturities over one year) (4) 19 15 (1) 47 46
- -----------------------------------------------------------------------------------------------------------------------------
Total (5) 157 152 (2) (10) (12)
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
interest revenue $(55) $ 79 $ 24 $ (19) $ 6 $(13)
- -----------------------------------------------------------------------------------------------------------------------------
Note: Amounts are calculated on a taxable equivalent basis where applicable, at
a tax rate approximating 35% and are before the effect of reserve requirements.
Changes in interest revenue or interest expense arising from the combination of
rate and volume variances are allocated proportionally to rate and volume based
on their relative absolute magnitudes.
11
13
Statistical Disclosure by Bank Holding Companies (continued)
- ------------------------------------------------------------
II. Securities Portfolio
A. Carrying values of securities at year-end are as follows:
- ----------------------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE December 31,
(in millions) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury and agency securities $5,244 $2,727 $4,010
Obligations of states and political subdivisions 112 26 49
Other securities:
Other mortgage-backed 2 3 4
Bonds, notes and debentures 10 11 12
Other 5 - 36
- ----------------------------------------------------------------------------------------------------------------------------------
Total other securities 17 14 52
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities available for sale $5,373 $2,767 $4,111
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT SECURITIES December 31,
(in millions) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury and agency securities $1,518 $1,994 $2,292
Other securities:
Other mortgage-backed 16 23 29
Bonds, notes and debentures 16 14 16
Stock of Federal Reserve Bank 51 50 37
Other 1 1 1
- ----------------------------------------------------------------------------------------------------------------------------------
Total other securities 84 88 83
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment securities $1,602 $2,082 $2,375
- ----------------------------------------------------------------------------------------------------------------------------------
B. Maturity Distribution of Securities
Information required by this section of Guide 3 is presented in the
Corporation's 1998 Annual Report to Shareholders in note 3 of Notes to
Financial Statements on Securities on pages 78 through 80, which note is
incorporated herein by reference.
12
14
Statistical Disclosure by Bank Holding Companies (continued)
- ------------------------------------------------
III. Loan Portfolio
A. Types of Loans
Information required by this section of Guide 3 is included in the
Corporate Risk section of the Corporation's 1998 Annual Report to
Shareholders on pages 55 through 65, which portions are incorporated herein
by reference.
B. Maturities and Sensitivities of Loans to Changes in Interest Rates
Maturity distribution of loans at December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(in millions) Within 1 year (a) 1-5 years Over 5 years Total
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic:(b)
Commercial and financial $3,554 $6,770 $1,736 $12,060
Commercial real estate 572 1,175 538 2,285
- ------------------------------------------------------------------------------------------------------------------------------------
Total domestic 4,126 7,945 2,274 14,345
International 1,003 239 312 1,554
- ------------------------------------------------------------------------------------------------------------------------------------
Total $5,129 $8,184 $2,586 $15,899
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Maturity distributions are based on remaining contractual maturities.
(a) Includes demand loans and loans with no stated maturity.
(b) Excludes consumer mortgages, credit card, other consumer credit and lease
finance assets.
Sensitivity of loans at December 31, 1998, to changes in interest rates
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic International
(in millions) operations (a) operations Total
- ------------------------------------------------------------------------------------------------------------------------------------
Loans due in one year or less (b) $4,126 $1,003 $5,129
Loans due after one year:
Variable rates 8,950 429 9,379
Fixed rates 1,269 122 1,391
- ------------------------------------------------------------------------------------------------------------------------------------
Total loans $14,345 $1,554 $15,899
- ------------------------------------------------------------------------------------------------------------------------------------
Note: Maturity distributions are based on remaining contractual maturities.
(a) Excludes consumer mortgages, credit card, other consumer credit and lease
finance assets.
(b) Includes demand loans and loans with no stated maturity.
C. Risk Elements
Information required by this section of Guide 3 is included in the
Corporate Risk section of the Corporation's 1998 Annual Report to
Shareholders on pages 55 through 65, which portions are incorporated herein
by reference.
IV. Summary of Loan Loss Experience
The Corporation maintains a credit loss reserve that, in management's
judgment, is adequate to absorb losses embedded in the loan portfolio.
Management reviews the adequacy of the reserve at least quarterly. The
reserve determination methodology is designed to provide procedural
discipline in assessing the adequacy of the reserve. For analytical
purposes, the reserve methodology estimates loss potential in both the
commercial and consumer loan portfolios. This methodology primarily uses an
individual evaluation of problem credits and a historical analysis of loss
experience and criticized credit levels. In addition, the status and amount
of nonperforming and past-due loans are considered. Qualitative factors
considered include: industry risks, current economic factors affecting
collectibility, trends in portfolio volume, quality, maturity and
composition and current interest rate levels and economic conditions.
