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The Bank of New York Mellon Corporation Reports Third Quarter Continuing EPS of $0.26

PRNewswire-FirstCall
NEW YORK
(NYSE:BK)
Oct 16, 2008

Results include 46 cents per share for merger and integration expense, tax settlements and support agreement charges

NEW YORK, October 16, 2008 — The Bank of New York Mellon Corporation (NYSE: BK) today reported income from continuing operations of $305 million, or $0.26 per share, in the third quarter of 2008. This compares to income from continuing operations of $642 million, or $0.56 per share, in the third quarter of 2007 and $302 million, or $0.26 per share, in the second quarter of 2008.

"In the face of unprecedented market volatility our operating performance exceeded expectations, driven by the strength and diversity of our securities servicing and asset management businesses. We supported our clients in these extraordinarily turbulent markets and I am very proud of the tireless dedication and focus of our employees," said Robert P. Kelly, chairman and chief executive officer of The Bank of New York Mellon.

"We recently announced our participation in the U.S. Treasury's program to invest capital in nine leading U.S. financial institutions. In addition, we are honored to have been selected by the Treasury as the sole provider of a broad range of custodial and trustee services for the government's Troubled Asset Relief Program (TARP)."

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

  (dollar amounts in
  millions, except per          3Q08             2Q08            3Q07
  share amounts)            -----------     ------------    ------------
                             Net             Net             Net
                            income  EPS     income   EPS    income   EPS
  --------------------------------------------------------------------------
  Continuing operations
   -- GAAP                   $305  $0.26     $302   $0.26    $642   $0.56
  Non-GAAP adjustments:
  M&I expenses                 66   0.06       89    0.08     127    0.11
  SILO/LILO/tax settlements    30   0.03      380    0.33       -       -
  --------------------------------------------------------------------------
    Continuing operations
     excluding M&I expenses
     and SILO/LILO/tax
     settlements              401   0.35      771    0.67     769    0.67
  Support agreement charges   433   0.37       (5)      -       -       -
  --------------------------------------------------------------------------
    Continuing operations
     excluding M&I expenses,
       SILO/LILO/tax
       settlements and
       support agreement
       charges                834   0.72      766    0.67     769    0.67
  Intangible amortization      74   0.06       77    0.07      84    0.07
  --------------------------------------------------------------------------
    Continuing operations
     excluding M&I expenses,
     SILO/LILO/tax
     settlements, support
     agreement charges and
     intangible
     amortization            $908  $0.79(a)  $843   $0.74    $853   $0.75(a)
  --------------------------------------------------------------------------

  (a) Does not foot due to rounding.

In the third quarter of 2008, the Company recorded an after-tax charge of $0.06 per share associated with merger and integration ("M&I") expenses and $0.03 per share related to the settlement with the IRS of tax structured lease transactions ("SILO/LILO"), as well as the settlement of several audit cycles. Additionally, in the third quarter of 2008, the Company recorded an after-tax charge of $0.37 per share, or $433 million, associated with various support agreements.

The operating results for the third quarter of 2008 also included pre-tax costs associated with the write-down of certain investment securities ($162 million). For additional information, see page 8.

Third Quarter Highlights of The Bank of New York Mellon Corporation (Unless otherwise noted, all comments begin with the results of the third quarter of 2008 and are compared to the third quarter of 2007). Please refer to the Quarterly Earnings Summary for detailed business segment information.

Total revenue was $3.626 billion, comprised of $2.923 billion of fee and other revenue including the write-down of certain investment securities ($162 million) and $703 million of net interest revenue including a pre-tax charge for the SILO/LILO tax settlement ($112 million).

  ----------------------------------------------------------------------
  Reconciliation of total revenue                             3Q08 vs.
                                                            ------------
  (dollar amounts in millions)     3Q08      2Q08    3Q07   3Q07    2Q08
  ----------------------------------------------------------------------

  Fee and other revenue          $2,923    $2,982  $2,931    -%     (2)%
  Securities losses                 162       152       9
  ----------------------------------------------------------------------
    Total fee and other revenue
     -- Non-GAAP                  3,085     3,134   2,940    5      (2)%
  Net interest revenue              703       411     669    5      71
  SILO/LILO                         112       377       -
  ----------------------------------------------------------------------
    Total net interest revenue
     -- Non-GAAP                    815       788     669   22       3
  ----------------------------------------------------------------------
    Total revenue, excluding
     SILO/LILO and securities
     writedowns -- Non-GAAP      $3,900    $3,922  $3,609    8%     (1)%
  ----------------------------------------------------------------------

