July 17, 2007

The Bank of New York Mellon Corporation Reports Second Quarter Continuing EPS of $0.34 Excluding Merger and Integration Expenses


Second Quarter Continuing EPS of $0.26

Results include a charge related to SILOs of $380 million after-tax, or 33 cents a share

Solid growth in Securities Servicing, Capital Ratios strengthened and Integration on track

NEW YORK, July 17, 2008 — The Bank of New York Mellon Corporation (NYSE: BK) today reported income from continuing operations of $302 million, or $0.26 per share, in the second quarter of 2008. This compares to income from continuing operations of $448 million, or $0.62 per share, in the second quarter of 2007 and $749 million, or $0.65 per share, in the first quarter of 2008.

"In a very challenging environment for financial institutions, we were pleased to generate 12% revenue growth excluding a tax-related SILO charge and investment securities writedowns. During the second quarter we benefited from $13 billion of net flows in asset and wealth management and continued new business wins in securities servicing businesses. Our capital position remains strong and capital ratios strengthened materially versus the first quarter. Continuing EPS, excluding SILO and M&I expenses, increased modestly over the prior year. We continue to stay focused on executing on our growth strategies and integration activities," said Robert P. Kelly, chief executive officer of The Bank of New York Mellon.

  ------------------------------------------------------------------------
  Continuing operations net income and EPS on a quarterly basis

  (dollar amounts
  in millions,            2Q08                1Q08               2Q07 (a)
  except per      ----------------    ----------------     ----------------
  share amounts)  After-tax    EPS    After-tax    EPS     After-tax    EPS
  -------------------------------------------------------------------------
  Continuing
   operations          $302  $0.26         $749  $0.65          $448  $0.62
  Merger and
   integration
   (M&I) expenses        89   0.08           75   0.07            32   0.04
  SILO charge           380   0.33            -      -             -      -
  -------------------------------------------------------------------------
    Continuing
     operations
     excluding M&I
     expenses and
     SILO charge        771   0.67          824   0.72           480   0.66
  Intangible
   amortization          77   0.07           75   0.07            19   0.03
  -------------------------------------------------------------------------
    Continuing
     operations
     excluding M&I
     expenses, SILO
     charge and
     intangible
     amortization      $848  $0.74         $899  $0.78 (b)      $499  $0.69
  -------------------------------------------------------------------------
  (a) Legacy The Bank of New York only.
  (b) Does not foot due to rounding.

In the second quarter of 2008 the Company recorded a $380 million after-tax charge related to sale-in, lease-out (SILO) transactions. The charge reduced net interest revenue by $377 million in the second quarter. For additional information, see page 9.

The results for the second quarter of 2008 also included net pre-tax costs associated with the writedown of certain investment securities ($152 million), and a pre-tax charge of $22 million for credit monitoring related to lost tapes in our Issuer and Treasury Services segments. The net impact of these items decreased earnings per share by approximately nine cents.

Second Quarter Highlights of The Bank of New York Mellon Corporation (Unless otherwise noted, all comments begin with the results of the second quarter of 2008. This is followed by commentary that compares the current period to pro forma combined results of the second 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 Financial. Please refer to the Quarterly Earnings Summary for detailed business segment information.)

— Total revenue on a fully tax equivalent (FTE) basis totaled $3.412 billion and on a pro forma combined basis declined by 3%, compared to the prior year period. During the second quarter, net interest revenue was reduced by the SILO charge ($377 million) and total fee and other revenue was reduced by the writedown of certain investment securities ($152 million). Excluding these items, total revenue increased 12% (represented by fee revenue growth of 7% and net interest revenue growth of 34%). On the same basis, total revenue increased 3% (unannualized) sequentially.

— Assets under management, excluding securities lending assets, amounted to $1.113 trillion at quarter end. On a pro forma combined basis, this represents an increase of 3% compared with the prior year. Sequentially, assets under management increased 1% (unannualized). Net asset inflows totaled $13 billion for the second quarter of 2008. Assets under custody and administration amounted to $23.0 trillion. On a pro forma combined basis, this represents an increase of 4% compared with the prior year.

— Asset and wealth management fees totaled $844 million. On a pro forma combined basis, this represents a decrease of $12 million compared to the prior year and an increase of $2 million sequentially. The decrease compared with the prior year period reflects broad declines in the equity markets partially offset by strength in money market flows and certain global equity strategies.

— Performance fees were $16 million. On a pro forma combined basis, performance fees were $63 million in the second quarter of 2007. In the first quarter of 2008, these fees were $20 million. The year-over-year decline was primarily due to a lower level of performance fees generated from certain equity and alternative strategies.

— Asset servicing fees totaled $868 million. On a pro forma combined basis, this represents an increase of 25% compared to the second quarter of 2007 reflecting the benefit of higher spreads in securities lending, new business and the fourth quarter 2007 acquisition of the remaining 50% interest in the joint venture with ABN AMRO. On a sequential basis, these fees declined 3% (unannualized) reflecting a decline in securities lending revenue partially offset by new business and revenue synergies. Securities lending fee revenue was $207 million in the second quarter of 2008 compared with $99 million in the prior year period on a pro forma combined basis and $242 million in the first quarter of 2008.

— Issuer services fees were $444 million. On a pro forma combined basis, these fees increased by 7%, primarily reflecting increases in Depositary Receipts and global corporate trust fees. On a sequential basis, these fees increased by 18% (unannualized) due primarily to seasonality associated with Depositary Receipts.

