THE BANK OF NEW YORK COMPANY, INC.

                         Quarterly Report on Form 10-Q
              For the quarterly period ended September 30, 2005



  The Quarterly Report on Form 10-Q and cross reference index is on page 67.



















 


                      THE BANK OF NEW YORK COMPANY, INC.
                               FINANCIAL REVIEW
                               TABLE OF CONTENTS



         Consolidated Financial Highlights	                      1

         Management's Discussion and Analysis of Financial
         Condition and Results of Operations

          - Introduction	                                      3
          - Overview	                                              3
          - Third Quarter 2005 Highlights	                      4
          - Consolidated Income Statement Review	              5
          - Business Segment Review	                              9
          - Critical Accounting Policies	                     23
          - Consolidated Balance Sheet Review	                     27
          - Liquidity	                                             34
          - Capital Resources	                                     36
          - Trading Activities	                                     38
          - Asset/Liability Management	                             40
          - Statistical Information	                             41
          - Other Developments	                                     43
          - Forward-Looking Statements and
              Factors That Could Affect Future Results	             47
          - Website Information	                                     50

         Consolidated Financial Statements
          - Consolidated Balance Sheets
             September 30, 2005 and December 31, 2004	             51
          - Consolidated Statements of Income
             for the Three Months and Nine Months Ended 
             September 30, 2005 and 2004	                     52
          - Consolidated Statement of Changes In
             Shareholders' Equity for the Nine
             Months Ended September 30, 2005	                     53
          - Consolidated Statements of Cash Flows
             for the Nine Months Ended 
             September 30, 2005 and 2004                             54
          - Notes to Consolidated Financial Statements	        55 - 66

         Form 10-Q
          - Cover	                                             67
          - Controls and Procedures	                             68
          - Legal Proceedings	                                     68
          - Changes in Securities, Use of Proceeds, and
             Issuer Purchases of Equity Securities	             69
          - Exhibits	                                             69
          - Signature	                                             70



 1


                               THE BANK OF NEW YORK COMPANY, INC.
                                      Financial Highlights
                        (Dollars in millions, except per share amounts)
                                           (Unaudited)

                                            September 30,    June 30,      September 30,
                                                2005           2005            2004
                                            ------------   -------------   ------------
                                                                  
  Quarter
  -------
  Revenue (tax equivalent basis)            $      2,126   $       2,077   $      1,747
  Net Income                                         389             398            354
  Basic EPS                                         0.51            0.52           0.46
  Diluted EPS                                       0.51            0.52           0.46
  Cash Dividends Per Share                          0.21            0.20           0.20
  Return on Average Common
   Shareholders' Equity                            16.15%          17.12%         15.90%
  Return on Average Assets                          1.53            1.59           1.45
  Efficiency Ratio                                  65.5            65.7           65.2

  Year-to-date
  ------------
  Revenue (tax equivalent basis)            $      6,103   $       3,995   $      5,197
  Net Income                                       1,166             777          1,089
  Basic EPS                                         1.52            1.01           1.41
  Diluted EPS                                       1.51            1.00           1.40
  Cash Dividends Per Share                          0.61            0.40           0.59
  Return on Average Common
    Shareholders' Equity                           16.59%          16.82%         16.73%
  Return on Average Assets                          1.56            1.57           1.47
  Efficiency Ratio                                  65.8            65.9           66.0

  Assets                                    $    101,766   $     103,063   $     93,175
  Loans                                           42,143          40,681         37,119
  Securities                                      26,230          25,779         23,246
  Deposits - Domestic                             34,807          37,921         34,786
           - Foreign                              26,270          26,076         23,654
  Long-Term Debt                                   7,529           7,586          6,137
  Common Shareholders' Equity                      9,608           9,471          9,054

  Common Shareholders'
   Equity Per Share                         $      12.48   $       12.29   $      11.66
  Market Value Per Share 
   of Common Stock                                 29.41           28.78          29.17

  Allowance for Loan Losses as
   a Percent of Total Loans                         1.33%           1.38%          1.61%
  Allowance for Loan Losses as
   a Percent of Non-Margin Loans                    1.57            1.62           1.92
  Total Allowance for Credit Losses as
   a Percent of Total Loans                         1.68            1.75           2.04
  Total Allowance for Credit Losses as
   a Percent of Non-Margin Loans                    1.97            2.05           2.42


  Tier 1 Capital Ratio                              7.93            8.07           8.09
  Total Capital Ratio                              12.20           12.49          12.09
  Leverage Ratio                                    6.59            6.55           6.38
  Tangible Common Equity Ratio                      5.32            5.26           5.49

  Employees                                       23,081          22,993         23,034



 2

                               THE BANK OF NEW YORK COMPANY, INC.
                                      Financial Highlights
                        (Dollars in millions, except per share amounts)
                                           (Estimated)

                                            September 30,    June 30,      September 30,
                                                2005           2005            2004
                                            -------------   ------------   -------------
                                                                  
  Assets Under Custody (In trillions)    
  -----------------------------------    
  Assets Under Custody                      $       10.3   $        10.3   $        8.9

   Equity Securities                                  31%             35%            33%
   Fixed Income Securities                            69              65             67

   Cross-Border Assets                      $        3.1   $         2.9   $        2.5

  Assets Under Management (In billions)    
  -------------------------------------    
  Total Assets Under Management             $        107   $         105   $         97
   Equity Securities                                  34%             34%            35%
   Fixed Income Securities                            21              21             21
   Alternative Investments                            14              14             15
   Liquid Assets                                      31              31             29
   








 3

Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
  Results of Operations
  ---------------------

INTRODUCTION

     The Bank of New York Company, Inc.'s (the "Company") actual results of 
future operations may differ from those estimated or anticipated in certain 
forward-looking statements contained herein for reasons that are discussed 
below and under the heading "Forward-Looking Statements and Factors That Could 
Affect Future Results".  When used in this report, the words "estimate," 
"forecast," "project," "anticipate," "expect," "intend," "believe," "plan," 
"goal," "should," "may," "strategy," "target," and words of similar meaning 
are intended to identify forward-looking statements in addition to statements 
specifically identified as forward-looking statements.

OVERVIEW

     The Bank of New York Company, Inc. (NYSE: BK) is a global leader in 
providing a comprehensive array of services that enable institutions and 
individuals to move and manage their financial assets in more than 100 markets 
worldwide.  The Company has a long tradition of collaborating with clients to 
deliver innovative solutions through its core competencies: securities 
servicing, treasury management, investment management, and individual and 
regional banking services.  The Company's extensive global client base 
includes a broad range of leading financial institutions, corporations, 
government entities, endowments and foundations.  Its principal subsidiary, 
The Bank of New York, founded in 1784, is the oldest bank in the United States 
and has consistently played a prominent role in the evolution of financial 
markets worldwide.

     The Company has executed a consistent strategy over the past decade by 
focusing on highly scalable, fee-based securities servicing and fiduciary 
businesses, with top-three market share in most of its major product lines.  
The Company distinguishes itself competitively by offering the broadest array 
of products and services around the investment lifecycle.  These include: 
advisory and asset management services to support the investment decision; 
extensive trade execution, clearance and settlement capabilities; custody, 
securities lending, accounting and administrative services for investment 
portfolios; and sophisticated risk and performance measurement tools for 
analyzing portfolios.  The Company also provides services for issuers of both 
equity and debt securities.  By providing integrated solutions for clients' 
needs, the Company strives to be the preferred partner in helping its clients 
succeed in the world's rapidly evolving financial markets.

     The Company has grown both through internal reinvestment as well as 
execution of strategic acquisitions to expand product offerings and increase 
market share in its scale businesses.  Internal reinvestment occurs through 
increased technology spending, staffing levels, marketing/branding 
initiatives, quality programs, and product development.  The Company 
consistently invests in technology to improve the breadth and quality of its 
product offerings, and to increase economies of scale.  With respect to 
acquisitions, the Company has acquired 96 businesses since 1995, almost 
exclusively in its securities servicing and fiduciary segment.  The 
acquisition of Pershing in 2003 for $2 billion was the largest of these 
acquisitions.

     As part of the transformation to a leading securities servicing provider, 
the Company has also de-emphasized or exited its slower-growth traditional 
banking businesses over the past decade.  The Company's more significant 
actions include selling its credit card business in 1997 and its factoring 
business in 1999, and most recently, significantly reducing non-financial 
corporate credit exposures by 47% from December 31, 2000 to December 31, 2004. 

 4

Capital generated by these actions has been reallocated to the Company's 
higher-growth businesses.

     The Company's business model is well positioned to benefit from a number 
of long-term secular trends.  These include the growth of worldwide financial 
assets, globalization of investment activity, structural market changes, and 
increased outsourcing.  These trends benefit the Company by driving higher 
levels of financial asset trading volume and other transactional activity, as 
well as higher asset price levels and growth in client assets, all factors by 
which the Company is compensated for its services.  In addition, international 
markets offer strong growth opportunities.

THIRD QUARTER 2005 HIGHLIGHTS

     The Company reported third quarter net income of $389 million and diluted 
earnings per share of 51 cents, compared with net income of $354 million and 
diluted earnings per share of 46 cents in the third quarter of 2004 and net 
income of $398 million and diluted earnings per share of 52 cents in the 
second quarter of 2005.  Year-to-date net income was $1,166 million, or $1.51 
of diluted earnings per share, compared to $1,089 million, or $1.40 of diluted 
earnings per share in 2004. 

     Additional highlights for the quarter include:

*	Positive operating leverage over the third quarter of 2004.
*	Securities servicing fees up 18% versus the year-ago quarter.
*	Net interest income up 15% over the year-ago quarter.
*	Foreign exchange and other trading revenues up 39% from the year-ago 
        quarter.
*	Agreed on October 16, 2005 to acquire Alcentra Group Ltd., an 
        international asset management group.
*	New marketing alliances with leading clients in key growth markets.


     The Company's third quarter earnings reflect significant progress toward 
its key objectives of achieving positive operating leverage on an annual basis 
and sustaining top-line growth by expanding client relationships and winning 
new ones. The Company's credit performance remains excellent and its cost re-
engineering efforts continue to be effective. 

 5

CONSOLIDATED INCOME STATEMENT REVIEW

Noninterest Income
------------------



                                               Percent Inc/(Dec)
                                               -----------------  Year-to-date  Percent
                                               3Q05 vs. 3Q05 vs. --------------   Inc/
(Dollars in millions)      3Q05   2Q05   3Q04    2Q05     3Q04    2005    2004   (Dec)
                          ------ ------ ------ -------- -------- ------  ------ -------
                                                        
Servicing Fees
  Securities              $  806 $  776 $  684      4%      18%  $2,333  $2,116    10%
  Global Payment Services     75     76     85     (1)     (12)     226     247    (9)
                          ------ ------ ------                   ------  ------
                             881    852    769      3       15    2,559   2,363     8
Private Client Services
 and Asset Management Fees   120    122    113     (2)       6      363     333     9
Service Charges and Fees      93    103     98    (10)      (5)     288     286     1
Foreign Exchange and
 Other Trading Activities     93    103     67    (10)      39      292     273     7 
Securities Gains              15     23     14    (35)       7       50      59   (15)
Other*                        46     53     38    (13)      21      130     160   (19)
                          ------ ------ ------                   ------  ------
Total Noninterest Income  $1,248 $1,256 $1,099     (1)      14   $3,682  $3,474     6
                          ====== ====== ======                   ======  ======

* See "Other Developments."



     The increase in noninterest income versus the third quarter and year-to-
date periods of 2004 reflects broadly stronger performance in securities 
servicing, foreign exchange and other trading, and private client services and 
asset management. The sequential quarter decrease primarily reflects declines 
in foreign exchange and other trading, service charges and fees, and 
securities gains.

     Securities servicing fees in the third quarter of 2005 were up from the 
third quarter of 2004 reflecting solid growth across all business segments.  
On a year-to-date basis, 2005 securities servicing fees were up from 2004 due 
to strength in investor services and broker-dealer services. See "Business 
Segment Review" for additional details.

     Global payment services fees were lower than the third quarter and year-
to-date periods of 2004 and on a sequential quarter basis.  The decline 
reflects customers choosing to pay with higher compensating balances, which 
benefits net interest income.  On an invoiced services basis, total revenue 
was up 6% over the third quarter of 2004 and 3% sequentially. 

     Private client services and asset management fees for the third quarter 
were up from the third quarter of 2004 reflecting higher fees at Ivy Asset 
Management.  The sequential quarter decrease reflects higher asset management 
fees which were more than offset by seasonally lower private client fees. For 
the nine months ended September 30, 2005, private client services and asset 
management fees increased by 9% from a year ago, reflecting continued growth 
at Ivy Asset Management. Total assets under management were $107 billion, up 
from $97 billion a year ago and $105 billion at June 30, 2005. 

     Service charges and fees were down from the third quarter of 2004 and 
from the second quarter of 2005.  For the nine months of 2005, service charges 
and fees increased slightly from 2004.  The year-over-year quarterly decrease 
reflects lower advisory and commitment fees offset by higher capital markets 
and syndication fees.  The sequential quarter decrease reflects lower capital 
markets fees due to seasonally lower market activity.

     Foreign exchange and other trading revenues were up significantly from 
the third quarter of 2004 and down on a sequential-quarter basis. In 
comparison to the third quarter of 2004, the improved results reflect 
significantly higher client activity in foreign exchange as well as more 
favorable markets in interest rate derivatives.  Sequential quarter results 
were impacted by a decline in fixed income trading, lower retail flows at 

 6

Pershing, and a seasonal slowdown in foreign exchange activity.  For the nine 
months ending September 30, 2005, foreign exchange and other trading revenues 
were up from 2004.

     Securities gains in the third quarter were up compared with the third 
quarter of 2004 and down compared with the second quarter of 2005.  The 
sequential-quarter decrease reflects lower gains in the Company's sponsor fund 
portfolio.  Securities gains declined in the first nine months of 2005 versus 
a year ago reflecting $19 million of realized gains on four sponsor fund 
investments recorded in the first quarter of 2004.

     Other noninterest income increased versus the third quarter of 2004 and 
decreased from the second quarter of 2005. The third quarter of 2005 included 
gains on the sale of certain Community Reinvestment Act ("CRA") investments of 
$12 million ($5 million after related tax considerations) and four New York 
Stock Exchange seats of $6 million ($4 million after-tax). On a year-to-date 
basis, other noninterest income included a $17 million gain on the second 
quarter of 2005 sale of the Company's interest in Financial Models Company, 
Inc. For the nine months ended September 30, 2005, other noninterest income 
was down from the nine months ended September 30, 2004, primarily reflecting a 
2004 pre-tax gain of $48 million on the sale of a portion of the Company's 
investment in Wing Hang Bank Limited.  See "Other Developments".


Net Interest Income
-------------------



                                             Percent                              Percent
                                             Inc/(Dec)       Year-to-date         Inc/(Dec)
                                          ------------  ---------------------- ---------------
(Dollars in millions)                      3Q05   3Q05
                                            vs.    vs.          2004    2004 
                     3Q05   2Q05   3Q04    2Q05   3Q04   2005 Reported  Core** Reported Core**
                     ------ ------ ------ -----  -----  ----- -------- ------ -------- -------
                                                            
Net Interest Income $  492 $  470 $  428     5%    15% $1,417  $1,118  $1,263    27%     12%
Tax Equivalent 
 Adjustment*             8      7      8                   21      20      20  
                    ------ ------ ------                -----  ------   -----
Net Interest 
 Income on a Tax
 Equivalent Basis   $  500 $  477 $  436     5     15  $1,438  $1,138  $1,283    26      12
                    ====== ====== ======               ======  ======  ======
Net Interest Rate
 Spread               1.84%  1.84%  1.88%                1.87%   1.62%   1.86%
Net Yield 
 on Interest 
 Earning Assets       2.42   2.34   2.18                 2.37    1.88    2.11


*  A number of amounts related to net interest income are presented on a 
   "tax equivalent" basis.  The Company believes that this presentation
   provides comparability of net interest income arising from both taxable and
   tax-exempt sources and is consistent with industry standards.

** Excludes SFAS 13 adjustments.  See "Other Developments."



     The increases in net interest income over 2004 reflect the higher value 
of interest-free deposits as short-term rates increased, as well as growth in 
earning assets. The third quarter of 2005 also includes $4 million ($3 million 
after-tax) related to the recognition of interest on nonaccrual loans that 
were sold. The increase from the prior quarter also reflects asset-sensitive 
interest rate positioning, continued expansion of deposit spreads, and 
increased liquidity generated by servicing activities.  As a result of less of 
an ability to lag deposit repricing, the Company expects a moderation of the 
growth rate of net interest income in the fourth quarter of 2005.

     The net interest income rate spread was 1.84% in the third quarter of 
2005, compared with 1.88% in the third quarter of 2004 and 1.84% in the second 
quarter of 2005. The net yield on interest earning assets was 2.42% in the 
third quarter of 2005, compared with 2.18% in the third quarter of 2004 and 
2.34% in the second quarter of 2005. The decline in spread from the third 

 7

quarter of 2004 reflects deposits repricing faster than the Company's 
investment securities portfolio.

     The year-to-date net interest income spread was 1.87% in 2005 compared 
with 1.62% in 2004, while the net yield on interest earning assets was 2.37% 
in 2005 and 1.88% in 2004. Excluding the impact of the SFAS 13 leasing 
adjustments on the leveraged lease portfolio in 2004, the year-to-date 2004 
net interest rate spread was 1.86% while net yield on interest earning assets 
was 2.11%. The rise in the net yield from 2004 reflects the increasing value 
of interest-free deposits in a rising rate environment.

Noninterest Expense and Income Taxes
------------------------------------


                                              Percent Inc/(Dec)
                                              -----------------  Year-to-date  Percent
                                              3Q05 vs. 3Q05 vs. --------------   Inc/
(Dollars in million)      3Q05   2Q05   3Q04   2Q05     3Q04     2005    2004*  (Dec)
                         ------ ------ ------ -------- -------- ------  ------ -------
                                                       
Salaries and 
  Employee Benefits      $  644 $  640 $  564      1%      14%  $1,902  $1,708    11%
Net Occupancy                79     82     77     (4)       3      239     230     4
Furniture and Equipment      52     51     51      2        2      155     153     1
Clearing                     49     42     39     17       26      137     131     5 
Sub-custodian Expenses       25     24     21      4       19       72      65    11
Software                     54     55     52     (2)       4      162     151     7
Communications               24     22     22      9        9       69      69     - 
Amortization 
 of Intangibles              10     10      9      -       11       28      26     8
Other                       198    197    164      1       21      571     492    16
                         ------ ------ ------                   ------  ------
Total Noninterest
   Expense               $1,135 $1,123 $  999      1       14   $3,335  $3,025    10
                         ====== ====== ======                   ======  ======


* See "Other Developments."



     Noninterest expense for the third quarter of 2005 was up compared with 
the third quarter of 2004 and the second quarter of 2005.  The increase versus 
the year-ago quarter principally reflects increased staffing and clearing 
costs associated with new business and acquisitions, as well as higher pension 
and option expenses, expanded occupancy costs associated with business 
continuity, and higher legal and consulting costs. Other expenses in the third 
quarter included $14 million (both pre- and after-tax) of expenses associated 
with an anticipated settlement of the previously disclosed Russian funds 
transfer matter. The sequential increase reflects higher salaries and employee 
benefits and clearing expenses tied to the LJR acquisition.  The year 2005 is 
the third and final year the adoption of expensing stock options will impact 
year-over-year expense comparisons.  

     Relative to the third quarter of 2004, salaries and employee benefits 
expense increased, reflecting higher pension and stock option expense as well 
as higher staffing levels associated with growth in investor services and 
expansion of certain staff functions. Salaries and employee benefits expense 
for the third quarter increased slightly on a sequential quarter basis, 
reflecting the  Lynch, Jones, & Ryan, Inc.("LJR") acquisition.  For the first 
nine months of 2005, salaries and employee benefit expense also was higher, 
reflecting many of these same factors affecting the year-over-year quarterly 
comparison.

     During the quarter, headcount increased by 88 people reflecting additions 
related to LJR and in the correspondent clearing business. The Company 
migrated approximately 200 positions to lower-cost locations during the 
quarter, keeping it on target to meet its full-year objective of 500 
positions.

     Occupancy expenses were down sequentially as a result of a write-off in 
the second quarter.  On a year-to-date basis, occupancy expenses were up from 
2004, primarily reflecting business continuity initiatives and higher energy 

 8

costs.  Occupancy expense in 2004 included lease termination expenses of $8 
million recorded in the first quarter of 2004.

     Clearing and sub-custodian expenses, which are tied to transaction 
volumes, were up $8 million, or 12%, sequentially on a combined basis to $74 
million. On a year-to-date basis, clearing and sub-custodian expenses were 
$209 million on a combined basis, increased $13 million, or 7%, from a year 
ago. The increases reflect a higher level of business activity.

     The increase in software expense versus a year ago reflects spending and 
development to support business growth.

     Other expenses increased versus the prior-year quarter and year-to-date 
periods due to higher legal, advertising, and consulting costs as well as 
various other expenses tied to organic growth and business acquisitions.

     The effective tax rate for the third quarter of 2005 was 34.7%, compared 
to 32.8% in the third quarter of 2004 and 33.4% in the second quarter of 2005. 
The effective tax rate for the nine-month period ended September 30, 2005 was 
33.7%, compared with 29.5% for the nine-month period ended September 30, 2004.  
The increase in the year-to-date period reflects the benefit associated with 
the SFAS 13 leasing adjustment related to the Company's leasing portfolio in 
the first quarter of 2004.  

     The sequential quarter increase principally reflects the non-
deductibility of the amount associated with the anticipated settlement 
referenced above and the tax impact on the sale of the CRA investments. For 
the fourth quarter and full year 2005, the Company expects the effective tax 
rate to be approximately 33.7%.

     The effective tax rates in all periods reflect a reclassification related 
to Section 42 tax credits.  See "Other Developments".

Credit Loss Provision and Net Charge-Offs
-----------------------------------------

                                 3rd       2nd       3nd
                               Quarter   Quarter   Quarter     Year-to-Date
(In millions)                    2005      2005      2004      2005     2004
                               -------   -------   -------   -------   -------
Provision                      $    10   $     5   $     -   $     5   $    22
                               =======   =======   =======   =======   =======
Net Charge-offs:
  Commercial                   $    (2)  $    (2)  $    (4)  $    (7)  $   (21)
  Foreign                           (2)       (4)       (9)       (6)      (26)
  Regional Commercial               (3)        2        (1)       (3)       (1)
  Consumer                          (6)       (7)       (5)      (18)      (22)
                               -------   -------   -------   -------   -------
     Total                     $   (13)  $   (11)  $   (19)  $   (34)  $   (70)
                               =======   =======   =======   =======   =======

     The provision was $10 million in the third quarter of 2005, compared to 
the third quarter of 2004 when none was taken and $5 million in the second 
quarter of 2005.  For the first nine months of 2005, the provision was $5 
million compared with $22 million in 2004. On a year-to-date basis, the lower 
provision in 2005 reflects the Company's improved asset quality and a 
continued strong credit environment.

     The total allowance for credit losses was $707 million at September 30, 
2005, $756 million at September 30, 2004, and $710 million at June 30, 2005.  
The total allowance for credit losses as a percent of non-margin loans was 
1.97% at September 30, 2005, compared with 2.42% at September 30, 2004, and 
2.05% at June 30, 2005.

     Net charge-offs were $13 million in the third quarter of 2005 versus $19 
million in the third quarter of 2004 and $11 million in the second quarter of 
2005.  These represent 0.12% of total loans in the most recent quarter, 

 9

compared with 0.21% in the quarter ended September 30, 2004 and 0.11% in the 
quarter ended June 30, 2005.  For the nine months ended September 30, 2005, 
net charge-offs were $34 million compared to $70 million for the same period 
in 2004.



BUSINESS SEGMENT REVIEW

     The Company has an internal information system that produces performance 
data for its four business segments along product and service lines.

Business Segment Accounting Principles
---------------------------------------

     The Company's segment data has been determined on an internal management 
basis of accounting, rather than the generally accepted accounting principles 
used for consolidated financial reporting.  These measurement principles are 
designed so that reported results of the segments will track their economic 
performance.  Segment results are subject to restatement whenever improvements 
are made in the measurement principles or organizational changes are made.  In 
2004, the Company made several methodology changes.  These include a 
modification to the method for allocating its pension expense to the segments; 
changes to the method used to allocate earnings on capital, which caused a 
slight reallocation from reconciling items to the individual segments; and 
greater allocations of corporate expenses previously included in reconciling 
items to the individual segments.  See "Reconciling Items."  Prior periods 
have been restated.

     The measure of revenues and profit or loss by operating segment has been 
adjusted to present segment data on a taxable equivalent basis.  The provision 
for credit losses allocated to each reportable segment is based on 
management's judgment as to average credit losses that will be incurred in the 
operations of the segment over a credit cycle of a period of years.  
Management's judgment includes the following two factors among others: 
historical charge-off experience and the volume, composition, and size of the 
credit portfolio.  This method is different from that required under generally 
accepted accounting principles as it anticipates future losses which are not 
yet probable and therefore not recognizable under generally accepted 
accounting principles.  Balance sheet assets and liabilities and their related 
income or expense are specifically assigned to each segment.  Funds transfer-
pricing methods are used to allocate a cost of funds used or credit for funds 
provided to all segment assets or liabilities using a matched funding concept.  
Support and other indirect expenses are allocated to segments based on general 
internal guidelines.

Description of Business Segments
--------------------------------

     The results of individual business segments exclude unusual items such as 
the SFAS 13 lease adjustments and the RW Matter in 2004, which are included 
within reconciling amounts.

     The Company reports data for the four business segments: Servicing and 
Fiduciary, Corporate Banking, Retail Banking, and Financial Markets.