-- Assets under management, excluding securities lending assets, totaled $1.067 trillion at quarter end. This represents a decrease of 4% compared with the prior year and the sequential quarter. Net asset inflows in the third quarter of 2008 totaled $8 billion and were more than offset by market depreciation and the impact of a stronger U.S. dollar. Assets under custody and administration totaled $22.4 trillion, a decrease of 1% compared with prior year and a decrease of 3% sequentially, as the benefit of new business conversions was offset by weaker market values and the impact of a stronger U.S. dollar.

-- Securities servicing fees totaled $1.542 billion, an increase of 6% on a reported basis and approximately 10% adjusted for the sale of the B-Trade and G-Trade execution businesses in the first quarter of 2008. The increase on an adjusted basis reflects growth in asset servicing, issuer services and clearing services. Securities servicing fees declined 2% sequentially, primarily driven by the normal seasonality in the third quarter associated with securities lending.

-- Asset and wealth management fees totaled $792 million, a decline of 7% compared to the prior year and 6% sequentially reflecting the global weakness in market values, partially offset by net inflows of money market assets over both periods.

-- Foreign exchange and other trading activities totaled a record $385 million, an increase of 62% compared with $238 million in the prior year and an increase of 25% (unannualized) compared with $308 million in the second quarter of 2008. The increase compared to both periods reflects the benefit of higher market volatility and volumes associated with our client activity and the current market environment.

-- Securities losses totaled $162 million. This compares with a loss of $9 million in the third quarter of 2007 and a loss of $152 million in the second quarter of 2008. Further information on the investment portfolio is detailed on pages 8 and 9.

-- Net interest revenue (FTE) totaled $708 million with a net interest margin of 1.96%. The third quarter of 2008 included a pre-tax charge for the final SILO/LILO tax settlement of $112 million. Excluding this charge, net interest revenue was a record $820 million and the net interest margin was 2.27%. This compares with net interest revenue of $674 million and a net interest margin of 2.02% in the third quarter of 2007 and net interest revenue of $792 million and a net interest margin of 2.21% in the second quarter of 2008, excluding a $377 million (pre-tax) SILO charge.

-- The provision for credit losses was $30 million in the third quarter of 2008 compared to no provision for credit losses in the third quarter of 2007 and $25 million in the second quarter of 2008.

Total noninterest expense was $3.332 billion. This compares to noninterest expense of $2.706 billion in the third quarter of 2007 and $2.754 billion in the second quarter of 2008.

  ----------------------------------------------------------------------
  Reconciliation of noninterest
   expense                                                    3Q08 vs.
                                                            ------------
  (dollar amounts in millions)     3Q08      2Q08    3Q07   3Q07    2Q08
  ----------------------------------------------------------------------

  Noninterest expense            $3,332    $2,754  $2,706   23%     21%
  Support agreement charges         726        (9)      -
  ----------------------------------------------------------------------
    Subtotal                      2,606     2,763   2,706   (4)%    (6)%
  M&I expense                       111       149     218
  Intangible amortization           120       124     131
  ----------------------------------------------------------------------
    Total noninterest expense,
     excluding support agreement
     charges, M&I expenses and
     intangible amortization
     -- Non-GAAP                 $2,375    $2,490  $2,357    1%     (5)%
  ----------------------------------------------------------------------

-- Total noninterest expense (excluding M&I expense and intangible amortization) included a $726 million support agreement charge during the third quarter of 2008. Excluding this amount, expenses increased 1% compared with the prior year and declined 5% (unannualized) sequentially. Total staff expense declined compared to both periods, reflecting the benefit of continuing expense synergies and lower incentive levels. Strong expense control contributed to significant positive operating leverage of approximately 700 basis points year-over-year and approximately 400 basis points sequentially.

The effective tax rate for the third quarter of 2008 was a negative 15.5%. The negative tax rate reflects the absolute level of charges associated with the support agreements, securities losses and the final SILO/LILO settlement, as well as the settlement of prior tax audit cycles. Excluding these items, as well as M&I expenses, the effective tax rate was 32.4% in the third quarter of 2008.