— Clearing and execution services fees totaled $270 million. These fees decreased 5% compared with the second quarter of 2007 and increased 1% (unannualized) compared with the first quarter of 2008. In the first quarter of 2008, we sold the B-Trade and G-Trade execution businesses. Adjusting for this transaction, clearing and execution services fees increased 13% compared to the prior year and 5% sequentially.

— Foreign exchange and other trading activities totaled $308 million. This compares with $176 million in the prior year period on a pro forma combined basis, and $259 million in the first quarter of 2008. The increase compared to the prior year period primarily reflects the benefit of currency volatility and increased client volumes. The increase compared with the first quarter of 2008 primarily reflects continued growth in client volumes and continued volatility, as well as the negative impact of the adoption of FAS 157 in the first quarter of 2008.

— Investment income was $45 million. This compares with $77 million in the prior year period on a pro forma combined basis, and $23 million in the first quarter of 2008. The change from both prior periods primarily reflects the change in market value of seed capital investments. Seed capital revenue was $3 million in the second quarter of 2008 compared to $19 million in the second quarter of 2007 and a loss of $19 million in the first quarter of 2008.

— Securities losses totaled $152 million. This compares with a gain of $1 million in the second quarter of 2007 on a pro forma combined basis, and a loss of $73 million in the first quarter of 2008. Further information on the investment portfolio is detailed on page 8 of this earnings release.

— Other fee revenue totaled $53 million. Other fee revenue totaled $89 million in the second quarter of 2007 on a pro forma combined basis and $97 million in the first quarter of 2008. The first quarter of 2008 included a gain of $42 million associated with the initial public offering of VISA.

— Net interest revenue (FTE) totaled $415 million with a net interest margin of 1.16%. The second quarter of 2008 included the SILO charge of $377 million (pre-tax). Excluding the SILO charge, net interest revenue was $792 million and the net interest margin was 2.21%. This compares with net interest revenue of $592 million and a net interest margin of 1.95% in the second quarter of 2007 on a pro forma combined basis, and $773 million and a net interest margin of 2.14% in the first quarter of 2008. The increase in net interest revenue compared with the second quarter of 2007 reflects wider spreads on investment securities and a higher level of average interest earnings assets associated primarily with growth in Securities Servicing, partially offset by the lower value of non-interest bearing deposits in a low interest rate environment.

— Total noninterest expense was $2.758 billion. This compares to noninterest expense of $2.642 billion in the second quarter of 2007 on a pro forma combined basis, and $2.619 billion in the first quarter of 2008.

Excluding merger and integration expenses and intangible amortization expense, noninterest expense on a pro forma combined basis increased 2% compared with the second quarter of 2007 and 5% (unannualized) compared with the first quarter of 2008. The increases from both periods reflect business growth, the impact of the merit increase ($25 million) in the second quarter of 2008, and the $22 million expense for credit monitoring related to lost tapes. The sequential increase was also impacted by higher incentives, benefits and professional, legal and other purchased services.

On a pro forma combined basis, excluding the SILO charge, merger and integration expenses and intangible amortization expense, we generated more than 500 basis points of positive operating leverage compared to the second quarter of 2007.

— The provision for credit losses was $25 million in the second quarter of 2008 compared to a credit of $18 million on a pro forma combined basis in the second quarter of 2007 and in the first quarter of 2008 was $16 million.

— Pre-tax operating margin (FTE) was 18% in the second quarter of 2008. Excluding merger and integration expenses, intangible amortization expense and the SILO charge, the pre-tax operating margin (FTE) was 34%. This compares with 31% in the second quarter of 2007 on a pro forma combined basis and 36% in the first quarter of 2008, excluding merger and integration expenses and intangible amortization expense.

— The effective tax rate was 50.8% compared with 32.5% in the first quarter of 2008 and 31.9% in the second quarter of 2007. Excluding merger and integration expense and the SILO charge, the effective tax rate was 32.4% in the second quarter of 2008 compared with 33.3% in the first quarter of 2008 and 31.9% in the second quarter of 2007.

— Total average assets in the second quarter of 2008 were $196 billion, a decrease of $5 billion from the first quarter of 2008. The sale of Mellon 1st Business Bank during the second quarter reduced total assets by $3 billion.

— Return on average tangible common equity was 26.7% for the second quarter of 2008 and was 59.7% excluding merger and integration expense and the SILO charge.

— The Tier I capital ratio was 9.13% at June 30, 2008, compared to 8.76% at March 31, 2008.

— The adjusted tangible common equity to assets ratio was 4.31% at June 30, 2008, compared to 4.14% at March 31, 2008. The period-end balance sheet at June 30, 2008 was impacted by a spike in client deposits. The ratio based on average assets of $196 billion for the second quarter was 4.44%.

— The unrealized net of tax loss on available-for-sale securities was $1.818 billion at June 30, 2008, a slight increase from $1.789 billion at March 31, 2008, resulting from higher interest rates partially offset by narrower credit spreads.

— Average diluted shares of 1.147 billion were essentially unchanged compared with the first quarter of 2008.

On July 8, 2008, The Bank of New York Mellon Corporation declared a quarterly common stock dividend of 24 cents per share. This cash dividend is payable on Aug. 1, 2008 to shareholders of record as of the close of business on July 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 $23 trillion in assets under custody and administration, more than $1.1 trillion in assets under management and services more than $11 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 unless otherwise noted. Quarterly returns are annualized. Certain amounts are presented on an 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

The Quarterly Earnings Summary and supplemental financial trends for The Bank of New York Mellon Corporation have been updated through June 30, 2008 and are available at http://www.bnymellon.com/ (Investor Relations - financial reports).

