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MELLON REPORTS FIRST QUARTER 1993 EARNINGS

    Earnings, Excluding A Restructuring Charge and Securities Gains,
                Up 53 Percent From First Quarter of 1992
       Nonperforming Assets Decrease 11 Percent From Year-End 1992
    PITTSBURGH, April 20 /PRNewswire/ -- Mellon Bank Corporation (NYSE: MEL) today reported that first quarter 1993 earnings, excluding special items, increased by 53 percent from pro forma fully taxed earnings in the first quarter of 1992.
    "We are pleased to have maintained our core earnings momentum," said Frank V. Cahouet, chairman, president and chief executive officer. "The favorable trends of strong revenue growth and improving asset quality that prevailed throughout 1992 continued in the first quarter."
    The corporation reported net income of $34 million, or $.31 per common share, for the first quarter of 1993.  The quarter's results included an after-tax restructuring charge of $112 million taken in connection with the pending acquisition of The Boston Company, as well as $53 million in after-tax gains on the sale of securities.  Excluding these items, the corporation's net income for the quarter would have been $93 million, or $1.27 per common share.
    The corporation's first quarter 1993 results compare with pro forma fully taxed net income of $61 million, or $.90 per common share, in the first quarter of 1992.  The corporation's first quarter 1992 results were affected favorably by the corporation's tax position at that time. All remaining tax benefit carryforwards were exhausted in 1992 and, as a result, the corporation returned to fully taxed status in the first quarter of 1993.  Including tax benefits, the corporation's net income in the first quarter of 1992 was $86 million, or $1.36 per common share.
    Net interest revenue for the quarter was $317 million, up 13 percent from $280 million in the prior-year period.  Service fee revenue was $229 million, up 16 percent from $198 million in the first quarter of 1992.  Trading and other revenue was $90 million in the first quarter of 1993 -- including $87 million in gains on the sale of securities -- compared with $47 million in the prior-year period, which included $45 million in gains on the sale of securities.
    Operating expense for the first quarter of 1993 was $533 million, including the $175 million pretax restructuring charge and $25 million in net expense of acquired property.  This compared with operating expense of $367 million in the first quarter of 1992, which included $46 million in net expense of acquired property.
    The provision for credit losses was $35 million in the first quarter of 1993, compared with $60 million in the prior-year period.  Net credit losses were $49 million, down 27 percent from $67 million in the first quarter of 1992.
    Nonperforming assets totaled $532 million at March 31, 1993, down $63 million, or 11 percent, from $595 million at Dec. 31, 1992. Nonperforming assets decreased $336 million, or 39 percent, compared with March 31, 1992.
    Excluding the restructuring charge and securities gains, annualized return on assets and return on common shareholders' equity were 1.17 percent and 13.86 percent, respectively, in the first quarter of 1993.  These ratios compare favorably with pro forma fully taxed annualized return on assets and return on common shareholders' equity of .80 percent and 10.90 percent in the first quarter of 1992.
    With assets of approximately $31 billion, Mellon Bank Corporation is a major superregional bank holding company.  Through its subsidiaries, it provides wholesale, middle market and retail banking, as well as numerous service products including trust and investment, cash management and information services.
    Detailed supplemental information follows.
    Noninterest Revenue
                                          Quarter ended
                                            March 31,
    (in millions)                         1993     1992  Inc/(Dec)
    Trust and investment
     management fees                      $ 73     $ 71    $ 2
    Cash management fees and
     deposit transaction charges            48       40      8
    Information services fees               36       34      2
    Mortgage servicing fees                 17        8      9
    Credit card revenue                     13       12      1
    Other service fee revenue               42       33      9
       Total service fee revenue           229      198     31
    Trading revenue                          4        4      -
    Gains on sale of securities             87       45     42
    Other noninterest revenue               (1)      (2)     1
       Total noninterest revenue          $319     $245    $74
    Service fee revenue increased by $31 million, or 16 percent, compared with the first quarter of l992.  Principally responsible for this improvement were increases of 20 percent in cash management fees and deposit transaction charges, 104 percent in mortgage servicing fees and 33 percent in other service fee revenue.  The improvement in cash management fees and deposit transaction charges, compared with the first quarter of 1992, reflected, in large part, higher revenue from volume expansion of existing products.  The increase in mortgage servicing fees, compared with the prior-year period, resulted principally from the corporation's acquisition of mortgage servicing portfolios in 1992 as well as the servicing portfolio acquired in the December 1992 Meritor branch acquisition.  Other service fee revenue included revenue from a seasonal product, which will be lower in the remaining quarters of 1993.  Service fee revenue generated by this seasonal product increased $7 million compared with the prior-year period.