     The Servicing and Fiduciary businesses segment comprises the Company's 
core services, including securities servicing, global payment services, and 
private client services and asset management.  These businesses all share 
certain favorable attributes: they are well-diversified and fee-based; the 
Company serves the role of an intermediary rather than principal, thereby 
limiting risk and generating more stable earnings streams; and the businesses 
are scalable, which result in higher margins as revenues grow.  Long-term 
trends that should favor these businesses include the growth of financial 
assets worldwide, the globalization of investment activity, heightened demand 
for financial servicing outsourcing, and continuing structural changes in 
financial markets.

     Securities servicing provides financial institutions, corporations and 
financial intermediaries with a broad array of products and customized 
services for every step of the investment lifecycle.  The Company facilitates 
the movement, settlement, recordkeeping and accounting of financial assets 

 10

around the world by delivering timely and accurate information to issuers, 
investors and broker-dealers.  The Company groups its securities servicing 
businesses into four categories, each comprised of separate but related 
businesses.  Issuer services include corporate trust, depositary receipts and 
stock transfer. Investor services include global fund services, global 
custody, securities lending, global liquidity services and outsourcing.  
Broker-dealer services include government securities clearance and collateral 
management.  Execution and clearing services include in the execution area 
institutional agency brokerage, electronic trading, transition management 
services, and independent research.  Through Pershing, the clearing part of 
the business provides clearing, execution, financing, and custody for 
introducing brokers-dealers.  The Servicing and Fiduciary Businesses segment 
also includes customer-related foreign exchange trading.

     In issuer services, the Company sponsors more than 1,200 American and 
global depositary receipt programs, a 65% market share, acting in partnership 
with leading companies from 60 countries.  As a trustee, the Company provides 
diverse services for corporate, municipal, and structured issuers globally. 
Over 90,000 issues for more than 30,000 worldwide clients have resulted in the 
Company being trustee for more than $3 trillion in outstanding debt. The 
Company is the third largest stock transfer agent, servicing more than 16 
million shareowners.  Employee investment plan services has more than 118 
clients with 625,000 employees in over 54 countries.

     In investor services, the Company is one of the leading custodians with 
$10.3 trillion of assets under custody at September 30, 2005.  The Company is 
one of the largest mutual fund custodians for U.S. funds and one of the 
largest providers of fund services in the world with over $1.6 trillion in 
total assets.  The Company services 18% of the total industry assets for 
exchange-traded funds.  The Company is a leading U.K. custodian.  In 
securities lending, the Company is the largest lender of U.S. Treasury 
securities and depositary receipts with a lending pool of approximately $1.4 
trillion in 27 markets around the world.

     The Company's broker-dealer services business clears approximately 50% of 
U.S. Government securities.  The Company is the leader in global clearance, 
clearing equity and fixed income transactions in 101 markets.  With over $1 
trillion in tri-party balances worldwide, the Company is the world's largest 
collateral management agent.

     The Company's execution and clearing services business is the largest 
global institutional agency brokerage organization.  In addition, it is one of 
the world's leading institutional electronic brokers for non-U.S. dollar 
equity execution.  The Company provides execution, clearing and financial 
services outsourcing solutions in over 80 global markets, executing trades for 
more than 600 million shares and clearing more than 925,000 trades daily.  The 
Company has 17 seats on the New York Stock Exchange.  Pershing services more 
than 1,100 institutional and retail financial organizations and independent 
investment advisors who collectively represent nearly 6 million individual 
investors.

     Global payment services facilitates the flow of funds between the 
Company's customers and their clients through such business lines as funds 
transfer, cash management and trade services.  The Company is one of the 
largest funds transfer banks in the U.S., transferring $1.11 trillion daily 
via more than 130,000 wire transfers.

     Private client services and asset management includes traditional banking 
and trust services to affluent clients and investment management services for 
institutional and high-net-worth clients.  The Company offers a full array of 
wealth management services including financial and tax planning, trust and 
fiduciary services, fiduciary real estate management, estate planning, private 
banking, brokerage and investment solutions through BNY Asset Management.

     The Company's strategy is to be a market leader in these servicing and 
fiduciary businesses and continue to build on its product and service 
capabilities and add new clients.  The Company has completed 96 acquisitions 
since 1995 primarily in this segment, has made significant investments in 
technology to maintain its industry-leading position, and has continued the 
development of new products and services to meet its clients' needs.

 11

     The Corporate Banking segment provides lending and credit-related 
services to large public and private financial institutions and corporations 
nationwide, as well as to public and private mid-size businesses in the New 
York metropolitan area.  Special industry groups focus on industry segments 
such as banks, broker-dealers, insurance, media and telecommunications, 
energy, real estate, retailing, and government banking institutions.  Through 
BNY Capital Markets, Inc., the Company provides a broad range of capital 
markets and investment banking services including syndicated loans, bond 
underwriting, private placements of corporate debt and equity securities, and 
merger, acquisition and advisory services.  The Company is a leading arranger 
of syndicated financings with 113 transactions totaling approximately $48 
billion for clients in the nine months ended September 30, 2005.

     Corporate Banking coordinates delivery of all of the Company's services 
to customers through its global relationship managers.  The two main client 
bases served are financial institution clients and corporate clients.  The 
Company's strategy is to focus on those clients and industries that are major 
users of securities servicing and global payment services.

     The Company believes that credit is an important product for many of its 
customers to execute their business strategies.  However, the Company has 
continued to reduce its credit exposures in recent years by culling its loan 
portfolio of non-strategic exposures, focusing on increasing total 
relationship returns through cross-selling and limiting the size of its 
individual credit exposures and industry concentrations to reduce earnings 
volatility.

     The Retail Banking segment includes branch banking and consumer and 
residential mortgage lending. The Company's retail franchise includes more 
than 620,800 customer relationships and 76,900 business relationships. The 
Company operates 341 branches in 23 counties in the New York tri-state region. 
The Company has 241 branches in New York, 92 in New Jersey and 8 in 
Connecticut.  The New York branches are primarily suburban-based with 118 in 
upstate New York, 85 on Long Island and 38 in New York City. The retail 
network is a source of low-cost funding and provides a platform to cross-sell 
core services from the Servicing and Fiduciary businesses to both individuals 
and small businesses in the New York metropolitan area. The branches are a 
meaningful source of private client referrals.  Small business and investment 
centers are set up in the largest 100 branches.

     The Financial Markets segment includes non-client related trading of 
foreign exchange, trading of interest rate risk management products, investing 
and leasing activities, and treasury services to other business segments. The 
segment offers a comprehensive array of multi-currency hedging and yield 
enhancement strategies, and complements the other business segments. The 
Financial Markets segment centralizes interest rate risk management for the 
Company.

     There were no major customers from whom revenues were individually 
material to the Company's performance.

 12

Servicing and Fiduciary Businesses
----------------------------------


                                              Percent Inc/(Dec)
                                              -----------------   Year-to-date   Percent
                                              3Q05 vs. 3Q05 vs. ----------------   Inc/
(Dollars in millions)    3Q05    2Q05    3Q04    2Q05     3Q04     2005    2004    (Dec)
                      ------- ------- ------- -------- -------- -------  ------- -------
                                                         
Net Interest Income   $   189 $   178 $   135      6%      40%  $   535  $   403    33%
Provision for
  Credit Losses             1       1       1      -        -         3        2    50
Noninterest Income      1,095   1,058     953      3       15     3,178    2,937     8
Noninterest Expense       884     872     770      1       15     2,605    2,340    11
Income Before Taxes       399     363     317     10       26     1,105      998    11

Average Assets        $22,799 $23,114 $20,937     (1)       9   $22,966  $22,195     3
Average Deposits       37,418  36,624  35,897      2        4    36,710   36,330     1
Nonperforming Assets        -       1       3                         -        3     

(Dollars in billions)
Assets Under Custody  $10,343 $10,298 $ 8,906      -       16   $10,343  $ 8,906    16
Equity Securities          31%     35%     33%                       31%      33%     
  Fixed Income
  Securities               69      65      67                        69       67    
Cross-border Assets   $ 3,117 $ 2,883 $ 2,494      8       25   $ 3,117  $ 2,494    25

Assets Under 
  Management              107     105      97      2       10       107       97    10
   Equity Securities       34%     34%     35%                       34%      35%     
   Fixed Income
     Securities            21      21      21                        21       21    
   Alternative
     Investments           14      14      15                        14       15     
   Liquid Assets           31      31      29                        31       29     

S&P (registered 
  trademark) 500 
  Index (Period End)    1,229   1,191   1,115      3       10     1,229    1,115    10
NASDAQ (registered 
  trademark) Index
  (Period End)          2,152   2,057   1,897      5       13     2,152    1,897    13
Lehman Brothers
  Aggregate Bond
  (service mark)
  Index                 210.0   212.4   200.4     (1)       5     210.0    200.4     5
MSCI (registered
  trademark) EAFE 
  Index	              1,618.8 1,473.7 1,318.0     10       23   1,618.8  1,318.0    23
NYSE (registered
  trademark) Volume
  (In billions)          98.1   100.4    84.9     (2)      16     297.9    271.1    10
NASDAQ (registered
  trademark) Volume
  (In billions)         104.9   112.5    99.6     (7)       5     338.6    334.2     1



     The S&P 500 (registered trademark) Index was up 10% for the third 
quarter of 2005, with average daily price levels up 11% from the third 
quarter of 2004. The NASDAQ (registered trademark) Index was up 13% for 
the third quarter of 2005, with average daily prices up 15% compared 
with the third quarter of 2004. Globally, the MSCI(registered trademark)
EAFE index was up 23%. The Lehman Brothers Aggregate Bond (service mark)
index was up 5% for the third quarter of 2005. On a sequential quarter 
basis, combined NYSE and NASDAQ (registered trademark) non-program 
trading volumes were down approximately 3% during the third quarter of 2005. 
As the Company's business model is more volume- than price-sensitive, this 
created a drag on the Company's equity-linked businesses compared with the 
second quarter of 2005.

     Third quarter 2005 results showed continued strength in comparison to the 
third quarter of 2004, reflecting solid growth across all business segments.  
In the third quarter of 2005, pre-tax income was $399 million, up 26% from $317 
million a year ago and up 10% from $363 million in the second quarter of 2005. 
On a year-to-date basis, pre-tax income was $1,105 million, up 11% from $998 
million in 2004.

     Noninterest income for the third quarter of 2005 increased $142 million, 
or 15%, to $1,095 million from a year ago and $37 million, or 3%, on a 
sequential quarter basis. On a year-to-date basis, noninterest income was 
$3,178 million, up 8% compared with $2,937 million a year ago.

 13

Securities Servicing Fees
-------------------------



                                             Percent Inc/(Dec)
                                             -----------------  Year-to-date  Percent
                                             3Q05 vs. 3Q05 vs. --------------   Inc/
(In millions)            3Q05   2Q05   3Q04    2Q05     3Q04    2005    2004   (Dec)
                        ------ ------ ------ -------- -------- ------  ------ -------
                                                       
Execution and 
 Clearing Services      $  314 $  294 $  262       7%      20% $  901  $  844      7%

Investor Services          265    265    228       -       16     793     683     16

Issuer Services            170    159    141       7       21     468     433      8

Broker-Dealer Services      57     58     53      (2)       8     171     156     10
                        ------ ------ ------                   ------  ------ 
Securities
  Servicing Fees        $  806 $  776 $  684       4       18  $2,333  $2,116     10
                        ====== ====== ======                   ======  ======



     Securities servicing fees were $806 million in the third quarter, an 
increase of $122 million, or 18%, from the third quarter of 2004 and $30 
million, or 4%, from the second quarter of 2005. The year-over-year increase 
reflects solid growth across all business segments. The sequential increase 
reflects strong growth in issuer services as well as the early success of the 
LJR acquisition within execution and clearing. For the nine months of 2005, 
securities servicing fees were $2,333 million, an increase of $217 million from 
the nine months of 2004, reflecting strong growth in investor services and 
broker-dealer services.

     Execution and clearing includes institutional agency brokerage, electronic 
trading, transition management services, independent research and through 
Pershing, correspondent clearing services such as clearing, execution, 
financing, and custody for introducing broker-dealers.  The third quarter of 
2005 was up from 2004 reflecting the benefits of the LJR acquisition and solid 
organic growth at Pershing.  Fees for execution and clearing increased 
significantly from the second quarter of 2005, reflecting higher transition 
management activity. Transition activity can vary significantly from quarter to 
quarter and has no correlation to market volumes.  

     Pershing's fees were up from the third quarter of 2004 and essentially 
flat compared with the second quarter of 2005. The year-over-year increase 
reflects Pershing's continuing strategic shift to more value-added, fee-based 
non-transactional services as well as higher transaction-based revenue. The 
majority of Pershing's revenues is generated from non-transactional activities, 
such as asset gathering and technology services to broker-dealers, with 
revenues tied to both assets under administration and services provided. On a 
year-over-year basis, stable assets under administration and net new business 
drove modest increase in fees. Pershing's assets under administration were $752 
billion at quarter-end, compared with $730 billion at June 30, 2005. As of 
September 30, 2005, margin loans increased slightly compared with the second 
quarter of 2005.

     Investor services, which includes global fund services, global custody, 
securities lending, global liquidity services and outsourcing, was up 
significantly from the third quarter of 2004 and essentially unchanged from the 
second quarter of 2005.  Year-over-year results reflect strong performance 
across all business lines. The sequential quarter was flat as a seasonal 
slowdown in securities lending was offset by solid results across most 
businesses. Global fund services was favorably impacted by new business from 
Europe and higher international transaction volumes.  Securities lending 
increased significantly year-over-year and decreased sequentially. The 
year-over-year positive variance in securities lending reflects continued 
growth in new business and robust demand for Treasury collateral. 

 14

     At September 30, 2005, assets under custody was $10.3 trillion, up from 
$8.9 trillion at September 30, 2004 and essentially unchanged from $10.3 
trillion at June 30, 2005.  A substantial portion of the increase in assets 
under custody since 2004 was due to new business and business line growth.

     Issuer services, which includes corporate trust, depositary receipts and 
stock transfer, showed strong growth versus the third quarter of 2004 and 
increased sequentially.  The increase versus the year-ago quarter primarily 
reflects increase in trading volumes and corporate actions in depositary 
receipt ("DR"). In the DR business, higher revenue reflects increased corporate 
actions activity, such as dividends, capital raisings, and mergers & 
acquisitions. DR issuance also showed solid performance, reflecting the growing 
interest among U.S. investors in global equities. Corporate trust fees showed 
continued strength in international issuance and structured products In 
corporate trust, international issuance was seasonally slower, which was offset 
by strength in structured, municipal, and corporate products. The new business 
wins in corporate trust are driven by the Company's introduction of new 
products, analytic tools, and expanded capacity.

     Broker-dealer services, which includes government securities clearance and 
collateral management, improved versus the year-ago period as a result of 
increased collateral management activity and higher volumes in government 
securities clearance. Sequential performance was marginally lower, as higher 
fees from collateral management were offset by lower volumes in government 
securities clearance. In collateral management services, the Company continues 
to attract new business in both the U.S. and European markets.  In addition, 
the Company's growth has been paced by broader adoption and greater utilization 
of collateral management products.  

     Global payment services fees were lower than the third quarter and year-
to-date periods of 2004 and on a sequential quarter basis. The decline reflects 
customers choosing to pay with higher compensating balances, which benefits net 
interest income. On an invoiced services basis, total revenue was up 6% over 
the third quarter of 2004 and 3% sequentially.

     Private client services and asset management revenues continue to 
demonstrate solid performance with fees up 6% compared with the third quarter 
of 2004. The increase from the third quarter of 2004 primarily reflects higher 
fees at Ivy Asset Management. On a sequential quarter basis, private client 
services and asset management revenues were down slightly, reflecting 
seasonally lower private client fees partially offset by higher asset 
management fees. 

     Assets under management ("AUM") were $107 billion at September 30, 2005, 
up from $97 billion at September 30, 2004 and $105 billion at June 30, 2005.  
The sequential increase in AUM was driven by growth in money market and fixed 
income classes. Institutional clients represent 70% of AUM while individual 
clients equal 30%. AUM at September 30, 2005, are 34% invested in equities, 21% 
in fixed income, 14% in alternative investments and the remainder in liquid 
assets. Ivy's AUM was $15.3 billion at September 30, 2005, compared with $14.6 
billion at September 30, 2004 and $15.3 billion at June 30, 2005. The year-
over-year increase in Ivy's AUM reflects primarily net new business and 
stronger market performance of the assets. 

     In the third quarter of 2005, noninterest income attributable to foreign 
exchange and other trading activities was $51 million, up from $44 million in 
the third quarter of 2004 and down from $55 million in the second quarter of 
2005. The year-over-year increase reflects higher volatility in foreign 
exchange and fixed income trading. The sequential quarter decrease reflects a 
seasonal slow down in foreign exchange activity.  On a year-to-date basis, 
noninterest income attributable to foreign exchange and other trading 
activities was $156 million, down from $163 million in 2004, reflecting lower 
foreign exchange volatility and lower other trading activities. 

     Net interest income in the Servicing and Fiduciary businesses segment was 
$189 million for the third quarter of 2005, up 40% compared with $135 million 

 15

in the third quarter of 2004 and $178 million in the second quarter of 2005. 
The significant increase from the third quarter of 2004 is primarily due to 
higher value of interest-free deposits related to the rise in short-term rates 
and customers' increased use of compensating balances to pay for services. The 
increase in net interest income from the second quarter of 2005 is primarily 
due to the expansion of deposit spreads and increased liquidity generated by 
servicing activities. Average assets for the quarter ended September 30, 2005 
were $22.8 billion, compared with $20.9 billion in the third quarter of 2004 
and $23.1 billion in the second quarter of 2005.  The year-over-year increase 
in average assets reflects a higher level of servicing activity in 2005 
compared with 2004. Average assets for the nine months ended September 30, 2005 
were $23.0 billion compared with $22.2 billion in the first nine months of 
2004.  The third quarter of 2005 average deposits were $37.4 billion, compared 
with $35.9 billion in the third quarter of 2004 and $36.6 billion in the second 
quarter of 2005.  The increases in average deposits reflects customers' 
increased use of compensating balances in a rising interest rate environment. 
Average deposits for the nine months of 2005 were $36.7 billion compared with 
$36.3 billion in 2004.

     Net charge-offs in the Servicing and Fiduciary Businesses segment were $2 
million in the third quarter of 2005, compared with $10 million in the third 
quarter of 2004 and $5 million in the second quarter of 2005.  On a year-to-
date basis, net charge-offs were $7 million compared with $15 million in 2004. 
Nonperforming assets were zero at September 30, 2005, compared with $3 million 
at September 30, 2004 and $1 million at June 30, 2005.

     Noninterest expense for the third quarter of 2005 was $884 million, 
compared with $770 million in the third quarter of 2004 and $872 million in the 
second quarter of 2005.  The increase in noninterest expense from the third 
quarter of 2004 reflects higher staffing levels associated with growth in 
investor services and expansion of certain staff functions as well as increased 
pension and stock option expense. The sequential quarter increase reflects 
higher staffing and incentives tied to improved revenues and higher clearing 
expense tied to the LJR acquisition. Noninterest expense for the nine months of 
2005 was $2,605 million compared with $2,340 million for the same period in 
2004 and is attributable to the same factors affecting the year-over-year 
quarterly increase. 

Corporate Banking
-----------------



                                               Percent Inc/(Dec)
                                               -----------------   Year-to-date  Percent
                                               3Q05 vs. 3Q05 vs. ---------------  Inc/
   (In millions)      3Q05     2Q05     3Q04     2Q05     3Q04    2005     2004   (Dec)
                    -------- -------- -------- -------- -------- ------- ------- -------
                                                          
Net Interest Income $     92 $     87 $     88      6%       5%  $   266 $   262     2%
Provision for
  Credit Losses           16       18       15    (11)       7        52      50     4
Noninterest Income        84       91       71     (8)      18       256     217    18
Noninterest Expense       59       59       57      -        4       175     172     2
Income Before Taxes      101      101       87      -       16       295     257    15

Average Assets      $ 17,022 $ 17,271 $ 17,485     (1)      (3)  $17,274 $17,384    (1)
Average Deposits       5,702    5,653    5,422      1        5     5,628   5,921    (5)
Nonperforming Assets      94      126      269    (25)     (65)       94     269   (65)
Net Charge-offs            4        -        3      -       33         9      24   (63)


     The Corporate Banking segment coordinates all banking and credit-related 
services to customers through its global relationship managers.  The two main 
client bases served are financial institution clients and corporate clients. 
The Company's strategy is to focus on those clients and industries that are 
major users of securities servicing and global payment services.

     Over the past several years, the Company has been seeking to improve its 
overall risk profile by reducing its credit exposures through elimination of 
non-strategic exposures, cutting back large individual exposures and avoiding 
outsized industry concentrations.  In 2002, the Company set a goal of reducing 
corporate credit exposure to $24 billion by December 31, 2004.  This goal was 
accomplished in early 2004 and exposures have since declined to $22.6 billion.

 16

     In the third quarter of 2005, pre-tax income was $101 million, up 16%, 
compared with $87 million in the third quarter of 2004 and flat in comparison 
to the $101 million in the second quarter of 2005. The improvement in year-
over-year results primarily reflects higher net interest income. On a year-to-
date basis, pre-tax income was $295 million, up 15% compared with $257 million 
in 2004 reflecting both higher noninterest income and net interest income.

     The Corporate Banking segment's net interest income was $92 million in the 
third quarter of 2005, compared with $88 million in the third quarter of 2004 
and $87 million in the second quarter of 2005. On a year-to-date basis, net 
interest income was $266 million, compared with $262 million for the nine 
months of 2004.  Average assets for the quarter were $17.0 billion, compared 
with $17.5 billion in the third quarter of last year and $17.3 billion in the 
second quarter of 2005. Average assets for the nine months of 2005 were $17.3 
billion compared with $17.4 billion in 2004. The sequential and year-over-year 
declines reflect a reduction in corporate borrowing. Average deposits in the 
Corporate Banking segment were $5.7 billion versus $5.4 billion in the third 
quarter of 2004 and $5.7 billion in the second quarter of 2005. On a year-to-
date basis, average deposits were $5.6 billion compared with $5.9 billion in 
2004.  

     The third quarter of 2005 provision for credit losses was $16 million, 
compared with $15 million in the third quarter of last year and $18 million in 
the second quarter of 2005. On a year-to-date basis, provision for credit 
losses was $52 million compared with $50 million in 2004. After a significant 
period of reduction, exposures in Corporate Banking have leveled out.  Net 
charge-offs in the Corporate Banking segment were $4 million in the third 
quarter of 2005, $3 million in the third quarter of 2004, and zero in the 
second quarter of 2005.  Net charge-offs for the nine months of 2005 were $9 
million compared with $24 million in 2004. Nonperforming assets were $94 
million at September 30, 2005, down from $269 million at September 30, 2004 and 
$126 million at June 30, 2005.  The decrease in nonperforming assets from the 
third quarter of 2004 primarily reflects loan sales, paydowns, and charge-offs 
of commercial loans. 

     Noninterest income was $84 million in the current quarter, compared with 
$71 million in the third quarter of 2004 and $91 million in the second quarter 
of 2005. On a year-to-date basis, noninterest income was $256 million compared 
with $217 million in 2004. The increases reflect higher gains on asset 
dispositions, higher capital markets fees and higher income from Wing Hang 
Bank. The sequential quarter decline reflects lower syndication and other 
capital markets fees.

     Noninterest expense in the third quarter was $59 million, compared with 
$57 million in the third quarter of 2004 and $59 million in the second quarter 
of 2005. On a year-to-date basis, noninterest expense was $175 million compared 
with $172 million in 2004. The year-over-year increase primarily reflects 
higher pension and stock options expenses.


 17

Retail Banking
--------------


                                               Percent Inc/(Dec)
                                               -----------------   Year-to-date  Percent
                                               3Q05 vs. 3Q05 vs. ---------------  Inc/
   (In millions)      3Q05     2Q05     3Q04     2Q05     3Q04    2005     2004    (Dec)
                    -------- -------- -------- -------- -------- ------- ------- -------
                                                          
Net Interest Income $    136 $    131 $    125       4%       9% $   395 $   366      8%
Provision for Credit
  Losses                   5        5        6       -      (17)      15      16     (6)
Noninterest Income        27       27       28       -       (4)      80      85     (6)
Noninterest Expense      101       99       99       2        2      298     286      4
Income Before Taxes       57       54       48       6       19      162     149      9

Average Assets      $  6,180 $  6,071 $  5,639       2       10  $ 6,119 $ 5,445     12
Average Noninterest
  Bearing Deposits     5,377    5,510    5,398      (2)       -    5,462   5,212      5
Average Deposits      14,862   15,125   15,311      (2)      (3)  15,000  15,094     (1) 
Nonperforming Assets      12       13       15      (8)     (20)      12      15    (20)
Net Charge-offs            7        6        6      17       17       18      17      6

Number of Branches       341      341      341       -        -      341     341      -
Number of ATMs           378      376      379       1        -      378     379      -


     The Retail Banking segment provides the Company with a stable source of 
core deposits.  The segment represents an attractive distribution channel, and 
the Company has continued to expand the products offered through the retail 
branch system.  The branch system is focused on the suburban Tri-State New York 
metropolitan area.

     The Retail Banking segment continues to demonstrate good results in spite 
of increased competition in the New York metropolitan area. Net interest income 
has been strong, reflecting the benefit of a rising rate environment on the 
value of the segment's deposits.   In the third quarter of 2005, pre-tax income 
was $57 million, up 19% from $48 million in the third quarter of 2004 and 6% 
from $54 million in the second quarter of 2005. On a year-to-date basis, pre-
tax income was $162 million, up 9% from $149 million in 2004.

     The Company continues to enhance the services offered through the branch 
system.  This includes leveraging its retail client base to distribute BNY 
Asset Management and third-party investment products.  Currently, investment 
products are cross-sold to over 10% of the client base.  The Company is also 
seeking selective expansion opportunities within its current branch footprint.

