The Bank of New York Mellon Reports First Quarter Continuing EPS of $0.72 Excluding...

The Bank of New York Mellon Reports First Quarter Continuing EPS of $0.72
Excluding Merger and Integration Expenses An Increase of 16% Compared with
First Quarter of 2007
First Quarter Continuing EPS of $0.65 compared with $0.61 a year ago

NEW YORK, April 17 /PRNewswire-FirstCall/ -- The Bank of New York Mellon
Corporation (NYSE: BK) today reported income from continuing operations of
$749 million, or $0.65 per share, in the first quarter of 2008. This compares
to income from continuing operations of $437 million, or $0.61 per share, in
the first quarter of 2007 and $700 million, or $0.61 per share, in the fourth
quarter of 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20071001/NYM012LOGO )
Adjusting for the impact of merger and integration expenses ($126 million
pre-tax), diluted earnings per share for the first quarter of 2008 were $0.72,
which compares to $0.62 a year ago (an increase of 16%) and $0.67 sequentially
(an unannualized increase of 7%).
Adjusting for the impact of merger and integration expenses ($126 million
pre-tax) and intangible amortization ($122 million pre-tax), diluted earnings
per share for the first quarter of 2008 were $0.78, which compares to $0.65 a
year ago (an increase of 20%) and $0.74 sequentially (an unannualized increase
of 5%). See the table on page 10 for a reconciliation of net income and
earnings per share.
"Our businesses are performing well in a tough environment. We generated
14% revenue growth compared to the first quarter of 2007, significant positive
operating leverage and 16% EPS growth. Market volumes and volatility,
together with new business wins, continued to favor our asset servicing and
clearing businesses, while lower market values impacted our asset management
business. Our progress on the merger and integration continues to be
excellent," said Robert P. Kelly, chief executive officer of The Bank of New
York Mellon.
The results for first quarter of 2008 included net pre-tax costs
associated with the write down of certain investments in the securities
portfolio ($74 million), the write-down of seed capital investments related to
a formerly affiliated hedge fund manager ($25 million), and an expense
associated with capital support agreements ($12 million). The results for the
first quarter also included the pre-tax benefit of $42 million associated with
the initial public offering for VISA. The net impact of these items decreased
earnings per share by approximately $0.04.
First Quarter Highlights of The Bank of New York Mellon (Unless otherwise
noted, all comments begin with the results of the first quarter of 2008. This
is followed by commentary that compares the current period to pro forma
combined results of the first quarter of 2007 unless otherwise noted. The
appendix to this release provides the pro forma combined results, without
purchase accounting adjustments resulting from the merger of The Bank of New
York and Mellon. Please refer to the Quarterly Earnings Summary for detailed
business sector information.)
-- Total revenue (FTE) totaled $3.760 billion, consisting of 79% fee and
other revenue and 21% net interest revenue. On a pro forma combined
basis, the growth was 14%, driven by fee revenue growth of 9% and net
interest revenue growth of 39%.

-- Assets under management, excluding securities lending assets, amounted
to $1.105 trillion. On a pro forma combined basis, this represents an
increase of 8% compared to the prior year. Net asset inflows totaled
$23 billion for the first quarter of 2008. Assets under custody and
administration amounted to $23.1 trillion. On a pro forma combined
basis, this represents an increase of 9% compared with the prior year.

-- Asset and wealth management fees totaled $842 million. On a pro forma
combined basis, this represents an increase of 5%, reflecting the
benefit of strong money market flows and other new business partially
offset by the prior loss of business at one of the investment boutiques
and lower equity market values. Sequential revenue decreased 5%
(unannualized) reflecting a combination of lower equity market values
as well as negative long-term flows.

-- Performance fees were $20 million. On a pro forma combined basis,
performance fees were $49 million in the first quarter of 2007. On a
sequential basis, these fees were $62 million in the fourth quarter of
2007.

-- Asset servicing fees totaled $897 million. On a pro forma combined
basis, the increase was 40%, compared to the prior year and 11%
(unannualized) sequentially, reflecting the benefit of market
volatility, strong new business activity and the fourth quarter 2007
acquisition of the joint venture with ABN AMRO. Securities lending fee
revenue was $242 million compared with $65 million in the prior year on
a pro forma basis and $164 million in the fourth quarter of 2007.

-- Issuer services fees were $376 million. On a pro forma combined basis,
these fees increased by 1%, primarily reflecting higher global
corporate trust fees. On a sequential basis, these fees declined by
14% (unannualized) due primarily to the seasonality associated with
depositary receipts.

-- Clearing and execution services fees totaled $267 million. These fees
decreased 3% compared with the first quarter of 2007 and decreased 15%
(unannualized) compared with the fourth quarter of 2007. During the
first quarter of 2008, the B-Trade and G-Trade execution businesses
were sold to BNY ConvergEx. Adjusting for this transaction, clearing
and execution services fees increased 12% compared to the prior year
and were flat sequentially.