The capital ratios for the third quarter of 2008 reflect the record level of client deposits generated subsequent to the market turmoil that began in mid-September. Noninterest-bearing deposits were $82 billion at Sept. 30, 2008, $31 billion at June 30, 2008 and $27 billion at Sept. 30, 2007. The Company placed an increased level of deposits principally with either the Federal Reserve or in overnight deposits with large global banks. At the end of the third quarter, total assets were $268 billion and averaged $199 billion during the quarter.

The unrealized net of tax loss on our securities portfolio was $2.8 billion at Sept. 30, 2008 compared with $1.8 billion at June 30, 2008. The increase primarily resulted from wider credit spreads.

  --------------------------------------------------------------------------
  Capital Ratios                                       Quarter ended
                                               -----------------------------
                                               Sept. 30,  June 30,  Dec. 31,
                                                 2008      2008        2007
  --------------------------------------------------------------------------

  Tier I capital ratio                          9.33%(a)    9.33%      9.32%
  Total (Tier I plus Tier II) capital ratio    12.81 (a)   12.90      13.25
  Leverage capital ratio                        6.48        6.39       6.53
  Average shareholders' equity to average
   assets ratio                                14.08       14.54      15.10
  Tangible common equity to assets ratio(b)     3.88 (c)    4.62       5.24
  Tangible common equity to average assets
   ratio(b)                                     4.41 (c)    4.76       5.38
  --------------------------------------------------------------------------

  (a) Preliminary.
  (b) Common equity less goodwill and intangible assets plus the benefit of
      the deferred tax liability associated with non-tax deductible
      intangible assets and tax deductible goodwill, divided by total
      assets less goodwill and intangible assets.
  (c) At Sept. 30, 2008, total and average assets were adjusted for the
      deposits placed with the Federal Reserve of $37.9 billion and other
      short-term investments -- U.S. government-backed commercial paper of
      $10.9 billion.  The average impact of these assets was %3.5 billion in
      the third quarter of 2008.  Both of these sets of assets are assigned
      a zero risk-weighting by the regulators.

On Oct. 14, 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 Nov. 3, 2008 to shareholders of record as of the close of business on Oct. 24, 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 $22.4 trillion in assets under custody and administration, approximately $1.1 trillion in assets under management and services approximately $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 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 Sept. 30, 2008 and are available at http://www.bnymellon.com/ (Investor Relations -- financial reports).

Conference Call Data

Robert P. Kelly, chairman and 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 8 a.m. EDT on Thursday, October 16, 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 October 16, 2008. Replays of the conference call and audio webcast will be available beginning October 16, 2008 at approximately 2 p.m. EDT through October 30, 2008 by dialing (866) 452-2106 (U.S.) or (203) 369-1212 (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
  ------------------------------------------------------------------------

                                                  Quarter ended
                                        ----------------------------------
  (dollar amounts in millions, except
   per share amounts and unless
   otherwise noted; common shares       Sept. 30,   June 30,     Sept. 30,
   in thousands)                          2008        2008         2007
  ------------------------------------------------------------------------

  Return on average tangible common
   equity (annualized):
     GAAP                                 19.0%       18.5%        33.2%
     Non-GAAP adjusted(a)                 45.5%       41.2%        39.0%

  Return on equity (annualized):
     GAAP                                  4.3%        4.3%         8.9%
     Non-GAAP adjusted(b)                 12.9%       11.9%        11.8%

  Fee and other revenue as a percentage
   of total revenue (FTE)                   81%(c)      88%(c)       81%

  Annualized fee revenue per employee
   (based on average headcount)
   (in thousands)                         $285        $294         $291

  Non-U.S. percent of revenue,
   excluding the SILO/LILO
   charges (FTE)                            34%         35%          30%

  Pre-tax operating margin (FTE):
     GAAP                                    8%         18%          25%
     Non-GAAP adjusted(b)                  36%          34%          35%

  Net interest margin (FTE)              1.96%(c)     1.16%(c)     2.02%

  Selected average balances:
     Interest-earning assets         $144,290     $144,255     $133,521
     Total assets                    $198,827     $195,997     $183,828
     Interest-bearing deposits        $86,853      $94,785      $80,870
     Noninterest-bearing deposits     $33,462      $24,822      $26,466
     Shareholders' equity             $27,996      $28,507      $28,669

  Average common shares and
   equivalents outstanding
   (in thousands):
     Basic                          1,143,445    1,135,153    1,128,734
     Diluted                        1,151,469    1,146,886    1,141,145