13
15
Statistical Disclosure by Bank Holding Companies (continued)
- ------------------------------------------------
IV. Summary of Loan Loss Experience (continued)
When losses on specific loans are identified, management charges off the portion
deemed uncollectible. The allocation of the Corporation's reserve for credit
losses is presented below as required by Guide 3.
- ------------------------------------------------------------------------------------------------------------------------------------
December 31,
(in millions) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic reserve:
Commercial and financial $194 $162 $117 $169 $195
Real estate:
Commercial 92 88 98 92 157
Consumer 56 51 58 61 75
Consumer credit 117 132 198 135 141
Lease finance assets 26 30 43 6 17
- ------------------------------------------------------------------------------------------------------------------------------------
Total domestic reserve 485 463 514 463 585
International reserve 11 12 11 8 22
- ------------------------------------------------------------------------------------------------------------------------------------
Total reserve $496 $475 $525 $471 $607
- ------------------------------------------------------------------------------------------------------------------------------------
Further information on the Corporation's credit policies, the factors that
influenced management's judgment in determining the level of the reserve for
credit losses, and the analyses of the credit loss reserve for the years
1994-1998 are set forth in the Financial Section of the Corporation's 1998
Annual Report to Shareholders in the Credit Risk section on pages 55 and 56, the
Credit Quality Expense, Reserve for Credit Losses and Review of Net Credit
Losses section on pages 64 and 65, in note 1 of Notes to Financial Statements
under Reserve for Credit Losses on page 75 and in note 6 on page 81 which
portions are incorporated herein by reference.
For each category above, the ratio of loans to consolidated total loans is as
follows:
- ----------------------------------------------------------------------------------------------------------------------------------
December 31,
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
Domestic loans:
Commercial and financial 38% 37% 37% 40% 38%
Real estate:
Commercial 7 6 6 6 6
Consumer 27 29 29 32 32
Consumer credit 14 14 14 16 18
Lease finance assets 9 9 9 3 3
- ----------------------------------------------------------------------------------------------------------------------------------
Total domestic loans 95 95 95 97 97
International loans 5 5 5 3 3
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans 100% 100% 100% 100% 100%
- -----------------------------------------------------------------------------------------------------------------------------------
14
16
Statistical Disclosure by Bank Holding Companies (continued)
- ------------------------------------------------
V. Deposits
---------------------------------------------------------------------------------------------------------------------------
Maturity distribution of domestic time deposits at December 31, 1998
Within 4-6 7-12 Over
(in millions) 3 months months months 1 year Total
---------------------------------------------------------------------------------------------------------------------------
Time certificates of deposit in denominations
of $100,000 or greater $2,144 $ 509 $ 415 $ 154 $3,222
Time certificates of deposit in denominations
of less than $100,000 1,404 1,489 1,790 1,068 5,751
---------------------------------------------------------------------------------------------------------------------------
Total time certificates of deposit 3,548 1,998 2,205 1,222 8,973
---------------------------------------------------------------------------------------------------------------------------
Other time deposits in denominations
of $100,000 or greater 19 - - 1 20
Other time deposits in denominations
of less than $100,000 18 - - - 18
---------------------------------------------------------------------------------------------------------------------------
Total other time deposits 37 - - 1 38
---------------------------------------------------------------------------------------------------------------------------
Total domestic time deposits $3,585 $1,998 $2,205 $1,223 $9,011
---------------------------------------------------------------------------------------------------------------------------
The majority of foreign deposits of approximately $3.1 billion at
December 31, 1998, were in amounts in excess of $100,000. Additional
information required by this section of Guide 3 is set forth in the
Corporation's 1998 Annual Report to Shareholders in Consolidated
Balance Sheet -- Average Balances and Interest Yields/Rates on pages 38
and 39, which pages are incorporated herein by reference.
VI. Return on Equity and Assets
Year ended December 31,
1998 1997 1996
---------------------------------------------------------------------------------------------------------------------------
(1) Return on total assets(a), based on:
Net income 1.81% 1.80% 1.74%
Net income applicable to common stock 1.79 1.75 1.64
(2) Return on common shareholders' equity (a),
based on net income applicable to common stock 20.67 21.47 20.38
Return on total shareholders' equity (a), based on net income 20.75 20.83 19.23
(3) Dividend payout ratio of common stock, based on
diluted net income per share 42.42 44.00 44.95
(4) Equity to total assets (a), based on:
Common shareholders' equity 8.67 8.14 8.05
Total shareholders' equity 8.72 8.62 9.07
---------------------------------------------------------------------------------------------------------------------------
(a) Computed on a daily average basis.