Conference Call Data

Robert P. Kelly, chief executive officer; Gerald L. Hassell, president; and Thomas P. Gibbons, chief financial officer, along with other members of executive management from The Bank of New York Mellon Corporation, will host a conference call and simultaneous live audio webcast at 9 a.m. EDT on Thursday, July 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 7 a.m. EDT on July 17, 2008. Replays of the conference call and audio webcast will be available beginning July 17, 2008 at approximately 2 p.m. EDT through Thursday, July 31, 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;            June 30,      March 31,     June 30,
   common shares in thousands)           2008           2008      2007 (a)
  ------------------------------------------------------------------------
  Diluted EPS from continuing
   operations - As reported
   (GAAP) (b)                           $0.26          $0.65        $0.62
  Non-GAAP adjusted EPS: Excluding
   merger and integration expenses
   and the SILO charge (b)               0.67           0.72         0.66
     Memo: Excluding merger and
      integration, the SILO charge
      and intangible amortization
      expense (b)                        0.74           0.78         0.69

  Diluted EPS from net income (b)        0.27           0.65         0.62

  Return on average tangible
   common equity (annualized):
     GAAP                                26.7%          49.1%        37.3%
     Non-GAAP adjusted (c)               59.7%          53.6%        39.8%

  Return on equity (annualized):
     GAAP                                 4.3%          10.2%        15.5%
     Non-GAAP adjusted (d)               12.0%          12.2%        17.3%

  Fee and other revenue as a
   percentage of total
   revenue (FTE)                           88% (e)        79%          78%

  Annualized fee and other
   revenue per employee
   (based on average headcount)
   (in thousands)                        $280           $281         $274

  Non-U.S. percent of revenue
   (excluding the SILO charge)
   (FTE)                                   35%            33%          32%

  Pre-tax operating margin (FTE):
     GAAP                                  18%            30%          32%
     Non-GAAP adjusted (d)                 34%            36%          36%

  Net interest margin (FTE)              1.16% (e)      2.14%        2.01%

  Selected average balances:
     Interest-earning assets         $144,255       $145,118      $90,557
     Total assets                    $195,997       $200,790     $114,323
     Interest-bearing deposits        $94,785        $92,881      $53,610
     Noninterest-bearing deposits     $24,822        $26,240      $15,334
     Shareholders' equity             $28,507        $29,551      $11,566

  Average common shares and
   equivalents outstanding
   (in thousands):
     Basic                          1,135,153      1,134,280      713,187
     Diluted                        1,146,886      1,147,906      722,881

  Period-end data
  Assets under management
   (in billions)                       $1,113         $1,105         $153
  Assets under custody and
   administration (in trillions)        $23.0          $23.1        $16.7(f)
     Cross-border assets
      (in trillions)                    $10.3          $10.0         $7.4(f)
  Market value of securities on
   loan (in billions)                    $588           $660         $397

  Employees                            43,100         42,600       23,200

  Tier I capital ratio                   9.13% (g)      8.76%        8.09%
  Adjusted tangible common
   equity to assets ratio (h)            4.31%          4.14%        4.53%
  Adjusted tangible common
   equity to average assets ratio        4.44%          4.23%        5.03%
  Book value per common share          $24.93         $24.89       $16.50
  Tangible book value per
   common share                         $5.00          $4.84        $7.35
  Dividends per share                   $0.24          $0.24        $0.23
  Closing common stock price
   per share                           $37.83         $41.73       $43.93
  Market capitalization               $43,356        $47,732      $31,495
  ------------------------------------------------------------------------