     Net interest income in the third quarter of 2005 was $136 million, 
compared with $125 million in the third quarter of 2004 and $131 million in the 
second quarter of 2005.  Net interest income has increased over the third 
quarter of 2004 and on a sequential quarter basis as rates have risen, 
benefiting spreads.  The increase in average assets since the third quarter of 
2004 has also contributed to the increase in net interest income. On a year-to-
date basis, net interest income was $395 million compared with $366 million in 
2004 reflecting the same factor discussed above.

     Noninterest income was $27 million for the quarter, compared with $28 
million in the third quarter of last year and $27 million in the second quarter 
of 2005.  On a year-to-date basis, noninterest income was $80 million compared 
with $85 million in 2004. The decrease in noninterest income compared to 2004 
reflects lower monthly service fees partially offset by higher debit card fees.

     Noninterest expense in the third quarter of 2005 was $101 million, 
compared with $99 million last year and $99 million in the second quarter of 
2005.  The increases from the third quarter of 2004 and second quarter of 2005 
reflect slightly higher compensation and occupancy expense. For the nine months 
of 2005, noninterest expense was $298 million compared with $286 million in 
2004 reflecting higher employee benefits, advertising, occupancy, and 
consulting costs.

     Net charge-offs were $7 million in the third quarter of 2005, compared 
with $6 million in the third quarter of 2004 and $6 million in the second 
quarter of 2005. For the nine months of 2005, net charge-offs were $18 million 

 18

compared with $17 million from a year ago.  Nonperforming assets were $12 
million at September 30, 2005, compared with $15 million at September 30, 2004 
and $13 million at June 30, 2005.

     Average deposits generated by the Retail Banking segment were $14.9 
billion in the third quarter of 2005, compared with $15.3 billion in the third 
quarter of 2004 and $15.1 billion in the second quarter of 2005. For the nine 
months of 2005, average deposits were $15.0 billion compared with $15.1 billion 
in 2004. The decrease reflects customers seeking higher yields in a rising rate 
environment.  Average assets in the Retail Banking sector were $6.2 billion, 
compared with $5.6 billion in the third quarter of 2004 and $6.1 billion in the 
second quarter of 2005. On a year-to-date basis, average assets were $6.1 
billion, compared with $5.4 billion in 2004. The increase from 2004 in average 
assets is due to higher consumer loans.

Financial Markets
-----------------


                                             Percent Inc/(Dec)
                                             -----------------   Year-to-date  Percent
                                             3Q05 vs. 3Q05 vs. ---------------  Inc/
   (In millions)       3Q05    2Q05    3Q04    2Q05     3Q04    2005     2004   (Dec)
                     ------- ------- ------- -------- -------- ------- ------- -------
                                                          
Net Interest Income  $    71 $    70 $    79       1%     (10)%$   209  $  237    (12)%
Provision for 
  Credit Losses            4       6       5     (33)     (20)      15      15      -
Noninterest Income        42      49      35     (14)      20      137     126      9
Noninterest Expense       33      34      29      (3)      14      100      83     20
Income Before Taxes       76      79      80      (4)      (5)     231     265    (13)

Average Assets       $50,507 $49,741 $49,148       2        3  $49,547 $49,973     (1)
Average Deposits       3,850   4,137   3,517      (7)       9    3,983   3,724      7
Average Investment
  Securities          25,642  24,719  22,374       4       15   24,642  22,783      8
Net Charge-offs            -       -       -       -        -        -      14   (100)


     In the third quarter of 2005, pre-tax income was $76 million, compared 
with $80 million a year ago and $79 million in the second quarter of 2005. On a 
year-to-date basis, pre-tax income was $231 million, down from $265 million in 
2004.  The decreases over the third quarter and year-to-date 2004 are primarily 
due to a decline in net interest income, resulting from higher funding costs 
for the segment's securities portfolio.

     Net interest income for the third quarter was $71 million compared with 
$79 million a year ago and $70 million for the second quarter of 2005. The 
decrease from the third quarter of 2004 reflects the rising rate environment, 
which increased funding costs.  On a year-to-date basis, net interest income 
was $209 million, down 12% from $237 million in 2004.  The year-over-year 
decreases primarily reflect the rising rate environment and on a year-to-date 
basis, a decline in average assets.  Average third quarter 2005 assets in the 
Financial Markets segment, composed primarily of short-term liquid assets and 
investment securities, were $50.5 billion, compared with $49.1 billion in the 
third quarter last year and $49.7 billion on a sequential quarter basis.  The 
increases reflect higher levels of investment securities.  Average investment 
securities increased as the Company continues to invest in adjustable or short 
life classes of structured mortgage-backed securities, both of which have short 
durations.  Average assets for the first nine months of 2005 were $49.5 
billion, compared to $50.0 billion for the first nine months of 2004.  

     Noninterest income was $42 million in the third quarter of 2005, compared 
with $35 million in the third quarter of 2004 and $49 million in the second 
quarter of 2005.  On a year-to-date basis, noninterest income was $137 million 
in 2005 compared with $126 million in 2004. The positive variances reflect 
stronger interest rate derivatives and other trading activities.

     Net charge-offs were zero in the third quarter and second quarter of 2005 
and in the third quarter of 2004, respectively.  For the nine months of 2005, 
net charge-offs were zero compared with $14 million for the same period in 
2004. Charge-offs in 2004 primarily related to the Company's airline exposure. 
Noninterest expense was $33 million in the third quarter of 2005, compared with 

 19

$29 million in last year's third quarter and $34 million in the second quarter 
of 2005.  On a year-to-date basis, noninterest expense was $100 million for 
2005 compared with $83 million for 2004.  The increases over the third quarter 
and year-to-date 2004 are attributable to higher employee incentive 
compensation and technology expenses.

     The consolidating schedule below shows the contribution of the Company's 
segments to its overall profitability.



(Dollars in millions)        Servicing
                                and
For the Quarter Ended        Fiduciary   Corporate   Retail    Financial  Reconciling  Consolidated
September 30, 2005           Businesses   Banking    Banking    Markets      Items        Total
--------------------------   ----------  ---------  ---------  ---------  -----------  ------------
                                                                     
Net Interest Income          $      189  $      92  $     136  $      71  $         4  $        492
Provision for Credit Losses           1         16          5          4          (16)           10
Noninterest Income                1,095         84         27         42            -         1,248
Noninterest Expense                 884         59        101         33           58         1,135
                             ----------  ---------  ---------  ---------  -----------  ------------
Income Before Taxes          $      399  $     101  $      57  $      76  $       (38) $        595
                             ==========  =========  =========  =========  ===========  ============

Contribution Percentage              63%        16%         9%        12%
Average Assets               $   22,799  $  17,022  $   6,180  $  50,507  $     4,402  $    100,910




                             Servicing
                                and
For the Quarter Ended        Fiduciary   Corporate   Retail    Financial  Reconciling  Consolidated
June 30, 2005                Businesses   Banking    Banking    Markets      Items        Total
--------------------------   ----------  ---------  ---------  ---------  -----------  ------------
                                                                     
Net Interest Income          $      178  $      87  $     131  $      70  $         4  $        470
Provision for Credit Losses           1         18          5          6          (25)            5
Noninterest Income                1,058         91         27         49           31         1,256
Noninterest Expense                 872         59         99         34           59         1,123
                             ----------  ---------  ---------  ---------  -----------  ------------
Income Before Taxes          $      363  $     101  $      54  $      79  $         1  $        598
                             ==========  =========  =========  =========  ===========  ============

Contribution Percentage              61%        17%         9%        13%
Average Assets               $   23,114  $  17,271  $   6,071  $  49,741  $     4,264  $    100,461





                             Servicing
                                and
For the Quarter Ended        Fiduciary   Corporate   Retail    Financial  Reconciling  Consolidated
September 30, 2004           Businesses   Banking    Banking    Markets      Items        Total
--------------------------   ----------  ---------  ---------  ---------  -----------  ------------
                                                                     
Net Interest Income          $      135  $      88  $     125  $      79  $         1  $        428
Provision for Credit Losses           1         15          6          5          (27)            -
Noninterest Income                  953         71         28         35           12         1,099
Noninterest Expense                 770         57         99         29           44           999
                             ----------  ---------  ---------  ---------  -----------  ------------
Income Before Taxes          $      317  $      87  $      48  $      80  $        (4) $        528
                             ==========  =========  =========  =========  ===========  ============

Contribution Percentage              60%        16%         9%        15%
Average Assets               $   20,937  $  17,485  $   5,639  $  49,148  $     4,146  $     97,355



 20




(Dollars in millions)
                             Servicing
                                and
For the Nine Months Ended    Fiduciary   Corporate   Retail    Financial  Reconciling  Consolidated
September 30, 2005           Businesses   Banking    Banking    Markets      Items        Total
-------------------------    ----------  ---------  ---------  ---------  -----------  ------------
                                                                     
Net Interest Income          $      535  $     266  $     395  $     209  $        12  $      1,417
Provision for
  Credit Losses                       3         52         15         15          (80)            5
Noninterest Income                3,178        256         80        137           31         3,682
Noninterest Expense               2,605        175        298        100          157         3,335
                             ----------  ---------  ---------  ---------  -----------  ------------                             
Income Before Taxes          $    1,105  $     295  $     162  $     231  $       (34) $      1,759
                             ==========  =========  =========  =========  ===========  ============

Contribution Percentage              62%        16%         9%        13%
Average Assets               $   22,966  $  17,274  $   6,119  $  49,547  $     4,305  $    100,211





                             Servicing
                                and
For the Nine Months Ended    Fiduciary   Corporate   Retail   Financial  Reconciling  Consolidated
September 30, 2004           Businesses   Banking    Banking   Markets      Items         Total
-------------------------    ----------  ---------  ---------  ---------  -----------  ------------
                                                                     
Net Interest Income          $      403  $     262  $     366  $     237  $      (150) $      1,118
Provision for
  Credit Losses                       2         50         16         15          (61)           22
Noninterest Income                2,937        217         85        126          109         3,474
Noninterest Expense               2,340        172        286         83          144         3,025
                             ----------  ---------  ---------  ---------  -----------  ------------
Income Before Taxes          $      998  $     257  $     149  $     265  $      (124) $      1,545
                             ==========  =========  =========  =========  ===========  ============

Contribution Percentage              60%        15%         9%        16%
Average Assets               $   22,195  $  17,384  $   5,445  $  49,973  $     4,132  $     99,129



 21

Reconciling Items
-----------------

     Description-Reconciling items for net interest income primarily relate to 
the recording of interest income on a taxable equivalent basis, reallocation of 
capital, and the funding of goodwill and intangibles.  The adjustment to the 
provision for credit losses reflects the difference between the aggregate of 
the credit provision over a credit cycle for the reportable segments and the 
Company's recorded provision.  The Company's approach to acquisitions is highly 
centralized and controlled by senior management.  Accordingly, the resulting 
goodwill and other intangible assets are reconciling items for average assets.  
The related amortization is a reconciling item for noninterest expense.  Other 
reconciling items for noninterest expense primarily reflect corporate overhead 
and severance.

     To assess as accurately as possible the performance of its segments in 
2004, the Company analyzed reconciling items related to corporate overhead.  As 
a result of this analysis, the Company reclassified from reconciling items to 
the individual segments certain items related to insurance, compliance, and 
incentive compensation expenses.  In addition, a minor modification was made to 
the method used to allocate earnings on capital.  The impact of these changes 
was a decline in pre-tax income of the segments and a reduction in the amount 
of reconciling items as shown below:

                                 3rd         2nd         1st   
Segment                        Quarter     Quarter     Quarter    Year-to-date
                              ---------   ---------   ---------   ------------
(In millions)                    2004       2004        2004          2004
-----------------------       ---------   ---------   ---------   ------------
Servicing and Fiduciary        $    (30)  $     (35)   $    (30)   $      (95)
Corporate Banking                    (5)         (5)         (5)          (15)
Retail Banking                       (5)         (1)         (6)          (12)
Financial Markets                    (7)         (5)          1           (11)
                              ----------  ----------   ---------   -----------
Subtotal                            (47)        (46)        (40)         (133)
Reconciling                          47          46          40           133
                              ----------  ----------   ---------   ----------
Total                          $      -   $       -    $      -    $        -
                              ==========  ==========   =========   ==========

 22

     The detail of reconciling items for 2005 and 2004 are presented in the 
following table.

                                     3rd      2nd      3rd
                                   Quarter  Quarter  Quarter    Year-to-date
                                   -------- -------- -------- -----------------
(In millions)                        2005     2005     2004     2005     2004
                                   -------- -------- -------- -------- --------
Segments' Revenue                  $  1,736 $  1,691 $  1,514 $  5,056 $  4,633
Adjustments:
   Earnings Associated with
     Assignment of Capital               (8)      (8)     (13)     (25)     (48)
   Securities Gains                       -       10        -       10       19
   SFAS 13 Cumulative 
     Lease Adjustment                     -        -        -        -     (145)
   Taxable Equivalent Basis and
     Other Tax-Related Items             12       12       14       37       41
   Other                                  -       21       12       21       92
                                   -------- -------- -------- -------- --------
Subtotal- Revenue Adjustments             4       35       13       43      (41)
                                   -------- -------- -------- -------- --------
Consolidated Revenue               $  1,740 $  1,726 $  1,527 $  5,099 $  4,592
                                   ======== ======== ======== ======== ========

Segments' Income Before Tax        $    633 $    597 $    532 $  1,793 $  1,669
Adjustments:
   Revenue Adjustments (Above)            4       35       13       43      (41)
   Provision for Credit Losses
     Different than GAAP                 16       25       27       80       61
   Severance                             (2)      (4)       -       (7)     (12)
   Goodwill and
     Intangible Amortization            (10)     (10)      (9)     (28)     (25)
   Lease Termination                      -        -        -        -       (8)
   Corporate Overhead and Other         (46)     (45)     (35)    (122)     (99)
                                   -------- -------- -------- -------- --------
Consolidated Income
     Before Tax                    $    595 $    598 $    528 $  1,759 $  1,545
                                   ======== ======== ======== ======== ========
Segments' Total
     Average Assets                $ 96,508 $ 96,197 $ 93,209 $ 95,906 $ 94,997
Adjustments:
   Goodwill and Intangibles           4,402    4,264    4,146    4,305    4,132
                                   -------- -------- -------- -------- --------
Consolidated Average Assets        $100,910 $100,461 $ 97,355 $100,211 $ 99,129
                                   ======== ======== ======== ======== ========

     In addition to the recurring items discussed above, other significant 
items may be included as reconciling items. In the third quarter of 2005, the 
$14 million of expenses associated with an anticipated settlement of the 
previously disclosed Russian funds transfer matter was a reconciling item. In 
the second quarter of 2005, the $17 million gain on the sale of Financial 
Models Company, Inc. ("FMC"), $10 million of above trend securities gains, and 
the $10 million legal accrual for certain regulatory matters were reconciling 
items. In the first quarter of 2004, SFAS 13 cumulative adjustments to the 
leasing portfolio, securities gains on four large sponsor funds, gains on sale 
on Wing Hang Bank, and severance and lease termination expenses were 
reconciling items.

Allocation to Segments - Earnings associated with the assignment of capital 
relate to preferred trust securities, which are assigned as capital to 
segments.  Since the Company considers these issues to be capital, it does not 
allocate the interest expense associated with these securities to individual 
segments.  If this interest expense were allocated to segments, it could be 
assigned based on segment capital, assets, risks, or some other basis.

     The reconciling item for securities gains relates to the Financial 
Markets business.  The taxable equivalent adjustment is not allocated to 
segments because all segments contribute to the Company's taxable income and 
the Company believes it is arbitrary to assign the tax savings to any 
particular segment.  Most of the assets that are attributable to the tax 

 23

equivalent adjustment are recorded in the Financial Markets segment. In the 
second quarter of 2005, the gain on sale of FMC would be allocated to the 
Servicing and Fiduciary segment as would the $10 million regulatory charge. 
Most of the securities gains result from securities attributable to the 
Financial Markets segment.  In the first quarter of 2004, the $145 million 
reconciling item related to SFAS 13 cumulative lease adjustment and the $19 
million gain on sponsor fund investments would be attributable to the 
Financial Markets segment.  In addition, the $48 million gain on the sale of 
Wing Hang recorded in Other would be attributable to the Corporate Banking 
segment.

     The reconciling item for the provision for loan losses primarily relates 
to Corporate Banking.  Severance and lease termination costs primarily relate 
to the Servicing and Fiduciary segment, the Corporate Banking segment, and to 
staff areas.  Goodwill and intangible amortization primarily relates to the 
Securities Servicing and Fiduciary segment.  Corporate overhead is difficult 
to identify specifically with any particular segment.  Approaches to 
allocating corporate overhead to segments could be based on revenues, 
expenses, number of employees, or a variety of other measures.

CRITICAL ACCOUNTING POLICIES

     The Company's significant accounting policies are described in the "Notes 
to Consolidated Financial Statements" under "Summary of Significant Accounting 
and Reporting Policies" in the Company's 2004 Annual Report on Form 10-K.  Four 
of the Company's more critical accounting policies are those related to the 
allowance for credit losses, the valuation of derivatives and securities where 
quoted market prices are not available, goodwill and other intangibles, and 
pension accounting.

Allowance for Credit Losses
---------------------------

     The allowance for credit losses represents management's estimate of 
probable losses inherent in the Company's loan portfolio.  This evaluation 
process is subject to numerous estimates and judgments.  Probabilities of 
default ratings are assigned after analyzing the credit quality of each 
borrower/counterparty and the Company's internal ratings are generally 
consistent with external rating agencies' default databases.  Loss given 
default ratings are driven by the collateral, structure, and seniority of each 
individual asset and are consistent with external loss given default/recovery 
databases.  The portion of the allowance related to impaired credits is based 
on the present value of future cash flows.  Changes in the estimates of 
probability of default, risk ratings, loss given default/recovery rates, and 
cash flows could have a direct impact on the allocated allowance for loan 
losses.

     To the extent actual results differ from forecasts or management's 
judgment, the allowance for credit losses may be greater or less than future 
charge-offs.

     The Company considers it difficult to quantify the impact of changes in 
forecast on its allowance for credit losses. Nevertheless, the Company believes 
the following discussion may enable investors to better understand the 
variables that drive the allowance for credit losses.

     Another key variable in determining the allowance is management's judgment 
in determining the size of the unallocated allowance. At September 30, 2005, 
the unallocated allowance was 14% of the total allowance. If the unallocated 
allowance were five percent higher or lower, the allowance would have increased 
or decreased by $35 million, respectively.

     The credit rating assigned to each pass credit is another significant 
variable in determining the allowance.  If each pass credit were rated one 
grade better, the allowance would have decreased by $54 million, while if each 
pass credit were rated one grade worse, the allowance would have increased by 
$100 million.

 24

     For higher risk rated credits, if the loss given default were 10% worse, 
the allowance would have increased by $6 million, while if the loss given 
default were 10% better, the allowance would have decreased by $51 million.

     For impaired credits, if the fair value of the loans were 10% higher or 
lower, the allowance would have increased or decreased by $5 million, 
respectively.


Valuation of Derivatives and Securities Where Quoted Market Prices Are Not
--------------------------------------------------------------------------
 Available
 ---------

     When quoted market prices are not available for derivatives and 
securities values, such values are determined at fair value, which is defined 
as the value at which positions could be closed out or sold in a transaction 
with a willing counterparty over a period of time consistent with the 
Company's trading or investment strategy.  Fair value for these instruments is 
determined based on discounted cash flow analysis, comparison to similar 
instruments, and the use of financial models.  Financial models use as their 
basis independently sourced market parameters including, for example, interest 
rate yield curves, option volatilities, and currency rates.  Discounted cash 
flow analysis is dependent upon estimated future cash flows and the level of 
interest rates.  Model-based pricing uses inputs of observable prices for 
interest rates, foreign exchange rates, option volatilities and other factors.  
Models are benchmarked and validated by independent parties.  The Company's 
valuation process takes into consideration factors such as counterparty credit 
quality, liquidity and concentration concerns.  The Company applies judgment 
in the application of these factors.  In addition, the Company must apply 
judgment when no external parameters exist.  Finally, other factors can affect 
the Company's estimate of fair value including market dislocations, incorrect 
model assumptions, and unexpected correlations.

     These valuation methods could expose the Company to materially different 
results should the models used or underlying assumptions be inaccurate.  See 
"Use of Estimates" in "Summary of Significant Accounting and Reporting 
Policies" of the Notes to Consolidated Financial Statement in the Company's 
2004 Annual Report on Form 10-K.

     To assist in assessing the impact of a change in valuation, at September 
30, 2005, approximately $2.6 billion of the Company's portfolio of securities 
and derivatives is not priced based on quoted market prices because no such 
quoted market prices are available.  A change of 2.5% in the valuation of 
these securities and derivatives would result in a change in pre-tax income of 
$64 million.

Goodwill and Other Intangibles
------------------------------

     The Company records all assets and liabilities acquired in purchase 
acquisitions, including goodwill, indefinite-lived intangibles, and other 
intangibles, at fair value as required by SFAS 141. Goodwill ($3,613 million 
at September 30, 2005) and indefinite-lived intangible assets ($370 million at 
September 30, 2005) are not amortized but are subject to annual tests for 
impairment or more often if events or circumstances indicate they may be 
impaired.  Other intangible assets are amortized over their estimated useful 
lives and are subject to impairment if events or circumstances indicate a 
possible inability to realize the carrying amount.  The initial recording of 
goodwill and other intangibles requires subjective judgments concerning 
estimates of the fair value of acquired assets.  The goodwill impairment test 
is performed in two phases.  The first step of the goodwill impairment test 
compares the fair value of the reporting unit with its carrying amount, 
including goodwill.  If the fair value of the reporting unit exceeds its 
carrying amount, goodwill of the reporting unit is considered not impaired; 
however, if the carrying amount of the reporting unit exceeds its fair value, 
an additional procedure must be performed.  That additional procedure compares 
the implied fair value of the reporting unit's goodwill with the carrying 
amount of that goodwill.  An impairment loss is recorded to the extent that 
the carrying amount of goodwill exceeds its implied fair value.  Indefinite-

 25

lived intangible assets are evaluated for impairment at least annually by 
comparing their fair value to their carrying value.

     Other identifiable intangible assets ($443 million at September 30, 2005) 
are evaluated for impairment if events and circumstances indicate a possible 
impairment.  Such evaluation of other intangible assets is based on 
undiscounted cash flow projections.  Fair value may be determined using: 
market prices, comparison to similar assets, market multiples, discounted cash 
flow analysis and other determinates.  Estimated cash flows may extend far 
into the future and, by their nature, are difficult to determine over an  
extended timeframe.  Factors that may significantly affect the estimates 
include, among others, competitive forces, customer behaviors and attrition, 
changes in revenue growth trends, cost structures and technology, and changes 
in discount rates and specific industry or market sector conditions.  Other 
key judgments in accounting for intangibles include useful life and 
classification between goodwill and indefinite-lived intangibles or other 
intangibles that require amortization.  See Note "Goodwill and Intangibles" of 
the Notes to Consolidated Financial Statements for additional information 
regarding intangible assets.

     The following discussion may assist investors in assessing the impact of 
a goodwill or intangible asset impairment charge.  The Company has $4.4 
billion of goodwill and intangible assets at September 30, 2005.  The impact 
of a 5% impairment charge would result in a change of pre-tax income of 
approximately $221 million.

Pension Accounting
------------------

     The Company has defined benefit pension plans covering approximately 
14,700 U.S. employees and approximately 2,400 non-U.S. employees at September 
30, 2004.

     The Company has three defined benefit pension plans in the U.S. and six 
overseas.  At December 31, 2004, the U.S. plans account for 86% of the 
projected benefit obligation.  Pension credits were $24 million, $39 million, 
and $95 million in 2004, 2003 and 2002.  In addition to its pension plans, the 
Company also has an Employee Stock Ownership Plan ("ESOP") that may provide 
additional benefits to certain employees.  Upon retirement, covered employees 
are entitled to the higher of their benefit under the ESOP or the defined 
benefit plan.  If the benefit is higher under the defined benefit plan, the 
employees' ESOP account is contributed to the pension plan.

     A number of key assumption and measurement date values determine pension 
expense.  The key elements include the long-term rate of return on plan 
assets, the discount rate, the market-related value of plan assets, and for 
the primary U.S. plan, the price used to value stock in the ESOP.  Since 2002, 
these key elements have varied as follows:

                                            2005     2004     2003     2002
Domestic Plans:                           -------- -------- -------- --------
Long-Term Rate of Return
 on Plan Assets                              8.25%    8.75%    9.00%   10.50%
Discount Rate                                6.00     6.25     6.50     7.25
Market-Related Value of
 Plan Assets(1)  (in millions)             $ 1,502  $ 1,523  $ 1,483  $ 1,449
ESOP Stock Price(1)                          30.67    27.88    33.30    42.58

(In millions)
Net U.S Pension Credit/(Expense)                   $    31  $    46  $   100
All other Pension Credit/(Expense)                      (7)      (7)      (5)
                                                   -------- -------- --------
Total Pension Credit                               $    24  $    39  $    95
                                                   ======== ======== ========
------------

(1) Actuarially smoothed data.  See "Critical Accounting Policies" in the MD&A 
section of the Company's 2004 Annual Report on Form 10-K.

 26

     The discount rate for U.S. pension and postretirement plans is based on, 
among other factors, a spread over the Lehman AA Long-Term Corporate Bond 
Index Yield.  At September 30, 2004 and 2003, the Lehman AA Long-Term 
Corporate Bond Index Yields were 5.36% and 5.35%, and the discount rates were 
6.00% and 6.25%, respectively.  The discount rates for foreign pension plans 
are based on high quality corporate bonds rates in countries that have an 
active corporate bond market.  In those countries with no active corporate 
bond market, discount rates are based on local government bond rates plus a 
credit spread.

     The Company's expected long-term rate of return on plan assets is based 
on anticipated returns for each asset class. For 2005 and 2004, the 
assumptions for the long-term rates of return on plan assets were 8.25% and 
8.75%, respectively.  Anticipated returns are weighted for the target 
allocation for each asset class.  Anticipated returns are based on forecasts 
for prospective returns in the equity and fixed income markets, which should 
track the long-term historical returns for these markets.  The Company also 
considers the growth outlook for U.S. and global economies, as well as current 
and prospective interest rates.