15
17
Statistical Disclosure by Bank Holding Companies (continued)
- ------------------------------------------------
VII. Short-Term Borrowings
Federal funds purchased and securities sold under agreements to
repurchase represent funds acquired for securities transactions and
other funding requirements. Federal funds purchased mature on the
business day after execution. Selected balances and rates are as
follows:
--------------------------------------------------------------------------------------------------
(dollar amounts in millions) 1998 1997
--------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold
under agreements to repurchase:
Maximum month-end balance $3,594 $2,063
Average daily balance $2,207 $1,390
Average rate during the year 5.56% 5.51%
Balance at December 31 $3,594 $1,997
Average rate at December 31 4.07% 5.84%
--------------------------------------------------------------------------------------------------
ITEM 2. PROPERTIES
Pittsburgh properties
- ---------------------
In 1983, Mellon Bank entered into a long-term lease of One Mellon Bank Center, a
54-story office building in Pittsburgh, Pennsylvania. At December 31, 1998,
Mellon Bank occupied approximately 78% of the building's approximately 1,525,000
square feet of rentable space and subleased substantially all of the remaining
space to third parties.
During 1984, Mellon Bank entered into a sale/leaseback arrangement of the Union
Trust Building, also known as Two Mellon Bank Center, in Pittsburgh,
Pennsylvania, while retaining title to the land thereunder. At December 31,
1998, Mellon Bank occupied approximately 82% of this building's approximately
595,000 square feet of rentable space and subleased substantially all of the
remaining space to third parties.
Mellon Bank owns the 41-story office building in Pittsburgh, Pennsylvania, known
as Three Mellon Bank Center. At December 31, 1998, Mellon Bank occupied
approximately 99% of the approximately 943,000 square feet of rentable space,
with the remainder leased to third parties.
In September 1998, Mellon Bank broke ground for its 14-story, approximately
750,000 square foot Mellon Client Service Center (the "Center") in Pittsburgh,
Pennsylvania. The Center is expected to be ready for occupancy in the spring of
2001 with Mellon Bank occupying all of the space.
Philadelphia properties
- -----------------------
Mellon Bank leases a building in Philadelphia, Pennsylvania, known as Mellon
Independence Center. At December 31, 1998, Mellon Bank occupied approximately
50% of Mellon Independence Center's approximately 882,000 square feet of
rentable space, with the remainder of the space in the building subleased to
third parties.
In 1990, Mellon Bank entered into a 25-year lease for a portion of a 53-story
office building known as Mellon Bank Center, at the corner of 18th and Market
Streets in the Center City area of Philadelphia, Pennsylvania. At December 31,
1998, Mellon Bank leased approximately 19% of the building's approximately
1,245,000 square feet of rentable space.
Boston properties
- -----------------
The Boston Company leases space in a 41-story downtown Boston, Massachusetts
office building known as One Boston Place. At December 31, 1998, The Boston
Company leased approximately 34% of One Boston Place's approximately 770,000
square feet of rentable space.
16
18
ITEM 2. PROPERTIES (continued)
At December 31, 1998, The Boston Company also occupied space in three office
buildings in the Wellington Business Center located in Medford, Massachusetts.
At December 31, 1998, The Boston Company leased 100% of the approximately
117,000 rentable square foot building known as Client Services Center II. At
December 31, 1998, The Boston Company leased 100% of the approximately 320,000
rentable square foot building known as Client Services Center III and leased
approximately 22,000 square feet of rentable space in the building known as
Client Services Center I.
In February 1999, Mellon announced the opening of a three-story, approximately
385,000 square foot office building in Everett, Massachusetts. It has entered
into a 20-year lease of the facility and will relocate from space in the three
office buildings in the Wellington Business Center located in Medford,
Massachusetts that it currently occupies and will occupy all of this new
building.
New York properties
- -------------------
At December 31, 1998, The Dreyfus Corporation leased approximately 277,000
square feet of rentable space at 200 Park Avenue in New York City. Other than
approximately 14,000 square feet of rentable space which is subleased to a third
party, all of the space is currently occupied by Dreyfus. At December 31, 1998,
Dreyfus Service Corporation leased approximately 160,000 square feet of rentable
space in EAB Plaza in Uniondale, New York. This space is 100% occupied by
Dreyfus.
Other properties
- ----------------
The banking subsidiaries' retail offices are both owned and leased under leases
expiring at various times through the year 2020.
Other subsidiaries of the Corporation lease office space primarily for their
operations at many of the locations listed on pages 14 through 16 of the
Principal Locations and Operating Entities Section of the Corporation's 1998
Annual Report, which pages are incorporated herein by reference. For additional
information on the Corporation's premises and equipment, see note 7 of Notes to
Financial Statements on page 82 of the Corporation's 1998 Annual Report, which
note is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS
Various legal actions and proceedings are pending or are threatened against the
Corporation and its subsidiaries, some of which seek relief or damages in
amounts that are substantial. These actions and proceedings arise in the
ordinary course of the Corporation's businesses and include suits relating to
its lending, collections, servicing, investment, mutual fund, advisory, trust
and other activities. Because of the complex nature of some of these actions and
proceedings, it may be a number of years before such matters ultimately are
resolved. After consultation with legal counsel, management believes that the
aggregate liability, if any, resulting from such pending and threatened actions
and proceedings will not have a material adverse effect on the Corporation's
financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders for vote during the fourth quarter
of 1998.