  (a) Legacy The Bank of New York only.
  (b) See page 11 for a reconciliation of GAAP to Non-GAAP earnings per
      share.
  (c) Calculated excluding merger and integration expenses and the SILO
      charge.
  (d) Calculated excluding merger and integration expenses, the SILO charge
      and intangible amortization expense.
  (e) Excluding the SILO charge, fee and other revenue as a percentage of
      total revenue was 79% and the net interest margin was 2.21%.
  (f) Revised for Acquired Corporate Trust Business and harmonization
      adjustments.
  (g) Preliminary.
  (h) Common 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             Six months ended
  (in millions,        ------------------------------   ------------------
   except per          June 30,  March 31,   June 30,   June 30,  June 30,
   share amounts)         2008       2008      2007(a)     2008      2007(a)
  ------------------------------------------------------------------------
  Fee and other revenue
  Securities servicing
   fees:
     Asset servicing      $868       $897       $427     $1,765      $820
     Issuer services       444        376        367        820       686
     Clearing and
      execution services   270        267        291        537       573
  ------------------------------------------------------------------------
       Total securities
        servicing fees   1,582      1,540      1,085      3,122     2,079
  Asset and wealth
   management fees         844        842        168      1,686       319
  Performance fees          16         20         21         36        35
  Foreign exchange and
   other trading
   activities              308        259        117        567       244
  Treasury services        130        124         55        254       105
  Distribution and
   servicing               110         98          2        208         4
  Financing-related fees    50         48         61         98       113
  Investment income         45         23         39         68        75
  Securities gains
   (losses)               (152)       (73)        (2)      (225)        -
  Other                     53         97         34        150        81
  ------------------------------------------------------------------------
       Total fee and
        other revenue    2,986      2,978      1,580      5,964     3,055
  ------------------------------------------------------------------------
  Net interest revenue
  Interest revenue       1,092      1,656      1,162      2,748     2,183
  Interest expense         681        889        710      1,570     1,304
  ------------------------------------------------------------------------
       Net interest
        revenue            411        767        452      1,178       879
  Provision for credit
   losses                   25         16        (15)        41       (30)
  ------------------------------------------------------------------------
       Net interest revenue
        after provision for
        credit losses      386        751        467      1,137       909
  ------------------------------------------------------------------------
  Noninterest expense
  Staff                  1,391      1,352        752      2,743     1,472
  Professional, legal
   and other purchased
   services                280        252        132        532       262
  Net occupancy            139        129         81        268       160
  Distribution and
   servicing               131        130          4        261         8
  Software                  88         79         57        167       111
  Furniture and equipment   79         79         54        158       104
  Business development      75         66         37        141        67
  Sub-custodian             62         61         42        123        76
  Communications            33         32         23         65        42
  Clearing and execution    21          9         44         30        81
  Other                    186        182         87        368       159
  ------------------------------------------------------------------------
       Subtotal          2,485      2,371      1,313      4,856     2,542
  Amortization of
   intangible assets       124        122         29        246        57
  Merger and integration
   expenses:
     The Bank of New York
      Mellon Corporation   146        121         35        267        39
     Acquired Corporate
      Trust Business         3          5         12          8        23
  ------------------------------------------------------------------------
       Total noninterest
        expense          2,758      2,619      1,389      5,377     2,661
  ------------------------------------------------------------------------
  Income
  Income from continuing
   operations before
   income taxes            614      1,110        658      1,724     1,303
  Provision for income
   taxes                   312        361        210        673       418
  ------------------------------------------------------------------------
       Income from
        continuing
        operations         302        749        448      1,051       885
  Discontinued operations:
     Income (loss) from
      discontinued
      operations            16         (5)        (4)        11        (9)
     Provision (benefit)
      for income taxes       9         (2)        (1)         7        (3)
  ------------------------------------------------------------------------
       Income (loss) from
        discontinued
        operations,
        net of tax           7         (3)        (3)         4        (6)
  ------------------------------------------------------------------------
     Net income           $309       $746       $445     $1,055      $879
  ------------------------------------------------------------------------

  Earnings per share
  Basic:
     Income from continuing
      operations         $0.27      $0.66      $0.63      $0.93     $1.24
     Income (loss) from
      discontinued
      operations,
      net of tax          0.01          -          -          -     (0.01)
  ------------------------------------------------------------------------
       Net income        $0.27 (b)  $0.66      $0.62 (b)  $0.93     $1.24(b)
  ------------------------------------------------------------------------
  Diluted:
     Income from
      continuing
      operations         $0.26      $0.65      $0.62      $0.92     $1.23
     Income (loss) from
      discontinued
      operations,
      net of tax          0.01          -          -          -     (0.01)
  ------------------------------------------------------------------------
       Net income        $0.27      $0.65      $0.62      $0.92     $1.22
  ------------------------------------------------------------------------

  (a) Legacy The Bank of New York only.
  (b) Does not foot due to rounding.



                 THE BANK OF NEW YORK MELLON CORPORATION
                        Consolidated Balance Sheet

  (dollar amounts in millions,                          June 30,    Dec. 31,
  except per share amounts)                               2008        2007
  --------------------------------------------------------------------------
  Assets
  Cash and due from banks                                $5,990      $6,635
  Interest-bearing deposits with banks                   37,896      34,312
  Federal funds sold and securities purchased under
   resale agreements                                     16,098       9,108
  Securities:
    Held-to-maturity (fair value of $1,882 and $2,171)    1,945       2,180
    Available-for-sale                                   42,391      46,518
  --------------------------------------------------------------------------
      Total securities                                   44,336      48,698
  Trading assets                                          5,992       6,420
  Loans (includes $276 at fair value at June 30, 2008)   50,568      50,931
  Reserve for loan losses                                  (353)       (327)
  --------------------------------------------------------------------------
      Net loans                                          50,215      50,604
  Premises and equipment                                  1,698       1,731
  Accrued interest receivable                               510         739
  Goodwill                                               16,565      16,331
  Intangible assets                                       6,273       6,402
  Other assets (includes $547 at fair value at
   June 30, 2008)                                        15,652      16,676
  --------------------------------------------------------------------------
        Total assets                                   $201,225    $197,656
  --------------------------------------------------------------------------

  Liabilities
  Deposits:
    Noninterest-bearing (principally domestic offices)  $30,910     $32,372
    Interest-bearing deposits in domestic offices        22,832      21,082
    Interest-bearing deposits in foreign offices         73,462      64,671
  --------------------------------------------------------------------------
      Total deposits                                    127,204     118,125
  Federal funds purchased and securities sold under
   repurchase agreements                                  2,488       2,193
  Trading liabilities                                     4,468       4,577
  Payables to customers and broker-dealers                9,596       7,578
  Commercial paper                                           25       4,079
  Other borrowed funds                                    1,110       1,840
  Accrued taxes and other expenses                        6,304       8,101
  Other liabilities (including allowance for lending
   related commitments of $133 and $167, also includes
   $148 at fair value at June 30, 2008)                   5,517       4,887
  Long-term debt                                         15,944      16,873
  --------------------------------------------------------------------------
        Total liabilities                               172,656     168,253
  --------------------------------------------------------------------------