     The market-related value of plan assets also influences the level of 
pension expense.  Differences between expected and actual returns are 
recognized over five years to compute an actuarially derived market-related 
value of plan assets.  

     Unrecognized actuarial gains and losses are amortized over the future 
service period (11 years) of active employees if they exceed a threshold 
amount.  The Company currently has unrecognized losses which are being 
amortized.

     For the first nine months of 2005, pension expense increased by $36 
million, in line with an anticipated $48 million increase for the year 2005. 
This increase reflects changes in assumptions, the amortization of 
unrecognized pension losses and a decline in the market-related value of plan 
assets.  These same factors are expected to further increase pension expense 
in 2006.  To reduce the impact of these factors, the Company changed certain 
of its domestic defined benefit pension plans during the third quarter of 
2005.  The primary change was to switch the computation of benefits from final 
average pay to career average pay effective January 1, 2006.

     The annual impact on the primary U.S. plan of hypothetical changes in the 
key elements on the pension credit are shown in the table below.

(Dollars in millions)               Increase in                   Decrease in
                                Pension Expense   2005 Base   Pension Expense
                                --------------- ------------- ---------------
  Long-Term Rate of Return
   on Plan Assets                  7.25%   7.75%     8.25%      8.75%   9.25%
  Change in Pension Expense      $ 14.6  $  7.3    $    -     $  7.3  $ 14.6

  Discount Rate                    5.50%   5.75%     6.00%      6.25%   6.50%
  Change in Pension Expense      $  7.4  $  3.7    $    -     $  3.6  $  7.2

  Market-Related Value of
   Plan Assets                   -20.00% -10.00%   $1,502     +10.00% +20.00%
  Change in Pension Expense      $ 58.2  $ 29.1         -     $ 27.2  $ 39.6

  ESOP Stock Price               $20.67  $25.67    $30.67     $35.67  $40.67
  Change in Pension Expense      $ 14.6  $  7.0    $    -     $  6.5  $ 12.6


 27


CONSOLIDATED BALANCE SHEET REVIEW

     Total assets were $101.8 billion at September 30, 2005, compared with 
$94.5 billion at December 31, 2004 and $103.1 billion at June 30, 2005. The 
September 30, 2005 balance sheet was slightly elevated due to some sizable 
overdrafts from securities servicing customers.  The increase in assets from 
December 31, 2004 reflects increased loans to securities industry customers.  
Total shareholders' equity was $9.6 billion at September 30, 2005, compared 
with $9.3 billion at December 31, 2004 and $9.5 billion at June 30, 2005.  In 
comparison to December 31, 2004, shareholders' equity reflects the retention 
of earnings and an increase in the securities valuation allowance. 

     Return on average common equity for the third quarter of 2005 was 16.15%, 
compared with 15.90% in the third quarter of 2004 and 17.12% in the second 
quarter of 2005. For the nine months of 2005, return on average common equity 
was 16.59% compared with 16.73% in 2004.

     Return on average assets for the third quarter of 2005 was 1.53%, 
compared with 1.45% in the third quarter of 2004 and 1.59% in the second 
quarter of 2005. For the nine months of 2005, return on average assets was 
1.56% compared with 1.47% in 2004.

Investment Securities
---------------------

     The table below shows the distribution of the Company's securities 
portfolio:

Investment Securities (at Fair Value)

(In millions)                                            09/30/05     12/31/04
                                                       ----------   ----------
  Fixed Income:
   Mortgage-Backed Securities                          $   21,967   $   19,393
   Asset-Backed Securities                                     29            -
   Corporate Debt                                           1,160        1,259
   Short-Term Money Market Instruments                        964          982
   U.S. Treasury Securities                                   225          403
   U.S. Government Agencies                                   620          505
   State and Political Subdivisions                           228          197
   Emerging Market Debt (Collateralized
     By U.S. Treasury Zero Coupon Obligations)                117          107
   Other Foreign Debt                                         471          545
                                                       ----------   ----------
   Subtotal Fixed Income                                   25,781       23,391

  Equity Securities:
   Money Market Funds                                         394          388
   Other                                                       32           10
                                                       ----------   ----------
   Subtotal Equity Securities                                 426          398
                                                       ----------   ----------
  Total Securities                                     $   26,207   $   23,789
                                                       ==========   ==========

     Total investment securities were $26.2 billion at September 30, 2005, 
compared with $25.8 billion at June 30, 2005.  Average investment securities 
were $25.6 billion in the third quarter of 2005, compared with $22.4 billion 
in the third quarter of last year and $24.7 billion in the second quarter of 
2005.  The increases were primarily due to growth in the Company's portfolio 
of highly rated mortgage-backed securities, which are 89% rated AAA, 7% AA, 
and 4% A.  The Company has been adding either adjustable or short life classes 
of structured mortgage-backed securities, both of which have short durations.  
The effective duration of the Company's mortgage portfolio at September 30, 
2005 was approximately 1.7 years.

     Net unrealized loss for securities available-for-sale was $59 million at 
September 30, 2005, compared with net unrealized gains of $150 million at 

 28

September 30, 2004 and net unrealized gains of $60 million at June 30, 2005.  
The change in the value of available-for-sale securities at September 30, 2005 
from June 30, 2005 reflects the increase in long-term interest rates over the 
quarter.  The asymmetrical accounting treatment of the impact of a change in 
interest rates on the Company's balance sheet may create a situation in which 
an increase in interest rates can adversely affect reported equity and 
regulatory capital, even though economically there may be no impact on the 
economic capital position of the Company.  For example, an increase in rates 
will result in a decline in the value of the fixed rate portion of the 
Company's fixed income investment portfolio, which will be reflected through a 
reduction in other comprehensive income in the Company's shareholders' equity, 
thereby affecting the tangible common equity ("TCE") ratio.  Under current 
accounting rules, there is no corresponding change in value of the Company's 
fixed rate liabilities, even though economically these liabilities are more 
valuable as rates rise.

Loans
-----




(Dollars in billions)                                   Quarterly                 Year-to-date
                            Period End                   Average                    Average
                   -------------------------- -------------------------- -------------------------
                   Total  Non-Margin  Margin  Total  Non-Margin  Margin  Total  Non-Margin  Margin
                   -----  ----------  ------- -----  ----------  ------  -----  ----------  ------
                                                                 
September 30, 2005 $42.1   $   35.8   $  6.3  $39.9   $   33.5   $  6.4  $39.3   $   32.9   $  6.4
December 31, 2004   35.8       29.7      6.1   39.4       33.0      6.4   37.8       31.5      6.3
September 30, 2004  37.1       31.2      5.9   37.6       31.3      6.3   37.2       30.9      6.3



     Total loans were $42.1 billion at September 30, 2005 compared with $35.8 
billion at December 31, 2004.  The increase in total loans from December 31, 
2004 primarily reflects an increase in overdrafts and securities industry 
loans.  The Company continues to focus on its strategy of reducing non-
strategic and outsized corporate loan exposures to improve its credit risk 
profile.  Average total loans were $39.9 billion in the third quarter of 2005, 
compared with $37.6 billion in the third quarter of 2004 while for the nine 
months ended September 30, 2005, average loans were $39.3 billion compared 
with $37.2 billion for September 30, 2004.  The increase in average loans from 
September 30, 2004 results from increased lending to financial institutions.

     The following tables provide additional details on the Company's credit 
exposures and outstandings at September 30, 2005 in comparison to December 31, 
2004.

Overall Loan Portfolio
----------------------



                                        Unfunded   Total              Unfunded   Total
(In billions)                  Loans  Commitments Exposure   Loans  Commitments Exposure
                              ----------------------------  ----------------------------
                              09/30/05  09/30/05  09/30/05  12/31/04  12/31/04  12/31/04
                              --------  --------  --------  --------  --------  --------
                                                              
Financial Institutions        $   14.7  $   22.7  $   37.4  $    9.5  $   21.6  $   31.1
Corporate                          3.6      19.0      22.6       3.6      19.4      23.0
                              --------  --------  --------  --------  --------  --------
                                  18.3      41.7      60.0      13.1      41.0      54.1
                              --------  --------  --------  --------  --------  --------
Consumer & Middle Market           9.8       4.6      14.4       8.9       4.5      13.4
Leasing Financings                 5.7       0.1       5.8       5.6         -       5.6
Commercial Real Estate             2.0       1.3       3.3       2.1       1.2       3.3
Margin loans                       6.3         -       6.3       6.1         -       6.1
                              --------  --------  --------  --------  --------  --------
Total                         $   42.1  $   47.7  $   89.8  $   35.8  $   46.7  $   82.5
                              ========  ========  ========  ========  ========  ========



 29

Financial Institutions
----------------------

     The financial institutions portfolio exposure was $37.4 billion at 
September 30, 2005 compared to $31.1 billion at December 31, 2004. The 
increase in exposure from year-end 2004 reflects greater activity in the 
capital markets at September 30, 2005, which drove higher levels of customer 
borrowing, compared with December 31, 2004.  These exposures are of high 
quality with 81% meeting the investment grade criteria of the Company's rating 
system.  These exposures are generally short-term, with 77% expiring within 
one year and are frequently secured.  For example, mortgage banking, 
securities industry, and investment managers often borrow against marketable 
securities held in custody at the Company.  The diversity of the portfolio is 
shown in the accompanying table.




(In billions)
                          September 30, 2005                     December 31, 2004
                     --------------------------- ----- ----- ---------------------------
                             Unfunded   Total    %Inv   %due         Unfunded   Total
Lending Division     Loans Commitments Exposures Grade <1 Yr Loans Commitments Exposures
-------------------  ----- ----------- --------- ----- ----- ----- ----------- ---------
                                                       
Banks                $ 5.7  $     4.0   $   9.7    66%   91% $ 4.2  $     3.5   $    7.7
Securities Industry    3.7        3.5       7.2    80    96    1.5        3.0        4.5
Insurance              0.5        5.1       5.6    93    43    0.5        4.8        5.3
Government             0.1        4.5       4.6    98    58      -        5.0        5.0
Asset Managers         4.4        3.9       8.3    82    84    3.0        3.8        6.8
Mortgage Banks         0.2        0.6       0.8    69    54    0.2        0.7        0.9
Endowments             0.1        1.1       1.2    99    48    0.1        0.8        0.9
                     ----- ----------- --------- ----- ----- ----- ----------- ---------
   Total             $14.7  $    22.7   $  37.4    81%   77% $ 9.5  $    21.6   $   31.1
                     ===== =========== ========= ===== ===== ===== =========== =========


Corporate
---------

     The corporate portfolio exposure declined to $22.6 billion at September 
30, 2005 from $23.0 billion at year-end 2004.  Approximately 74% of the 
portfolio is investment grade while 18% of the portfolio matures within one 
year.




(In billions)
                          September 30, 2005                      December 31, 2004
                     --------------------------- ----- ----- ---------------------------
                             Unfunded   Total    %Inv   %due         Unfunded   Total
Lending Division     Loans Commitments Exposures Grade <1 Yr Loans Commitments Exposures
-------------------  ----- ----------- --------- ----- ----- ----- ----------- ---------
                                                       
Media                $ 1.1  $     2.1   $   3.2    61%   12% $ 0.9  $     2.2   $    3.1
Cable                  0.4        0.3       0.7    29    20    0.6        0.4        1.0
Telecom                0.1        0.4       0.5    79     3    0.1        0.5        0.6
                     ----- ----------- --------- ----- ----- ----- ----------- ---------
   Subtotal            1.6        2.8       4.4    57%   12%   1.6        3.1        4.7

Energy                 0.4        4.6       5.0    85     8    0.4        4.4        4.8
Retailing              0.1        2.1       2.2    75    28    0.1        2.1        2.2
Automotive*            0.1        1.2       1.3    57    40    0.1        1.7        1.8
Healthcare             0.2        1.7       1.9    84    17    0.3        1.5        1.8
Other**                1.2        6.6       7.8    78    22    1.1        6.6        7.7
                     ----- ----------- --------- ----- ----- ----- ----------- ---------
   Total             $ 3.6  $    19.0   $  22.6    74%   18% $ 3.6  $    19.4   $   23.0
                     ===== =========== ========= ===== ===== ===== =========== =========


* During the third quarter of 2005, the Company eliminated the Automotive division and 
transferred the customers to the other geographic lending divisions. The amounts in the 
table were reconstructed for comparison to year-end.

** Diversified portfolio of industries and geographies



     The Company's exposure to the airline industry consists of a $473 million 
leasing portfolio (including a $16 million real estate lease exposure). The 
airline-leasing portfolio consists of $250 million to major U.S. carriers, 
$134 million to foreign airlines and $89 million to U.S. regionals.

     During the third quarter of 2005, the airline industry continued to face 
liquidity issues driven by persistently high fuel prices and the inability to 
implement meaningful fare increases.  The industry's considerable excess 

 30

capacity and higher oil prices continue to negatively impact the valuations of  
aircraft, especially the less fuel-efficient models, in the secondary market.  
Because of these factors, the Company continues to maintain a sizable 
allowance for loan losses against these exposures and to closely monitor the 
portfolio. At September 30, 2005, two of the Company's airline customers with 
aggregate exposure of $150 million had filed for bankruptcy. These exposures 
are 94% reserved. The Company expects these airlines to make decisions during 
the fourth quarter to affirm or disaffirm these leases. These decisions will 
drive the Company's level of charge-offs in the fourth quarter.

Counterparty Risk Ratings Profile
---------------------------------

     The table below summarizes the risk ratings of the Company's foreign 
exchange and interest rate derivative counterparty credit exposure for the 
past year.
                                          For the Quarter Ended
                            --------------------------------------------------
Rating(1)                      9/30/05    6/30/05   3/31/05  12/31/04   9/30/04
---------------------       --------------------------------------------------
AAA to AA-                      71%       68%       74%        68%        68%
A+ to A-                        13        15        13         19         21
BBB+ to BBB-                    13        14        10         10          8
Noninvestment Grade              3         3         3          3          3
                            -------- --------- ---------- --------- ----------
Total                          100%      100%      100%       100%       100%
                            ======== ========= ========== ========= ==========

(1) Represents credit rating agency equivalent of internal credit ratings.

Nonperforming Assets
--------------------




                                                              Change      Percent
                                                            9/30/05 vs.     Inc/
(Dollars in millions)                9/30/05     6/30/05      6/30/05      (Dec)
                                    ---------   ---------   -----------   --------
                                                              
Loans:
     Commercial                     $      35   $      78   $      (43)     (55)%
     Foreign                               15          15           (-)       - 
     Other                                 57          47           10       21 
                                    ---------   ---------   -----------
  Total Nonperforming Loans               107         140          (33)     (24)
     Other Real Estate                      -           -            -        -
                                    ---------   ---------   -----------
  Total Nonperforming Assets        $     107   $     140   $      (33)     (24)
                                    =========   =========   ===========

Nonperforming Assets Ratio                0.3%        0.4%
Allowance for Loan
   Losses/Nonperforming Loans           524.9       400.5
Allowance for Loan
   Losses/Nonperforming Assets          524.9       400.5
Total Allowance for Credit
   Losses/Nonperforming Loans           661.2       506.1
Total Allowance for Credit
   Losses/Nonperforming Assets          661.2       506.1



     Nonperforming assets declined by $33 million, or 24%, during the third 
quarter of 2005 to $107 million and are down 63% from a year ago.  The 
sequential quarter decrease in nonperforming loans primarily reflects the 
Company's partial sale of exposure to a cable operator that is categorized 
as nonperforming. The decrease from the third quarter of 2004 primarily 
reflects loan sales, paydowns, and charge-offs of commercial loans.  The 
ratio of the total allowance for credit losses to nonperforming assets 
increased to 661.2% at September 30, 2005, compared with 263.3% at 
September 30, 2004 and 506.1% at June 30, 2005.

 31

Activity in Nonperforming Assets

(In millions)                                 Quarter End         Year-to-date
                                       September 30, 2005   September 30, 2005
                                       ------------------   ------------------
Balance at Beginning of Period           $          140       $          214
   Additions                                         18                   24
   Charge-offs                                       (6)                 (18)
   Paydowns/Sales                                   (45)                (113)
                                       ------------------   ------------------
Balance at End of Period                 $          107       $          107
                                       ==================   ==================



     Interest income would have been increased by $1 million for each of the 
third quarters of 2005 and 2004 if loans on nonaccrual status at September 30, 
2005 and 2004 had been performing for the entire period.  On a year-to-date 
basis, interest income would have increased by $3 million and $8 million for 
2005 and 2004 had loans on nonaccrual status at September 30, 2005 and 2004 
been performing for the entire period.

Impaired Loans
--------------

     The table below sets forth information about the Company's impaired 
loans.  The Company uses the discounted cash flow, collateral value, or market 
price methods for valuing its impaired loans:

                                         September 30, June 30, September 30,
(In millions)                                    2005     2005          2004
                                          ------------ -------- -------------
Impaired Loans with an Allowance          $         48 $    55    $      160
Impaired Loans without an Allowance(1)              22      64           108
                                          ------------ -------- -------------
Total Impaired Loans                      $         70 $   119    $      268
                                          ============ ======== =============
Allowance for Impaired Loans(2)           $         20 $    30    $       57
Average Balance of Impaired Loans
 during the Quarter                       $        120 $   145    $      293
Interest Income Recognized on
 Impaired Loans during the Quarter        $        1.2 $   1.6    $      2.4

(1)  When the discounted cash flows, collateral value or market price equals 
     or exceeds the carrying value of the loan, then the loan does not require 
     an allowance under the accounting standard related to impaired loans.
(2)  The allowance for impaired loans is included in the Company's allowance
     for credit losses.

 32

Allowance
---------

                                         September 30,  June 30, September 30,
(Dollars in millions)                            2005      2005          2004
                                          ------------ --------- ------------
Margin Loans                              $      6,320 $  6,055    $    5,911
Non-Margin Loans                                35,823   34,626        31,208
                                          ------------ ---------   ----------
Total Loans                               $     42,143 $ 40,681    $   37,119
                                          ============ =========   ==========

Allowance for Loan Losses                 $        561 $    562    $      598
Allowance for Lending-Related
  Commitments                                      146      148           158
                                          ------------ ---------   ----------
Total Allowance for Credit Losses         $        707 $    710    $      756
                                          ============ =========   ==========
Allowance for Loan Losses As a
  Percent of Total Loans                          1.33%    1.38%         1.61%
Allowance for Loan Losses As a
  Percent of Non-Margin Loans                     1.57     1.62          1.92
Total Allowance for Credit Losses
  As a Percent of Total Loans                     1.68     1.75          2.04
Total Allowance for Credit Losses
  As a Percent of Non-Margin Loans                1.97     2.05          2.42

     The total allowance for credit losses was $707 million, or 1.68% of total 
loans at September 30, 2005, compared with $756 million, or 2.04% of total 
loans at September 30, 2004 and $710 million, or 1.75% of total loans at June 
30, 2005.

     The Company has $6.3 billion of secured margin loans on its balance sheet 
at September 30, 2005.  The Company has rarely suffered a loss on these types 
of loans and doesn't allocate any of its allowance for credit losses to these 
loans.  As a result, the Company believes the ratio of total allowance for 
credit losses to non-margin loans is a more appropriate metric to measure the 
adequacy of the reserve.

     The ratio of the total allowance for credit losses to non-margin loans 
decreased to 1.97% at September 30, 2005, compared with 2.42% at September 30, 
2004, and 2.05% at June 30, 2005, reflecting continued improvement in the 
credit quality in the third quarter of 2005.

     The ratio of the allowance for loan losses to nonperforming assets was 
524.9% at September 30, 2005, up from 208.1% at September 30, 2004, and 400.5% 
at June 30, 2005.

     The allowance for loan losses and the allowance for lending related 
commitments consists of four elements: (1) an allowance for impaired credits 
(nonaccrual commercial credits over $1 million), (2) an allowance for higher 
risk rated credits, (3) an allowance for pass rated credits, and (4) an 
unallocated allowance based on general economic conditions and risk factors in 
the Company's individual markets.

     The first element, impaired credits, is based on individual analysis of 
all nonperforming commercial credits over $1 million. The allowance is 
measured by the difference between the recorded value of impaired loans and 
their fair value. Fair value is either the present value of the expected 
future cash flows from borrower, the market value of the loan, or the fair 
value of the collateral.

     The second element, higher risk rated credits, is based on the assignment 
of loss factors for each specific risk category of higher risk credits.  The 
Company rates each credit in its portfolio that exceeds $1 million and assigns 
the credits to specific risk pools.  A potential loss factor is assigned to 
each pool, and an amount is included in the allowance equal to the product of 
the amount of the loan in the pool and the risk factor.  Reviews of higher 

 33

risk rated loans are conducted quarterly and the loan's rating is updated as 
necessary.  The Company prepares a loss migration analysis and compares its 
actual loss experience to the loss factors on an annual basis to attempt to 
ensure the accuracy of the loss factors assigned to each pool.  Pools of past 
due consumer loans are included in specific risk categories based on their 
length of time past due.

     The third element, pass rated credits, is based on the Company's expected 
loss model. Borrowers are assigned to pools based on their credit ratings.  
The expected loss for each loan in a pool incorporates the borrower's credit 
rating, loss given default rating and maturity.  The credit rating is 
dependent upon the borrower's probability of default.  The loss given default 
incorporates a recovery expectation.  Borrower and loss given default ratings 
are reviewed semi-annually at a minimum and are periodically mapped to third 
party, including rating agency, default and recovery data bases to ensure 
ongoing consistency and validity.  Commercial loans over $1 million are 
individually analyzed before being assigned a credit rating.  The Company also 
applies this technique to its leasing and consumer portfolios.  All current 
consumer loans are included in the pass rated consumer pools.

     The fourth element, the unallocated allowance, is based on management's 
judgment regarding the following factors:

*	Economic conditions including duration of the current cycle;

*	Past experience including recent loss experience;

*	Credit quality trends;

*	Collateral values;

*	Volume, composition, and growth of the loan portfolio;

*	Specific credits and industry conditions;

*	Results of bank regulatory and internal credit exams;

*	Actions by the Federal Reserve Board;

*	Delay in receipt of information to evaluate loans or confirm existing 
        credit deterioration; and

*	Geopolitical issues and their impact on the economy.

     Based on an evaluation of these four elements, including individual 
credits, historical credit losses, and global economic factors, the Company 
has allocated its allowance for credit losses as follows:

                                                 September 30,    December 31,
                                                         2005            2004
                                                 ------------     -----------
Domestic
   Real Estate                                            2%               2%
   Commercial                                            75               75
   Consumer                                               7                3
Foreign                                                   2                4
Unallocated                                              14               16
                                                 ------------     -----------
                                                        100%             100%
                                                 ============     ===========

     Such an allocation is inherently judgmental, and the entire allowance for 
credit losses is available to absorb credit losses regardless of the nature of 
the loss.

 34

Deposits
--------

     Total deposits were $61.1 billion at September 30, 2005, compared with 
$58.4 billion at September 30, 2004 and $64.0 billion at June 30, 2005.  The 
decrease on a sequential quarter basis was primarily due to lower market 
activity levels, which resulted in a reduced level of customer deposits at 
quarter end. Noninterest-bearing deposits were $16.3 billion at September 30, 
2005, compared with $17.4 billion at December 31, 2004.  Interest-bearing 
deposits were $44.8 billion at September 30, 2005, compared with $41.3 billion 
at December 31, 2004.

LIQUIDITY

     The Company maintains its liquidity through the management of its assets 
and liabilities, utilizing worldwide financial markets. The diversification of 
liabilities reflects the Company's efforts to maintain flexibility of funding 
sources under changing market conditions. Stable core deposits, including 
demand, retail time, and trust deposits from processing businesses, are 
generated through the Company's diversified network and managed with the use 
of trend studies and deposit pricing. The use of derivative products such as 
interest rate swaps and financial futures enhances liquidity by enabling the 
Company to issue long-term liabilities with limited exposure to interest rate 
risk. Liquidity also results from the maintenance of a portfolio of assets 
which can be easily sold and the monitoring of unfunded loan commitments, 
thereby reducing unanticipated funding requirements. Liquidity is managed on 
both a consolidated basis and at The Bank of New York Company, Inc. parent 
company ("Parent").

     On a consolidated basis, non-core sources of funds such as money market 
rate accounts, certificates of deposits greater than $100,000, federal funds 
purchased, and other borrowings were $13.1 billion and $14.5 billion on an 
average basis for the nine months of 2005 and 2004. Average foreign deposits, 
primarily from the Company's European based securities servicing business, 
were $25.9 billion at both September 30, 2005 and 2004. Domestic savings and 
other time deposits were $9.9 billion on a year-to-date average basis at 
September 30, 2005 compared to $10.2 billion at September 30, 2004. Average 
payables to customers and broker-dealers decreased to $6.0 billion from $6.5 
billion.  On a year-to-date basis, long-term debt averaged $7.2 billion and 
$6.1 billion at September 30, 2005 and 2004.  A significant reduction in the 
Company's securities servicing businesses would reduce its access to foreign 
deposits.

     The Parent has four major sources of liquidity: dividends from its 
subsidiaries, the commercial paper market, a revolving credit agreement with 
third party financial institutions, and access to the capital markets.

     At September 30 2005, the Bank can pay dividends of approximately $744 
million to the Parent without the need for regulatory waiver.  This dividend 
capacity would increase in the remainder of 2005 to the extent of the Bank's 
net income less dividends.  Nonbank subsidiaries of the Parent have liquid 
assets of approximately $264 million.  These assets could be liquidated and 
the proceeds delivered by dividend or loan to the Parent.

     For the quarter ended September 30, 2005, the Parent's quarterly average 
commercial paper borrowings were $231 million compared with $67 million in 
2004.  At September 30, 2005, the Parent had cash of $409 million compared 
with cash of $777 million at September 30, 2004 and $858 million at June 30, 
2005.  Net of commercial paper outstanding, the Parent's cash position at 
September 30, 2005 was down $475 million compared with September 30, 2004 
reflecting the Parent's purchase of Pershing from the Bank in the first 
quarter of 2005.  