  Period-end data
  Assets under management
   (in billions)                       $1,067       $1,113       $1,106
  Assets under custody and
   administration (in trillions)        $22.4        $23.0        $22.7
     Cross-border assets
      (in trillions)                     $8.9        $10.3         $9.6
  Market value of securities on
   loan (in billions)                    $470         $588         $663

  Employees                            43,200       43,100       40,600

  Book value per common share          $23.97       $24.93       $25.43
  Tangible book value per common
   share                                $6.65        $7.19        $7.95
  Dividends per share                   $0.24        $0.24        $0.24
  Closing common stock price per
   share                               $32.58       $37.83       $44.14
  Market capitalization               $37,388      $43,356      $50,266
  ----------------------------------------------------------------------

  (a) Calculated excluding M&I expenses and the SILO/LILO/tax settlements
      and support agreement charges.
  (b) Calculated excluding M&I expenses, intangible amortization expenses,
      the SILO/LILO/tax settlements and support agreement charges.
  (c) Excluding the SILO/LILO charge, fee and other revenue as a percentage
      of total revenue was 78% and 79% and the net interest margin was
      2.27% and 2.21% for the third and second quarters of 2008.



                 THE BANK OF NEW YORK MELLON CORPORATION
                 Condensed Consolidated Income Statement

  --------------------------------------------------------------------------
                                 Quarter ended           Nine months ended
  (in millions,         ------------------------------  --------------------
  except per share      Sept. 30,  June 30,  Sept. 30,  Sept. 30,  Sept. 30,
  amounts)                2008       2008      2007       2008      2007(a)
  --------------------------------------------------------------------------
  Fee and other revenue
  Securities servicing
   fees:
    Asset servicing       $803       $864      $720     $2,566      $1,540
    Issuer services        477        444       436      1,297       1,122
    Clearing and
     execution services    262        270       304        799         877
  --------------------------------------------------------------------------
      Total securities
       servicing fees    1,542      1,578     1,460      4,662       3,539
  Asset and wealth
   management fees         792        844       854      2,478       1,173
  Performance fees           3         16        (3)        39          32
  Foreign exchange and
   other trading
   activities              385        308       238        952         482
  Treasury services        130        130       122        384         227
  Distribution and
   servicing               107        110        95        315          99
  Financing-related fees    45         50        51        143         164
  Investment income         17         45        22         85          97
  Other                     64         53       101        214         182
  --------------------------------------------------------------------------
      Total fee revenue  3,085      3,134     2,940      9,272       5,995
  Securities gains
   (losses)               (162)      (152)       (9)      (387)         (9)
  --------------------------------------------------------------------------
      Total fee and
       other revenue     2,923      2,982     2,931      8,885       5,986
  --------------------------------------------------------------------------
  Net interest revenue
  Interest revenue       1,339      1,092     1,778      4,087       3,961
  Interest expense         636        681     1,109      2,206       2,413
  --------------------------------------------------------------------------
      Net interest
       revenue             703        411       669      1,881       1,548
  Provision for
   credit losses            30         25         -         71         (30)
  --------------------------------------------------------------------------
      Net interest
       revenue after
       provision for
       credit losses       673        386       669      1,810       1,578
  --------------------------------------------------------------------------
  Noninterest expense
  Staff                  1,218      1,391     1,280      3,961       2,752
  Professional, legal
   and other purchased
   services                287        280       241        819         503
  Net occupancy            164        139       144        432         304
  Distribution
   and servicing           133        131       127        394         135
  Software                  78         88        91        245         202
  Furniture and
   equipment                80         79        80        238         184
  Sub-custodian and
   clearing                 80         83       110        233         267
  Business development      62         75        56        203         123
  Other(b)                 999        215       228      1,430         429
  --------------------------------------------------------------------------
      Subtotal           3,101      2,481     2,357      7,955       4,899
  Amortization of
   intangible assets       120        124       131        366         188
  Merger and
   integration expenses:
    The Bank of New York
     Mellon Corporation    107        146       205        374         244
    Acquired Corporate
     Trust Business          4          3        13         12          36
  --------------------------------------------------------------------------
      Total noninterest
       expense           3,332      2,754     2,706      8,707       5,367
  --------------------------------------------------------------------------
  Income
  Income from
   continuing operations
   before income taxes     264        614       894      1,988       2,197
  Provision for
   income taxes            (41)       312       252        632         670
  --------------------------------------------------------------------------
      Income from
       continuing
       operations          305        302       642      1,356       1,527
  Discontinued
   operations:
    Income (loss) from
     discontinued
     operations             (2)        16        (4)         9         (13)
    Provision (benefit)
     for income taxes        -          9        (2)         7          (5)
  --------------------------------------------------------------------------
      Income (loss) from
       discontinued
       operations,
       net of tax           (2)         7        (2)         2          (8)
  --------------------------------------------------------------------------
    Net income            $303       $309      $640     $1,358      $1,519
  --------------------------------------------------------------------------
  Earnings per share
  Basic:
    Income from
     continuing
     operations          $0.27      $0.27     $0.57      $1.19       $1.79
    Income (loss) from
     discontinued
     operations,
     net of tax              -       0.01         -          -       (0.01)
  --------------------------------------------------------------------------
      Net income         $0.27      $0.27(c)  $0.57      $1.19       $1.78
  --------------------------------------------------------------------------
  Diluted:
    Income from
     continuing
     operations          $0.26      $0.26     $0.56      $1.18       $1.77
    Income (loss) from
     discontinued
     operations,
     net of tax              -       0.01         -          -       (0.01)
  --------------------------------------------------------------------------
      Net income         $0.26      $0.27     $0.56      $1.18       $1.76
  --------------------------------------------------------------------------