  Shareholders' equity
  Common stock-par value $0.01 per share; authorized
   3,500,000,000 shares; issued 1,148,499,006 and
   1,146,896,177 shares                                      11          11
  Additional paid-in capital                             20,126      19,990
  Retained earnings                                      10,463      10,015
  Accumulated other comprehensive loss, net of tax       (1,919)       (574)
  Less:  Treasury stock of 2,428,711 and 912,896
   shares, at cost                                         (112)        (39)
  --------------------------------------------------------------------------
      Total shareholders' equity                         28,569      29,403
  --------------------------------------------------------------------------
        Total liabilities and shareholders' equity     $201,225    $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 June 30, 2008, investment securities totaled $44.3 billion, which consists of our core portfolio of $41.5 billion and Three Rivers Funding Corp.'s ("TRFC") portfolio of $2.8 billion. TRFC was consolidated in the fourth quarter of 2007. The unrealized net of tax loss on our total securities available for sale portfolio was $1.818 billion at June 30, 2008, which was comprised of $1.480 billion in our core portfolio and $338 million in our TRFC portfolio. The unrealized net of tax loss at March 31, 2008 was $1.789 billion, which was comprised of $1.523 billion in our core portfolio and $266 million in our TRFC portfolio. The increase in the unrealized net of tax loss in the second quarter of 2008 compared with the first quarter of 2008 resulted from higher interest rates partially offset by narrower credit spreads.

At June 30, 2008, the unrealized net of tax loss on our securities available for sale portfolio decreased our adjusted tangible common equity to assets ratio by 93 basis points. We continue to have the ability and intent to hold our investment securities until any temporary impairment is recovered, or until maturity. The securities in our core asset and mortgage-backed securities portfolio continued to remain highly rated, with 93% rated AAA.

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                                          Commercial
  at June 30, 2008         Variable & Fixed Rate     Subprime    Mortgage-
  (dollar amounts         ------------------------   Mortgage     Backed
  in millions)            Agency     Alt-A   Prime  Securities  Securities
  ------------------------------------------------------------------------
  AAA                    $10,456    $6,542  $6,929     $173       $2,740
  AA                           -        52      27      737           85
  A                            -         -      18      171            -
  Other                        -        32       -       17            -
  ------------------------------------------------------------------------
    Total fair value     $10,456    $6,626  $6,974   $1,098       $2,825
  Amortized cost less
   writedowns            $10,503    $7,694  $7,370   $1,390       $2,929
  ------------------------------------------------------------------------
  Mark-to-market
   unrealized gain/
   (loss) (pre-tax)         $(47)  $(1,068)  $(396)   $(292)       $(104)
  ------------------------------------------------------------------------
  Percent of total
   fair value                 25%       16%     17%       3%           7%
  ------------------------------------------------------------------------


  ------------------------------------------------------------------------
                      Asset-Backed   European
                       Securities    Floating
                          CDOs      Rate Notes   Other       Total     %
  ------------------------------------------------------------------------
  AAA                     $16         $8,741    $2,837      $38,434   93%
  AA                       18            159       650        1,728    4
  A                         8              -       475          672    2
  Other                     -              -       229          278    1
  ------------------------------------------------------------------------
    Total fair value      $42         $8,900    $4,191 (a)  $41,112  100%
  Amortized cost less
   writedowns             $79         $9,245    $4,305      $43,515
  ------------------------------------------------------------------------
  Mark-to-market
   unrealized gain/
   (loss) (pre-tax)      $(37)         $(345)    $(114)     $(2,403)
  ------------------------------------------------------------------------
  Percent of total
   fair value               -%            22%       10%         100%
  ------------------------------------------------------------------------
  (a) Excludes $.4 billion of unrated investments that principally support
      our asset management activities.

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

  --------------------------------------------------------------------------
  Credit ratings for the
  TRFC portfolio
  at June 30, 2008          Variable & Fixed Rate    Subprime
  (dollar amounts         ------------------------   Mortgage
  in millions)            Agency     Alt-A   Prime  Securities  Credit Cards
  --------------------------------------------------------------------------
  AAA                        $95    $1,110     $11     $192          $-
  AA                           -         -       -       33          38
  A                            -         -       -        -         670
  Other                        -         -       -       17           -
  --------------------------------------------------------------------------
    Total fair value         $95    $1,110     $11     $242        $708
  --------------------------------------------------------------------------
  Amortized cost less
   writedowns                $96    $1,456     $12     $273        $744
  --------------------------------------------------------------------------
  Mark-to-market
   unrealized gain/
   loss (pre-tax)            $(1)    $(346)    $(1)    $(31)       $(36)
  --------------------------------------------------------------------------
  Percent of total fair
   value                       3%       41%      -%       9%         26%
  --------------------------------------------------------------------------


  -----------------------------------------------------------------------
                             Home
                         Equity Lines    Other Asset-
                          of Credit    Backed Securities    Total      %
  -----------------------------------------------------------------------
  AAA                        $128             $20          $1,556     57%
  AA                          109              27             207      7
  A                           144               -             814     30
  Other                       140               -             157      6
  -----------------------------------------------------------------------
    Total fair value         $521             $47          $2,734    100%
  -----------------------------------------------------------------------
  Amortized cost less
   writedowns                $669             $50          $3,300
  -----------------------------------------------------------------------
  Mark-to-market unrealized
  gain/loss (pre-tax)       $(148)            $(3)          $(566)
  -----------------------------------------------------------------------
  Percent of total fair
   value                       19%              2%            100%
  -----------------------------------------------------------------------

We routinely test our investment securities for other than temporary impairment ("OTTI"). In the second quarter of 2008, we assumed an additional 17% decline in national home prices over the next two years and estimated the impact it would have on the cash flows underlying individual securities. As a result, we impaired certain securities and wrote them down to current market value and recorded a $152 million pre-tax securities loss associated with OTTI comprising the following:

— $72 million related to securities backed by Alt-A loans.