     The Parent has a back-up line of credit of $275 million with 14 financial 
institutions.  This line of credit matures in October 2006.  There were no 
borrowings under the line of credit at September 30, 2005 and September 30, 
2004.

 35

     The Parent also has the ability to access the capital markets.  At 
September 30, 2005, the Parent had a shelf registration statement with a 
capacity of $1.7 billion of debt, preferred stock, preferred trust securities, 
or common stock.  Access to the capital markets is partially dependent on the 
Company's credit ratings, which as of September 30, 2005 were as follows:

                                                          The Bank of
                   Parent          Parent  Parent Senior     New York
               Commercial    Subordinated      Long-Term    Long-Term
                    Paper  Long-Term Debt           Debt     Deposits  Outlook
               ----------  --------------  -------------  -----------  -------
Standard & 
 Poor's            A-1           A              A+            AA-       Stable

Moody's            P-1           A1             Aa3           Aa2       Stable

Fitch              F1+           A+             AA-           AA        Stable

     The Parent's major uses of funds are payment of principal and interest on 
its borrowings, acquisitions, and additional investment in its subsidiaries.

     The Parent has $100 million of long-term debt that becomes due in 2005 
subsequent to September 30, 2005 and $225 million of long-term debt that is 
due in 2006.  In addition, at September 30, 2005, the Parent has the option to 
call $230 million of subordinated debt in 2006, which it will call and 
refinance if market conditions are favorable.  The Parent expects to refinance 
any debt it repays by issuing a combination of senior and subordinated debt.

     The Company has $200 million of preferred trust securities that are 
callable in 2005. These securities qualify as Tier 1 Capital. The Company has 
not yet decided if it will call these securities. The decision to call will be 
based on interest rates, the availability of cash and capital, and regulatory 
conditions.  If the Company calls the preferred trust securities, it expects 
to replace them with new preferred trust securities or senior or subordinated 
debt.

     Double leverage is the ratio of investment in subsidiaries divided by the 
Company's consolidated equity plus trust preferred securities.  The Company's 
double leverage ratio at September 30, 2005 and 2004 was 103.82% and 98.44%, 
respectively. The Company's target double leverage ratio is a maximum of 120%. 
The double leverage ratio is monitored by regulators and rating agencies and 
is an important constraint on the Company's ability to invest in its 
subsidiaries to expand its businesses.

     Pershing LLC, an indirect subsidiary of the Company, has committed and 
uncommitted lines of credit in place for liquidity purposes.  The committed 
line of credit of $500 million with five financial institutions matures in 
March 2006. There were no borrowings against this line of credit during the 
third quarter of 2005. Pershing LLC has three separate uncommitted lines of 
credit amounting to $1 billion in aggregate. Average daily borrowing under 
these lines was $14 million, in aggregate, during the third quarter of 2005.

     Pershing Limited, an indirect subsidiary of the Company, has committed 
and uncommitted lines in place for liquidity purposes. The committed lines of 
credit of $275 million with four financial institutions matures in April 2006. 
There were no borrowings against this line of credit during the third quarter 
of 2005. Pershing Limited has three separate uncommitted lines of credit 
amounting to $300 million in aggregate. Average daily borrowing under these 
lines was $217 million, in aggregate, during the third quarter of 2005.

     The following comments relate to the information disclosed in the 
Consolidated Statements of Cash Flows.


     Cash used for other operating activities was $0.2 billion for the nine 
months of 2005, compared with $3.4 billion provided by operating activities 
through September 30, 2004.  The use of funds from operations in 2005 was 
principally the result of changes in trading activities.  The sources of cash 

 36

flows from operations in 2004 were principally the result of changes in 
trading and net income.

     In the nine months of 2005, cash used for investing activities was $7.0 
billion as compared to cash used for investing activities in the nine months 
of 2004 of $3.5 billion. In the nine months of 2005, purchases of securities 
available-for-sale and principal disbursed on loans to customers were a 
significant use of funds. Purchases of securities available-for-sale and 
change in interest-bearing deposits were the primary use of funds in 2004.

     Through September 30, 2005, cash provided by financing activities was 
$6.5 billion, compared to cash used of $0.5 billion in the nine months of 
2004. Sources of funds in 2005 include deposits and the issuance of long-term 
debt. Deposits, other borrowed funds and the issuance of long-term debt and 
common stock were the primary source of funds in 2004.


CAPITAL RESOURCES

     Regulators establish certain levels of capital for bank holding companies 
and banks, including the Company and the Bank, in accordance with established 
quantitative measurements. In order for the Parent to maintain its status as a 
financial holding company, the Bank must qualify as well capitalized. In 
addition, major bank holding companies such as the Parent are expected by the 
regulators to be well capitalized.  As of September 30, 2005 and 2004, the 
Company and the Bank were considered well capitalized on the basis of the 
ratios (defined by regulation) of Total and Tier 1 capital to risk-weighted 
assets and leverage (Tier 1 capital to average assets), which are shown as 
follows:



                   September 30, 2005  September 30, 2004                     Well   Adequately
                   ------------------  ------------------     Company  Capitalized  Capitalized
                    Company    Bank    Company      Bank      Targets   Guidelines   Guidelines
                   ---------  -------  ---------  -------  ----------  -----------  -----------
                                                                
Tier 1*                7.93%   8.37%       8.09%    7.59%       7.75%           6%           4%
Total Capital**       12.20   11.52       12.09    11.69       11.75           10            8
Leverage               6.59    7.01        6.38     5.98                        5          3-5
Tangible Common
  Equity ("TCE")       5.32    6.29        5.49     5.79        5.25+         N.A.         N.A.


* Tier 1 capital consists, generally, of common equity, preferred trust securities, and
  certain qualifying preferred stock, less goodwill and most other intangibles.
**Total Capital consists of Tier 1 capital plus Tier 2 capital. Tier 2 capital consists,
  generally, of certain qualifying preferred stock and subordinated debt and a portion of the
  loan loss allowance.



     During the third quarter of 2005 the Company retained $228 million of 
earnings. Also in the quarter, the Company issued $55 million subordinated 
debt qualifying as Tier II capital. During the third quarter of 2005, the 
Company bought back 2.2 million shares. 

     The Company's regulatory Tier 1 capital and Total capital ratios were 
7.93% and 12.20% at September 30, 2005, compared with 8.09% and 12.09% at 
September 30, 2004, and 8.07% and 12.49% at June 30, 2005. The regulatory 
leverage ratio was 6.59% at September 30, 2005, compared with 6.38% at 
September 30, 2004 and 6.55% at June 30, 2005. The Company's tangible common 
equity as a percentage of total assets was 5.32% at September 30, 2005, 
compared with 5.49% at September 30, 2004 and 5.26% at June 30, 2005. The 
tangible common equity ratio varies depending on the size of the balance sheet 
at quarter-end and the impact of interest rates on unrealized gains and losses 
among other things. The balance sheet size fluctuates from quarter to quarter 
based on levels of market activity. In general, when servicing clients are 
more actively trading securities, deposit balances, and the balance sheet as a 
whole, are higher to finance these activities.

 37

     A billion dollar change in assets changes the TCE ratio by 5 basis points 
while a $100 million change in common equity changes the TCE ratio by 10 basis 
points.

     On March 1, 2005, the Board of Governors of the Federal Reserve System 
(the "FRB") adopted a final rule that allows the continued limited inclusion 
of trust preferred securities in the Tier 1 capital of bank holding companies 
(BHCs).  See "Accounting Changes and New Accounting Pronouncements" in the 
Notes to the Consolidated Financial Statements.

     The following table presents the components of the Company's risk-based 
capital at September 30, 2005 and 2004:

(In millions)                                                  2005      2004
                                                             -------   -------
Common Stock                                                 $ 9,631   $ 9,054
Preferred Stock                                                    -         -
Preferred Trust Securities                                     1,150     1,150
Adjustments: Intangibles                                      (4,421)   (4,165)
             Securities Valuation Allowance                        -       (93)
             Merchant Banking Investments                         (8)       (6)
                                                             -------   -------
Tier 1 Capital                                                 6,352     5,940
                                                             -------   -------
Qualifying Unrealized Equity Security Gains                        -         -
Qualifying Subordinated Debt                                   2,709     2,193
Qualifying Allowance for Loan Losses                             706       749
                                                             -------   -------
Tier 2 Capital                                                 3,415     2,942
                                                             -------   -------
Total Risk-Based Capital                                     $ 9,767   $ 8,882
                                                             =======   =======

Risk-Adjusted Assets                                         $80,065   $73,447
                                                             =======   =======

 38


TRADING ACTIVITIES

     The fair value and notional amounts of the Company's financial 
instruments held for trading purposes at September 30, 2005 and 2004 are as 
follows:

                                  September 30, 2005           2005 Average
                                --------------------------- ------------------
(In millions)                   Notional     Fair Value         Fair Value
                                         ------------------ ------------------
Trading Account                  Amount  Assets Liabilities Assets Liabilities
---------------                 -------- ------ ----------- ------ -----------
Interest Rate Contracts:
  Futures and Forward
    Contracts                   $ 29,868 $    - $         - $    - $         9
  Swaps                          252,347  1,690       1,059  1,577         870
  Written Options                203,688      -       1,201      -       1,222
  Purchased Options              158,130    211           -    160           -
Foreign Exchange Contracts:
  Swaps                            3,087      -           -      -           -
  Written Options                  5,316      -           -      -           2
  Purchased Options                7,096     28           -     44           -
  Commitments to Purchase
   and Sell Foreign Exchange      79,491    522         471    422         398
Debt Securities                        -  3,642         124  3,359         104
Credit Derivatives                 1,807      1           5      1           7
Equities                           2,999    198         140    159         115
                                         ------ ----------- ------ -----------
Total Trading Account                    $6,292 $     3,000 $5,722 $     2,727
                                         ====== =========== ====== ===========


                                  September 30, 2004           2004 Average
                                --------------------------- ------------------
                                Notional     Fair Value         Fair Value
                                         ------------------ ------------------
Trading Account                  Amount  Assets Liabilities Assets Liabilities
---------------                 -------- ------ ----------- ------ -----------
Interest Rate Contracts:
  Futures and Forward
    Contracts                   $ 38,572 $   26 $         - $   35 $         -
  Swaps                          222,255  1,717         725  1,655         744
  Written Options                160,255      -       1,324      -       1,244
  Purchased Options              112,129    186           -    210           -
Foreign Exchange Contracts:
  Swaps                            2,937      -           -      -           -
  Written Options                  6,333      -           -      -           9
  Purchased Options                9,356     39           -     50           -
  Commitments to Purchase
   and Sell Foreign Exchange      69,985    502         503    374         396
Debt Securities                        -  1,332         102  1,581         106
Credit Derivatives                 1,497      2           5      2           7
Equities                           1,958    217         196    119          83
                                         ------ ----------- ------ -----------
Total Trading Account                    $4,021 $     2,855 $4,026 $     2,589
                                         ====== =========== ====== ===========

     The Company's trading activities are focused on acting as a market maker 
for the Company's customers.  The risk from these market making activities and 
from the Company's own positions is managed by the Company's traders and 
limited in total exposure as described below.

     The Company manages trading risk through a system of position limits, a 
value at risk (VAR) methodology-based on a Monte Carlo simulation, stop loss 
advisory triggers, and other market sensitivity measures.  Risk is monitored 
and reported to senior management by an independent unit on a daily basis.  
Based on certain assumptions, the VAR methodology is designed to capture the 
potential overnight pre-tax dollar loss from adverse changes in fair values of 
all trading positions.  The calculation assumes a one-day holding period for 
most instruments, utilizes a 99% confidence level, and incorporates the non-
linear characteristics of options.  The VAR model is used to calculate 
economic capital, which is allocated to the business units for computing risk-
adjusted performance.

 39

     As VAR methodology does not evaluate risk attributable to extraordinary 
financial, economic or other occurrences, the risk assessment process includes 
a number of stress scenarios based upon the risk factors in the portfolio and 
management's assessment of market conditions. Additional stress scenarios 
based upon historic market events are also tested.  Stress tests by their 
design incorporate the impact of reduced liquidity and the breakdown of 
observed correlations. The results of these stress tests are reviewed weekly 
with senior management.

     The following table indicates the calculated VAR amounts for the trading 
portfolio for the periods indicated.




(Dollars in millions)                  3rd Quarter 2005               Year-to-date 2005
                                ---------------------------  -------------------------------------
                                Average   Minimum   Maximum  Average   Minimum   Maximum   9/30/05
                                -------   -------   -------  -------   -------   -------   -------
                                                                      
Interest Rate                   $   2.7   $   1.8   $   4.4  $   2.8   $   1.8   $   4.6   $   3.7
Foreign Exchange                    1.1       0.4       2.9      1.6       0.4       4.1       0.8
Equity                              0.5       0.3       0.8      0.6       0.3       1.1       0.7
Credit Derivatives                  1.2       0.9       1.8      1.6       0.9       2.1       1.0
Diversification                    (1.0)       NM        NM     (1.3)       NM        NM      (1.2)
Overall Portfolio                   4.5       3.2       7.0      5.3       3.2       9.1       5.0






                                      3rd Quarter 2004                Year-to-date 2004
                                ---------------------------  -------------------------------------                                
                                Average   Minimum   Maximum  Average   Minimum   Maximum   9/30/04
                                -------   -------   -------  -------   -------   -------   -------
                                                                      
Interest Rate                   $   2.8   $   2.1   $   4.2  $   4.1   $   2.1   $   7.8   $   2.9
Foreign Exchange                    0.9       0.5       1.6      1.0       0.4       3.1       1.4
Equity                              0.8       0.6       1.6      1.2       0.6       2.4       1.3
Credit Derivatives                  1.5       1.3       1.6      1.8       1.3       2.1       1.5
Diversification                    (1.4)       NM        NM     (1.4)       NM        NM      (2.2)
Overall Portfolio                   4.6       3.6       6.2      6.7       3.6      12.8       4.9



NM - Because the minimum and maximum may occur on different days for different
     risk components, it is not meaningful to compute a portfolio 
     diversification effect.

     During the nine months of 2005, interest rate risk generated 
approximately 42% of average VAR, credit derivatives generated 24% of average 
VAR, foreign exchange accounted for 25% of average VAR, and equity generated 
9% of average VAR.  During the third quarter and nine months of 2005, the 
Company's daily trading loss did not exceed the Company's calculated VAR 
amounts on any given day.

     The following table of total daily revenue or loss captures trading 
volatility and shows the number of days on which the Company's trading 
revenues fell within particular ranges during the past year.

Distribution of Revenues
------------------------
                                         For the Quarter Ended
                            --------------------------------------------------
Revenue Range                9/30/05    6/30/05   3/31/05  12/31/04   9/30/04
                            --------------------------------------------------
(Dollars in millions)                    Number of Occurrences
----------------------      --------- --------- --------- ---------- ---------
Less than $(2.5)                 0         0         0          0         0
$(2.5)~ $ 0                      3         6         1          6        11
$ 0   ~ $ 2.5                   51        40        50         49        48
$ 2.5 ~ $ 5.0                    8        16        11          8         5
More than $5.0                   2         2         0          0         0


 40

ASSET/LIABILITY MANAGEMENT

     The Company's asset/liability management activities include lending, 
investing in securities, accepting deposits, raising money as needed to fund 
assets, and processing securities and other transactions.  The market risks 
that arise from these activities are interest rate risk, and to a lesser 
degree, foreign exchange risk.  The Company's primary market risk is exposure 
to movements in U.S. dollar interest rates.  Exposure to movements in foreign 
currency interest rates also exists, but to a significantly lower degree.  The 
Company actively manages interest rate sensitivity.  In addition to gap 
analysis, the Company uses earnings simulation and discounted cash flow models 
to identify interest rate exposures.

     An earnings simulation model is the primary tool used to assess changes 
in pre-tax net interest income.  The model incorporates management's 
assumptions regarding interest rates, balance changes on core deposits, and 
changes in the prepayment behavior of loans and securities and the impact of 
derivative financial instruments used for interest rate risk management.  
These assumptions have been developed through a combination of historical 
analysis and future expected pricing behavior.  These assumptions are 
inherently uncertain, and, as a result, the earnings simulation model may not 
precisely estimate net interest income or the impact of higher or lower 
interest rates on net interest income.  Actual results may differ from 
projected results due to timing, magnitude and frequency of interest rate 
changes and changes in market conditions and management's strategies, among 
other factors.

     The Company evaluates the effect on earnings by running various interest 
rate ramp scenarios up and down from a baseline scenario, which assumes no 
changes in interest rates.  These scenarios are reviewed to examine the impact 
of large interest rate movements.  Interest rate sensitivity is quantified by 
calculating the change in pre-tax net interest income between the scenarios 
over a 12-month measurement period.  The measurement of interest rate 
sensitivity is the percentage change in net interest income as shown in the 
following table:

(Dollars in millions)                   September 30, 2005      June 30, 2005
                                             $        %           $        %
                                        --------- --------   ---------- ------
     +200 bp Ramp vs. Stable Rate      $    (26)   (1.25)%   $   (15)  (0.74)%
     +100 bp Ramp vs. Stable Rate            (6)   (0.27)          4    0.20
     -100 bp Ramp vs. Stable Rate            (3)   (0.16)        (17)  (0.84)

     The base case scenario Fed Funds rate in the September 30, 2005 analysis 
was 3.75% versus 3.25% for the June 30, 2005 analysis.  The 100+ basis point 
ramp scenario assumes short-term rates rise 25 basis points in each of the 
next four quarters, while the 200+ ramp scenario assumes a 50 basis point per 
quarter increase.  The 100+ basis point September 30, 2005 scenario assumes a 
steepening of the yield curve with 10-year rates  rising 106 basis points. 
The 200+ basis point September 30, 2005 scenario assumes a slight steepening 
of the yield curve with 10-year rates rising 205 basis points.  These 
scenarios do not reflect strategies that management could employ to limit the 
impact as interest rate expectations change.

     The above table relies on certain critical assumptions including 
depositors' behavior related to interest rate fluctuations and the prepayment 
and extension risk in certain of the Company's assets.  To the extent that 
actual behavior is different from that assumed in the models, there could be a 
change in interest rate sensitivity.

 41


STATISTICAL INFORMATION



                                  THE BANK OF NEW YORK COMPANY, INC.
                      Average Balances and Rates on a Taxable Equivalent Basis 
                                       (Dollars in millions)

                                              For the three months       For the three months
                                            ended September 30, 2005   ended September 30, 2004
                                         ----------------------------  ----------------------------
                                          Average             Average   Average             Average
                                          Balance   Interest   Rate     Balance   Interest   Rate
                                         --------   --------  -------  --------   --------  ------- 
                                                                          
ASSETS
------
Interest-Bearing
 Deposits in Banks
 (primarily foreign)                     $   8,629  $     68    3.13%  $  11,416  $     77    2.69%
Federal Funds Sold and Securities
 Purchased Under Resale Agreements           4,465        38    3.37       6,443        20    1.22
Margin Loans                                 6,392        71    4.40       6,315        40    2.50
Loans
 Domestic Offices                           22,955       271    4.69      21,333       218    4.06
 Foreign Offices                            10,561       121    4.53       9,939        72    2.89
                                         ---------  --------           ---------  --------           
   Non-Margin Loans                         33,516       392    4.64      31,272       290    3.69
                                         ---------  --------           ---------  --------           
Securities
 U.S. Government Obligations                   228         2    3.55         450         3    2.64
 U.S. Government Agency Obligations          3,956        41    4.19       3,560        30    3.37
 Obligations of States and
  Political Subdivisions                       231         4    6.59         227         4    8.29
 Other Securities                           21,227       224    4.23      18,137       162    3.57
 Trading Securities                          3,361        38    4.49       1,587        11    2.81
                                         ---------  --------           ---------  --------
   Total Securities                         29,003       309    4.27      23,961       210    3.52
                                         ---------  --------           ---------  --------

Total Interest-Earning Assets               82,005       878    4.25%     79,407       637    3.19%
                                                    --------           ---------  --------
Allowance for Credit Losses                   (562)                         (592)
Cash and Due from Banks                      2,974                         3,027
Other Assets                                16,493                        15,513
                                         ---------                     ---------
   TOTAL ASSETS                          $ 100,910                     $  97,355
                                         =========                     =========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
 Money Market Rate Accounts              $   6,827  $     30    1.74%  $   6,474  $     13    0.83%
 Savings                                     8,637        27    1.23       9,296        16    0.70
 Certificates of Deposit
  $100,000 & Over                            3,137        28    3.56       3,640        14    1.56
 Other Time Deposits                         1,529        11    2.84         934         4    1.61
 Foreign Offices                            25,887       152    2.33      25,227        92    1.44
                                         ---------  --------           ---------  --------
  Total Interest-Bearing Deposits           46,017       248    2.14      45,571       139    1.22
Federal Funds Purchased and 
 Securities Sold Under Repurchase
 Agreements                                  1,245         9    2.96       1,572         4    1.12
Other Borrowed Funds                         1,716        13    3.10       2,416         9    1.51
Payables to Customers and Broker-Dealers     5,714        35    2.41       5,785        14    0.95
Long-Term Debt                               7,568        73    3.81       6,083        35    2.26
                                         ---------  --------           ---------  --------
  Total Interest-Bearing Liabilities        62,260       378    2.41%     61,427       201    1.31%
                                                    --------           ---------  --------
Noninterest-Bearing Deposits                15,815                        14,576
Other Liabilities                           13,271                        12,489
Common Shareholders' Equity                  9,564                         8,863
                                         ---------                     ---------
  TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                  $ 100,910                     $  97,355
                                         =========                     =========
Net Interest Earnings
 and Interest Rate Spread                           $    500    1.84%             $    436    1.88%
                                                    ========  =======             ========  =======
Net Yield on Interest-Earning Assets                            2.42%                         2.18%
                                                              =======                       =======




 42


                                       THE BANK OF NEW YORK COMPANY, INC.
                          Average Balances and Rates on a Taxable Equivalent Basis 
                                             (Dollars in millions)


                                                For the nine months         For the nine months
                                              ended September 30, 2005    ended September 30, 2004
                                             --------------------------  --------------------------
                                             Average            Average  Average            Average
                                             Balance  Interest   Rate    Balance  Interest   Rate
                                             -------  --------  -------  -------  --------  -------
                                                                          
ASSETS
------
Interest-Bearing
 Deposits in Banks
 (primarily foreign)                        $  9,207  $    206    2.99%  $11,960  $    224    2.50%
Federal Funds Sold and Securities
 Purchased Under Resale Agreements             4,813       102    2.82     6,964        53    1.02
Margin Loans                                   6,380       188    3.94     6,330       108    2.29
Loans
 Domestic Offices                             22,606       760    4.50    21,547       483    2.99
 Foreign Offices                              10,336       322    4.17     9,364       197    2.81
                                            --------  --------           -------  --------
   Non-Margin Loans                           32,942     1,082    4.39    30,911       680    2.94
                                            --------  --------           -------  --------
Securities
 U.S. Government Obligations                     289         7    3.23       456         8    2.47
 U.S. Government Agency Obligations            3,690       110    3.97     3,955        98    3.29
 Obligations of States and
  Political Subdivisions                         214        11    7.03       236        13    7.23
 Other Securities                             20,449       617    4.02    18,136       474    3.48
 Trading Securities                            3,084        98    4.30     2,139        34    2.17
                                            --------  --------           -------  --------
   Total Securities                           27,726       843    4.06    24,922       627    3.36
                                            --------  --------           -------  --------
Total Interest-Earning Assets                 81,068     2,421    3.99%   81,087     1,692    2.79%
                                                      --------           -------  --------
Allowance for Credit Losses                     (578)                       (633)
Cash and Due from Banks                        3,342                       2,947
Other Assets                                  16,379                      15,728
                                            --------                    --------
   TOTAL ASSETS                             $100,211                    $ 99,129
                                            ========                    ========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Interest-Bearing Deposits
 Money Market Rate Accounts                 $  6,939  $     77    1.49%  $ 6,648  $     36    0.73%
 Savings                                       8,824        72    1.09     9,267        47    0.68
 Certificates of Deposit
  $100,000 & Over                              3,028        70    3.09     3,847        39    1.33
 Other Time Deposits                           1,101        20    2.37       967        11    1.55
 Foreign Offices                              25,896       413    2.13    25,874       251    1.30
                                            --------  --------           -------  --------
  Total Interest-Bearing Deposits             45,788       652    1.90    46,603       384    1.10
Federal Funds Purchased and 
 Securities Sold Under Repurchase
 Agreements                                    1,262        23    2.44     1,599        10    0.82
Other Borrowed Funds                           1,831        33    2.43     2,400        27    1.50
Payables to Customers and Broker-Dealers       6,025        88    1.95     6,521        38    0.78
Long-Term Debt                                 7,223       187    3.42     6,143        95    2.04
                                            --------  --------           -------  --------
  Total Interest-Bearing Liabilities          62,129       983    2.12%   63,266       554    1.17%
                                                      --------           -------  --------
Noninterest-Bearing Deposits                  15,533                      14,465
Other Liabilities                             13,152                      12,701
Common Shareholders' Equity                    9,397                       8,697
                                            --------                     -------
  TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                     $100,211                     $99,129
                                            ========                     =======
Net Interest Earnings
 and Interest Rate Spread                             $  1,438    1.87%           $  1,138    1.62%
                                                      ========  =======           ========  =======
Net Yield on Interest-Earning Assets                              2.37%                       1.88%
                                                                =======                     =======






 43

OTHER DEVELOPMENTS

     In July 2005, the Company acquired the bond administration business of 
Marshall & Ilsley Trust Company N.A., and M&I Marshall & Ilsley Bank 
(together, "M&I"), where they act as bond trustee, paying/fiscal agent, 
master trustee, transfer agent and/or registrar.  The transaction involves 
the acquisition of approximately 560 bond trusteeships and agency 
appointments, representing $4.8 billion of principal debt outstanding for an 
estimated 225 clients. 