  (a) Results for nine months ended Sept. 30, 2007 include six months of
      legacy The Bank of New York Company, Inc. and three months of The Bank
      of New York Mellon Corporation.
  (b) Includes the support agreement charges of $726 million recorded in the
      third quarter of 2008.
  (c) Does not foot due to rounding.



                 THE BANK OF NEW YORK MELLON CORPORATION
                        Consolidated Balance Sheet

  ------------------------------------------------------------------------
  (dollar amounts in millions,                    Sept. 30,       Dec. 31,
  except per share amounts)                          2008           2007
  ------------------------------------------------------------------------
  Assets
  Cash and due:
    Banks                                           $7,430         $6,555
    Federal Reserve Bank                            37,909             80
  Other short-term investment -- U.S.
   government-backed commercial paper,
   at fair value                                    10,865              -
  Interest-bearing deposits with banks              52,222         34,312
  Federal funds sold and securities purchased
   under resale agreements                           7,759          9,108
  Securities:
    Held-to-maturity (fair value of $7,580
     and $2,171)                                     7,705          2,180
    Available-for-sale                              33,910         46,518
  ------------------------------------------------------------------------
      Total securities                              41,615         48,698
  Trading assets                                     8,091          6,420
  Loans                                             59,042         50,931
  Allowance for loan losses                           (365)          (327)
  ------------------------------------------------------------------------
      Net loans                                     58,677         50,604
  Premises and equipment                             1,678          1,731
  Accrued interest receivable                          738            739
  Goodwill                                          16,335         16,331
  Intangible assets                                  6,043          6,402
  Other assets                                      18,148         16,676
  ------------------------------------------------------------------------
        Total assets                              $267,510       $197,656
  ------------------------------------------------------------------------

  Liabilities
  Deposits:
    Noninterest-bearing (principally domestic
     offices)                                      $81,727        $32,372
    Interest-bearing deposits in domestic
     offices                                        25,465         21,082
    Interest-bearing deposits in foreign
     offices                                        66,976         64,671
  ------------------------------------------------------------------------
      Total deposits                               174,168        118,125
  Borrowing from Federal Reserve related to
   asset-backed commercial paper, at fair value     10,865              -
  Federal funds purchased and securities sold
   under repurchase agreements                       6,467          2,193
  Trading liabilities                                5,728          4,577
  Payables to customers and broker-dealers          10,971          7,578
  Commercial paper                                      43          4,079
  Other borrowed funds                               2,916          1,840
  Accrued taxes and other expenses                   5,134          8,101
  Other liabilities (including allowance for
   lending related commitments of $129 and $167)     8,164          4,887
  Long-term debt                                    15,541         16,873
  ------------------------------------------------------------------------
        Total liabilities                          239,997        168,253
  ------------------------------------------------------------------------