— $50 million related to asset-backed securities ("ABS") CDOs. At June 30, 2008, the amortized cost/fair value of our total ABS CDOs was $93 million. The amortized cost/fair value of this portfolio, net of OTTI, was 24% of par at June 30, 2008. At June 30, 2008, $14 million (fair value) of ABS CDOs are included in trading assets and $79 million (amortized cost) are included in securities available for sale.

— $30 million related to securities backed by home equity lines of credit ("HELOC") in the TRFC portfolio resulting from both a deterioration of specific securities combined with weakening credit support due to below investment grade ratings of certain bond insurers.

Our Alt-A portfolio is 99% AAA-rated and 1% AA-rated. At origination, the portfolio's weighted-average FICO score was 716 and its weighted-average LTV was 74%. Approximately 50% of the total portfolio is supported by better performing fixed-rate collateral. Finally, the portfolio's weighted-average current credit enhancement is 13%.

The HELOC securities in the TRFC portfolio are tested for impairment based on the quality of the underlying security and the condition of the monoline insurer providing credit support. Securities were deemed impaired if we expected they would not be repaid in full without the support of the insurer and the insurer was rated below investment grade.

At June 30, 2008, the combined fair value of the core and TRFC subprime mortgage securities portfolios was $1.3 billion with 85% of the portfolios rated AA or higher. The core portfolio is primarily comprised of vintages from 2005 or earlier. The TRFC portfolio is primarily comprised of vintages originated in 2006 and 2007. The weighted-average current credit enhancement on these portfolios was 35% at June 30, 2008.

SILO Transactions

In the second quarter of 2008 we recorded a $380 million charge related to sale-in, lease-out (SILO) transactions. This charge includes $237 million, in accordance with FAS 13-2, related to revising the cash flows associated with the Company's SILO transactions, as well as $143 million for establishing interest reserves on associated tax benefits. The charge was prompted by recent federal court decisions in BB&T Corp. v. United States and AWG Leasing Trust v. United States, where the tax benefits from certain SILO and lease-in, lease-out (LILO) transactions were denied. In the third quarter of 2008, we expect to deposit funds with the IRS to offset the accrual of interest on the disputed SILO transactions. The cost of the deposit, as well as the recalculation of the cash flows associated with the SILO transactions will result in a decrease in earnings per share of approximately $0.02 per share in both the second half of 2008 and full year 2009. We continue to believe our tax treatment of the SILO transactions was proper under the tax law as it existed at the time the tax benefits were reported. We are currently in discussions with the IRS.

Capital Support Agreements

During the second quarter of 2008, we executed the following capital support agreements: $28.6 million and $18 million covering securities in two short-term net asset value ("NAV") funds, both in the Asset Management segment. These agreements are in addition to the capital support agreement for the commingled short-term NAV fund ("CNAV fund") of $55.5 million covering securities related to Whistle Jacket Capital/White Pine Financial, LLC, in the Asset Servicing segment. Under these agreements, we could provide capital in specified circumstances in varying maturities through June 2009. A previously disclosed capital support agreement for the CNAV Fund covering securities related to Thornburg Mortgage Capital Resources was canceled during the second quarter of 2008 resulting in a $12 million credit recorded in Other expense, which was partially offset by $8 million of expense related to the current estimated fair value of the remaining capital support agreements. We continue to monitor exposure to NAV and money market funds that we manage. On a case-by-case basis, depending on future circumstances, we could enter into further capital support agreements with the funds.

  Capital Ratios

  -----------------------------------------------------------------------
  Capital Ratios                              Quarter ended
                                   --------------------------------------
                                   June 30,       March 31,      Dec. 31,
                                     2008            2008          2007
  -----------------------------------------------------------------------
  Adjusted tangible common
   equity to assets ratio (a) (b)    4.31%           4.14%         4.96%
  Adjusted tangible common equity
   to average assets ratio           4.44            4.23          5.09
  Tier I capital ratio (b) (c)       9.13            8.76          9.32
  Total (Tier I plus Tier II)
   capital ratio (c)                12.63           12.14         13.25
  Leverage capital ratio             6.39            6.18          6.53
  Average shareholders' equity
   to assets ratio                  14.54           14.72         13.61
  -----------------------------------------------------------------------

  (a) Common equity less goodwill and intangible assets divided by total
      assets less goodwill and intangible assets, adjusted for deferred tax
      liabilities associated with non-tax deductible identifiable intangible
      assets. The Company's major credit rating agencies have notified us
      that in their computation of our capital adequacy, they will give
      credit for deferred tax liabilities associated with tax deductible
      goodwill.  The regulators are also considering giving credit for
      deferred tax liabilities in their capital computations.  If the ratio
      had also been adjusted for the benefit of the deferred liability
      associated with tax deductible goodwill ($548 million) the ratio would
      have been 31 basis points higher at June 30, 2008.
  (b) Consolidated target ratios for Tier I and adjusted tangible common
      equity are 8.00% and 5.00%, respectively.
  (c) Preliminary.