     In August 2005, the Company and Nordea, the leading financial services 
provider in the Nordic region, have entered into a strategic agreement to 
provide global custody and selected related services to Nordea's 
institutional clients in the Nordic and Baltic Sea regions. The scope of the 
agreement involves approximately EUR 240 billion of assets, which represent 
about half of Nordea's EUR 500 billion assets under custody.

     In August 2005, the Company announced a strategic arrangement with 
IL&FS Trust Company Limited ("ITCL"), a leading provider of trust and 
fiduciary services in India. The arrangement between the two organizations 
will provide Indian issuers with access to the Company's global network, a 
comprehensive array of services to the international capital markets, and 
leading-edge technology capabilities. Under the arrangement, ITCL will 
perform corporate trust services in India, and the Company will provide 
offshore services.

     In October 2005, the Company announced a marketing alliance with 
National Australia Bank ("National"). The arrangement will enable the 
Company to offer commission recapture services to National's custody clients 
in Australia and New Zealand. The alliance continues the strategic 
international build-out of the Company's transition management and 
commission recapture capabilities, which has included the opening of its 
Sydney office and acquisition of LJR.

     On October 18, 2005, the Company announced its definitive agreement to 
acquire Alcentra Group Limited, an international asset management group 
focused on funds which invest in sub-investment grade debt.  Alcentra's 
management team will retain a 20 percent shareholder interest.  Alcentra has 
operations in London and Los Angeles and currently manages 15 different 
investment funds with over $6.2 billion of assets. The transaction is 
expected to close by year-end, pending regulatory approval and other 
customary conditions of closing.

     Construction of the new data center in the mid-south region of the U.S. 
has been completed and the Company has obtained a certificate of occupancy. 
The data center is expected to be operating at two-thirds capacity in early 
November and fully operational next year. The new data center will improve 
the geographic diversification and resilience of the Company's operations 
and will support the processing needs of the Company's institutional and 
retail customers.

     The Company participates in unconsolidated investments that own real 
estate qualifying for low income housing tax credits based on Section 42 of 
the Internal Revenue Code. The Company's share of operating losses generated 
by these investments is recorded as other income. The Company has historically 
netted the tax credits generated by these investments against the related 
operating losses.  The Company has reviewed this accounting method and has 
decided to record these tax credits as a reduction of income tax expense. To 
provide comparable historical information, the tables below show the restated 
prior period results.  The resulting adjustments did not have an impact on net 
income.



 44


                                   THE BANK OF NEW YORK COMPANY, INC.
                                   Consolidated Statements of Income
                            (Dollars in millions, except per share amounts)
                                              (Unaudited)
                                                        For the three months ended
                                             --------------------------------------------
                                             March 31, June 30, September 30, December 31, Year
                                                 2004     2004          2004         2004  2004
                                             --------- -------- ------------- ----------- ------
                                                                           
Interest Income
---------------
Loans                                        $     118 $    272   $      290    $    401  $1,080
Margin Loans                                        34       35           40          48     156
Securities
  Taxable                                          181      180          181         197     741
  Exempt from Federal Taxes                         10       10           10          11      40
                                             --------- -------- ------------- ----------- ------
                                                   191      190          191         208     781
Deposits in Banks                                   68       78           77          81     305
Federal Funds Sold and Securities Purchased 
  Under Resale Agreements                           16       17           20          27      80
Trading Assets                                      14        9           11          17      51
                                             --------- -------- ------------- ----------- ------
    Total Interest Income                          441      601          629         782   2,453
                                             --------- -------- ------------- ----------- ------
Interest Expense
----------------
Deposits                                           118      126          139         164     548
Federal Funds Purchased and Securities Sold 
  Under Repurchase Agreements                        3        3            4           6      15
Other Borrowed Funds                                 9        9            9          25      52
Customer Payables                                   13       12           14          19      57
Long-Term Debt                                      30       30           35          41     136
                                             --------- -------- ------------- ----------- ------
    Total Interest Expense                         173      180          201         255     808
                                             --------- -------- ------------- ----------- ------
Net Interest Income                                268      421          428         527   1,645
-------------------
Provision for Credit Losses                         12       10            -          (7)     15
                                             --------- -------- ------------- ----------- ------
Net Interest Income After Provision
  for Credit Losses                                256      411          428         534   1,630
                                             --------- -------- ------------- ----------- ------
Noninterest Income
------------------
Servicing Fees
 Securities                                        716      716          685         742   2,858
 Global Payment Services                            79       83           84          71     317
                                             --------- -------- ------------- ----------- ------
                                                   795      799          769         813   3,175
Private Client Services and
  Asset Management Fees                            108      113          113         115     448
Service Charges and Fees                            96       93           98          98     385
Foreign Exchange and Other Trading Activities      106      100           67          90     364
Securities Gains                                    33       12           14          18      78
Other                                               82       39           38          42     200
                                             --------- -------- ------------- ----------- ------
    Total Noninterest Income                     1,220    1,156        1,099       1,176   4,650
                                             --------- -------- ------------- ----------- ------
Noninterest Expense
-------------------
Salaries and Employee Benefits                     574      570          564         617   2,324
Net Occupancy                                       81       72           77          75     305
Furniture and Equipment                             51       51           51          51     204
Clearing                                            48       44           39          45     176
Sub-custodian Expenses                              22       22           21          22      87
Software                                            49       50           52          43     193
Communications                                      24       23           22          23      93
Amortization of Intangibles                          8        8            9           9      34
Other                                              156      172          164         212     706
                                             --------- -------- ------------- ----------- ------
    Total Noninterest Expense                    1,013    1,012          999       1,097   4,122
                                             --------- -------- ------------- ----------- ------
Income Before Income Taxes                         463      555          528         613   2,158
Income Taxes                                        99      184          174         262     718
                                             --------- -------- ------------- ----------- ------
Net Income                                   $     364 $    371   $      354    $    351  $1,440
----------                                   ========= ======== ============= =========== ======
Per Common Share Data:
----------------------
   Basic Earnings                            $    0.47 $   0.48   $     0.46    $   0.45  $ 1.87
   Diluted Earnings                               0.47     0.48         0.46        0.45    1.85
   Cash Dividends Paid                            0.19     0.20         0.20        0.20    0.79
Diluted Shares Outstanding                         778      779          778         780     778
------------------------------------------------------------------------------------------------



 45


                                   THE BANK OF NEW YORK COMPANY, INC.
                                   Consolidated Statements of Income
                            (Dollars in millions, except per share amounts)
                                              (Unaudited)
                                                         For the year ended December 31,
                                               -------------------------------------------------
                                                  2004      2003      2002      2001      2000
                                               --------- --------- --------- --------- ---------
                                                                        
Interest Income
---------------
Loans                                          $   1,080 $   1,187 $   1,452 $   2,239 $   2,889
Margin Loans                                         156        86        12        32        21
Securities
  Taxable                                            741       651       639       463       323
  Exempt from Federal Income Taxes                    40        48        61        74        63
                                               --------- --------- --------- --------- ---------
                                                     781       699       700       537       386
Deposits in Banks                                    305       150       133       252       273
Federal Funds Sold and Securities Purchased 
  Under Resale Agreements                             80        79        51       159       277
Trading Assets                                        51       129       259       401       531
                                               --------- --------- --------- --------- ---------
    Total Interest Income                          2,453     2,330     2,607     3,620     4,377
                                               --------- --------- --------- --------- ---------
Interest Expense
----------------
Deposits                                             548       507       644     1,392     2,011
Federal Funds Purchased and Securities Sold  
  Under Repurchase Agreements                         15        13        29       103       153
Other Borrowed Funds                                  52        21        65       163       139
Customer Payables                                     57        30         2         4         -
Long-Term Debt                                       136       150       202       277       317
                                               --------- --------- --------- --------- ---------
    Total Interest Expense                           808       721       942     1,939     2,620
                                               --------- --------- --------- --------- ---------
Net Interest Income                                1,645     1,609     1,665     1,681     1,757
-------------------
Provision for Credit Losses                           15       155       685       375       105
                                               --------- --------- --------- --------- ---------
Net Interest Income After Provision
  for Credit Losses                                1,630     1,454       980     1,306     1,652
                                               --------- --------- --------- --------- ---------
Noninterest Income
------------------
Servicing Fees
 Securities                                        2,858     2,412     1,896     1,775     1,650
 Global Payment Services                             317       314       296       291       265
                                               --------- --------- --------- --------- ---------
                                                   3,175     2,726     2,192     2,066     1,915
Private Client Services and
  Asset Management Fees                              448       384       344       314       296
Service Charges and Fees                             385       375       357       352       360
Foreign Exchange and Other Trading Activities        364       327       234       338       261
Securities Gains                                      78        35      (118)      154       150
Other                                                200       149       124       337       120
                                               --------- --------- --------- --------- ---------
    Total Noninterest Income                       4,650     3,996     3,133     3,561     3,102
                                               --------- --------- --------- --------- ---------
Noninterest Expense
-------------------
Salaries and Employee Benefits                     2,324     2,002     1,581     1,593     1,493
Net Occupancy                                        305       261       230       233       184
Furniture and Equipment                              204       185       138       178       108
Clearing                                             176       154       124        61        36
Sub-custodian Expenses                                87        74        70        62        68
Software                                             193       170       115        90        66
Communications                                        93        92        65        86        56
Amortization of Goodwill and Intangibles              34        25         8       112       115
Merger and Integration Costs                           -        96         -         -         -
Other                                                706       639       420       404       384
                                               --------- --------- --------- --------- ---------
    Total Noninterest Expense                      4,122     3,698     2,751     2,819     2,510
                                               --------- --------- --------- --------- ---------
Income Before Income Taxes                         2,158     1,752     1,362     2,048     2,244
Income Taxes                                         718       595       460       705       815
                                               --------- --------- --------- --------- ---------
Net Income                                     $   1,440 $   1,157 $     902 $   1,343 $   1,429
----------                                     ========= ========= ========= ========= =========
Per Common Share Data:
----------------------
   Basic Earnings                              $    1.87 $    1.54 $    1.25 $    1.84 $    1.95
   Diluted Earnings                                 1.85      1.52      1.24      1.81      1.92
   Cash Dividends Paid                              0.79      0.76      0.76      0.72      0.66
Diluted Shares Outstanding                           778       759       728       741       745
------------------------------------------------------------------------------------------------



 46

Other 2004 Developments

     Other First Quarter Developments in 2004 are summarized in the following 
table:



(In millions)
                              Income Statement    Pre-Tax         After-Tax
Item                              Caption          Income   Tax    Income
----------------------------  ----------------    -------  -----  ---------
Net Interest Income
---------------------
SFAS 13 cumulative
 lease adjustment -            Net Interest
 (leasing portfolio)             Income            $  (145) $ 113  $    (32)

Noninterest Income
--------------------
Gain on sale of Wing Hang      Other Income             48    (21)       27

Gain on sponsor fund 
 investments                   Securities
                                 Gains                  19     (7)       12

Subtotal-Noninterest                               -------  -----  --------
 Income                                                 67    (28)       39

Noninterest Expense
---------------------
Severance tied to              Salaries and
 relocations                     Employee Benefits     (10)     4        (6)

Lease terminations             Net Occupancy            (8)     3        (5)

Subtotal-Noninterest                               -------  -----  --------
 Expense                                               (18)     7       (11)

                                                   -------  -----  --------
Total                                              $   (96) $  92  $     (4)
                                                   =======  =====  ========

     Net interest income in the first quarter of 2004 included an after-tax 
charge of $32 million resulting from a cumulative adjustment to the leasing 
portfolio, which was triggered under Statement of Financial Accounting 
Standards No. 13 "Accounting for Leases" ("SFAS 13") by the combination of a 
reduction in state and local taxes and a restructuring of the lease portfolio 
completed in the first quarter.  The SFAS 13 adjustment impacts the timing of 
lease income reported by the Company, and resulted in a reduction in net 
interest income of $145 million, offset by tax benefits of $113 million.

     Noninterest income in the first quarter of 2004 included a $27 million 
after-tax gain on the sale of a portion of the Company's interest in Wing Hang 
Bank Limited ("Wing Hang"), a Hong Kong based bank, which was recorded in 
other income, and $19 million ($12 million after-tax) of higher than 
anticipated securities gains in the first quarter resulting from realized 
gains on sponsor fund investments in Kinkos, Inc., Bristol West Holdings, 
Inc., Willis Group Holdings, Ltd., and True Temper Sports, Inc.

     The Company took several actions in the first quarter of 2004 associated 
with its long-term cost reduction initiatives impacting noninterest expense.  
These actions included an after-tax severance charge of $6 million related to 
staff reductions tied to job relocations and a $5 million after-tax charge for 
terminating high cost leases associated with the staff redeployments.

 47

FORWARD-LOOKING STATEMENTS AND FACTORS THAT COULD AFFECT FUTURE RESULTS

     The information presented with respect to, among other things, earnings 
and revenue outlook, projected business growth, the outcome of legal, 
regulatory and investigatory proceedings, future loan losses, and the 
Company's plans, objectives and strategies is forward-looking information.  
Forward-looking statements are the Company's current estimates or 
expectations of future events or future results.

     The Company, or its executive officers and directors on behalf of the 
Company, may from time to time make forward-looking statements.  When used in 
this report, any press release or oral statements, the words "estimate, " 
"forecast," "project," "anticipate," "target," "expect," "intend," "think," 
"continue," "seek," "believe," "plan," "goal," "could," "should," "may," 
"will," "strategy," and words of similar meaning are intended to identify 
forward-looking statements in addition to statements specifically identified 
as forward-looking statements.

     Forward-looking statements, including the Company's discussions and 
projections of future results of operations and discussions of future plans 
contained in Management's Discussion and Analysis and elsewhere in this Form 
10-Q, are based on management's current expectations and assumptions and are 
subject to risks and uncertainties, some of which are discussed herein, that 
could cause actual results to differ materially from projected results.  
Forward-looking statements could be affected by a number of factors, some of 
which by their nature are dynamic and subject to rapid and possibly abrupt 
changes which the Company is necessarily unable to predict with accuracy, 
including:

General Business and Economic Conditions and Internal Operations - Disruptions 
in general economic activity in the United States or abroad to the Company's 
operational functions or to financial market settlement functions.  The 
economic and other effects of the continuing threat of terrorist activity 
following the WTC disaster and subsequent U.S. military actions.  Changes in 
customer credit quality, future changes in interest rates, actual and assumed 
rates of return on pension assets, inflation, rising employee benefit 
expenses, the effectiveness of management's efforts to control expenses, 
general credit quality, the levels of economic, capital market, and merger and 
acquisition activity, consumer behavior, government monetary policy, 
competition, credit, market and operating risk, and loan demand.  The 
performance of the domestic economy, international economic markets, 
technological, regulatory and structural changes in the Company's industry, 
market demand for the Company's products and services, continuation of the 
trend to investment management outsourcing, the savings rate of individuals, 
growth of worldwide financial assets, continued globalization of investment 
activity, and future global political, economic, business and market 
conditions.  Variations in management projections, methodologies used by 
management to set adequate reserve levels for expected and contingent 
liabilities, evaluate risk or market forecasts and the actions that management 
could take in response to these changes.

Continuation of favorable global trends - The Company's businesses benefit 
from certain global trends, such as the growth of financial assets, creation 
of new securities, financial services industry consolidation, rapid 
technological change, globalization of investment activities, structural 
changes to financial markets, shortened settlement cycles, straight-through 
processing requirements, and increased demand for outsourcing.  These long-
term trends all increase the demand for the Company's products and services 
around the world.  However, in the near term, uncertainty surrounding recently 
adopted regulations and potential legislative and regulatory changes in the 
securities industry, as well as investigations by various federal and state 
regulatory agencies, the Department of Justice and state attorney generals, 
could have an adverse effect on investment activity and the Company.

Acquisitions - Lower than expected performance or higher than expected costs 
in connection with acquisitions and integration of acquired businesses, 

 48

acquisitions of businesses with expensive technology components, changes in 
relationships with customers, entering new and unfamiliar markets, incurring 
undiscovered liabilities, incorrectly valuing acquisition candidates, the 
ability to satisfy customer requirements, retain customers and realize the 
growth opportunities of acquired businesses and management's ability to 
achieve efficiency goals.

Competition - The Company is subject to increased competition from other 
domestic and international banks and financial service companies such as 
trading firms, broker-dealers and asset managers as well as from unregulated 
financial services organizations.  It is also subject to rapid technological 
changes requiring significant and ongoing investments in technology to develop 
competitive new products and services or adopt new technologies. Technological 
advances which result in lower transaction costs may adversely impact the 
Company's revenues.

Interest rates - The levels of market interest rates, the shape of the yield 
curve and the direction of interest rate changes all affect net interest 
income that the Company earns in many different businesses.

Volatility of currency markets - The degree of volatility in foreign exchange 
rates can affect the amount of foreign exchange trading revenue.  While most 
of the Company's foreign exchange revenue is derived from its securities 
servicing client base, activity levels are generally higher when there is more 
volatility.  Therefore, the Company benefits from currency volatility.

Dependence on fee-based business - Revenues reflect changes in the volume of 
financial transactions in the United States and abroad, the level of capital 
market activity affects processing revenues, changes in asset values affect 
fees which are based on the value of assets under custody and management, the 
level of cross-border investing, investor sentiment, the pace of worldwide 
pension reform and the concomitant creation of new pools of pension assets, 
the level of debt issuance and currency exchange rate volatility all impact 
the Company's revenues.

Access to liquidity - Limitations on the Company's access to the funds 
markets, arising from a loss of confidence of debt purchasers or 
counterparties in the funds markets in general or the Company in particular, 
it would adversely affect the Company.

Operational risk and business continuity - The Company continually assesses 
and monitors operational risk in its businesses.  Operational risk is 
mitigated by formal risk management oversight within the Company as well as by 
automation, standardized operating procedures, segregation of duties and 
controls, timely confirmation and reconciliation procedures and insurance.  In 
addition, the Company provides for disaster and business recovery planning for 
events that could damage the Company's physical facilities, cause delay or 
disruptions to operational functions, including telecommunications networks, 
or impair the Company's clients, vendors and counterparties.  Events beyond 
those contemplated in the plans could negatively affect the Company.  

Reputational and legal risk - Adverse publicity and damage to the Company's 
reputation arising from its failure or perceived failure to comply with legal 
and regulatory requirements, financial reporting irregularities involving 
other large and well known companies and regulatory investigations of the 
mutual fund industry could affect the Company's ability to attract and retain 
customers, maintain access to the capital markets or result in suits, 
enforcement actions, fines and penalties.

Legislative and regulatory environment - Heightened regulatory scrutiny and 
increased sanctions, changes or potential changes in domestic and 
international legislation and regulation as well as domestic or international 
regulatory investigations impose compliance, legal, review and response costs 
and may allow additional competition, facilitate consolidation of competitors, 
or attract new competitors into the Company's businesses.  The cost of 
geographically diversifying the Company's facilities to comply with regulatory 

 49

mandates.  The nature of any new capital accords to be adopted by the Basel 
Committee on Banking Supervision and implemented by the Federal Reserve.

Taxes - The U.S. Treasury and Internal Revenue Service have taken increasingly 
aggressive positions against certain corporate investment programs that either 
reduce or defer taxes.  The Company believes that its historic investments 
have been carefully structured to comply with then current tax law, and 
received external legal and tax advice confirming the Company's treatment of 
the investments.  Going forward, there may be fewer opportunities to 
participate in lease investing, tax credit programs and similar transactions 
that have benefited the Company in the past.  This may adversely impact the 
Company's net interest income and effective tax rate.

     The Company has entered into investments that produce synthetic fuel from 
coal byproducts.  Section 29 of the Internal Revenue code provides a tax 
credit for these types of transactions.  The amount of the credit is dependent 
on the amount of synthetic fuel produced by these investments. Synthetic fuel
production can be impacted by mine, workforce, transportation, and weather 
conditions among other factors.  The tax credits available under Section 29 of 
the Internal Revenue Code for the production and sale of synthetic fuel 
produced in any given year are phased out if the Reference Price of a barrel 
of oil for that year falls within a specified, inflation-adjusted price range. 

     The Company estimates that the 2005 phase-out would begin if the entire 
calendar year 2005 reference prices average above $52 (which corresponds to 
popularly published spot prices of $56) and the credit would be fully phased 
out at $65 (which corresponds to popularly published spot prices of $69). 

     Based on information available through October 31, 2005, the Company does 
not expect that further changes in the price of oil in the fourth quarter of 
2005 should adversely impact its effective tax rate for 2005. If the reference 
price of a barrel of oil in future years exceeds the applicable phase-out 
threshold for those years, the tax credits generated by the synthetic fuel 
facilities in those years could be reduced or eliminated.

Acts of terrorism - Acts of terrorism could have a significant impact on the 
Company's business and operations.  While the Company has in place business 
continuity and disaster recovery plans, acts of terrorism could still damage 
the Company's facilities and disrupt or delay normal operations, and have a 
similar impact on the Company's clients, suppliers, and counterparties.  Acts 
of terrorism could also negatively impact the purchase of the Company's 
products and services to the extent they resulted in reduced capital markets 
activity or lower asset price levels.

Accounting Principles - Changes in generally accepted accounting principles in 
the United States that are applicable to the Company could have an impact on 
the Company's reported results of operations even though they do not have an 
economic impact on the Company's business.

                                     *  *  *                             

     This is not an exhaustive list and as a result of variations in any of 
these factors, actual results may differ materially from any forward-looking 
statements.

     Forward-looking statements speak only as of the date they are made.  The 
Company will not update forward-looking statements to reflect facts, 
assumptions, circumstances or events which have changed after a forward- 
looking statement was made.

 50

Government Monetary Policies
----------------------------

     The Federal Reserve Board has the primary responsibility for United 
States monetary policy.  Its actions have an important influence on the demand 
for credit and investments and the level of interest rates, and thus on the 
earnings of the Company.



Competition
-----------

     The businesses in which the Company operates are very competitive.  
Competition is provided by both unregulated and regulated financial services 
organizations, whose products and services span the local, national, and 
global markets in which the Company conducts operations.

     A wide variety of domestic and foreign companies compete for processing 
services. For securities servicing and global payment services, international, 
national, and regional commercial banks, trust banks, investment banks, 
specialized processing companies, outsourcing companies, data processing 
companies, stock exchanges, and other business firms offer active competition.  
In the private client services and asset management markets, international, 
national, and regional commercial banks, standalone asset management 
companies, mutual funds, securities brokerage firms, insurance companies, 
investment counseling firms, and other business firms and individuals actively 
compete for business. Commercial banks, savings banks, savings and loan 
associations, and credit unions actively compete for deposits, and money 
market funds and brokerage houses offer deposit-like services.  These 
institutions, as well as consumer and commercial finance companies, national 
retail chains, factors, insurance companies and pension trusts, are important 
competitors for various types of loans. Issuers of commercial paper compete 
actively for funds and reduce demand for bank loans.

WEBSITE INFORMATION

     The Company makes available on its website, www.bankofny.com:

*	All of its SEC filings, including annual report on Form 10-K, 
        quarterly reports on Form 10-Q, current reports on Form 8-K and 
        all amendments to these reports, SEC Forms 3, 4 and 5 and its 
        proxy statement as soon as reasonably practicable after such 
        material is electronically filed with or furnished to the SEC,
*	Its earnings releases and management conference calls and 
        presentations, and
*	Its corporate governance guidelines and the charters of the 
        audit and examining, compensation and organization, and 
        nominating and governance committees of its Board of Directors.

     The corporate governance guidelines and committee charters are available 
in print to any shareholder who requests it.  Requests should be sent to The 
Bank of New York Company, Inc., Corporate Communications, One Wall Street, NY, 
NY 10286.



 51



                                   THE BANK OF NEW YORK COMPANY, INC.
                                      Consolidated Balance Sheets
                            (Dollars in millions, except per share amounts)
                                             (Unaudited)
                                                      September 30, 2005       December 31, 2004
                                                      ------------------       -----------------
                                                                         
Assets
------
Cash and Due from Banks                               $            3,493       $           3,886
Interest-Bearing Deposits in Banks                                 7,058                   8,192
Securities
  Held-to-Maturity (fair value of $2,048 in 2005
    and $1,873 in 2004)                                            2,071                   1,886
  Available-for-Sale                                              24,159                  21,916
                                                      ------------------       -----------------
    Total Securities                                              26,230                  23,802
Trading Assets at Fair Value                                       6,292                   4,627
Federal Funds Sold and Securities Purchased 
  Under Resale Agreements                                          3,572                   5,708
Loans (less allowance for loan losses of $561 in 2005
  and $591 in 2004)                                               41,582                  35,190
Premises and Equipment                                             1,040                   1,097
Due from Customers on Acceptances                                    175                     137
Accrued Interest Receivable                                          357                     285
Goodwill                                                           3,613                   3,477
Intangible Assets                                                    813                     793
Other Assets                                                       7,541                   7,335
                                                      ------------------       -----------------
     Total Assets                                     $          101,766       $          94,529
                                                      ==================       =================
Liabilities and Shareholders' Equity
------------------------------------
Deposits
 Noninterest-Bearing (principally domestic offices)   $           16,289       $          17,442
 Interest-Bearing
   Domestic Offices                                               18,966                  18,692
   Foreign Offices                                                25,822                  22,587
                                                      ------------------       -----------------
     Total Deposits                                               61,077                  58,721
Federal Funds Purchased and Securities
  Sold Under Repurchase Agreements                                 3,349                   1,205
Trading Liabilities                                                3,000                   2,873
Payables to Customers and Broker-Dealers                           8,103                   8,664
Other Borrowed Funds                                               1,270                     533
Acceptances Outstanding                                              176                     139
Accrued Taxes and Other Expenses                                   4,552                   4,452
Accrued Interest Payable                                             132                     113
Other Liabilities (including allowance for
  lending-related commitments of
  $146 in 2005 and $145 in 2004)                                   2,970                   2,418
Long-Term Debt                                                     7,529                   6,121
                                                      ------------------       -----------------
     Total Liabilities                                            92,158                  85,239
                                                      ------------------       -----------------
Shareholders' Equity
 Common Stock-par value $7.50 per share,
  authorized 2,400,000,000 shares, issued
  1,048,772,989 shares in 2005 and
  1,044,841,603 shares in 2004                                     7,866                   7,836
 Additional Capital                                                1,865                   1,790
 Retained Earnings                                                 6,846                   6,162
 Accumulated Other Comprehensive Income                             (107)                     (6)
                                                      ------------------       -----------------
                                                                  16,470                  15,782
 Less: Treasury Stock (278,556,517 shares in 2005
        and 266,720,629 shares in 2004), at cost                   6,852                   6,492
       Loan to ESOP (305,261 shares in 2005), at cost                 10                       -
                                                      ------------------       -----------------
     Total Shareholders' Equity                                    9,608                   9,290
                                                      ------------------       -----------------
     Total Liabilities and Shareholders' Equity       $          101,766       $          94,529
                                                      ==================       =================
------------------------------------------------------------------------------------------------

Note: The balance sheet at December 31, 2004 has been derived from the audited financial  
statements at that date.