-- Foreign exchange and other trading activities totaled $259 million.
This compares with $182 million in the prior year period on a pro forma
combined basis, and $305 million in the fourth quarter of 2007. The
increase compared to the prior year primarily reflects the benefit of
increased client volumes and currency volatility. The decrease
compared with the fourth quarter of 2007 primarily reflects a lower
valuation of the credit derivatives portfolio and the impact of the
adoption of SFAS 157 on the valuation of the interest rate derivatives
portfolio.

-- Investment income was $23 million. This compares with $61 million in
the prior year period on a pro forma combined basis, and $52 million in
the fourth quarter of 2007. The decrease from prior periods primarily
resulted from a seed capital investment loss of $19 million in the
first quarter of 2008 as well as lower private equity investment
revenue. The loss in the first quarter of 2008 excludes the $25
million loss on seed capital investments related to a formerly
affiliated hedge fund manager, which was recognized in other expense.

-- Securities losses totaled $73 million compared to a gain of $2 million
in the first quarter of 2007, on a pro forma combined basis and a loss
of $191 million in the fourth quarter of the 2007. Further information
on the investment portfolio is detailed on page 8 of this earnings
release.

-- Other fee revenue totaled $97 million. Other fee revenue totaled $97
million in the first quarter of 2007 on a pro forma combined basis, and
$82 million in the fourth quarter of 2007. The first quarter of 2008
includes a gain of $42 million associated with the initial public
offering of VISA.

-- Net interest revenue (FTE) totaled $773 million with a net interest
margin of 2.10%. This compares with net interest revenue of $558
million in the first quarter of 2007, on a pro forma combined basis,
and $757 million in the fourth quarter of 2007. The increase compared
with the first quarter of 2007 reflects a higher level of interest-
earning assets associated primarily with the growth in Securities
Servicing and wider spreads on investment securities, partially offset
by the lower value of noninterest-bearing deposits in a declining
interest rate environment.

-- Total noninterest expense was $2.619 billion. This compares to
noninterest expense of $2.305 billion in the first quarter of 2007 on
a pro forma combined basis, and $2.749 billion in the fourth quarter of
2007.

Excluding merger and integration expense, intangible amortization
expense, and non-operating items in the first quarter of 2007, detailed
in the Quarterly Earnings Summary, noninterest expense on a pro forma
combined basis increased 6% compared with the first quarter of 2007 and
declined 5% compared to the fourth quarter of 2007. The results
reflect $118 million of expense synergies in the first quarter of 2008
associated with the merger as detailed in the Quarterly Earnings
Summary.

On a pro forma combined basis, excluding merger and integration
expense, intangible amortization expense, and non-operating items in
the first quarter of 2007, detailed in the Quarterly Earnings Summary,
we generated approximately 750 bps of positive operating leverage
compared to the first quarter of 2007 and approximately 350 bps
compared to the fourth quarter of 2007.

-- The provision for credit losses was $16 million in the first quarter of
2008 compared to a credit of $12 million on a pro forma combined basis
in the first quarter of 2007 and in the fourth quarter of 2007 was $20
million.

-- Pre-tax operating margin (FTE) was 30% in the first quarter of 2008.
Excluding merger and integration expenses and intangible amortization
expense, the pre-tax operating margin (FTE) was 36%. This compares
with 33% in the first quarter of 2007, on a pro forma combined basis
and 34% in the fourth quarter of 2007, excluding merger and integration
expense, intangible amortization expense and non-operating items.

-- The effective tax rate was 32.5% compared with 31.8% in the fourth
quarter of 2007 and 32.2% in the first quarter of 2007. Excluding
merger and integration expense, the tax rate was 33.3% in the first
quarter of 2008 compared with 33.2% in the fourth quarter of 2007 and
32.3% in the first quarter of 2007.

-- Total assets at March 31, 2008 were $205 billion, an increase of $7
billion from Dec. 31, 2007, principally reflecting a higher level of
client deposits.

-- Return on tangible common equity was 49.7% for the first quarter of
2008, 54.3% excluding merger and integration expense and intangible
amortization expense.

-- The Tier I capital ratio was 8.80% at March 31, 2008 compared to 9.32%
at Dec. 31, 2007.

-- The adjusted tangible shareholders' equity to assets ratio was 4.14% at
March 31, 2008 compared with 4.96% at Dec. 31, 2007. This decline
reflects an increase of $1.447 billion in unrealized mark-to-market
losses in the securities portfolio, net of tax, to $1.789 billion, as
well as an increase in period end assets. For additional information,
see page 8.