17
19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is set forth in the Corporation's 1998
Annual Report to Shareholders in Liquidity and Dividends on pages 48 through 50,
in Selected Quarterly Data on page 67, in note 22 of Notes to Financial
Statements on pages 95 and 96 and in Corporate Information on page 111, which
portions are incorporated herein by reference.
In October 1996, the board of directors declared a dividend, paid October 31,
1996, of one right (a "Right") issued pursuant to the Shareholder Protection
Rights Agreement, dated as of October 15, 1996 (the "Rights Agreement"), for
each outstanding share of the Corporation's Common Stock (the "Common Stock").
The Rights are not currently exercisable and trade only with the Common Stock
(and are currently evidenced only in connection with the Common Stock). The
Rights would separate from the Common Stock and become exercisable only when a
person or group acquires 15% or more of the Common Stock or ten days after a
person or group commences a tender offer that would result in ownership of 15%
or more of the Common Stock. At that time, each Right would entitle the holder
to purchase for $112.50 (the "exercise price") one one-hundredth of a share of
participating preferred stock, which is designed to have economic and voting
rights generally equivalent to one share of common stock. Should a person or
group actually acquire 15% or more of the Common Stock, each Right held by the
acquiring person or group (or their transferees) would become void and each
Right held by the Corporation's other shareholders would entitle those holders
to purchase for the exercise price a number of shares of the Common Stock having
a market value of twice the exercise price. Should the Corporation, at any time
after a person or group has become a 15% beneficial owner and acquired control
of the Corporation's board of directors, be involved in a merger or similar
transaction with any person or group or sell assets to any person or group, each
outstanding Right would then entitle its holder to purchase for the exercise
price a number of shares of such other company having a market value of twice
the exercise price. In addition, if any person or group acquires 15% or more of
the Common Stock, the Corporation may, at its option and to the fullest extent
permitted by law, exchange one share of Common Stock for each outstanding Right.
The Rights are not exercisable until the above events occur and will expire on
October 31, 2006, unless earlier exchanged or redeemed by the Corporation. The
Corporation may redeem the Rights for one-half cent per Right under certain
circumstances.
The foregoing description is not intended to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is an exhibit to this
Report.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is set forth in the Corporation's 1998
Annual Report to Shareholders in the Financial Summary on page 21, in the
Significant Financial Events in 1998 on pages 22 through 24, in the Overview of
1998 results on pages 25 and 26, in the Consolidated Balance Sheet -- Average
Balances and Interest Yields/Rates on pages 38 and 39, and in note 1 of Notes to
Financial Statements on pages 72 through 78, which portions are incorporated
herein by reference.
18
20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item is set forth in the Corporation's 1998
Annual Report to Shareholders in the Financial Review on pages 22 through 67 and
in note 22 of Notes to Financial Statements on pages 95 and 96, which portions
are incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this Item is set forth in the Corporation's 1998
Annual Report to Shareholders in the Interest Rate Sensitivity Analysis on pages
50 through 55, in note 1 of Notes to Financial Statements under
Off-balance-sheet instruments used for risk management purposes and
Off-balance-sheet instruments used for trading activities on page 77 and in note
24 of Notes to Financial Statements on pages 96 through 103, which portions are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to Item 14 on page 22 hereof for a detailed listing of the
items under Financial Statements, Financial Statement Schedules, and Other
Financial Data which are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is included in the Corporation's proxy
statement for its 1999 Annual Meeting of Shareholders (the "1999 Proxy
Statement") in the Election of Directors-Biographical Summaries of Nominees and
Directors section on pages 2 through 7 and in the Section 16(a) Beneficial
Ownership Reporting Compliance section on page 28, each of which sections is
incorporated herein by reference, and in the following section "Executive
Officers of the Registrant."
EXECUTIVE OFFICERS OF THE REGISTRANT
The name and age of, and the positions and offices held by, each executive
officer of the Corporation as of March 1, 1999, together with the offices held
by each such person during the last five years, are listed on the following
pages. Messrs. McGuinn, Condron and Elliott have executed employment contracts
with the Corporation. All other executive officers serve at the pleasure of
their appointing authority. No executive officer has a family relationship to
any other listed executive officer.
19
21
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
Executive Officers of the Registrant (continued)
- ------------------------------------
Age Position Year Elected
--- -------- ------------
Martin G. McGuinn 56 Chairman and Chief Executive Officer, 1999 (1)
Mellon Bank Corporation and Mellon
Bank, N.A.
Christopher M. Condron 51 President and Chief Operating Officer, 1999 (2)
Mellon Bank Corporation and Mellon
Bank, N.A.
Chairman and Chief Executive Officer, 1996
The Dreyfus Corporation
Steven G. Elliott 52 Senior Vice Chairman and Chief 1999 (3)
Financial Officer, Mellon Bank
Corporation and Mellon Bank, N.A.