    The corporation recorded $87 million in gains on the sale of securities during the first quarter of 1993, resulting principally from the sale of U.S. agency mortgage-backed securities that were sold from the securities available for sale portfolio.  These sales were undertaken as part of the financing plan and balance sheet restructuring related to the pending acquisition of The Boston Company.
    Other noninterest revenue in the first quarter of 1993 included a write-off of discount on term debt, primarily offset by net gains on the sale of equity securities.
    In the first quarter of 1993, the corporation announced its intent to sell three of its information services businesses.  Service fee revenue generated by these businesses totaled $25 million in the first quarter of 1993, compared with $24 million in the first quarter of 1992. Service fee revenue for these businesses totaled $94 million for the full year 1992.
    Operating Expense
                                          Quarter ended
                                             March 31,
    (dollar amounts in millions)           1993    1992  Inc/(Dec)
    Staff expense                          $155    $142   $ 13
    Net occupancy expense                    37      36      1
    Professional, legal and other
     purchased services                      31      25      6
    Equipment expense                        26      25      1
    Amortization of goodwill,
     intangibles and issue costs             24      16      8
    FDIC assessment and regulatory
     examination fees                        14      13      1
    Shares, capital and franchise
     taxes                                    4       6     (2)
    Other expense                            42      58    (16)
       Operating expense before
        the net expense of
        acquired property and
        restructuring expense               333     321     12
    Net expense of acquired property         25      46    (21)
    Restructuring expense                   175       -    175
       Total operating expense             $533    $367   $166
    Average full-time equivalent
     staff                               18,100  17,300    800
    Efficiency ratio(B):
     Including amortization of
       intangibles                           60pct.  67pct.  (7) bp
     Excluding amortization of
      intangibles                            56      63     (7)
    (B) Operating expense before the net expense of acquired property and restructuring expense as a percentage of net interest (computed on a fully taxable equivalent basis), service, trading and other revenue, excluding securities gains.
    Operating expense before the net expense of acquired property and restructuring expense increased by $12 million, or 4 percent, in the first quarter of 1993, compared with the first quarter of 1992.  The corporation's December 1992 Meritor branch acquisition contributed to higher expenses in nearly all expense categories. In addition, staff expense increased due to higher bonuses and commissions, benefits expense and temporary employees expense.
    The corporation adopted FAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions," in the first quarter of 1993 by beginning to amortize the transition obligation over a 20-year transition period.  Adoption of the statement increased benefits expense by approximately $1 million compared with the prior-year period.  The reduction in other expense in the first quarter of 1993 resulted from lower expenses in a number of expense categories.
    The decrease in the net expense of acquired property in the first quarter of 1993, compared with the prior-year period, resulted primarily from a lower provision to the reserve for OREO in the first quarter of 1993.  A $48 million provision was recorded in the first quarter of 1992.
    A restructuring charge of $175 million pretax, or $112 million after-tax, was recorded in the first quarter of 1993 to reflect the corporation's estimate of the restructuring costs associated with the pending acquisition of The Boston Company.
    The increase in average full-time equivalent staff level, compared with the prior-year quarter, primarily reflected the addition of the employees of Meritor, as well as a higher level of temporary employees to support revenue increases in the corporation's service businesses.
    Income Taxes
    The corporation returned to a fully taxable status in 1993.  The provision for income taxes totaled $34 million in the first quarter of 1993, compared with $12 million in the first quarter of 1992.  Excluding the impact of restructuring expense and securities gains, the corporation's effective tax rate was 40 percent in the first quarter of 1993.  Without the availability of unrecognized tax benefits to offset federal income taxes, the corporation's provision for income taxes in the first quarter of 1992 would have been $37 million.  The corporation adopted FAS No. 109, "Accounting for Income Taxes", on a prospective basis in the first quarter of 1993.  Adoption of the standard did not materially affect the corporation's first quarter 1993 financial position or results of operations.