-- Average diluted shares of 1.148 billion were essentially unchanged
compared with the fourth quarter of 2007.

On April 8, 2008, The Bank of New York Mellon declared a quarterly common
stock dividend of 24 cents per share. This cash dividend is payable on May 2,
2008 to shareholders of record as of the close of business on April 23, 2008.
The Bank of New York Mellon Corporation is a global financial services
company focused on helping clients manage and service their financial assets,
operating in 34 countries and serving more than 100 markets. The company is a
leading provider of financial services for institutions, corporations and
high-net-worth individuals, providing superior asset management and wealth
management, asset servicing, issuer services, clearing services and treasury
services through a worldwide client-focused team. It has more than $23
trillion in assets under custody and administration, more than $1.1 trillion
in assets under management and services $12 trillion in outstanding debt.
Additional information is available at www.bnymellon.com.
Earnings Release Format
Throughout this earnings release, all information is reported on a
continuing operations basis, before extraordinary (loss), unless otherwise
noted. Quarterly returns are annualized. Certain amounts are presented on a
fully taxable equivalent (FTE) basis. We believe that this presentation
provides comparability of amounts arising from both taxable and tax-exempt
sources, and is consistent with industry practice. The adjustment to an FTE
basis has no impact on net income. Where financial measures are presented
excluding certain specified amounts, we believe the presentation enhances
investor understanding of period-to-period results.
Supplemental Financial Information
Please refer to the Quarterly Earnings Summary for supplemental financial
information of The Bank of New York Mellon Corporation, including 5-quarter
trends of fee and other revenue, net interest revenue, noninterest expense as
well as business segment trends. The Quarterly Earnings Summary is available
at www.bnymellon.com (Investor Relations - financial reports).
Conference Call Data
Robert P. Kelly, chief executive officer; Gerald L. Hassell, president;
and Bruce W. Van Saun, chief financial officer, along with other members of
executive management from The Bank of New York Mellon, will host a conference
call and simultaneous live audio webcast at 8 a.m. EDT on Thursday, April 17,
2008. This conference call and audio webcast will include forward-looking
statements and may include other material information. Persons wishing to
access the conference call and audio webcast may do so by dialing
(888) 677-5383 (U.S.) and (210) 838-9221 (international) Passcode: Earnings,
or by logging on to www.bnymellon.com. The earnings release together with the
quarterly earnings summary will be available at www.bnymellon.com beginning at
approximately 6:30 a.m. EDT on April 17. Replays of the conference call and
audio webcast will be available beginning April 17 at approximately 2 p.m. EDT
through Thursday, May 1, 2008 by dialing (866) 356-4359 (U.S.) or
(203) 369-0105 (International). The archived version of the conference call
and audio webcast will also be available at www.bnymellon.com for the same
time period.

THE BANK OF NEW YORK MELLON CORPORATION
Financial Highlights
--------------------------------------------------------------------------
(dollar amounts in millions, Quarter ended
except per share amounts and --------------------------------
unless otherwise noted; common March 31, Dec. 31, March 31,
shares in thousands) 2008 2007 2007 (a)
--------------------------------------------------------------------------
Continuing Operations:
Fee and other revenue $2,978 $3,044 $1,475
Net interest revenue 767 752 427
------ ------ ------
Total revenue $3,745 $3,796 $1,902

Diluted EPS from continuing
operations - As reported (GAAP) (b) 0.65 0.61 0.61
Non-GAAP adjusted EPS: Excluding
merger and integration expense (b) 0.72 0.67 0.62
Memo: Excluding merger and
integration and intangible
amortization expenses (b) 0.78 0.74 0.65

Diluted EPS from net income (b) 0.65 0.45 0.60

Return on tangible common equity
(annualized):
GAAP 49.7% 45.0% (c) 39.2%
Non-GAAP adjusted (d) 54.3% 48.9% 40.1%

Return on equity (annualized):
GAAP 10.2% 9.5% (c) 15.7%
Non-GAAP adjusted (d) 12.3% 11.5% 16.7%

Fee and other revenue as a percentage
of total revenue (FTE) 79% 80% 77%

Annualized fee and other revenue per
employee (based on average
headcount) (in thousands) $281 $291 $263

Non-U.S. percent of revenue (FTE) 33% 32% (e) 30%

Pre-tax operating margin (FTE):
GAAP 30% 27% 34%
Non-GAAP adjusted (d) 36% 34% 36%

Net interest margin (FTE) 2.10% 2.16% 2.18%

Selected average balances:
Interest-earning assets $147,232 $140,622 $79,075
Total assets $202,738 $192,987 $102,041
Interest-bearing deposits $94,769 $86,278 $43,862
Noninterest-bearing deposits $26,315 $28,449 $14,903
Shareholders' equity $29,487 $29,136 $11,277