  Shareholders' equity
  Common stock-par value $0.01 per share;
   authorized 3,500,000,000 shares; issued
   1,148,509,331 and 1,146,896,177 shares               11             11
  Additional paid-in capital                        20,212         19,990
  Retained earnings                                 10,438         10,015
  Accumulated other comprehensive loss,
   net of tax                                      (3,115)          (574)
  Less: Treasury stock of 942,777 and
   912,896 shares, at cost                            (33)           (39)
  ------------------------------------------------------------------------
      Total shareholders' equity                    27,513         29,403
  ------------------------------------------------------------------------
        Total liabilities and shareholders'
         equity                                   $267,510       $197,656
  ------------------------------------------------------------------------



  Investment Securities Portfolio

At Sept. 30, 2008, our investment securities portfolio totaled $41.6 billion. The unrealized net of tax loss on our total securities portfolio was $2.8 billion at Sept. 30, 2008. The unrealized net of tax loss at June 30, 2008 was $1.8 billion. The increase compared to the prior quarter was primarily driven by wider credit spreads. The securities in our portfolio continued to remain highly rated, with 91% rated AAA/AA.

  The following table provides the detail of our total securities portfolio.



  --------------------------------------------------------------------------
  Securities portfolio                       Fair Value  Portfolio
  Sept. 30, 2008                              as % of    Aggregate   Quarter
  (dollar amounts         Amortized   Fair   Amortized  Unrealized   to-date
  in millions)              Cost      Value   Cost(a)    Gain/Loss   Change
  --------------------------------------------------------------------------

  Agencies               $ 11,565   $11,456      99%      $(109)      $(61)
  Alt-A securities          8,825     6,486      72      (2,339)      (925)
  Prime/Other mortgage-
   backed securities        7,012     6,300      90        (712)      (315)
  Subprime mortgage
   securities               1,602     1,202      72        (400)       (77)
  Commercial mortgage-
   backed securities        2,845     2,650      93        (195)       (91)
  Asset-backed securities
   CDOs                        41        39      11          (2)        35
  European floating rate
   notes                    8,131     7,658      94        (473)      (128)
  Home equity lines of
   credit                     624       439      58        (185)       (37)
  SIV securities              131       130      71          (1)        (3)
  Other                     5,364     5,130      94        (234)       (79)
  --------------------------------------------------------------------------
    Total                 $46,140   $41,490      88%    $(4,650)   $(1,681)
  --------------------------------------------------------------------------


  --------------------------------------------------------------------------
  Securities portfolio
  Sept. 30, 2008                Life-to-date/          Ratings
  (dollar amounts                Impairment    -----------------------
  in millions)                    Charge(b)    AAA    AA    A    Other
  --------------------------------------------------------------------------

  Agencies                           $-        100%    -%    -%    -%
  Alt-A securities                  246         74    10    10     6
  Prime/Other mortgage-backed
   securities                        12         95     3     1     1
  Subprime mortgage securities       63         27    54    16     3
  Commercial mortgage-backed
   securities                         -         97     3     -     -
  Asset-backed securities CDOs      320         41    10    33    16
  European floating rate notes        -         98     2     -     -
  Home equity lines of credit       137         23    22    28    27
  SIV securities                     51         63    12     9    16
  Other                              90         48    10    21    21
  --------------------------------------------------------------------------
    Total                          $919(b)      85%    6%    5%    4%
  --------------------------------------------------------------------------

  (a) Amortized cost before impairments.
  (b) Life-to-date impairment charges include $301 million associated with
      the consolidation of Three Rivers Funding Corporation in December
      2007.

At Sept. 30, 2008, we assumed an additional decline of approximately 15% in national home prices over the next two years and estimated the impact it would have on the cash flows of the underlying individual securities. As a result, we recorded an impairment charge and wrote down to current market value certain securities, resulting in a $162 million pre-tax securities loss comprised of the following:

  -----------------------------------------------------
  Securities losses (impairment charges)
  (in millions)                                    3Q08
  -----------------------------------------------------
  Alt-A securities                                  $29
  Prime mortgage securities                          12
  Subprime mortgage securities                       12
  Asset-backed securities CDOs                       42
  Home equity line of credit securities              10
  SIV securities                                      5
  Other (including FHLMC)                            52
  -----------------------------------------------------
    Total securities losses (impairment charges)   $162
  -----------------------------------------------------

At the time of purchase, 100% of our Alt-A portfolio was rated AAA. At Sept. 30, 2008, this portfolio had migrated to 74% AAA-rated, 10% AA-rated, 10% A-rated and 6% other. At the time of purchase, the portfolio's weighted- average FICO score was 711 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 approximately 13%. The unrealized loss on the Alt-A portfolio at Sept. 30, 2008 was $2.3 billion.