See accompanying Notes to Consolidated Financial Statements.




 52

   


                                   THE BANK OF NEW YORK COMPANY, INC.
                                   Consolidated Statements of Income
                            (Dollars in millions, except per share amounts)
                                              (Unaudited)
                                                               For the three         For the nine
                                                                months ended         months ended
                                                               September 30,         September 30,
                                                              2005       2004       2005      2004
                                                              ----       ----       ----      ----							       	
                                                                                 
Interest Income
---------------
Loans                                                        $  392     $  290     $1,082    $  680
Margin Loans                                                     71         40        188       108
Securities
  Taxable                                                       253        181        694       543
  Exempt from Federal Income Taxes                               10         10         30        30
                                                             ------     ------     ------    ------
                                                                263        191        724       573
Deposits in Banks                                                68         77        206       224
Federal Funds Sold and Securities Purchased 
  Under Resale Agreements                                        38         20        102        53
Trading Assets                                                   38         11         98        34
                                                             ------     ------     ------    ------
    Total Interest Income                                       870        629      2,400     1,672
                                                             ------     ------     ------    ------
Interest Expense
----------------
Deposits                                                        248        139        652       384
Federal Funds Purchased and Securities Sold 
  Under Repurchase Agreements                                     9          4         23        10
Other Borrowed Funds                                             13          9         33        27
Customer Payables                                                35         14         88        38
Long-Term Debt                                                   73         35        187        95
                                                             ------     ------     ------    ------
    Total Interest Expense                                      378        201        983       554
                                                             ------     ------     ------    ------
Net Interest Income                                             492        428      1,417     1,118
-------------------
Provision for Credit Losses                                      10          -          5        22
                                                             ------     ------     ------    ------
Net Interest Income After Provision for Credit Losses           482        428      1,412     1,096
                                                             ------     ------     ------    ------
Noninterest Income
------------------
Servicing Fees
 Securities                                                     806        684      2,333     2,116
 Global Payment Services                                         75         85        226       247
                                                             ------     ------     ------    ------
                                                                881        769      2,559     2,363
Private Client Services and Asset Management Fees               120        113        363       333
Service Charges and Fees                                         93         98        288       286
Foreign Exchange and Other Trading Activities                    93         67        292       273
Securities Gains                                                 15         14         50        59
Other                                                            46         38        130       160
                                                             ------     ------     ------    ------
    Total Noninterest Income                                  1,248      1,099      3,682     3,474
                                                             ------     ------     ------    ------
Noninterest Expense
-------------------
Salaries and Employee Benefits                                  644        564      1,902     1,708
Net Occupancy                                                    79         77        239       230
Furniture and Equipment                                          52         51        155       153
Clearing                                                         49         39        137       131
Sub-custodian Expenses                                           25         21         72        65
Software                                                         54         52        162       151
Communications                                                   24         22         69        69
Amortization of Intangibles                                      10          9         28        26
Other                                                           198        164        571       492
                                                             ------     ------     ------    ------
    Total Noninterest Expense                                 1,135        999      3,335     3,025
                                                             ------     ------     ------    ------
Income Before Income Taxes                                      595        528      1,759     1,545
Income Taxes                                                    206        174        593       456
                                                             ------     ------     ------    ------
Net Income                                                   $  389     $  354     $1,166    $1,089
----------                                                   ======     ======     ======    ======
Per Common Share Data:
   Basic Earnings                                            $ 0.51     $ 0.46     $ 1.52    $ 1.41
   Diluted Earnings                                            0.51       0.46       1.51      1.40
   Cash Dividends Paid                                         0.21       0.20       0.61      0.59
Diluted Shares Outstanding                                      769        778        773       778
---------------------------------------------------------------------------------------------------

See accompanying Notes to Consolidated Financial Statements.




 53



                          THE BANK OF NEW YORK COMPANY, INC.
              Consolidated Statement of Changes in Shareholders' Equity
                        For the nine months ended September 30, 2005
                                 (Dollars in millions)
                                      (Unaudited)

                                                                        
Common Stock
Balance, January 1                                                            $       7,836
  Issuances in Connection with Employee Benefit Plans                                    30
                                                                              -------------
Balance, September 30                                                                 7,866
                                                                              -------------
Additional Capital
Balance, January 1                                                                    1,790
  Issuances in Connection with Employee Benefit Plans                                   114
  Stock Rights Redemption                                                               (39)
                                                                              -------------
Balance, September 30                                                                 1,865
                                                                              -------------
Retained Earnings
Balance, January 1                                                                    6,162
  Net Income                                                    $     1,166           1,166
  Cash Dividends on Common Stock                                                       (482)
                                                                              -------------
Balance, September 30                                                                 6,846
                                                                              -------------
Accumulated Other Comprehensive Income

Balance, January 1                                                                       (6)
      Change in Fair Value of Securities Available-for-Sale,
        Net of Taxes of $(51)                                           (81)            (81)
      Reclassification Adjustment, Net of Taxes of $5                     7               7
      Foreign Currency Translation Adjustment,
        Net of Taxes of $(8)                                            (24)            (24)
      Net Unrealized Derivative loss on Cash Flow Hedges,
        Net of Taxes of $(2)                                             (1)             (1)
      Minimum Pension Liability Adjustment, 
        Net of Taxes of $(1)                                             (2)             (2)
                                                                 -----------   -------------
Balance, September 30                                                                  (107)

Total Comprehensive Income                                      $     1,065
                                                                ===========
Less Treasury Stock
Balance, January 1                                                                    6,492
  Issued                                                                                (36)
  Acquired                                                                              396
                                                                              -------------
Balance, September 30                                                                 6,852
                                                                              -------------
Less Loan to ESOP
Balance, January 1                                                                        -
  Loan to ESOP                                                                           10
                                                                              -------------
Balance, September 30                                                                    10
                                                                              -------------
Total Shareholders' Equity, September 30, 2005                                $       9,608
                                                                              =============

-------------------------------------------------------------------------------------------


Comprehensive Income for the three months ended September 30, 2005 and 2004 was $306 and $435.
Comprehensive Income for the nine months ended September 30, 2005 and 2004 was $1,065 and $1,045.

See accompanying Notes to Consolidated Financial Statements.





 54


                        THE BANK OF NEW YORK COMPANY, INC.
                      Consolidated Statements of Cash Flows
                               (Dollars in millions)
                                    (Unaudited)

                                                           For the nine months
                                                             ended September 30,
                                                              2005       2004
                                                            --------   --------
                                                                 
Operating Activities
Net Income                                                  $  1,166   $  1,089
Adjustments to Determine Net Cash Attributable to
 Operating Activities:
  Provision for Credit Losses
    and Losses on Other Real Estate                                5         22
  Depreciation and Amortization                                  403        367
  Deferred Income Taxes                                          236        208
  Securities Gains                                               (50)       (59)
  Change in Trading Activities                                (1,815)     1,753
  Change in Accruals and Other, Net                             (152)        35
                                                            --------   --------
Net Cash (Used for) Provided by Operating Activities            (207)     3,415
                                                            --------   --------
Investing Activities
Change in Interest-Bearing Deposits in Banks                     713     (1,337)
Change in Margin Loans                                          (262)      (199)
Purchases of Securities Held-to-Maturity                        (508)    (1,224)
Paydowns of Securities Held-to-Maturity                          277        154
Maturities of Securities Held-to-Maturity                         38          6
Purchases of Securities Available-for-Sale                   (13,018)   (10,532)
Sales of Securities Available-for-Sale                         3,578      3,278
Paydowns of Securities Available-for-Sale                      5,103      6,177
Maturities of Securities Available-for-Sale                    1,787      1,708
Net Principal Received (Disbursed) on Loans to Customers      (6,687)    (1,055)
Sales of Loans and Other Real Estate                             141         28
Change in Federal Funds Sold and Securities
  Purchased Under Resale Agreements                            2,136       (249)
Purchases of Premises and Equipment                              (71)      (222)
Acquisitions, Net of Cash Acquired                              (257)      (100)
Proceeds from the Sale of Premises and Equipment                   -          8
Other, Net                                                        51         23
                                                            --------   --------
Net Cash Used for Investing Activities                        (6,979)    (3,536)
                                                            --------   --------
Financing Activities
Change in Deposits                                             3,459      2,098
Change in Federal Funds Purchased and Securities
  Sold Under Repurchase Agreements                             2,144        135
Change in Payables to Customers and Broker-Dealers              (560)    (2,460)
Change in Other Borrowed Funds                                   694        137
Proceeds from the Issuance of Long-Term Debt                   1,589        148
Repayments of Long-Term Debt                                    (102)      (126)
Issuance of Common Stock                                         140        155
Treasury Stock Acquired                                         (406)      (119)
Cash Dividends Paid                                             (482)      (455)
                                                            --------   --------
Net Cash Provided by (Used for) Financing Activities           6,476       (487)
                                                            --------   --------
Effect of Exchange Rate Changes on Cash                          317       (178)
                                                            --------   --------
Change in Cash and Due From Banks                               (393)      (786)
Cash and Due from Banks at Beginning of Period                 3,886      3,843
                                                            --------   --------
Cash and Due from Banks at End of Period                    $  3,493   $  3,057
                                                            ========   ========
-------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for:
    Interest                                                $    965   $    462
    Income Taxes                                                 273        313
Noncash Investing Activity
 (Primarily Foreclosure of Real Estate)                            -          1
-------------------------------------------------------------------------------


See accompanying Notes to Consolidated Financial Statements.




 55

                        THE BANK OF NEW YORK COMPANY, INC.
                    Notes to Consolidated Financial Statements

1.  General
    -------

     The accounting and reporting policies of The Bank of New York Company, 
Inc., a financial holding company, and its consolidated subsidiaries (the 
"Company") conform with generally accepted accounting principles and general 
practice within the banking industry.  Such policies are consistent with those 
applied in the preparation of the Company's annual financial statements.

     The accompanying consolidated financial statements are unaudited.  In the 
opinion of management, all adjustments necessary for a fair presentation of 
financial position, results of operations and cash flows for the interim 
periods have been made.

2.  Accounting Changes and New Accounting Pronouncements
    ----------------------------------------------------

     The Company adopted SFAS No. 123, "Accounting for Stock-Based 
Compensation," in 1995.  At that time, as permitted by the standard, the 
Company elected to continue to apply the provisions of Accounting Principles 
Board Opinion No. 25, "Accounting for Stock Issued to Employees," and 
accounted for the options granted to employees using the intrinsic value 
method, under which no expense is recognized for stock options because they 
were granted at the stock price on the grant date and therefore have no 
intrinsic value.

     On January 1, 2003, the Company adopted the fair value method of 
accounting for its options under SFAS 123 as amended by SFAS 148 "Accounting 
for Stock-Based Compensation-Transition and Disclosure".  SFAS 148 permits 
three different methods of adopting fair value: (1) the prospective method, 
(2) the modified prospective method, and (3) the retroactive restatement 
method.  Under the prospective method, options issued after January 1, 2003 
are expensed while all options granted prior to January 1, 2003 are accounted 
for under APB 25 using the intrinsic value method.  Consistent with industry 
practice, the Company elected the prospective method of adopting fair value 
accounting.

     During the nine months ended September 30, 2005, approximately 6 million 
options were granted. In the third quarter and nine months of 2005, the 
Company recorded $14 million and $37 million of stock option expense.

     The retroactive restatement method requires the Company's financial 
statements to be restated as if fair value accounting had been adopted in 
1995.  The following table discloses the pro forma effects on the Company's 
net income and earnings per share as if the retroactive restatement method had 
been adopted.

(Dollars in millions,                        Third Quarter     Year-to-date
  except per share amounts)                   2005    2004     2005    2004
                                             ------  ------   ------  ------
Reported net income                          $  389  $  354   $1,166  $1,089
Stock based employee compensation costs,
 using prospective method, net of tax             8       6       22      17
Stock based employee compensation costs,
 using retroactive restatement method,
 net of tax                                      (8)    (14)     (29)    (44)
                                             ------  ------   ------  ------
Pro forma net income                         $  389  $  346   $1,159  $1,062
                                             ======  ======   ======  ======

Reported diluted earnings per share          $ 0.51  $ 0.46   $ 1.51  $ 1.40
Impact on diluted earnings per share              -   (0.01)   (0.01)  (0.03)
                                             ------  ------   ------  ------ 
Pro forma diluted earnings per share         $ 0.51  $ 0.45   $ 1.50  $ 1.37
                                             ======  ======   ======  ======

 56

     The fair value of options granted in 2005 and 2004 were estimated at the 
grant date using the following weighted average assumptions:

                                               Third Quarter     Year-to-date
                                                2005    2004     2005    2004
                                               -----   -----     ----    ----
Dividend Yield                                    *     3.00%    2.77%   2.50%
Expected Volatility                               *    25.06    25.21   25.00
Risk Free Interest Rates                          *     3.35     4.18    2.61
Expected Options Lives                            *        5        5       5

* There were no stock options granted in the third quarter of 2005.

     In December 2004, the FASB issued FASB Statement No. 123 (revised 2004) 
("SFAS 123(R)"), "Share-Based Payment", which is a revision of FASB Statement 
No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation."  SFAS 123(R) 
eliminates the ability to account for share-based compensation transactions 
using Accounting Principles Board Opinion No. 25 and requires that such 
transactions be accounted for using a fair value-based method.  SFAS 123(R) 
covers a wide range of share-based compensation arrangements including share 
options, restricted share plans, performance-based awards, share appreciation 
rights, and employee share purchase plans.  In April 2005, the Securities and 
Exchange Commission ("SEC") issued a release that amends the compliance dates 
for SFAS 123(R).  Under the SEC's new rule, the Company will be required to 
apply SFAS 123(R) as of January 1, 2006.

     SFAS 123(R) may be adopted using one of two methods: (1) A "modified 
prospective" method in which compensation cost is recognized beginning with 
the effective date (a) based on the requirements of SFAS 123(R) for all share-
based payments granted after the effective date and (b) based on the 
requirements of SFAS 123 for all awards granted to employees prior to the 
effective date of SFAS 123(R) that remain unvested on the effective date.  (2) 
A "modified retrospective" method which includes the requirements of the 
modified prospective method described above, but also permits entities to 
restate based on the amounts previously recognized under SFAS 123 for purposes 
of pro forma disclosures either (a) all prior periods presented or (b) prior 
interim periods of the year of adoption.  The Company expects to adopt SFAS 
123(R) using the "modified prospective" method.

     The Company adopted the fair value method of accounting for stock-based 
compensation prospectively as of January 1, 2003.  By January 1, 2006, the 
Company will be amortizing all of its unvested stock option grants.  Certain 
of the Company's stock compensation grants vest when the employee retires. 
SFAS 123(R) will require the completion of expensing of new grants with this 
feature by the first date the employee is eligible to retire. Currently, the 
Company generally expenses these grants over their stated vesting period.

    The Company is currently evaluating the impact of adopting SFAS 123(R).

     On February 1, 2003, the Company adopted FASB Interpretation No. 46 ("FIN 
46"), "Consolidation of Variable Interest Entities".  This interpretation 
requires a company that holds a variable interest in an entity to consolidate 
the entity if the company's interest in the variable interest entity ("VIE") 
is such that the company will absorb a majority of the VIE's expected losses 
and/or receives a majority of the entity's expected residual returns.  FIN 46 
also requires additional disclosures by primary beneficiaries and other 
significant variable interest holders.  The consolidation requirements of FIN 
46 applied immediately to VIEs created after January 31, 2003.  Various 
amendments to FIN 46, including FIN 46(R), delayed the effective date for 
certain previously established entities until the first quarter of 2004.  The 
adoption of FIN 46 and FIN 46(R) did not have a significant impact on the 
Company's results of operations or financial condition.

     As of December 31, 2004, the Company had variable interests in 5 
securitization trusts.  These trusts are qualifying special-purpose entities, 

 57

which are exempt from the consolidation requirements of FIN 46.  See Footnote 
"Securitizations" in the 2004 Annual Report.

     The most significant impact of FIN 46 and FIN 46(R) was to require that 
the trusts used to issue trust preferred securities be deconsolidated.  As a 
result, the trust preferred securities no longer represent a minority 
interest. Under regulatory capital rules, minority interests count as Tier 1 
Capital. The Company has $1,150 million of trust preferred securities 
outstanding. 

     On March 1, 2005, the Board of Governors of the Federal Reserve System 
(the "FRB") adopted a final rule that allows the continued limited inclusion 
of trust preferred securities in the Tier 1 capital of bank holding companies 
(BHCs). Under the final rule, the Company will be subject to a 15 percent 
limit in the amount of trust preferred securities that can be included in Tier 
1 capital, net of goodwill, less any related deferred tax liability.  Amounts 
in excess of these limits will continue to be included in Tier 2 capital.  The 
final rule provides a five-year transition period, ending March 31, 2009, for 
application of quantitative limits.  Under the transition rules, the Company 
expects all its trust preferred securities to continue to qualify as Tier 1 
capital.  Both the Company and the Bank are expected to remain "well 
capitalized" under the final rule.  At the end of the transition period, the 
Company expects all its current trust preferred securities will continue to 
qualify as Tier 1 capital.

     In May 2004, FASB issued FASB Staff Position No. 106-2, "Accounting and 
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement 
and Modernization Act of 2003" ("FSP FAS 106-2"), which supersedes FSP FAS 
106-1, in response to the December 2003 enactment of the Medicare Prescription 
Drug, Improvement and Modernization Act of 2003 ("the Act").  FSP FAS 106-2 
provides guidance on the accounting for the effects of the Act for employers 
that sponsor postretirement health care plans that provide prescription drug 
benefits. The Company believes that its plans are eligible for the subsidy 
provided by the Act and adopted FSP FAS 106-2 in the third quarter of 2004 
retroactive to January 1, 2004. The adoption of FSP FAS 106-2 did not have a 
significant impact on the Company's results of operations or financial 
position.

     In September 2004, the FASB issued FASB Staff Position (FSP) EITF 03-1-1, 
which delaying the recognition and measurement provisions of EITF 03-1 pending 
the issuance of further implementation guidance.  Such guidance was also 
issued in September 2004 in the form of proposed FSP EITF Issue No. 03-1-a, 
"Implementation Guidance for the Application of Paragraph 16 of EITF Issue No. 
03-1" (FSP EITF 03-1-a).  At its June 2005 meeting, the FASB decided that they 
will issue proposed FSP EITF 03-1-a as final.  The final FSP, to be re-titled 
FSP FAS 115-1, "The Meaning of Other-Than-Temporary Impairment and its 
Application to Certain Investments", requires that a) for each individual 
impaired security, a company assert its ability and intent to hold to recovery 
and to designate an expected recovery period in order to avoid recognizing an 
impairment charge through earnings, b) a company need not make such an 
assertion for minor impairments caused by changes in interest rate and sector 
spreads, c) the company must recognize an impairment charge on securities 
impaired as a result of interest rate and/or sector spreads immediately upon 
changing their assertion to an intent to sell such security, and d) defines 
when a change in a company's assertion for one security would not call into 
question assertions made for other impaired securities. The final FSP is 
expected to be issued in the fourth quarter of 2005 and would be effective for 
reporting periods beginning after December 15, 2005.  The Company does not 
expect the adoption of the final standard will have a significant impact on 
its financial condition or results of operations.

     The FASB has issued an exposure draft revising the accounting guidance 
under SFAS 13 surrounding leveraged leases.  The exposure draft modifies 
existing interpretations of SFAS 13 and associated industry practice. As a 
result, a settlement of the tax matters associated with the Company's 
structured leasing investments (see "Commitments and Contingencies" footnote) 

 58

could result in a material one-time charge to earnings related to a change in 
the timing of the lease cash flows.  However, an amount approximating this 
one-time charge would be recognized into income over the remaining term of the 
affected leases.  The FASB has indicated it plans to issue a final 
pronouncement by the end of 2005 that would be effective for 2005.

	In June 2005, the FASB ratified the consensus in EITF Issue No. 04-5, 
"Determining Whether a General Partner, or the General Partners as a Group, 
Controls a Limited Partnership or Similar Entity When the Limited Partners 
Have Certain Rights" ("EITF 04-5"), which provides guidance in determining 
whether a general partner controls a limited partnership.  EITF 04-5 is 
effective for general partners of all new limited partnerships formed and for 
existing limited partnerships for which the partnership agreements are 
modified. The guidance in EITF 04-5 is effective after June 29, 2005. For 
general partners in all other limited partnerships, the guidance in this Issue 
is effective no later than the beginning of the first reporting period in 
fiscal years beginning after December 15, 2005.  The Company is currently 
evaluating the impact of adopting EITF 04-5.

     In July 2005, the FASB issued an Exposure Draft of a proposed 
Interpretation, "Accounting for Uncertain Tax Positions". The proposed 
Interpretation clarifies the accounting for uncertain tax positions in 
accordance with FASB Statement No. 109, "Accounting for Income Taxes". The 
proposed Interpretation requires that a tax position meet a "probable 
recognition threshold" for the benefit of the uncertain tax position to be 
recognized in the financial statements. A tax position that fails to meet the 
probable recognition threshold will result in either reduction of current or 
deferred tax asset or receivable, or recording a current or deferred tax 
liability. The proposed Interpretation also provides guidance on measurement, 
derecognition of tax benefits, classification, interim period accounting 
disclosure, and transition requirements in accounting for uncertain tax 
positions. The proposed Interpretation has a 60-day comment period and shall 
be effective for all companies as of the first fiscal year ending after 
December 15, 2005. The Company is assessing the impact of adopting the new 
pronouncement and is currently unable to estimate its impact on the Company's 
consolidated financial statements.

     The Company participates in unconsolidated investments that own real 
estate qualifying for low income housing tax credits based on Section 42 of 
the Internal Revenue Code.  The Company's share of operating losses generated 
by these investments is recorded as other income. The Company has historically 
netted the tax credits generated by these investments against the related 
operating losses.  In the first quarter of 2005, the Company reviewed this 
accounting method and determined it was more appropriate to record these tax 
credits as a reduction of income tax expense.  Prior period results for other 
income and income tax expense have been reclassified and did not have an 
impact on net income.  See "Other Developments."

     Certain other prior year information has been reclassified to conform its 
presentation with the 2005 financial statements.

 59


3.  Acquisitions and Dispositions
    -----------------------------

     The Company continues to be an active acquirer of securities servicing 
and asset management businesses.

     The Company has announced 5 acquisitions in 2005.  The total acquisition 
cost in the third quarter and nine months of 2005 was $177 million and $188 
million, paid in cash. The Company frequently structures its acquisitions with 
both an initial payment and a later contingent payment tied to post-closing 
revenue or income growth.  The Company records the fair value of contingent 
payments as an additional cost of the entity acquired in the period that the 
payment becomes probable.

     Goodwill and the tax-deductible portion of goodwill related to 
acquisitions in the third quarter and nine months of 2005 was $124 million, in 
both periods. At September 30, 2005, the Company was liable for potential 
contingent payments related to acquisitions in the amount of $204 million. 
During the third quarter and the nine months of 2005, the Company paid or 
accrued $9 million and $43 million for contingent payments related to 
acquisitions made in prior years. The pro forma effect of the 2005 
acquisitions is not material to year-to-date 2005 net income.


2005
----

     In January 2005, the Company acquired certain of the assets and 
liabilities of Standard & Poor's Securities, Inc. ("SPSI"), the institutional 
brokerage subsidiary of Standard & Poor's.  The Company will assume SPSI's 
client relationships and Standard & Poor's research clients will have access 
to BNY Securities Group's diverse set of execution management platforms and 
commission management services.  The acquisition demonstrates the Company's 
strategy to work with leading independent providers of research and other 
financial services.

    In March 2005, the Company acquired the execution and commission 
management services of Boston Institutional Services ("BIS").  Under the terms 
of the agreement, the Company will assume BIS's client relationships for its 
execution and commission management business.

     In July 2005, the Company acquired Lynch, Jones & Ryan, Inc. ("LJR"), a 
subsidiary of Instinet Group.  LJR is the pioneer and premier provider of 
commission recapture programs, with over 30 years experience in providing 
value-added trading services to institutional investors who comprise 1,400 
plan sponsor funds, with more than $2.2 trillion in assets.  The Company's 
headquarters are in New York, with regional offices in Chicago, Dallas, and 
San Francisco and a presence in London, Tokyo and Sydney.  The acquisition of 
LJR bolsters the Company's position as a leading provider of agency brokerage 
and commission management services, and reinforces its long-standing 
commitment to the plan sponsor and institutional fund community around the 
world.

     In June 2005, the Company and Trust Company of Australia Ltd. ("Trust") 
formed a joint venture that will provide securitization trustee and other 
agency-related services to Australian-based issuers of debt.  The new company 
will combine Trust's strong local infrastructure and market presence with the 
Company's global experience and expertise to provide a wide range of trustee 
and agency services.  The joint venture, based in Sydney, began operating in 
early June 2005.  The joint venture presents the Company with a significant 
opportunity to expand its footprint in Australia and to capitalize on the 
sizeable growth potential in the securitization market across a variety of 
asset classes.