  Nonperforming Assets

  -------------------------------------------------------------------------
  Nonperforming assets                          Quarter ended
                                   ----------------------------------------
                                   June 30,       March 31,      June 30,
  (dollar amounts in millions)       2008            2008          2007 (a)
  -------------------------------------------------------------------------
  Loans:
    Commercial                        $52             $50           $16
    Commercial real estate            106              49             -
    Residential real estate            55              33             4
    Foreign                            60              78             6
  -------------------------------------------------------------------------
      Total nonperforming loans       273             210            26
    Other assets owned                  6               5             1
  -------------------------------------------------------------------------
      Total nonperforming assets     $279            $215           $27
  -------------------------------------------------------------------------
  Nonperforming loans ratio           0.5%            0.4%          0.1%
  Allowance for loan losses/
   nonperforming loans              129.3           149.5       1,084.6
  Total allowance for credit
   losses/nonperforming loans       178.0           231.9       1,596.2
  -------------------------------------------------------------------------
  (a) Legacy The Bank of New York only.



  Allowance for Credit Loss, Provision and Net Charge-offs

  -------------------------------------------------------------------------
  Allowance for credit loss,
  provision and net charge-offs                Quarter ended
                                 ------------------------------------------
                                   June 30,       March 31,      June 30,
  (dollar amounts in millions)       2008            2008          2007 (a)
  -------------------------------------------------------------------------
  Allowance for credit losses
   - beginning of period             $487            $494          $425
  Provision for credit losses          25              16          (15)
  Sale of Mellon 1st Business Bank    (13)              -            -
  SFAS 159 adoption                     -             (10)           -
  Net (charge-offs)/recoveries:
    Commercial                        (12)             (6)           -
    Leasing                             1               -            5
    Foreign                             -              (5)           -
    Other                              (2)             (2)           -
  -------------------------------------------------------------------------
  Total net (charge-offs)/recoveries  (13)            (13)           5
  -------------------------------------------------------------------------
  Allowance for credit losses
   - end of period                   $486            $487         $415
  -------------------------------------------------------------------------
  Allowance for loan losses          $353            $314         $282
  Allowance for unfunded commitments  133             173          133
  -------------------------------------------------------------------------
  (a) Legacy The Bank of New York only.

The unallocated allowance was 22% at June 30, 2008 compared with 23% at March 31, 2008 and 28% at June 30, 2007.

Consolidated Net Income Including Discontinued Operations

Net income, including discontinued operations, totaled $309 million, or $0.27 per share, in the second quarter of 2008, compared with $746 million, or $0.65 per share, in the first quarter of 2008 and $445 million, or $0.62 per share, in the second quarter of 2007.

Supplemental Information — GAAP to Non-GAAP Reconciliations

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 this information facilitates comparisons with prior periods and reflects the principal basis on which our management internally monitors financial performance. These items also are excluded from our segment measures used internally to evaluate segment performance because management does not consider them to be particularly relevant or useful in evaluating the operating performance of our business segments.

  -------------------------------------------------------------------------
  Quarterly reconciliation of
  earnings per share
  (in millions,             2Q08               1Q08            2Q07 (a)
  except per          ----------------   ---------------   ---------------
  share amounts)      After-tax    EPS   After-tax   EPS   After-tax   EPS
  -------------------------------------------------------------------------
  Net income-GAAP        $309    $0.27      $746   $0.65      $445   $0.62
  Discontinued
   operations income
   (loss)                   7     0.01        (3)      -        (3)      -
  -------------------------------------------------------------------------
    Continuing
     operations           302     0.26       749    0.65       448    0.62
  Merger and
   integration (M&I)
   expenses                89     0.08        75    0.07        32    0.04
  SILO charge             380     0.33         -       -         -       -
  -------------------------------------------------------------------------
    Continuing
     operations
     excluding M&I
     expenses and SILO
     charge               771     0.67       824    0.72       480    0.66
  Intangible
   amortization            77     0.07        75    0.07        19    0.03
  -------------------------------------------------------------------------
    Continuing
     operations
     excluding M&I
     expenses, SILO
     charge and
     intangible
     amortization        $848    $0.74      $899   $0.78 (b)  $499   $0.69
  -------------------------------------------------------------------------


  ---------------------------------------------------------------------
  Year-to-date reconciliation
  of earnings per share      June 30, 2008            June 30 2007 (a)
  (in millions, except     ------------------      --------------------
  per share amounts)       After-tax      EPS      After-tax        EPS
  ---------------------------------------------------------------------
  Net income-GAAP             $1,055    $0.92           $879      $1.22
  Discontinued
   operations income
   (loss)                          4        -            (6)      (0.01)
  ---------------------------------------------------------------------
    Continuing operations      1,051     0.92            885       1.23
  Merger and integration
   (M&I) expenses                164     0.14             42       0.06
  SILO charge                    380     0.33              -          -
  ---------------------------------------------------------------------
    Continuing operations
     excluding M&I expenses
    and SILO charge            1,595     1.39            927       1.28 (b)
  Intangible amortization        152     0.13             35       0.05
  ---------------------------------------------------------------------
    Continuing operations
     excluding M&I expenses,
     SILO charge and
     intangible amortization  $1,747    $1.52           $962      $1.33
  ---------------------------------------------------------------------
  (a) Legacy The Bank of New York only.
  (b) Does not foot due to rounding.