At Sept. 30, 2008, the fair value of our total asset-backed securities ("ABS") CDOs was $51 million. The fair value of this portfolio, net of OTTI, was 11% of par at Sept. 30, 2008. At Sept. 30, 2008, $12 million of ABS CDOs are included in trading assets and $39 million are included in securities available-for-sale.

The home equity lines of credit ("HELOC") securities 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. The securities losses in the third quarter of 2008 related to HELOC securities resulted from both a deterioration of specific securities combined with weakening credit support due to below investment grade ratings of certain bond insurers.

At Sept. 30, 2008, the fair value of our subprime mortgage securities portfolio was $1.2 billion with 81% of the portfolio rated AA or higher. The weighted-average current credit enhancement on this portfolio was approximately 35% at Sept. 30, 2008.

SILO/LILO and Tax Settlements

In the third quarter of 2008, we reached a settlement with the Internal Revenue Service ("IRS") to formally close our 1998 through 2002 audit cycle. We also settled our 1994 through 1996 New York State and New York City audits. As part of the IRS settlement, we also accepted the IRS uniform SILO/LILO settlement offer announced on Aug. 6, 2008. The combined after-tax charge of the settlements was $30 million. In the second quarter of 2008 we recorded a $380 million after-tax charge related to the SILO transactions covered by this settlement.

Support Agreements

As previously disclosed, BNY Mellon elected to support its clients invested in money market mutual funds, cash sweep funds and similar collective funds impacted by the Lehman Brothers Holdings, Inc. ("Lehman") bankruptcy filing. The support agreements relate to five commingled cash funds used primarily for overnight custody cash sweeps, four Dreyfus money market funds and various securities lending customers. These agreements are in addition to agreements that existed at June 30, 2008 covering SIV exposure in two short- term net asset value funds and the support agreements covering securities related to Whistle Jacket Capital/White Pine Financial, LLC to a commingled short-term net asset value fund.

During the third quarter of 2008, we also offered to support certain clients holding auction rate securities in the Wealth Management (expense of $15 million) and Treasury Services (expense of $3 million) segments.

Balance Sheet

During the recent market turmoil, there was a significant increase in deposits, reflecting client reactions to market volatility. Due to the anticipated short-term nature of these deposits, we have placed them primarily with either the Federal Reserve or in overnight deposits with large global banks. At Sept. 30, 2008, total assets grew to $267.5 billion compared with $201.2 billion at June 30, 2008. Total assets averaged $198.8 billion for the third quarter of 2008, compared with $196.0 billion for the second quarter of 2008. Deposits totaled $174.2 billion at Sept. 30, 2008 and $127.2 billion at

June 30, 2008. Total deposits averaged $120.3 billion in the third quarter of 2008 and $119.6 billion in the second quarter of 2008.

The recent market events resulted in a significant increase in our percentage of liquid assets to total assets to 43% at Sept. 30, 2008 from 30% at June 30, 2008. At Sept. 30, 2008, we had approximately $70.9 billion of overnight liquid funds and cash of $45.3 billion (including approximately $37.9 billion on deposit with the Federal Reserve) for a total of approximately $116.2 billion of available funds.

  Nonperforming Assets

  ------------------------------------------------------------------------
  Nonperforming assets                           Quarter ended
                                   ---------------------------------------
                                   Sept. 30,       June 30,      Sept. 30,
  (dollar amounts in millions)       2008            2008          2007
  ------------------------------------------------------------------------
  Loans:
    Commercial                        $65             $52           $18
    Commercial real estate            118             106             -
    Other residential mortgages        75              55            11
    Foreign                             1              60             6
  ------------------------------------------------------------------------
      Total nonperforming loans       259             273            35
    Other assets owned                  8               6             2
  ------------------------------------------------------------------------
      Total nonperforming assets     $267            $279           $37
  ------------------------------------------------------------------------
  Nonperforming loans ratio           0.4%            0.5%          0.1%
  Allowance for loan losses/
   nonperforming loans              140.9%          129.3%        948.6%
  Total allowance for credit
   losses/nonperforming loans       190.7%          178.0%      1,457.1%
  ------------------------------------------------------------------------