     In July 2005, The Bank of New York and BHF-BANK established BHF BNY 
Securities Services GmbH as a jointly held subsidiary. Based in Frankfurt am 

 60

Main, the new company will market Global Custody (Depotbank) services for 
German investment companies, and securities custody and settlement services 
for the national and international direct investments of institutional 
investors.

     In July 2005, the Company acquired the bond administration business of 
Marshall & Ilsley Trust Company N.A., and M&I Marshall & Ilsley Bank 
(together, "M&I"), where they act as bond trustee, paying/fiscal agent, master 
trustee, transfer agent and/or registrar. The transaction involved the 
acquisition of approximately 560 bond trusteeships and agency appointments, 
representing $4.8 billion of principal debt outstanding for an estimated 225 
clients. 
     
     In August 2005, the Company and Nordea, the leading financial services 
provider in the Nordic region, have entered into a strategic agreement to 
provide global custody and selected related services to Nordea's 
institutional clients in the Nordic and Baltic Sea regions. The scope of the 
agreement involves approximately EUR 240 billion of assets which represent 
about half of Nordea's EUR 500 billion assets under custody. 
     
     In August 2005, the Company announced a strategic arrangement with 
IL&FS Trust Company Limited ("ITCL"), a leading provider of trust and 
fiduciary services in India. The arrangement between the two organizations 
will provide Indian issuers with access to the Company's global network, a 
comprehensive array of services to the international capital markets, and 
leading-edge technology capabilities. Under the arrangement, ITCL will 
perform corporate trust services in India, and the Company will provide 
offshore services.

     In October 2005, the Company announced a marketing alliance with 
National Australia Bank ("National"). The arrangement will enable the 
Company to offer commission recapture services to National's custody clients 
in Australia and New Zealand. The alliance continues the strategic 
international build-out of the Company's transition management and 
commission recapture capabilities, which has included the opening of its 
Sydney office and acquisition of LJR.

     In October 2005, the Company announced a definitive agreement to acquire 
Alcentra Group Limited, an international asset management group focused on 
funds that invest in sub-investment grade debt. Alcentra's management team 
will retain a 20 percent interest.  Alcentra has operations in London and Los 
Angeles and currently manages 15 different investment funds with over $6.2 
billion of assets. The transaction is expected to close by year-end, subject 
to regulatory approval and other customary conditions of closing.

4.  Goodwill and Intangibles
    ------------------------

     Goodwill by business segment is as follows:

(In millions)
                                       September 30, 2005    December 31, 2004
                                       ------------------    -----------------
 Servicing and
  Fiduciary Businesses                      $       3,473      $         3,337
 Corporate Banking                                     31                   31
 Retail Banking                                       109                  109
 Financial Markets                                      -                    -
                                       ------------------    -----------------
Consolidated Total                          $       3,613      $         3,477
                                       ==================    =================

     The Company's business segments are tested annually for goodwill 
impairment.

 61

Intangible Assets
-----------------


                                  September 30, 2005                        December 31, 2004
                      ----------------------------------------------  ------------------------------
                                                        Weighted
                        Gross                  Net       Average        Gross                 Net
                      Carrying  Accumulated Carrying  Amortization    Carrying  Accumulated Carrying
(Dollars in millions)  Amount  Amortization  Amount  Period in Years   Amount  Amortization  Amount
                      -------- ------------ -------- ---------------  -------- ------------ --------
                                                                       
Trade Names           $    370  $        -  $    370 Indefinite Life  $    370  $        -  $    370
Customer Relationships     521         (89)      432        16             474         (65)      409
Other Intangible
   Assets                   28         (17)       11         6              41         (27)       14



   
  The aggregate amortization expense of intangibles was $10 million and $9 
million for the quarters ended September 30, 2005 and 2004, respectively. The 
aggregate amortization expense of intangibles was $28 million and $26 million 
for the nine months ended September 30, 2005 and 2004, respectively. Estimated 
amortization expense for the next five years is as follows:

                                         For the Year Ended        Amortization
(In millions)                                   December 31,            Expense
                                         ------------------        ------------
                                                 2005                       $40
                                                 2006                        43
                                                 2007                        39
                                                 2008                        38
                                                 2009                        37

5.  Allowance for Credit Losses
    ---------------------------

     The allowance for credit losses is maintained at a level that, in 
management's judgment, is adequate to absorb probable losses associated with 
specifically identified loans, as well as estimated probable credit losses 
inherent in the remainder of the loan portfolio at the balance sheet date.  
Management's judgment includes the following factors, among others: risks of 
individual credits; past experience; the volume, composition, and growth of 
the loan portfolio; and economic conditions.

     The Company conducts a quarterly portfolio review to determine the 
adequacy of its allowance for credit losses.  All commercial loans over $1 
million are assigned to specific risk categories.  Smaller commercial and 
consumer loans are evaluated on a pooled basis and assigned to specific risk 
categories.  Following this review, senior management of the Company analyzes 
the results and determines the allowance for credit losses.  The Risk 
Committee of the Company's Board of Directors reviews the allowance at the end 
of each quarter.

     The portion of the allowance for credit losses allocated to impaired 
loans (nonaccrual commercial loans over $1 million) is measured by the 
difference between their recorded value and fair value.  Fair value is the 
present value of the expected future cash flows from borrowers, the market 
value of the loan, or the fair value of the collateral.

     Commercial loans are placed on nonaccrual status when collateral is 
insufficient and principal or interest is past due 90 days or more, or when 
there is reasonable doubt that interest or principal will be collected.  
Accrued interest is usually reversed when a loan is placed on nonaccrual 
status.  Interest payments received on nonaccrual loans may be recognized as 
income or applied to principal depending upon management's judgment.  
Nonaccrual loans are restored to accrual status when principal and interest 
are current or they become fully collateralized.  Consumer loans are not 
classified as nonperforming assets, but are charged off and interest accrued 
is suspended based upon an established delinquency schedule determined by 
product.  Real estate acquired in satisfaction of loans is carried in other 
assets at the lower of the recorded investment in the property or fair value 
minus estimated costs to sell.

 62

     Transactions in the allowance for credit losses are summarized as 
follows:




(In millions)                        Three Months Ended September 30, 2005
                               ----------------------------------------------
                                                Allowance for
                                Allowance for  Lending-Related  Allowance for
                                 Loan Losses     Commitments    Credit Losses
                               --------------  ---------------  -------------       
                                                       
Balance, Beginning of Period      $      562     $        148     $      710
  Charge-Offs                            (14)               -            (14)
  Recoveries                               1                -              1
                               --------------  ---------------  -------------
  Net Charge-Offs                        (13)               -            (13)
  Provision                               12               (2)            10 
                               --------------  ---------------  -------------
Balance, End of Period            $      561     $        146     $      707
                               ==============  ===============  =============




                            Three Months Ended September 30, 2004
                               ----------------------------------------------
                                                Allowance for
                                Allowance for  Lending-Related  Allowance for
                                 Loan Losses     Commitments    Credit Losses
                               --------------  ---------------  -------------        
                                                       
Balance, Beginning of Period      $      598     $        177     $      775
  Charge-Offs                            (21)               -            (21)
  Recoveries                               2                -              2
                               --------------  ---------------  -------------
  Net Charge-Offs                        (19)               -            (19)
  Provision                               19              (19)             -
                               --------------  ---------------  -------------
Balance, End of Period            $      598     $        158     $      756
                               ==============  ===============  =============



    

                                     Nine Months Ended September 30, 2005
                               ----------------------------------------------
                                                Allowance for
                                Allowance for  Lending-Related  Allowance for
                                 Loan Losses     Commitments    Credit Losses
                               --------------  ---------------  -------------         
                                                       
Balance, Beginning of Period      $      591     $        145     $      736
  Charge-Offs                            (40)               -            (40)
  Recoveries                               6                -              6
                               --------------  ---------------  -------------
  Net Charge-Offs                        (34)               -            (34)
  Provision                                4                1              5 
                               --------------  ---------------  -------------
Balance, End of Period            $      561     $        146     $      707
                               ==============  ===============  =============



    
                                     Nine Months Ended September 30, 2004
                               ----------------------------------------------
                                                Allowance for
                                Allowance for  Lending-Related  Allowance for
                                 Loan Losses     Commitments    Credit Losses
                               --------------  ---------------  -------------      
                                                       
Balance, Beginning of Period      $      668     $        136     $      804
  Charge-Offs                            (76)               -            (76)
  Recoveries                               6                -              6
                               --------------  ---------------  -------------
  Net Charge-Offs                        (70)               -            (70)
  Provision                                -               22             22
                               --------------  ---------------  -------------
Balance, End of Period            $      598     $        158     $      756
                               ==============  ===============  =============


 63

6.  Capital Transactions
    --------------------

     The Company has 5 million authorized shares of Class A preferred stock 
having a par value of $2.00 per share.  At September 30, 2005 and December 31, 
2004, 3,000 shares were outstanding.

     During the quarter ended September 30, 2005, the Company issued $55 
million subordinated debt qualifying as Tier II capital.

     At September 30, 2005, the Company had registration statements with a 
remaining capacity of approximately $1.7 billion of debt, preferred stock, 
preferred trust securities, or common stock.


7.  Earnings Per Share
    ------------------

     The following table illustrates the computations of basic and diluted 
earnings per share:




(Dollars in millions,                  Three Months Ended    Nine Months Ended
 except per share amounts)                September 30,        September 30,
                                       ------------------   ------------------
                                                         
                                         2005      2004       2005      2004
                                       --------  --------   --------  --------

Net Income (1)                         $    389  $    354   $  1,166  $  1,089
                                       ========  ========   ========  ========
Basic Weighted Average
  Shares Outstanding                        761       772        766       772
Shares Issuable Due to 
  Employee Stock Compensation                 8         6          7         6
                                       --------  --------   --------  --------
Diluted Weighted Average
  Shares Outstanding                        769       778        773       778
                                       ========  ========   ========  ========

Basic Earnings Per Share:              $   0.51  $   0.46   $   1.52  $   1.41
Diluted Earnings Per Share:                0.51      0.46       1.51      1.40


(1) Net Income, net income available to common shareholders and diluted net 
    income are the same for all periods presented.

 64


8.   Employee Benefit Plans
     ----------------------

     The components of net periodic benefit cost are as follows:



                                          Pension Benefits                    Healthcare Benefits 
                             -------------------------------------- ------------------------------------
                             Three Months Ended  Nine Months Ended  Three Months Ended  Nine Months Ended
                                September 30,      September 30,       September 30,     September 30,
                             ------------------- ------------------- ------------------ ----------------
                             Domestic   Foreign  Domestic   Foreign
                             --------- --------- --------- ---------
(In millions)                2005 2004 2005 2004 2005 2004 2005 2004   2005      2004     2005     2004
---------------------        ---- ---- ---- ---- ---- ---- ---- ---- --------  -------- --------  ------
                                                                                  
Net Periodic Cost (Income)
 Service Cost                $ 16 $ 12 $  2 $  2 $ 48 $ 35 $  6 $  7  $     -  $      -  $     1  $    1
 Interest Cost                 14   13    2    2   42   38    7    6        2         2        6       6
 Expected Return on Assets    (30) (33)  (2)  (2) (90) (99)  (8)  (8)      (2)       (1)      (5)     (5)
 Other                          4    1    -    -   13    3    1    -        2         2        5       5
                             ---- ---- ---- ---- ---- ---- ---- ----  -------  --------  -------  ------
Net Periodic Cost (Income)   $  4 $ (7)$  2 $  2 $ 13 $(23)$  6 $  5  $     2  $      3  $     7  $    7
                             ==== ==== ==== ==== ==== ==== ==== ====  =======  ========  =======  ======



9.   Income Taxes
     ------------
     
       The statutory federal income tax rate is reconciled to the Company's 
effective income tax rate below:
                                                        Nine Months Ended
                                                          September 30,
                                                        ----------------
                                                          2005     2004  
                                                          ----     ---- 
Federal Rate                                              35.0%    35.0% 
State and Local Income Taxes,
  Net of Federal Income Tax Benefit                        3.7     (0.9)  
Nondeductible Expenses                                     0.5      0.1  
Credit for Synthetic Fuel Investments                     (1.8)    (1.2)
Credit for Low-Income Housing Investments                 (1.6)    (2.0) 
Tax-Exempt Income From Municipal Securities               (0.1)    (0.2) 
Other Tax-Exempt Income                                   (1.1)    (1.3) 
Foreign Operations                                        (0.2)     0.5 
Leveraged Lease Portfolio                                 (0.3)    (0.7) 
Tax Reserve - LILO Exposure                                0.5      0.5  
Other - Net                                               (0.9)    (0.3) 
                                                          -----    ----- 
Effective Rate                                            33.7%    29.5% 
                                                         ======   ====== 

 65


10.  Commitments and Contingent Liabilities
     --------------------------------------

     In the normal course of business, various commitments and contingent 
liabilities are outstanding which are not reflected in the accompanying 
consolidated balance sheets.  Management does not expect any material losses 
to result from these matters.

     A summary of the notional amount of the Company's off-balance-sheet 
credit transactions, net of participations, at September 30, 2005 and December 
31, 2004 follows:

Off-Balance-Sheet Credit Risks
------------------------------

                                                   September 30,  December 31,
(In millions)                                               2005          2004
-----------------------------------                 ------------   -----------
Lending Commitments                                 $     34,225   $    34,834
Standby Letters of Credit, Net                            10,205         9,507
Commercial Letters of Credit                               1,464         1,264
Securities Lending Indemnifications                      297,237       232,025

     The total potential loss on undrawn commitments, standby and commercial 
letters of credit, and securities lending indemnifications is equal to the 
total notional amount if drawn upon, which does not consider the value of any 
collateral.  Since many of the commitments are expected to expire without 
being drawn upon, the total amount does not necessarily represent future cash 
requirements.

     In securities lending transactions, the Company generally requires the 
borrower to provide 102% cash collateral which is monitored on a daily basis, 
thus reducing credit risk. Securities lending transactions are generally 
entered into only with highly-rated counterparties. At September 30, 2005 and 
December 31, 2004, securities lending indemnifications were secured by 
collateral of $303.5 billion and $233.0 billion, respectively.

     The notional amounts for other off-balance-sheet risks express the dollar 
volume of the transactions; however, credit risk is much smaller.  The Company 
performs credit reviews and enters into netting agreements to minimize the 
credit risk of foreign currency and interest rate risk management products.  
The Company enters into offsetting positions to reduce exposure to foreign 
exchange and interest rate risk.

     Standby letters of credit principally support corporate obligations and 
include $0.9 billion and $0.5 billion that were collateralized with cash and 
securities on September 30, 2005 and December 31, 2004.  At September 30, 
2005, approximately $6.8 billion of the standbys will expire within one year, 
and the balance between one to five years.

Other
-----

     In the ordinary course of business, the Company makes certain investments 
that have tax consequences.  From time to time, the IRS may question or 
challenge the tax position taken by the Company.  The Company engaged in 
certain types of structured leasing investments, referred to as "LILOs", prior 
to 1999 that the IRS has challenged.  In 2004, the IRS proposed adjustments to 
the Company's tax treatment of these transactions.  The Company believes that 
its tax position related to these transactions was proper based upon 
applicable statutes, regulations and case law in effect at the time the 
transactions were entered into.  However, a court or other judicial or 
administrative authority, if presented with the transactions, could disagree.

     Beginning in the fourth quarter of 2004, the Company had several 
appellate conferences with the IRS related to the Company's LILO transactions. 
Negotiations have continued with the IRS and based on these negotiations, the 
Company believes it is likely it will settle the proposed IRS tax adjustments 
relating to transactions closed in 1996 and 1997.  However, negotiations are 
not final and it remains possible that the matter will be litigated.  The 

 66

Company's 1998 leveraged lease transactions are in a later audit cycle and 
thus are unlikely to be part of any settlement of the 1996 and 1997 leases.  
However, the Company believes that a comparable settlement for 1998 will 
ultimately be possible given the similarity between these leases and the 
earlier leases.  

       There were no significant new developments on the LILO matter during the 
third quarter of 2005.

     On February 11, 2005, the IRS released Notice 2005-13, which identified 
certain lease investments known as "SILOs" as potentially subject to IRS 
challenge.  The Company believes that certain of its lease investments entered 
into between 1999 and 2004 may be consistent with transactions described in 
the notice. In response, the Company is reviewing its lease portfolio and 
evaluating the technical merits of the IRS' position. Although it is likely 
the IRS will challenge the tax benefits associated with these leases, the 
Company remains confident that its leases complied with statutory, 
administrative and judicial authority existing at that time.

     The Company currently believes it has adequate tax reserves to cover its 
LILO exposure for all years and any other potential tax exposures the IRS 
could raise, based on a probability assessment of various potential outcomes.  
Probabilities and outcomes are reviewed as events unfold, and adjustments to 
the reserves are made when appropriate.

     In the ordinary course of business, the Company and its subsidiaries are 
routinely defendants in or parties to a number of pending and potential legal  
actions, including actions brought on behalf of various classes of claimants, 
and regulatory matters.  Claims for significant monetary damages are asserted 
in certain of these actions and proceedings.  Due to the inherent difficulty 
of predicting the outcome of such matters, the Company cannot ascertain what 
the eventual outcome of these matters will be; however, based on current 
knowledge and after consultation with legal counsel, the Company does not 
believe that judgments or settlements, if any, arising from pending or 
potential legal actions or regulatory matters, either individually or in the 
aggregate, will have a material adverse effect on the consolidated financial 
position or liquidity of the Company although they could have a material 
effect on net income for a given period.  The Company intends to defend itself 
vigorously against all of the claims asserted in these matters.

     See discussion of contingent legal matters in the "Legal Proceedings" 
section.


 67

                        QUARTERLY REPORT ON FORM 10-Q
                      THE BANK OF NEW YORK COMPANY, INC.


                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

Quarterly Report pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934 for the quarterly period ended September 30, 2005 

Commission file number 001-06152

THE BANK OF NEW YORK COMPANY, INC.
Incorporated in the State of New York
I.R.S. Employer Identification No. 13-2614959
Address: One Wall Street
         New York, New York 10286
         Telephone: (212) 495-1784

As of September 30, 2005, The Bank of New York Company, Inc. had
769,911,211 shares of common stock ($7.50 par value) outstanding.

The Bank of New York Company, Inc. (1) has filed all reports required 
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months(or such shorter period that the 
registrant was required to file such reports), and (2) has been subject 
to such filing requirements for the past 90 days.

The registrant is an accelerated filer (as defined in Rule 12b-2 of the 
Exchange Act).

The following sections of the Financial Review set forth in the cross-
reference index are incorporated in the Quarterly Report on Form 10-Q.

               Cross-reference                                        Page(s)
-----------------------------------------------------------------------------

PART I         FINANCIAL INFORMATION

Item 1         Financial Statements

               Consolidated Balance Sheets as of 
                  September 30, 2005 and December 31, 2004                51   

               Consolidated Statements of Income for 
                 the Three Months and Nine Months Ended 
                 September 30, 2005 and 2004                              52   

               Consolidated Statement of Changes in 
                 Shareholders' Equity for the Nine Months 
                 Ended September 30, 2005                                 53   

               Consolidated Statement of Cash Flows 
                 for the Nine Months Ended 
                 September 30, 2005 and 2004                              54

               Notes to Consolidated Financial Statements            55 - 66

Item 2         Management's Discussion and Analysis of 
                 Financial Condition and Results of Operations        3 - 50

Item 3         Quantitative and Qualitative Disclosures 
                 About Market Risk                                   38 - 40


 68

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     The Company's Disclosure Committee, whose members include the Chief 
Executive Officer and Chief Financial Officer, has responsibility for ensuring 
that there is an adequate and effective process for establishing, maintaining, 
and evaluating disclosure controls and procedures which are designed to ensure 
that information required to be disclosed by the Company in its SEC reports 
is timely recorded, processed, summarized and reported. In addition, the 
Company has established a Code of Conduct designed to provide a statement of 
the values and ethical standards to which the Company requires its employees 
and directors to adhere. The Code of Conduct provides the framework for 
maintaining the highest possible standards of professional conduct.  The 
Company also maintains an ethics hotline for employees.

     As of the end of the period covered by this report, an evaluation was 
carried out under the supervision and with the participation of the Company's 
management, including the Chief Executive Officer and Chief Financial Officer, 
of the effectiveness of the Company's disclosure controls and procedures as 
defined in Exchange Act Rule 13a-15(e) and 15d-15(e). Based on that 
evaluation, the Chief Executive Officer and Chief Financial Officer concluded 
that the Company's disclosure controls and procedures were effective. 

Changes in Internal Control Over Financial Reporting

    In the ordinary course of business, the Company may routinely modify, 
upgrade and enhance its internal controls and procedures for financial 
reporting.  However, there have not been any changes in the Company's internal 
controls over financial reporting as defined in Exchange Act Rule 13a-15(f) 
and 15d-15(f) during the fiscal quarter to which this report relates that have 
materially affected, or are reasonably likely to materially affect, the 
Company's internal control over financial reporting.


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

   In the ordinary course of business, the Company and its subsidiaries 
are routinely defendants in or parties to a number of pending and 
potential legal actions, including actions brought on behalf of various 
classes of claimants, and regulatory matters.  Claims for significant 
monetary damages are asserted in certain of these actions and proceedings.  
In regulatory enforcement matters, claims for disgorgement and the 
imposition of penalties and/or other remedial sanctions are possible.  Due 
to the inherent difficulty of predicting the outcome of such matters, the 
Company cannot ascertain what the eventual outcome of these matters will 
be; however, based on current knowledge and after consultation with legal 
counsel, the Company does not believe that judgments or settlements, if 
any, arising from pending or potential legal actions or regulatory 
matters, either individually or in the aggregate, will have a material 
adverse effect on the consolidated financial position or liquidity of the 
Company although they could have a material effect on net income for a 
given period.  The Company intends to defend itself vigorously against all 
of the claims asserted in these legal actions.

     As discussed in a report filed on Form 8-K on November 8, 2005, the 
Bank entered into a non-prosecution agreement with the U.S. Attorney's 
Offices for the Southern and Eastern Districts of New York ("SDNY" and 
"EDNY"). The agreement resolves the previously disclosed SDNY 
investigation involving funds transfer activities to and from Russia from 
1996-1999 and the EDNY investigation of a fraudulent scheme conducted by a 
former customer of one of the Bank's Long Island branch offices.  

 69

     There have been no material changes in the proceedings previously 
disclosed in the 10-Q for the second quarter of 2005 relating to the 
Company's mutual fund and issuer services businesses.

Item 2.  Changes in Securities, Use of Proceeds, and
----------------------------------------------------
           Issuer Purchases of Equity Securities
           -------------------------------------

     Shares of the Company's common stock were issued in the following 
transactions exempt from registration under the Securities Act of 1933 
pursuant to Section 4(2) thereof:
       
     (a) On October 10, 2005, 2,400 shares of common stock were issued to 
Richard C. Vaughan as part of his annual retainer as a non-employee director.
 
     (c) Under its stock repurchase program, the Company buys back shares from 
time to time.  The following table discloses the Company's repurchases of the 
Company's common stock made during the third quarter of 2005.

Issuer Purchases of Equity Securities
-------------------------------------
                                         Total Number         Maximum
                   Total      Average       of Shares     Number of Shares
                   Number      Price       Purchased as      That May be
Period           of Shares      Paid         Part of         Repurchased
                 Purchased   Per Share      Publicly       Under the Plans
                                        Announced Plans     or Programs
                                          or Programs
--------------  ----------  ----------   --------------- ------------------
July      1-31   2,160,639  $    31.08(1)      2,160,639         19,333,333
August    1-31      20,450       29.17            20,450         19,312,883
September 1-30       6,301       30.85             6,301         19,306,582
                ----------               ---------------
Total            2,187,390                     2,187,390
                ==========               ===============

(1) Based on initial price.

     All shares were repurchased through the Company's stock repurchase 
programs announced on November 12, 2002, and July 12, 2005, which permits the 
repurchase of 16 million shares and 20 million shares, respectively.  The 
shares repurchased in August and September primarily resulted from open market 
purchases, while 2.0 million shares were repurchased in July at an initial 
price of $31.25 from a broker-dealer counterparty who borrowed the shares, as 
part of an accelerated share repurchase program. The initial price is subject 
to a purchase price adjustment based on the price the counterparty actually 
pays for the shares.


Item 6.  Exhibits
-----------------

     Exhibit 12 - Ratio of Earnings to Fixed Charges for the Three Months and 
     Nine Months Ended September 30, 2005 and 2004;
     Exhibit 31 - Certification of Chairman and Chief Executive Officer 
     pursuant to Section 302 of the Sarbanes-Oxley Act of 2002;
     Exhibit 31.1 - Certification of Chief Financial Officer pursuant 
     to Section 302 of the Sarbanes-Oxley Act of 2002;
     Exhibit 32 - Certification of Chairman and Chief Executive Officer 
     pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; and
     Exhibit 32.1 - Certification of Chief Financial Officer pursuant 
     to Section 906 of the Sarbanes-Oxley Act of 2002.


 70

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned hereunto duly authorized.



                                          THE BANK OF NEW YORK COMPANY, INC.
                                          ----------------------------------
                                            (Registrant)





Date:  November 08, 2005               By:  /s/ Thomas J. Mastro
                                          ---------------------------------
                                     Name:  Thomas J. Mastro
                                    Title:  Comptroller



 71

                                EXHIBIT INDEX
                                -------------

Exhibit        Description
-------        -----------

  
  12           Ratio of Earnings to Fixed Charges for the Three Months and 
               Nine Months Ended September 30, 2005 and 2004.

  31           Certification of Chairman and Chief Executive Officer pursuant
               to Section 302 of the Sarbanes-Oxley Act of 2002.

  31.1         Certification of Chief Financial Officer pursuant to
               Section 302 of the Sarbanes-Oxley Act of 2002.

  32           Certification of Chairman and Chief Executive Officer pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.

  32.1         Certification of Chief Financial Officer pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002.