John T. Chesko 49 Vice Chairman and Chief Risk Officer, 1997 (4)
Mellon Bank Corporation and Mellon
Bank, N.A.
Jeffery L. Leininger 53 Vice Chairman, Mellon Bank Corporation 1996 (5)
and Mellon Bank, N.A.
Keith P. Russell 53 Vice Chairman, Mellon Bank Corporation 1996 (6)
and Mellon Bank, N.A.
Peter Rzasnicki 55 Vice Chairman, Mellon Bank Corporation 1998 (7)
and Mellon Bank, N.A.
William J. Stallkamp 59 Vice Chairman, Mellon Bank Corporation 1998 (8)
and Mellon Bank, N.A.
Chairman and Chief Executive Officer, 1996
Mellon PSFS
Allan P. Woods 52 Vice Chairman and Chief Information 1999 (9)
Officer, Mellon Bank Corporation and
Mellon Bank, N.A.
Michael A. Bryson 52 Executive Vice President and Treasurer, 1998 (10)
Mellon Bank Corporation
Michael K. Hughey 47 Senior Vice President and Controller of 1990
Mellon Bank Corporation and Senior
Vice President, Director of Taxes and
Controller, Mellon Bank, N.A.
20
22
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
Executive Officers of the Registrant (continued)
- ------------------------------------
(1) From 1993 through February 1998, Mr. McGuinn served as Vice Chairman,
Retail Financial Services, Mellon Bank Corporation and Mellon Bank, N.A.
From March 1998 through December 1998, he was Chairman and Chief
Executive Officer, Mellon Bank, N.A. and Vice Chairman, Mellon Bank
Corporation.
(2) From 1989 to January 1994, Mr. Condron was President of Boston Safe
Deposit and Trust Company and Executive Vice President of The Boston
Company. In January 1994, he assumed the title of Vice Chairman of The
Boston Company. From November 1994 through February 1998, he was Vice
Chairman, Mellon Bank Corporation and Mellon Bank, N.A. From March 1998
through December 1998, Mr. Condron was President and Chief Operating
Officer, Mellon Bank, N.A. and Vice Chairman, Mellon Bank Corporation.
(3) From 1992 through February 1998, Mr. Elliott served as Vice Chairman and
Chief Financial Officer of Mellon Bank Corporation and Mellon Bank, N.A.
From March 1998 through December 1998, he was Senior Vice Chairman and
Chief Financial Officer of Mellon Bank, N.A. and Vice Chairman and Chief
Financial Officer of Mellon Bank Corporation. From 1990 through April
1998, Mr. Elliott was Treasurer of Mellon Bank Corporation.
(4) From 1991 to December 1994, Mr. Chesko was Senior Vice President and
Senior Credit Approval Officer of the Credit Policy Department of Mellon
Bank, N.A. From December 1994 to June 1997, he was Executive Vice
President, Risk Management, of Mellon Bank, N.A. and Chief Compliance
Officer of Mellon Bank Corporation and Mellon Bank, N.A. From April 1996
to December 1998, Mr. Chesko was Chief Credit Officer of Mellon Bank
Corporation and Mellon Bank, N.A.
(5) From 1988 to February 1994, Mr. Leininger was Senior Vice President of
the Middle Market Banking Department's western region. From February 1994
to February 1996, he was Executive Vice President and Department Head of
Middle Market Banking of Mellon Bank, N.A.
(6) From 1992 to June 1996, Mr. Russell was Vice Chairman, Chief Risk and
Credit Officer, Mellon Bank Corporation and Mellon Bank, N.A.
(7) From 1993 to 1995, Mr. Rzasnicki was Executive Vice President, Mortgage
Banking Department and AFCO/CAFO. From 1995 through March 1998, he was
Executive Vice President, Global Trust Services, Mellon Bank, N.A.
(8) From 1988 to March 1998, Mr. Stallkamp was Executive Vice President,
Mellon Bank, N.A.
(9) From 1993 through December 1998, Mr. Woods was Executive Vice President,
Mellon Information Services Department, Mellon Bank, N.A.
(10) From 1994 to April 1998, Mr. Bryson was Senior Vice President, Strategic
Planning, Mellon Bank, N.A.
21
23
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is included in the 1999 Proxy Statement in
the Directors' Compensation section on pages 9 and 10 and in the Executive
Compensation section on pages 15 through 22, and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is included in the 1999 Proxy Statement in
the Beneficial Ownership of Stock section on pages 12 and 13, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is included in the 1999 Proxy Statement in
the Business Relationships and Related Transactions and Certain Legal
Proceedings sections on page 11, and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The financial statements and schedules required for the Annual Report of
the Corporation on Form 10-K are included, attached or incorporated by
reference as indicated in the following index. Page numbers refer to
pages of the Financial Section of the Corporation's 1998 Annual Report to
Shareholders.
(i) Financial Statements Page No.