Average common shares and
equivalents outstanding
(in thousands):
Basic 1,134,280 1,133,804 710,147
Diluted 1,147,906 1,148,176 719,976

Period-end data
Assets under management
(in billions) $1,105 $1,121 $142
Assets under custody and
administration (in trillions) $23.1 $23.1 $15.9 (f)
Cross-border assets
(in trillions) $10.0 $10.0 $6.7 (f)
Market value of securities on loan
(in billions) $676 $633 $397

Employees 42,600 42,500 23,100

Tier I capital ratio 8.80% (g) 9.32% 8.43%
Adjusted tangible shareholders'
equity to assets ratio (h) 4.14% 4.96% 5.47%
Book value per common share $24.89 $25.66 $16.11
Tangible book value per common share $4.84 $5.82 $6.92
Dividends per share $0.24 $0.24 $0.23
Closing common stock price per share $41.73 $48.76 $42.98
Market capitalization $47,732 $55,878 $30,750
--------------------------------------------------------------------------

(a) Legacy The Bank of New York only.
(b) All share-related data prior to July 1, 2007 is presented in post-
merger share count terms. See page 10 for additional information.
(c) Before the extraordinary loss.
(d) Calculated excluding merger and integration expense and intangible
amortization expense.
(e) Calculated excluding the $200 million CDO write-down in 4Q07.
(f) Revised for Acquired Corporate Trust Business and harmonization
adjustments.
(g) Preliminary.
(h) Shareholders' equity less goodwill and intangible assets plus the
benefit of the deferred tax liability associated with tax deductible
intangibles divided by total assets less goodwill and intangible
assets.

THE BANK OF NEW YORK MELLON CORPORATION
Consolidated Income Statement
--------------------------------------------------------------------------
Quarter ended
--------------------------------
March 31, Dec. 31, March 31,
(in millions, except per share amounts) 2008 2007 2007 (a)
--------------------------------------------------------------------------
Fee and other revenue
Securities servicing fees:
Asset servicing $897 $809 $393
Issuer services 376 438 319
Clearing and execution services 267 314 282
--------------------------------------------------------------------------
Total securities servicing fees 1,540 1,561 994
Asset and wealth management fees 842 887 151
Performance fees 20 62 14
Foreign exchange and other trading
activities 259 305 127
Treasury services 124 121 50
Distribution and servicing 98 113 2
Financing-related fees 48 52 52
Investment income 23 52 36
Securities gains (losses) (73) (191) 2
Other 97 82 47
--------------------------------------------------------------------------
Total fee and other revenue 2,978 3,044 1,475
Net interest revenue
Interest revenue 1,656 1,789 1,021
Interest expense 889 1,037 594
--------------------------------------------------------------------------
Net interest revenue 767 752 427
Provision for credit losses 16 20 (15)
--------------------------------------------------------------------------
Net interest revenue after
provision for credit losses 751 732 442
Noninterest expense
Staff 1,352 1,365 720
Professional, legal and other
purchased services 252 272 130
Distribution and servicing 130 133 4
Net occupancy 129 145 79
Furniture and equipment 79 82 50
Software 79 78 54
Business development 66 72 30
Sub-custodian 61 66 34
Clearing and execution 9 49 37
Communications 32 34 19
Other 182 198 72
--------------------------------------------------------------------------
Subtotal 2,371 2,494 1,229
Amortization of intangible assets 122 131 28
Merger and integration expense:
The Bank of New York Mellon 121 111 4
Acquired Corporate Trust Business 5 13 11
--------------------------------------------------------------------------
Total noninterest expense 2,619 2,749 1,272
--------------------------------------------------------------------------
Income
Income from continuing operations
before income taxes 1,110 1,027 645
Provision for income taxes 361 327 208
--------------------------------------------------------------------------
Income from continuing operations 749 700 437
Discontinued operations:
Income (loss) from discontinued
operations (5) (2) (5)
Provision (benefit) for income taxes (2) (2) (2)
--------------------------------------------------------------------------
Income (loss) from discontinued
operations, net of tax (3) - (3)
--------------------------------------------------------------------------
Income before extraordinary (loss) 746 700 434
Extraordinary (loss) on consolidation
of commercial paper conduit, net of tax - (180) -
--------------------------------------------------------------------------
Net income $746 $520 $434
--------------------------------------------------------------------------
Earnings per share (b)
Basic:
Income from continuing operations $0.66 $0.62 $0.61
Income (loss) from discontinued
operations, net of tax - - -
--------------------------------------------------------------------------
Income before extraordinary (loss) 0.66 0.62 0.61
Extraordinary (loss), net of tax - (0.16) -
--------------------------------------------------------------------------
Net income $0.66 $0.46 $0.61
--------------------------------------------------------------------------
Diluted:
Income from continuing operations $0.65 $0.61 $0.61
Income (loss) from discontinued
operations, net of tax - - -
--------------------------------------------------------------------------
Income before extraordinary (loss) 0.65 0.61 0.60 (c)
Extraordinary (loss), net of tax - (0.16) -
--------------------------------------------------------------------------
Net income $0.65 $0.45 $0.60
--------------------------------------------------------------------------

(a) Legacy The Bank of New York only.
(b) Earnings per share data prior to July 1, 2007 is presented in post-
merger share count terms. See page 10 for additional information.
(c) Does not foot due to rounding.