    CREDIT QUALITY
    Nonperforming Assets
                              March 31,     Dec. 31,    March 31,
    (dollar amounts
     in millions)                  1993(A)      1992(A)      1992
    Domestic nonperforming
     loans:
      Real estate                  $195         $216         $328
      Other domestic                101          110           86
    International
     nonperforming loans              8            8           57
         Total nonperforming
          loans                     304          334          471
    Assets acquired:
      Real estate acquired
       through foreclosures          99           96          219
      In-substance real
       estate foreclosures          136          154          181
      Reserve for real
       estate acquired              (19)         (10)         (42)
         Real estate acquired,
          net of reserves           216          240          358
      Other assets acquired          12           21           39
         Total acquired property    228          261          397
         Total nonperforming
          assets                   $532         $595         $868
    Nonperforming loans
     as a percentage of
     total loans                  1.56pct.     1.67pct.     2.56pct.
    Total nonperforming
     assets as a percentage
     of total loans and net
     acquired property            2.70pct.     2.94pct.     4.61pct.
    (A) Excludes Meritor segregated assets.
    Nonperforming assets totaled $532 million at March 31, 1993, a decrease of $63 million, or 11 percent, compared with Dec. 31, 1992. Nonperforming real estate assets, which include nonperforming real estate loans and OREO net of the reserve, decreased by $45 million during the quarter, primarily as a result of credit losses and sales. At March 31, 1993 nonperforming real estate assets were 77 percent of total nonperforming assets.
    Nonperforming assets decreased by $336 million, or 39 percent, compared with March 31, 1992 due primarily to a $275 million, or 40 percent, reduction in nonperforming real estate assets.  The reduction resulted primarily from sales, including the fourth quarter 1992 bulk sale of OREO and nonaccrual domestic commercial real estate loans, and credit losses.  The $49 million reduction in international nonperforming loans, compared with March 31, 1992, resulted primarily from in-substance foreclosures.  The decrease in other assets acquired resulted from asset sales and write-downs.
    Segregated Assets (A)
                                           March 31,     Dec. 31,
    (dollar amounts in millions)                1993         1992
    Nonaccrual loans                            $197         $259
    Acquired assets                               84            -
         Total segregated assets                 281          259
    Less:  FDIC loss sharing (B)                (267)        (237)
         Maximum credit exposure                $ 14         $ 22
    Reserve for segregated assets (C)
    Reserve balance at beginning of period      $ 18         $  -
        Segregated asset net losses              (13)           -
    Reserve balance at end of period            $  5         $ 18
    (A) Assets acquired in the Meritor branch acquisition that are classified as nonaccrual.
    (B) Represents the FDIC loss sharing arrangement of 80 percent of the first $60 million of net credit losses and 95 percent of the remaining balance of segregated assets.  At March 31, 1993, the entire balance of segregated assets was insured at the 95 percent rate as the $60 million credit loss threshold was met in the first quarter of 1993. Total net credit losses on segregated assets, before FDIC loss sharing, were $73 million in the first quarter of 1993.
    (C) This reserve is not included in the reserve for credit losses.
    Reserve for Credit Losses
                        March 31,   Dec. 31,  Sept. 30,  March 31,
    (dollar amounts
     in millions)            1993       1992       1992       1992
    Reserve for
     credit losses           $492(A)    $506(A)    $552       $589
    Reserve as a
     percentage of
     total loans            2.53pct.   2.54pct.   3.00pct.   3.20pct.
    Reserve as a
     percentage of
     nonperforming
     loans                   162pct.    152pct.    157pct.    125pct.
    (A) Excludes reserve for segregated assets.
    The reserve for credit losses decreased by $14 million during the first quarter of 1993, while the reserve as a percentage of nonperforming loans increased to 162 percent at March 31, 1993, from 152 percent at year-end 1992.  Management believes that the current reserve level is adequate to absorb future losses inherent in the loan portfolio, although the ultimate adequacy of the reserve is dependent upon future economic factors beyond the corporation's control.
    Selected Capital Data
                                   March 31,   Dec. 31,  March 31,
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Date:Apr 20, 1993
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