-------------------- --------
Mellon Bank Corporation (and its subsidiaries):
Consolidated Income Statement 68
Consolidated Balance Sheet 69
Consolidated Statement of Changes in Shareholders' Equity 70
Consolidated Statement of Cash Flows 71 and 72
Notes to Financial Statements 72 through 109
Report of Independent Auditors 110
(ii) Financial Statement Schedules
-----------------------------
Financial Statement schedules are omitted either because they are not
required or are not applicable, or because the required information is
shown in the financial statements or notes thereto.
(iii) Other Financial Data
--------------------
Selected Quarterly Data 67
(b) Current Reports on Form 8-K during the fourth quarter of 1998:
(1) A report dated October 16, 1998, which included, under Items 5 and 7,
(i) the Corporation's press release, dated October 16, 1998,
announcing the completion of its acquisition of a majority interest
in Newton Management Limited and (ii) the Corporation's press
release, dated October 20, 1998, regarding third quarter 1998 and
first nine months 1998 results of operations.
22
24
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(continued)
(b) Current Reports on Form 8-K during the fourth quarter of 1998 (continued)
(2) A report dated November 9, 1998, which included, under Item 7,
certain exhibits incorporated by reference into Registration
Statement No. 33-62151 pertaining to certain debt securities of
Mellon Financial Company and related guarantees of the Registrant.
(c) Exhibits
The exhibits listed on the Index to Exhibits on pages 25 through 30
hereof are incorporated by reference or filed herewith in response to
this Item. In addition, the information required by Exhibit 11.1,
Computation of Basic and Diluted Net Income Per Common Share, is set
forth in the Corporation's 1998 Annual Report to Shareholders in note 19
of Notes to Financial Statements on pages 87 and 88, which portions are
incorporated herein by reference.
23
25
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Corporation has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Mellon Bank Corporation
By: /s/ Martin G. McGuinn
----------------------------
Martin G. McGuinn
Chairman and Chief
Executive Officer
DATED: March 19, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report has been signed below by the following persons on behalf of the
Corporation and in the capacities and on the date indicated.
Signature Capacities
- ------------------------------ -----------------------------
By: /s/ Martin G. McGuinn
--------------------------- Director and Principal
Martin G. McGuinn Executive Officer
By: /s/ Steven G. Elliott Principal Financial Officer
---------------------------
Steven G. Elliott
By: /s/ Michael K. Hughey Principal Accounting Officer
---------------------------
Michael K. Hughey
Dwight L. Allison, Jr.; Directors
Burton C. Borgelt; Carol R. Brown;
Frank V. Cahouet; Jared L. Cohon;
Christopher M. Condron; J. W. Connolly;
Charles A. Corry; C. Frederick Fetterolf;
Ira J. Gumberg; Pemberton Hutchinson;
George W. Johnstone; Rotan E. Lee;
Andrew W. Mathieson; Edward J. McAniff;
Robert Mehrabian; Seward Prosser Mellon;
Mark A. Nordenberg; David S. Shapira;
Joab L. Thomas; Wesley W. von Schack;
and William J. Young
By: /s/ Carl Krasik DATED: March 19, 1999
---------------------------
Carl Krasik
Attorney-in-fact
24
26
Index to Exhibits
-----------------
Exhibit
No. Description Method of Filing
--- ------------------------------------- ----------------------------------------
3.1 Restated Articles of Incorporation of Previously filed as Exhibit 3.1 to
Mellon Bank Corporation, as amended the Quarterly Report on Form 10-Q
and restated as of September 17, 1998. (File No. 1-7410) for the quarter ended
September 30, 1998, and incorporated
herein by reference.
3.2 By-Laws of Mellon Bank Corporation, as Previously filed as Exhibit 3.2 to
amended, effective November 5, 1998. the Quarterly Report on Form 10-Q
(File No. 1-7410) for the quarter ended
September 30, 1998, and incorporated
herein by reference.
4.1 Instruments defining the rights See Exhibits 3.1 and 3.2 above.
of securities holders.
4.2 Shareholder Protection Rights Agreement Previously filed as Exhibit 1 to Form
between Mellon Bank Corporation and 8-A Registration Statement (File
Mellon Bank, N.A., as Rights Agent, No. 1-7410) dated October 29, 1996,
dated as of October 15, 1996. and incorporated herein by reference.
4.3 Amendment No. 1, dated as of June 2, Previously filed as Exhibit 4.1 to the
1997, to Shareholder Protection Rights Quarterly Report on Form 10-Q (File
Agreement between Mellon Bank No. 1-7410) for the quarter ended
Corporation and Mellon Bank, N.A., as June 30, 1997, and incorporated herein
Rights Agent, dated as of October 15, 1996. by reference.
4.4 Junior Subordinated Indenture, dated as of Previously filed as Exhibit 4.1
December 3, 1996, between Mellon Bank to Current Report on Form 8-K
Corporation and The Chase Manhattan Bank, (File No. 1-7410) dated December 3,
as Debenture Trustee. 1996, and incorporated herein by
reference.