  Allowance for Credit Losses, Provision and Net Charge-offs

  ------------------------------------------------------------------------
  Allowance for credit losses,                   Quarter ended
  provision and net charge-offs    ---------------------------------------
                                   Sept. 30,       June 30,      Sept. 30,
  (dollar amounts in millions)       2008            2008          2007
  ------------------------------------------------------------------------
  Allowance for credit losses --
   beginning of period               $486            $487          $415
  Addition resulting from the
   merger with Mellon                   -               -           130
  Provision for credit losses          30              25             -
  Sale of Mellon 1st Business Bank      -             (13)            -
  Net (charge-offs)/recoveries:
    Commercial                         (8)             (3)            -
    Commercial real estate             (2)             (9)            -
    Foreign                            (9)              -             -
    Leasing                             2               1           (35)
    Other                              (5)             (2)            -
  ------------------------------------------------------------------------
      Total net (charge-offs)/
       recoveries                     (22)            (13)          (35)
  ------------------------------------------------------------------------
  Allowance for credit losses --
   end of period                     $494            $486          $510
  ------------------------------------------------------------------------
  Allowance for loan losses          $365            $353          $332
  Allowance for unfunded
   commitments                        129             133           178
  ------------------------------------------------------------------------

The unallocated allowance was 19% at Sept. 30, 2008 compared with 22% at June 30, 2008 and 28% at Sept. 30, 2007.

Consolidated Net Income Including Discontinued Operations

Net income, including discontinued operations, totaled $303 million, or $0.26 per share, in the third quarter of 2008, compared with $309 million, or $0.27 per share, in the second quarter of 2008 and $640 million, or $0.56 per share, in the third quarter of 2007.

Supplemental Information -- Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with GAAP. We believe that the supplemental non-GAAP information included in this earnings release is useful to the investment community in analyzing the financial results and trends of our business. This information facilitates comparisons with prior periods and reflects the principal basis on which our management internally monitors financial performance. These items also reflect certain items that 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.

  ------------------------------------------------------------------------
  Reconciliation of net
  income and EPS --               3Q08            2Q08         3Q07
  GAAP to Non-GAAP           ------------    ------------  -----------
  (in millions, except        Net             Net           Net
  per share amounts)         income   EPS    income   EPS  income  EPS
  ------------------------------------------------------------------------
  Net income-GAAP             $303   $0.26    $309   $0.27  $640  $0.56
  Discontinued operations
   income (loss)                (2)      -       7    0.01    (2)     -
  ------------------------------------------------------------------------
    Continuing operations      305    0.26     302    0.26   642   0.56
  Non-GAAP adjustments:
  M&I expenses                  66    0.06      89    0.08   127   0.11
  SILO/LILO charge/
   tax settlements              30    0.03     380    0.33     -      -
  Support agreement charges    433    0.37      (5)      -     -      -
  ------------------------------------------------------------------------
    Continuing operations
     excluding M&I expenses,
     SILO/LILO/tax
     settlements and support
     agreement charges         834    0.72     766    0.67   769   0.67
  Intangible amortization       74    0.06      77    0.07    84   0.07
  ------------------------------------------------------------------------
    Continuing operations
     excluding M&I expenses,
     SILO/LILO/tax
     settlements, support
     agreement charges, and
     intangible amortization. $908   $0.79(a) $843   $0.74  $853  $0.75(a)
  ------------------------------------------------------------------------

  (a) Does not foot due to rounding.



  ----------------------------------------------------------------------
  Reconciliation of total revenue                              3Q08 vs.
                                                              ----------
  (dollar amounts in millions)     3Q08      2Q08     3Q07    3Q07  2Q08
  ----------------------------------------------------------------------
  Fee and other revenue           $2,923    $2,982   $2,931    -%   (2)%
  Net interest revenue               703       411      669
  ----------------------------------------------------------------------
    Total revenue                  3,626     3,393    3,600    1%    7%
  SILO/LILO charge                   112       377        -
  Securities writedowns              162       152        9
  ----------------------------------------------------------------------
    Total revenue, excluding
     SILO/LILO charge and
     securities writedowns        $3,900    $3,922   $3,609    8%   (1)%
  ----------------------------------------------------------------------

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 ability and intention to hold certain securities, assumptions regarding additional declines in national home prices and estimated impact of this decline, the description of client deposits and assumptions regarding performance in our Alt-A and securities available-for- sale portfolios. 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 October 16, 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.