THE BANK OF NEW YORK MELLON CORPORATION
Consolidated Balance Sheet
--------------------------------------------------------------------------
Quarter ended
(dollar amounts in millions, March 31, Dec. 31,
except per share amounts) 2008 2007
--------------------------------------------------------------------------
Assets
Cash and due from banks $7,689 $6,635
Interest-bearing deposits with banks 37,715 34,312
Federal funds sold and securities
purchased under resale agreements 11,898 9,108
Securities:
Held-to-maturity (fair value of $2,080
and $2,171) 2,116 2,180
Available-for-sale 43,403 46,518
--------------------------------------------------------------------------
Total securities 45,519 48,698
Trading assets 7,619 6,420
Loans (includes $241 at fair value
at March 31, 2008) 52,092 50,931
Reserve for loan losses (314) (327)
--------------------------------------------------------------------------
Net loans 51,778 50,604
Premises and equipment 1,714 1,731
Accrued interest receivable 723 739
Goodwill 16,581 16,331
Intangible assets 6,353 6,402
Other assets (includes $1,016 at fair value
at March 31, 2008) 17,346 16,676
--------------------------------------------------------------------------
Total assets $204,935 $197,656
--------------------------------------------------------------------------

Liabilities
Deposits:
Noninterest-bearing (principally
domestic offices) $28,446 $32,372
Interest-bearing deposits in
domestic offices 26,680 21,082
Interest-bearing deposits in foreign
offices 72,084 64,671
--------------------------------------------------------------------------
Total deposits 127,210 118,125
Federal funds purchased and securities
sold under repurchase agreements 2,963 2,193
Trading liabilities 5,902 4,577
Payables to customers and broker-dealers 7,727 7,578
Commercial paper 31 4,079
Other borrowed funds 2,999 1,840
Accrued taxes and other expenses 6,483 8,101
Other liabilities (including allowance
for lending related commitments of $173
and $167, includes $57 at fair value at
March 31, 2008) 5,772 4,887
Long-term debt 17,373 16,873
--------------------------------------------------------------------------
Total liabilities 176,460 168,253
--------------------------------------------------------------------------

Shareholders' equity
Common stock-par value $0.01 per share;
authorized 3,500,000,000 shares; issued
1,148,561,267 and 1,146,896,177 shares 11 11
Additional paid-in capital 20,078 19,990
Retained earnings 10,435 10,015
Accumulated other comprehensive loss,
net of tax (1,837) (574)
Less: Treasury stock of 4,743,585 and
912,896 shares, at cost (212) (39)
--------------------------------------------------------------------------
Total shareholders' equity 28,475 29,403
--------------------------------------------------------------------------
Total liabilities and
shareholders' equity $204,935 $197,656
--------------------------------------------------------------------------
Note: The balance sheet at Dec. 31, 2007 has been derived from the audited
financial statements as of that date.
Investment Portfolio
At March 31, 2008, investment securities totaled $45.5 billion, which
consists of our core portfolio of $42.6 billion and Three Rivers Funding
Corp.'s ("TRFC") portfolio of $2.9 billion. The unrealized net of tax loss on
our total securities available for sale portfolio was $1.789 billion at March
31, 2008, which was comprised of $1.523 billion in our core portfolio and $266
million in our TRFC portfolio. The unrealized net of tax loss at Dec. 31,
2007 was $342 million and related entirely to our core portfolio. The
increase in the unrealized loss in the first quarter of 2008 compared with the
fourth quarter of 2007 was due to spread widening in the fixed income and
asset-backed securities markets.
At March 31, 2008, the unrealized loss on our securities available for
sale portfolio decreased our adjusted tangible common equity ratio by 90 basis
points. Significant dislocation continued in the credit markets, particularly
late in the first quarter of 2008. Spreads continued to widen appreciably as
there were forced liquidations in the asset and mortgage-backed securities
markets. That said, our core asset and mortgage-backed securities portfolio
continued to remain highly rated, with 95% of our securities rated AAA, and
few downgrades. We continue to have the ability and intent to hold these
securities until any temporary impairment is recovered, or until maturity.
Below are the securities in our core portfolio, at fair value which
incorporates our unrealized loss, by credit rating.

