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

NEW YORK, April 17 /PRNewswire-FirstCall/ -- The Bank of New York Mellon Corporation 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.

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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 http://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 http://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 http://www.bnymellon.com/. The earnings release together with the quarterly earnings summary will be available at http://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 http://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.