4.5(a) Certificate representing the 7.72% Junior Previously filed as Exhibit 4.2
Subordinated Deferrable Interest Debentures, to Current Report on Form 8-K
Series A, of Mellon Bank Corporation. (File No. 1-7410) dated December 3,
1996, and incorporated herein by
reference.
4.5(b) Certificate representing the 7.995% Junior Previously filed as Exhibit 4.2
Subordinated Deferrable Interest Debentures, to Current Report on Form 8-K
Series B, of Mellon Bank Corporation. (File No. 1-7410) dated December 20,
1996, and incorporated herein by
reference.
25
27
Index to Exhibits (continued)
Exhibit
No. Description Method of Filing
--- ------------------------------------- ----------------------------------------
4.6(a) Amended and Restated Trust Agreement, dated Previously filed as Exhibit 4.3
as of December 3, 1996, of Mellon Capital I, to Current Report on Form 8-K
among Mellon Bank Corporation, as Depositor, (File No. 1-7410) dated December 3,
The Chase Manhattan Bank, as Property Trustee, 1996, and incorporated herein by
Chase Manhattan Bank Delaware, as Delaware reference.
Trustee, and the Administrative Trustees named
therein.
4.6(b) Amended and Restated Trust Agreement, dated Previously filed as Exhibit 4.3
as of December 20, 1996, of Mellon Capital II, to Current Report on Form 8-K
among Mellon Bank Corporation, as Depositor, (File No. 1-7410) dated December 20,
The Chase Manhattan Bank, as Property Trustee, 1996, and incorporated herein by
Chase Manhattan Bank Delaware, as Delaware reference.
Trustee, and the Administrative Trustees named
therein.
4.7(a) Certificate representing the 7.72% Capital Previously filed as Exhibit 4.4
Securities, Series A, of Mellon Capital I. to Current Report on Form 8-K
(File No. 1-7410) dated December 3,
1996, and incorporated herein by
reference.
4.7(b) Certificate representing the 7.995% Capital Previously filed as Exhibit 4.4
Securities, Series B, of Mellon Capital II. to Current Report on Form 8-K
(File No. 1-7410) dated December 20,
1996, and incorporated herein by
reference.
4.8(a) Guarantee Agreement, dated as of December 3, Previously filed as Exhibit 4.5
1996, between Mellon Bank Corporation, as to Current Report on Form 8-K
guarantor, and The Chase Manhattan Bank, as (File No. 1-7410) dated December 3,
Guarantee Trustee. 1996, and incorporated herein by
reference.
4.8(b) Guarantee Agreement, dated as of December 20, Previously filed as Exhibit 4.5
1996, between Mellon Bank Corporation, as to Current Report on Form 8-K
Guarantor, and The Chase Manhattan Bank, as (File No. 1-7410) dated December 20,
Guarantee Trustee. 1996, and incorporated herein by
reference.
26
28
Index to Exhibits (continued)
Exhibit
No. Description Method of Filing
--- ------------------------------------- ----------------------------------------
10.1 Lease dated as of February 1, 1983, Previously filed as Exhibit 10.4
between 500 Grant Street Associates to Annual Report on Form 10-K
Limited Partnership and Mellon (File No. 1-7410) for the year ended
Bank, N.A. with respect to One Mellon December 31, 1992, and incorporated
Bank Center. herein by reference.
10.2 First Amendment to Lease Agreement Previously filed as Exhibit 10.1
dated as of November 1, 1983, to Registration Statement on Form
between 500 Grant Street S-15 (Registration No. 2-88266)
Associates Limited Partnership and incorporated herein by
and Mellon Bank, N.A. reference.
10.3* Mellon Bank Corporation Profit Previously filed as Exhibit 10.7
Bonus Plan, as amended. to Annual Report on Form 10-K
(File No. l-7410) for the year ended
December 31, 1990, and incorporated
herein by reference.
10.4* Mellon Bank Corporation Long-Term Filed herewith.
Profit Incentive Plan (1996), as
amended effective January 15, 1999.
10.5* Mellon Bank Corporation Stock Previously filed as Exhibit 10.1 to the
Option Plan for Outside Directors Quarterly Report on Form 10-Q (File
(1989), as amended effective March 17, 1998. No. 1-7410) for the quarter ended
March 31, 1998, and incorporated
herein by reference.
10.6* Mellon Bank Corporation 1990 Filed herewith.
Elective Deferred Compensation Plan
for Directors and Members of the
Advisory Board, as amended, effective January 15,
1999.
10.7* Mellon Bank Corporation Elective Filed herewith.
Deferred Compensation Plan for
Senior Officers, as amended, effective January 15,
1999.
10.8* Mellon Bank IRC Section 401(a)(17) Previously filed as Exhibit 10.2 to the
Plan, as amended, effective Quarterly Report on Form 10-Q (File
September 15, 1998. No. 1-7410) for the quarter ended
September 30, 1998, and incorporated
herein by reference.