--------------------------------------------------------------------------
Credit ratings for
core securities
portfolio (a) Commercial
March 31, 2008 Variable & Fixed Rate Subprime Mortgage-
(dollar amounts --------------------- Mortgage Backed
in millions) Agency Non-Agency Securities Securities
--------------------------------------------------------------------------
AAA $10,905 $14,462 $227 $2,797
AA - 71 733 70
A - 19 172 7
Other - 23 18 -
--------------------------------------------------------------------------
Total fair value $10,905 $14,575 $1,150 $2,874
--------------------------------------------------------------------------
Amortized cost less
writedowns $10,811 $16,065 $1,457 $2,964
--------------------------------------------------------------------------
Fair value as a % of
amortized cost less
writedowns 101% 91% 79% 97%
--------------------------------------------------------------------------

Asset-Backed European
Securities Floating
CDOs Rate Notes Other Total %
--------------------------------------------------------------------------
AAA $34 $8,888 $2,559 $39,872 95%
AA 35 144 485 1,538 4
A 10 - 309 517 1
Other 11 - 203 255 -
--------------------------------------------------------------------------
Total fair value $90 $9,032 $3,556 $42,182 (b) 100%
--------------------------------------------------------------------------
Amortized cost less
writedowns $155 $9,501 $3,645 $44,598
--------------------------------------------------------------------------
Fair value as a % of
amortized cost less
writedowns 58% 95% 98% 95%
--------------------------------------------------------------------------
(a) Preliminary.
(b) Excludes $0.4 billion of unrated investments that principally support
our asset management activities.

Below are the securities in TRFC's portfolio, at fair value which
incorporates our unrealized loss, by credit rating.

--------------------------------------------------------------------------
Credit ratings
for TRFC's
portfolio
March 31, Variable Home
2008 & Fixed Equity Other
(dollar Rate Subprime Lines Asset-
amounts in --------- Mortgage Credit of Backed
millions) Mortgages Securities Cards Credit Securities Total %
--------------------------------------------------------------------------
AAA $1,307 $240 $- $454 $29 $2,030 69%
AA - - 39 - 18 57 2
A - - 662 160 - 822 28
Other - - - 38 - 38 1
--------------------------------------------------------------------------
Total
fair
value $1,307 $240 $701 $652 $47 $2,947 100%
--------------------------------------------------------------------------
Amortized
cost less
writedowns $1,591 $272 $741 $738 $50 $3,392
--------------------------------------------------------------------------
Fair value
as a % of
amortized
cost less
writedowns 82% 88% 95% 88% 94% 87%
--------------------------------------------------------------------------

We routinely test our investment portfolio securities for
other-than-temporary impairment ("OTTI"). In the first quarter of 2008, we
recorded a $74 million pre-tax securities loss associated with OTTI comprised
of the following:
-- $24 million related to asset-based securities ("ABS") CDOs. ABS CDOs,
on an amortized cost basis, net of OTTI, are reflected at 40% of par.
-- $22 million related to SIVs. This charge reduced our amortized cost
basis, net of OTTI, to 77% of par. At March 31, 2008, we had $162
million of SIV securities at fair value, which are included in other
securities in the core portfolio above.
-- $28 million related to securities backed by home equity lines of credit
in TRFC's portfolio based on both a deterioration of specific
securities combined with weakening credit support due to downgrades of
certain bond insurers providing credit support.

Capital Support Agreements
During the first quarter of 2008, we executed a capital support agreement
for a commingled short-term NAV fund ("CNAV Fund"), which is managed by
securities lending in the Asset Servicing segment, of $55.5 million covering
securities related to Whistle Jacket Capital/White Pine Financial, LLC
("Whistle Jacket"). Subsequently, we executed another capital support
agreement for the same CNAV Fund of $30 million covering securities related to
Thornburg Mortgage Capital Resources ("Thornburg"). Under these agreements,
we will provide capital in specified circumstances to the CNAV Fund until June
30, 2008 in support of Whistle Jacket securities and April 2009 in support of
Thornburg securities. Included in other expense during the first quarter of
2008 was $12 million associated with the current estimated fair value of the
support agreements. We continue to monitor exposure to SIV senior note
investments in the CNAV Funds we manage. On a case-by-case basis, depending
on future circumstances, we could enter into further capital support
agreements with the funds.

Nonperforming Loans

--------------------------------------------------------------------------
Nonperforming loans Quarter ended
----------------------------------
March 31, Dec. 31, March 31,
(dollar amounts in millions) 2008 2007 2007 (a)
--------------------------------------------------------------------------
Loans:
Commercial $50 $39 $15
Commercial real estate 49 40 -
Residential real estate 33 20 3
Foreign 78 87 9
--------------------------------------------------------------------------
Total nonperforming loans $210 $186 $27
--------------------------------------------------------------------------
Nonperforming loans ratio 0.4% 0.4% 0.1%
Allowance for loan losses/
nonperforming loans 149.5 175.8 1,074.1
Total allowance for credit losses/
nonperforming loans 231.9 265.6 1,574.1
--------------------------------------------------------------------------
(a) Legacy The Bank of New York only.