  ------------------------------------------------------------------------
  Reconciliation of total revenue                               2Q08 vs.
                                                              ------------
  (in millions)              2Q08        1Q08     2Q07(a)     2Q07    1Q08
  ------------------------------------------------------------------------
  Fee and other revenue    $2,986      $2,978     $2,929
  Net interest revenue        411         767        586
  ------------------------------------------------------------------------
    Total revenue - GAAP    3,397       3,745      3,515        (3)%    (9)%
  FTE increment                15          15         16
  SILO charge                 377           -          -
  ------------------------------------------------------------------------
    Total revenue (FTE)
     - non-GAAP, excluding
     the SILO charge        3,789       3,760      3,531         7%      1%
  Securities writedowns       152          74          -
  ------------------------------------------------------------------------
    Total revenue (FTE)
     - non-GAAP, excluding
     SILO charge and
     securities writedowns $3,941      $3,834     $3,531        12%      3%
  ------------------------------------------------------------------------
  (a) Proforma combined.

 

In the merger transaction between The Bank of New York and Mellon Financial, The Bank of New York shareholders received 0.9434 shares of the Company's common stock for each share of The Bank of New York common stock outstanding on the closing date of the merger. Mellon Financial shareholders received one share of the Company's common stock for each share of Mellon Financial common stock outstanding on the closing date of the merger.

Converting The Bank of New York Company's common stock into post-merger share count terms for the second quarter of 2007 increased diluted earnings per share and diluted earnings per share excluding merger and integration expense by $0.03 and increased diluted earnings per share excluding merger and integration expense and intangible amortization by $0.04.

  APPENDIX

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


                                   Three months ended June 30, 2007
                         ---------------------------------------------------
                         The Bank of     Mellon                       Total
  (in millions)            New York   Financial (a)  Adjustments   Pro forma
  --------------------------------------------------------------------------
  Fee and other revenue
  Securities servicing fees:
    Asset servicing           $427         $271          $(4)(b)       $694
    Issuer services            367           48            -            415
    Clearing and execution
     services                  291            4          (10)(b)        285
  --------------------------------------------------------------------------
      Total securities
       servicing fees        1,085          323          (14)         1,394
  Asset and wealth
   management fees             168          688            -            856
  Performance fees              21           42            -             63
  Foreign exchange and
   other trading activities    117           59            -            176
  Treasury services             55           66            -            121
  Distribution and servicing     2           81            -             83
  Financing-related fees        61            8            -             69
  Investment income             39           38            -             77
  Securities gains (losses)     (2)           3            -              1
  Other                         34           55            -             89
  --------------------------------------------------------------------------
    Total fee and other
     revenue                 1,580        1,363          (14)         2,929
  Net interest revenue
  Interest revenue           1,162          416            -          1,578
  Interest expense             710          282            -            992
  --------------------------------------------------------------------------
    Net interest revenue       452          134            -            586
  Provision for credit
   losses                      (15)          (3)           -            (18)
  --------------------------------------------------------------------------
    Net interest revenue
     after provision for
     credit losses             467          137            -            604
  Noninterest expense
  Staff                        752          551            -          1,303
  Professional, legal and
   other purchased services    132          121            -            253
  Net occupancy                 81           91            -            172
  Distribution and servicing     4          151          (14)(b)        141
  Software                      57           20            -             77
  Furniture and equipment       54           26            -             80
  Business development          37           35            -             72
  Sub-custodian                 42           18            -             60
  Communications                23           10            -             33
  Clearing and execution        44            -            -             44
  Other                         87          117            -            204
  --------------------------------------------------------------------------
    Subtotal                 1,313        1,140          (14)         2,439
  Amortization of intangible
   assets                       29           11            -             40
  Merger and integration
   expense:
    The Bank of New York
     Mellon Corporation         35          116            -            151
    Acquired Corporate
     Trust Business             12            -            -             12
  --------------------------------------------------------------------------
      Total noninterest
       expense               1,389        1,267          (14)         2,642
  --------------------------------------------------------------------------
  Income
  Income from continuing
   operations before
   income taxes                658          233            -            891
  Provision for income
   taxes                       210          (48)           -            162
  --------------------------------------------------------------------------
    Income from continuing
     operations                448          281            -            729
  Discontinued operations:
    Income (loss) from
     discontinued operations    (4)           1            -             (3)
    Provision (benefit) for
     income taxes               (1)           7            -              6
  --------------------------------------------------------------------------
      Income (loss) from
       discontinued
       operations,
       net of tax               (3)          (6)           -             (9)
  --------------------------------------------------------------------------
    Net income                $445         $275           $-           $720
  --------------------------------------------------------------------------

  (a) Mellon Financial's results for the second quarter of 2007 include the
      impact of pre-tax charges associated with merger and integration
      expenses ($116 million), early redemption of junior subordinated
      debentures ($46 million), exit costs associated with excess office
      space ($30 million), and a litigation reserve charge ($5 million), as
      well as the net benefit of a tax settlement and other discrete tax
      items ($122 million).
  (b) Adjustment to eliminate intercompany revenue and expenses for
      Clearing and Execution Services and Asset Servicing paid by Mellon
      Financial 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, growth in asset management and securities servicing businesses, ability to achieve plans for revenue and expense synergies and the merger of The Bank of New York and Mellon Financial, ability and intention to hold certain securities, expectations and other matters relating to SILO transactions, 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 Corporation (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 July 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.