* Management contract or compensatory plan arrangement.
27
29
Index to Exhibits (continued)
Exhibit
No. Description Method of Filing
--- ------------------------------------- ----------------------------------------
10.9* Mellon Bank Optional Life Insurance Filed herewith.
Plan, as amended, effective
January 15, 1999.
10.10* Mellon Bank Executive Life Insurance Filed herewith.
Plan, as amended, effective
January 15, 1999.
10.11* Mellon Bank Senior Executive Life Filed herewith.
Insurance Plan, as amended, effective
January 15, 1999.
10.12* Mellon Bank Corporation Retirement Plan Previously filed as Exhibit 10.1 to
for Outside Directors, effective Quarterly Report on Form 10-Q (File
January 1, 1994. No. 1-7410) for the quarter ended
June 30, 1995, and incorporated
herein by reference.
10.13* Mellon Bank Corporation Phantom Stock Filed herewith.
Unit Plan (1995), as amended, effective
January 15, 1999.
10.14* Employment Agreement between Mellon Previously filed as Exhibit 10.17 to
Bank, N.A. and Frank V. Cahouet, Annual Report on Form 10-K
effective as of July 25, 1993, and amended (File No. 1-7410) for the year ended
and restated as of October 17, 1995. December 31, 1995, and incorporated
herein by reference.
10.15* Letter Agreement, dated February 20, 1998, Previously filed as Exhibit 10.17 to
between Mellon Bank Corporation and Annual Report on Form 10-K (File
Frank V. Cahouet. No. 1-7410) for the year ended
December 31, 1997, and
incorporated herein by reference.
10.16* Employment Agreement between Mellon Previously filed as Exhibit 10.2
Bank, N.A. and W. Keith Smith, to Quarterly Report on Form 10-Q
effective as of July 25, 1993, and amended (File No. 1-7410) for the quarter ended
and restated as of August 1, 1995. September 30, 1995, and incorporated
herein by reference.
10.17* Letter Agreement, dated February 20, 1998, Previously filed as Exhibit 10.19 to
between Mellon Bank Corporation and Annual Report on Form 10-K (File
W. Keith Smith. No. 1-7410) for the year ended
December 31, 1997, and incorporated
herein by reference.
* Management contract or compensatory plan arrangement.
28
30
Index to Exhibits (continued)
Exhibit
No. Description Method of Filing
--- ------------------------------------- ----------------------------------------
10.18* Employment Agreement between Mellon Previously filed as Exhibit 10.3 to the
Bank Corporation and Martin G. McGuinn, Quarterly Report on Form 10-Q (File
effective as of February 1, 1998. No. 1-7410) for the quarter ended
September 30, 1998, and incorporated
herein by reference.
10.19* Employment Agreement between Mellon Previously filed as Exhibit 10.4 to the
Bank Corporation and Christopher M. Quarterly Report on Form 10-Q (File
Condron, effective as of February 1, 1998. No. 1-7410) for the quarter ended
September 30, 1998, and incorporated
herein by reference.
10.20* Employment Agreement between Mellon Previously filed as Exhibit 10.5 to the
Bank Corporation and Steven G. Elliott, Quarterly Report on Form 10-Q (File
effective as of February 1, 1998. No. 1-7410) for the quarter ended
September 30, 1998, and incorporated
herein by reference.
10.21* Form of Change in Control Severance Agreement Previously filed as Exhibit 10.5 to the
between Mellon Bank Corporation and members Quarterly Report on Form 10-Q (File
of the Executive Management Group. No. 1-7410) for the quarter ended
June 30, 1997, and incorporated
herein by reference.
10.22* Form of Change in Control Severance Agreement Filed herewith.
between Mellon Bank Corporation and
members of the Senior Management Committee.
12.1 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges
and Preferred Stock Dividends--parent
corporation.
12.2 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges and Ratio of
Earnings to Combined Fixed
Charges and Preferred Stock
Dividends--Mellon Bank Corporation
and its subsidiaries.
* Management contract or compensatory plan arrangement.
29
31
Index to Exhibits (continued)
Exhibit
No. Description Method of Filing
- --------- ----------------------------------------------- ---------------------------
13.1 All portions of the Mellon Bank Corporation Filed herewith.
1998 Annual Report to Shareholders that are
incorporated herein by reference.
21.1 List of Primary Subsidiaries of the Corporation. Filed herewith.
23.1 Consent of Independent Accountants. Filed herewith.
24.1 Power of Attorney. Filed herewith.
27.1 Financial Data Schedule. Submitted herewith.
Certain instruments, which define the rights of holders of long-term debt of the
Corporation and its subsidiaries, are not filed herewith because the total
amount of securities authorized under each of them does not exceed 10% of the
total assets of the Corporation and its subsidiaries on a consolidated basis.
The Corporation hereby agrees to furnish a copy of such instruments to the
Securities and Exchange Commission upon request.
30