Reserve for Credit Exposure, Provision and Net Charge-offs

--------------------------------------------------------------------------
Reserve for credit exposure,
provision and net charge-offs Quarter ended
----------------------------------
March 31, Dec. 31, March 31,
(dollar amounts in millions) 2008 2007 2007 (a)
--------------------------------------------------------------------------
Reserve for credit exposure:
Reserve for loan losses $314 $327 $290
Reserve for unfunded commitments 173 167 135
--------------------------------------------------------------------------
Total reserve for credit exposure $487 $494 $425
--------------------------------------------------------------------------
Provision for credit losses $16 $20 $(15)
--------------------------------------------------------------------------
Net charge-offs/(recoveries):
Commercial $6 $16 $5
Leasing - - (8)
Foreign 5 18 -
Other 2 1 -
--------------------------------------------------------------------------
Total net charge-offs/(recoveries) $13 $35 $(3)
--------------------------------------------------------------------------
(a) Legacy The Bank of New York only.

The unallocated reserve was 23% at March 31, 2008 compared with 23% at
Dec. 31, 2007 and 27% at March 31, 2007.
Consolidated Net Income Including Discontinued Operations
Net income, including discontinued operations, totaled $746 million, or
$0.65 per share, in the first quarter of 2008, compared with $520 million, or
$0.45 per share, in the fourth quarter of 2007 and $434 million, or $0.60 per
share, in the first quarter of 2007.
Supplemental Information - Reconciliation of Earnings Per Share - GAAP to
Non-GAAP
Reported amounts are presented in accordance with GAAP. We believe that
this supplemental non-GAAP information is useful to the investment community
in analyzing the financial results and trends of our business. We believe
they facilitate comparisons with prior periods and reflect the principal basis
on which our management internally monitors financial performance. These non-
GAAP items also are excluded from our segment measures used internally to
evaluate segment performance because management does not consider them
particularly relevant or useful in evaluating the operating performance of our
business segments.

--------------------------------------------------------------------------
Quarterly
reconciliation 1Q08 4Q07 1Q07 (a)
----------------- ---------------- -------------------
After-tax EPS After-tax EPS After-tax EPS
--------------------------------------------------------------------------
Net income-GAAP $746 $0.65 $520 $0.45 $434 $0.60
Discontinued operations
income (loss) (3) - - - (3) -
Extraordinary
(loss)-TRFC - - 180 0.16 - -
--------------------------------------------------------------------------
Continuing operations 749 0.65 700 0.61 437 0.61(b)
Merger and integration
(M&I) expenses 75 0.07 69 0.06 10 0.01
--------------------------------------------------------------------------
Continuing operations
excluding M&I
expenses 824 0.72 769 0.67 447 0.62
Intangible amortization 75 0.07 78 0.07 19 0.03
--------------------------------------------------------------------------
Continuing operations
before M&I expenses
and intangible
amortization $899 $0.78(b) $847 $0.74 $466 $0.65
--------------------------------------------------------------------------
(a) Legacy The Bank of New York only.
(b) Does not foot due to rounding.

Supplemental Information - Trend of Earnings Per Share on a GAAP and
Non-GAAP basis
In the merger transaction between The Bank of New York and Mellon, The
Bank of New York shareholders received .9434 shares of BNY Mellon common stock
for each share of The Bank of New York common stock outstanding on the closing
date of the merger. Mellon shareholders received one share of BNY Mellon
common stock for each share of Mellon common stock outstanding on the closing
date of the merger. The table below converts earnings per share for The Bank
of New York into post-merger share count terms for periods prior to July 1,
2007.

--------------------------------------------------------------------------
Continuing operations
before extraordinary
(loss) - fully
diluted earnings per Quarter ended
share ------------------------------------------------------
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 (a) 2007 (a)
--------------------------------------------------------------------------
As reported $0.65 $0.61 $0.56 $0.59 $0.57
As reported adjusted
for exchange ratio
(GAAP) 0.65 0.61 0.56 0.62 0.61

Non-GAAP
adjusted-excluding
merger and integration
expense:
As reported 0.72 0.67 0.66(b) 0.63 0.59
Adjusted for
exchange ratio 0.72 0.67 0.66(b) 0.66 0.62

Non-GAAP
adjusted-excluding
merger and integration
expense and intangible
amortization:
As reported 0.78 0.74 0.73(c) 0.65 0.61
Adjusted for
exchange ratio 0.78 0.74 0.73(c) 0.69 0.65
--------------------------------------------------------------------------
(a) Legacy The Bank of New York only.
(b) Including non-operating items totaling $12 million after-tax as
described in our third quarter 2007 Form 10-Q, non-GAAP adjusted
earnings per share - excluding merger and integration expense - would
have been $0.67 in the third quarter 2007.
(c) Including the non-operating items described above, non-GAAP adjusted
earnings per share - excluding merger and integration expense and
intangible amortization - would have been $0.74 in the third quarter
2007.

APPENDIX

THE BANK OF NEW YORK MELLON CORPORATION
Pro Forma Condensed Consolidated Income Statement
Excluding Purchase Accounting Adjustments

Three months ended March 31, 2007
----------------------------------------------------
The Bank of Mellon Total
(in millions) New York Financial Adjustments Pro forma
--------------------------------------------------------------------------
Fee and other revenue
Securities servicing fees:
Asset servicing $393 $252 $(5)(a) $640
Issuer services 319 52 - 371
Clearing and execution
services 282 2 (10)(a) 274
--------------------------------------------------------------------------
Total securities
servicing fees 994 306 (15) 1,285
Asset and wealth
management fees 151 650 - 801
Performance fees 14 35 - 49
Foreign exchange and other
trading activities 127 55 - 182
Treasury services 50 66 - 116
Distribution and servicing 2 82 - 84
Financing-related fees 52 11 - 63
Investment income 36 25 - 61
Securities gains 2 - - 2
Other 47 50 - 97
--------------------------------------------------------------------------
Total fee and other
revenue 1,475 1,280 (15) 2,740
Net interest revenue
Interest revenue 1,021 400 - 1,421
Interest expense 594 275 - 869
--------------------------------------------------------------------------
Net interest revenue 427 125 - 552
Provision for credit
losses (15) 3 - (12)
--------------------------------------------------------------------------
Net interest revenue
after provision for
credit losses 442 122 - 564
Noninterest expense
Staff 720 537 - 1,257
Professional, legal and
other purchased services 130 115 - 245
Net occupancy 79 56 - 135
Distribution and servicing 4 142 (14)(a) 132
Furniture and equipment 50 28 - 78
Software 54 18 - 72
Business development 30 28 - 58
Sub-custodian 34 17 (1)(a) 50
Clearing and execution 37 - - 37
Communications 19 6 - 25
Other 72 81 - 153
--------------------------------------------------------------------------
Subtotal 1,229 1,028 (15) 2,242
Amortization of
intangible assets 28 12 - 40
Merger and integration
expense:
The Bank of New York
Mellon 4 8 - 12
Acquired Corporate Trust
Business 11 - - 11
--------------------------------------------------------------------------
Total noninterest
expense 1,272 1,048 (15) 2,305
--------------------------------------------------------------------------
Income
Income from continuing
operations before
income taxes 645 354 - 999
Provision for income taxes 208 111 - 319
--------------------------------------------------------------------------
Income from continuing
operations 437 243 - 680
Discontinued operations:
Income (loss) from
discontinued operations (5) 11 - 6
Provision (benefit) for
income taxes (2) 2 - -
--------------------------------------------------------------------------
Income (loss) from
discontinued
operations, net
of tax (3) 9 - 6
--------------------------------------------------------------------------
Net income $434 $252 $- $686
--------------------------------------------------------------------------
(a) Adjustment to eliminate intercompany revenue and expenses for
Clearing and execution services and Asset servicing paid by Mellon to
The Bank of New York.

Cautionary Statement
The information presented in this Earnings Release may contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements, which may be expressed in a
variety of ways, including the use of future or present tense language, relate
to, among other things, statements with respect to future financial goals, the
merger of The Bank of New York and Mellon, ability and intention to hold
certain securities, and possible future activities relating to further capital
support agreements. These statements and other forward-looking statements
contained in other public disclosures of The Bank of New York Mellon (the
Company) which make reference to the cautionary factors described in this
Earnings Release, are based upon current beliefs and expectations and are
subject to significant risks and uncertainties (some of which are beyond the
Company's control). Factors that could cause the Company's results to differ
materially from those described in the forward-looking statements can be found
in the risk factors and other uncertainties set forth in the Company's annual
report on Form 10-K for the year ended December 31, 2007 and the Company's
other filings with the Securities and Exchange Commission. All
forward-looking statements in this Earnings Release speak only as of April 17,
2008 and the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after that date or to reflect the
occurrence of unanticipated events.
SOURCE The Bank of New York Mellon Corporation

Media - Kevin Heine, +1-212-635-1569, or Analysts - Steve Lackey,
+1-212-635-1578, both of The Bank of New York Mellon Corporation